How She Built a $100 million CPG Brand in Three Years Selling Cauliflower Pizzas with Gail Becker, Founder of CAULIPOWER

0:00Well, I mean, in the early days, it was easy because we weren't close to hitting our minimum. So in the early days, you know, the more volume, the better, you know, there were times in the business when certainly not now. Now we can keep us up with as much demand as there is. But there was a time in the business when I had, you know, request for orders from Walmart and request for orders from Costco. And I couldn't do both. I just couldn't do both. And so I remember I had to turn Costco down and that was really hard. But, you know, sometimes as an entrepreneur, you know, by our very nature, we're yes people.

0:51Yes, I can do it. Yes, I can get it there. Yes, it can be done. So, you know, no is not a popular word in our vocabulary. It certainly wasn't mine. But, you know, I had a reputation to think about. And, you know, the worst thing you can do for your customers is make a promise you can't keep.

1:31only and is not investment advice. Our guest today is Gail Becker, the founder of Kali Power, the most disruptive company in the better-for-you frozen food space and named as one of the top 10 world's most innovative food companies in 2022 by Fast Company. Hyper-growth company reached more than$100 million in revenue in five years under her leadership as CEO. We discuss how and why she left corporate America to start Kali Power, her approach to growth through retail, how she thought about fundraising and managing her cap table and what capital efficiency means to her and product expansion. Without further ado, here's Gail.

2:10Gail, thank you so much for joining me here today. How are you? I'm great. Thank you so much for having me. I'm really looking forward to this. This should be a lot of fun. Yeah, I like fun. I want to start from the very beginning. So you were this PR executive. You were working in corporate America. I know that you were inspired by your kids. They have celiac disease and you were looking at different food options for them, but taking the leap and founding the company, that's quite the leap. So what kind of went into actually going you to actually make that decision and as well as experimenting as well with cauliflower?

2:50Yeah. So to be perfectly honest, it's such an interesting phrase that you use. I don't know that I was inspired by my kids. I certainly got the idea from my kids, but I suppose in many ways, I was inspired by helping other people like me. And I think that that really is such a calling for so many entrepreneurs. As you say, I was, you know, in corporate America, relatively happy, you know, climb the top of the corporate ladder, all that good stuff. But I felt unfulfilled. And when my father passed away, I also felt like I needed something more meaningful. I really needed to help people. I needed to do something that was, you know, going to impact people's lives in some tiny but positive way.

3:44And, but I didn't know how. I didn't know what that third missing piece would be. and you know as the mom of two boys with celiac disease I grew very frustrated by what I saw the industry was putting in gluten-free food more fat sugar salt and calories and less nutrients and I guess like probably many people you have on the show I sort of thought well someone's going to do something about this but no one ever did and so I stumbled across cauliflower crust pizza one day on the internet. There were lots of recipes on how to make it online. And I made one and it was okay, but it took a ridiculous amount of time, 90 minutes after a full day of work, to be precise.

4:35And so I put all of those things together, right? My frustration with corporate life, the passing of my father and the realization that I wanted to honor him in some way because he He was an entrepreneur. And this realization that I can't be the only one that thinks 90 minutes is a ridiculous amount of time to make a pizza crust. So I put all of those things together. And what I came out with was, I know I'm going to leave my job and start a company called Kali Power. And that's what I did in May of 2016. That's unbelievable. At what point, I know you were kind of sick and tired, it seems, of your job, corporate America, wanted to solve this problem that you sure that you felt other people were experiencing, taking 90 minutes to actually create a cauliflower pizza.

5:25But at what point did you start from scratch and just say, I'm going all in from the very beginning? Or did you already have a product in market that you were working on on the side? What was that like? Well, I'm embarrassed to answer the question because just by the way that you asked it made it feel like maybe I should have had done a little bit more prior. No, you know, I didn't have any food experience. So I didn't, other than I cooked up, bought it and ate it. So certainly had nothing else in market. I just made dinner and lunches like everybody else. I think the decision to sort of go big or go home, honestly, had a little bit to do with my age, that I was a little bit of an older entrepreneur.

6:13and you know I realized boy I should have done something like this probably several times over my life but I didn't so if I waited this long I better go all in and that's ostensibly what I did I didn't you know there are lots of companies you know particularly lots of food companies that sort of start small you know create a product sell it in the farmer's market sell it to their friends go online, blah, blah, blah. That's a great way to start a business in, in the food space. Wasn't my way. I just decided, okay, if I'm going to do this, I'm going to go big. Um, and, um, yeah, so I just went right to manufacturing.

6:54So once you took the first leap, I mean, I mean, that first step manufacturing, talk to me a little bit about, since you didn't have any experience in the food, in a few business, what was that like finding the right partner and, and also building the brand from scratch? It was horrible. I had to kiss a lot of frogs and princes and however that goes. Because most people, honestly, and this is sort of that catch-22 with a lot of newly minted entrepreneurs, is that no one wanted to take me on. They either thought, well, this woman doesn't know anything about the food industry, or you can't make a crust out of cauliflower or your volume is not big enough for us and we just don't have the room.

7:41And so basically I met a lot of potential manufacturers who gave me all, sometimes one, sometimes two, sometimes all three of those answers. And, you know, there wasn't a lot to choose from because gluten-free pizza manufacturing, frozen pizza manufacturing then and even still now is relatively limited, particularly when you're talking about that small of a run. So, you know, it was really hard to find someone who would take a bet on me. And, you know, I did hire a consultant to help me find these manufacturers because clearly I didn't know how. And that was really, and I was a sponge and I still am a sponge.

8:24And I just listened and learned and asked a lot of questions and finally got to a point where we could make it. Also, how much money did you, since you kind of went all in from the beginning, how much money do you kind of set aside in order for Kali Power? And what did you feel like maybe your first benchmark was or was going to be? Well, certainly not enough. How much money? Not enough. Ask any founder that and he or she will answer the same. I will say that I did self-fund for the first year. Just like everything you hear and read, I took my own savings, a lot of my own savings, some money that I had received from my father, who only had a small business.

9:21He didn't have a large business, but he certainly was an entrepreneur and came here with nothing. Maxed out my credit cards, really gave my life an overhaul and really struggled in the beginning. But, you know, in some ways, those were really, you know, great times, too, because, boy, to go all in on something, you know, mind, body, spirit, bank account, that's quite a feeling. And I love those times, ironically. I really did. Um, and, uh, you know, obviously it, it's different now, but, um, I guess, you know, I, so I started the company in May of 2016 and the money lasted me until August, September of 2017.

10:19So I just made it last as long as I could. Yeah. Got it. Yeah. I mean, I, I can only imagine what that feels like going all in from the get go. I mean, kudos to you. And obviously it's worked out. Well, it all sounds very smart now, but at the time it was pretty stupid. Let's be honest. You know, I don't think anyone thought it was a good idea back then. But, you know, probably like a lot of people that you interview, it's almost like a calling, you know, just something I knew I had to do. I can't explain it. But it was just this something was pushing me. Something was pulling me. something was telling me.

10:59And really for the first time in my life, I decided to listen. How did you approach from the beginning? Obviously you find the right manufacturer through your consultant. How did you also approach sales channels from the beginning? Was it first DTC or were you able to go to farmer's markets or what was kind of that in terms of the actual sales side? Yeah. Well, so farmer's market is just not scalable. I mean, that's, that's like great for some people, but I was going straight to manufacturing. I was definitely going all in for retail. D to C is also very hard when you're talking about frozen. It's not really an option.

11:38I was in Amazon in the early days and, you know, certainly you could still get us there today, but the cost of frozen shipping is so high that it just, it's much, much easier and cheaper to buy it in stores. And so my goal was to achieve distribution and mass distribution as quickly as I could and really take advantage of my first to market position. And, you know, I think that when you start a company to when you have a mission, when you really do want to help people, you know, which was the reason I started Kali Power. My goal, my mission was to make, you know, better, more nutritious food accessible to all.

12:29And in order for me to do that, that meant I had to be available in a, you know, really in every category of retail, whether it was natural or specialty or mass or, you know, grocery. And so that's what I did. And I did that as quickly as I could. What was the first channel or the first kind of win? Was it targeting first like the natural channel and whichever channel it was, how were you able to actually get into? The first retailer I was in was 30 Whole Foods stores. So Whole Foods has this program where you can pitch the region that you live in. And so I lived in the SOPAC region, which was Los Angeles and a few other regional cities.

13:29And so I just submitted, I took my very, very, very expensive four samples of pizza and, you know, brought them in a styrofoam crate to the regional office of Whole Foods. They didn't even let me meet anybody. and um you know about a week later i got a note from the buyer that they really liked it and they're going to bring them in um to those 30 stores and that was like you know that was a moment that was a that was a like because up until that point you really it's just a bet i spent all of that time all of that money you don't know so i could have made this you know fantastic product or maybe, you know, I could have made a not so fantastic product and no one might've brought it in.

14:21But so when the, when the first buyer, you know, brought them in, it was really just, you know, definitely a moment in the trajectory of the business and a day I'll never forget really. Clearly during those, for those first, the kind of trial period of the 30 source, it must've gone pretty well, I'd imagine. It went pretty well. so what was what was then did whole foods come back to you and say we want to put this in x amount of stores like what was that kind of retail expansion from there well it was you know it's funny it it took a it it does take a while to expand regions in whole foods but um but obviously eventually we got there but you know initially like they don't know how these products are going to do, right?

15:10So they order fairly small. It's a new brand. No one's heard of it. Let's just bring in, you know, not a lot. And they sold out in two days and the distributor sold out in two days. And so I just remember just getting frantic calls and frantic orders, like wanting more, more, more. And, you know, we were like last priority at the co-manufacturer. So, you know, it's this dance, this really delicate dance, you know, make more and more, you know, please. And, you know, they're ordering and you're trying to deliver them. And, oh, my gosh, just crazy. It was crazy. And your team is small, you know, really small.

15:49There were like three of us, four of us at the time. And just trying to keep up with those orders was, you know, really significant. We needed to prove that we could continuously deliver. And we did. And we obviously grew from there. Yeah. Cause I'd imagine it also takes like a, like a heavy toll. It's a, it's a good problem to have, but still a problem to have, right. That there's so much demand for your products on the operations. Talk me to a little bit about how you also thought about like the operations and actually scaling like that side too, when it came to Kali power. Well, I mean, in the early days it was easy because, you know, we, we didn't, you know, we weren't close to hitting our minimum.

16:30So in the early days, you know, the more volume, the better, you know, there were times in the business when certainly not now, now we can keep us up with as much demand as there is. But there was a time in the business when I had, you know, a request for orders from Walmart, and request for for orders from Costco. and I couldn't do both. I just couldn't do both. And so I remember I had to turn Costco down and that was really hard. But, you know, sometimes as an entrepreneur, you know, by our very nature, we're yes people. Yes, I can do it. Yes, I can get it there. Yes, it can be done. So, you know, no is not a popular word in our vocabulary.

17:24It certainly wasn't mine. But, you know, I had a reputation to think about and, you know, the worst thing you can do for your customers is make a promise you can't keep. And so I did tell them no. And, you know, it was really a good decision. And the, and I was able, as a result, I was able to service everyone else. Yeah. I feel like, I feel like you say yes. And then on behind the scenes, you're like, okay, now we got to figure it out since that's a yes. Oh, I still do that. What was that decision? partly why? Because obviously you had to be, you couldn't be, as you were kind of scaling up, I know it's obviously different now when it comes to the business, but back then, as you were scaling, you had to pick maybe which retailer to enter and kind of focus on one retailer.

18:07Why did you, in that example, take, for example, Walmart over at Costco? Well, a couple of reasons. And that was really the only time and just a really good example of, you know, a finite, a binary decision. There, there was really none other, you know, given that they're both so large. So Costco was one region. You just started in one region. It wasn't a national, it wasn't national. Um, and Walmart was national, even though at the time it was only 900 stores today that our relationship with, with them is much bigger. But, um, you know, look, my goal if you go back to my mission which I always try and do and really every founder and every company should do I wanted to make you know more nutritious food accessible to all well Walmart was a pretty damn way good way to do that and you know they've been a great partner for us um and continue to be and you know I think it was the right decision Costco sometimes they bring you in, sometimes not.

19:14And to be honest with you, I've really struggled getting back in Costco since then. But I'm hoping now that the stars have aligned. But yeah, you always have to put your customers first. And sometimes putting your customer first is making sure that you can keep all the promises that you make. At what point did it make sense for you to raise a round of venture capital. How, how roughly, what was roughly like the size of the company and, and how many stores were you in when you decided to raise around for BFG? Well, it was, um, you know, it wasn't that it was, it's easy. How do you know when, when you run out of money or, or, or, I mean, it wasn't, that wasn't, I didn't have to hear like fairy bells ring or anything.

20:03Um, and it was, um, you know, technically you should raise it before you run out of money. I probably did it a little bit late, to be honest with you. I self-funded from March 2016 through October 2017. That's when we were going into Walmart. I didn't have enough money to make the product to sell to Walmart. I needed money so that I could fulfill those orders. I'd imagine that you probably, due to the demand, had a suite of investors. Why did you land with BFG? I didn't have a suite of investors. Most people turned me down. No, most people turned me down, to be honest with you. I think, look, women get 2 % of VC dollars.

20:56I saw it happen 100 times to me, to other people. So I'm sure that played into it a little bit. I'd like to say we were a new untested product, but we weren't. We were already in market, at least in Whole Foods and some other retailers. We were killing it. We were already going into Walmart. So, you know, it's not like that was a hope and a dream. That was a reality. And, you know, I think a lot of people thought, you know, oh, you know, cauliflower crust pizza, that's not really a thing. Most people said, most potential investors said, we want to see how you how you how you do in Walmart, which was really interesting to me because I don't you know, I thought it was supposed to be called venture capital.

21:52like or risk capital. But so a lot of people turned me down. Now, a lot of people that turned me down came back the following year and were basically throwing money at me. But in early on, it was very hard to raise money. When I was reading about your story and everything with cauliflower, that's that's to me what was really impressive because you're one of the fastest growing brands to a hundred million in sales. And yet you didn't raise that much VC funding considering about how much you, you accomplished on the sales side, which, and again, there's no, you know, one way to skin a cat. There's no like right kind of answer here, but it seems like from like kind of like a capital efficiency standpoint, you were doing really well with, with Kali Power.

22:41We were really capital efficient. We've always been capital efficient. I love that word. I think that's just a great phrase. And I'm very proud of that. You know, and I think, you know, a lot of it stems, quite frankly, from very early on. I said, you know, my dad left me a little bit of money in the form of his house, which he's a small house that he lived in for many years. The only house he'd ever owned. And he, you know, I know, I saw, I lived how hard he worked for that money. Like I saw it and I just thought I better be careful with it. I that's that's like blessed money. That is like money dripped in sweat and tears.

23:36And I needed to protect it. and I needed to make it last as long as I possibly could. And that has probably, you know, been a continuous theme throughout the, you know, building and trajectory of, of Kali Power. And it all started because I thought so highly and I knew how hard my, my dad had worked for that money. During that growth phase, and obviously Kali Power is still growing, but during that kind of really fast growth stage, we're going to zero to a hundred million. Are there some maybe examples that you can pull from when you thought about how you were being capital efficient and whether that's balancing the profitability and the growth side of the business to how you think about maybe margins or just whatever kind of comes to mind?

24:29You know what? It's hard because at the time we just needed to grow, right? So So certainly, you know, obviously our goal was always to be profitable. But as you know, that does take a little bit of time. And a lot of competitors came into the market and we had to, you know, battle them and we had to get another co-man. And there were all these things that we needed to spend that money on that was going to be a long-term investment for the future of the company. So I've always had sort of that long-term view. but you know we did you know we were you know very cautious about you know there were some things you know we weren't we weren't slap happy with the money sometimes I see these brands and they do these whole you know these huge activations or whatever and we certainly have done our fair of activations um but we tried to be really thoughtful and smart around it um we you know We really, obviously, we are a marketing-driven company, which has always been.

25:38But we rely very heavily on earned media, which can be much cheaper. And so that was one way that we were able to make the dollars stretch a little bit further. Even our headquarters, I didn't put the headquarters of a company in a very sort of exciting or flashy like, you know, Venice kind of cool, you know, showcase with ping pong tables in the middle. That would have been great. And I'm sure my team would have loved it. But I just couldn't see spending money on that. I wanted to spend money on the company, on the products and on our people. And that's where that's where I focus the efforts.

26:22On the marketing and branding side to Kali Power, because I know that now you're the chief branding and innovation officer. How did you think about, because I know that you said there's a ton of competitors kind of entering the market. It became maybe a pretty exciting, attractive hot space. How do you think about the overall positioning of Kali Power versus some of your competitors? Well, you know, look, I always say that people have told me imitation is the biggest, the biggest form of flattery, right? Flattery. And if that's true, I feel very flattered because there's a lot of competitors that that that came into the space.

27:05I think, you know, look, we just always played our own game. We always played our own game. I didn't look behind me. I just kept looking forward. And I think what happened is that a lot of the competitors were so quick to get in, were so wanted a piece of what Kali Power was building, that they made subpar products. And I think consumers and retailers really spoke and said, no, we don't want that. We want Kali Power. And I think the retailers brought in a lot of those competitors because they thought, oh, great, these people are going to do for the frozen aisle what Caulipower did, but they didn't.

27:53And so there was a time when they all sort of came to market. There were 50 new SKUs from like 30 different brands. And then the following year, a lot of them left. And so one of the things that we've always done, we've always looked straight ahead. We don't look at the competition. We play our own game and we make the best damn products that we can make. And I think that, you know, a lot of times, you know, big food, as they call it, or some of our larger competitive set. You know, they bet against the they bet against the consumer in the sense that they don't think that the consumer is going to know any better.

28:38At Collie Power, we always bet on the consumer. We absolutely believe that the consumer is going to know better. In fact, we're betting on it. And I think that's what we proved out when all of those, you know, in those couple of years when, you know, the market was just flooded with competitors. No, it's a bet on your quality and that the consumers will actually be able to tell a difference and maybe read the labels and really understand what type of ingredients are actually in and making sure it's not kind of fluff or filler ingredients. Exactly, exactly. That makes sense. At what point did you realize, hey, we have to expand and diversify and expand maybe our product assortment?

29:22And which product did you start off with? Um, it's interesting, you know, I didn't really expand the portfolio until I felt like we had permission to do that from our consumers. And I really felt like our because our consumers, our consumers are wonderful. They talk to us, they share information with us, they share ideas with us, they talk to us all the time in every form that you could possibly imagine. you know, we listen. And I think that's really what sets Cauliflower apart. So, you know, we, we, we have, you know, tried a number of different products over the years. You know, some were hits, some were less so.

30:02Our number two product is our chicken, which is real chicken coated in cauliflower and then baked and not fried. And that was just a huge hit and, you know, continues to be for us and is very popular and grows in popularity every day. Strong, strong product line. And we've certainly innovated from that. So, you know, we started out with two tenders, original and spicy. Then we have a nuggets. And then we're introducing a new chicken product at the end of in fourth quarter of this year or third quarter. And we also recently launched frozen meals, pasta meals directly from Italy, which are amazing.

30:46So I think you could say the house of Kali Power is primarily built on pizza, obviously pizza. That's what made us famous, chicken and meals. And that's where you'll see our growth continue to expand. What was the decision making when you were expanding new SKUs in terms of which SKU you actually wanted to land on? Was there also customer research since you obviously built your brand up through pizza? And if so, what were kind of maybe like tests that you ran before you actually invested into Inusku? Yeah. So, I mean, look, in the beginning, we didn't have much research. We couldn't afford much research.

31:26Now we do. Now we are swimming in research. Lots and lots and lots of research. So that's super helpful and wonderful. And we have all kinds of great people on the team who help us digest that research. tell us what it means and tell us what our consumers are looking for. And that's all great. You know, we tend to go to meaty categories, categories that are like, you know, sizable. We also look at categories that are ripe for disruption, right? Categories that maybe haven't been touched in so long. And I think our chicken is a wonderful example of that. That tends to be where we gravitate. You know, look, I think we've also had a lot of products end up on the cutting room floor because all of our products have to sort of, you know, meet the trifecta of tasting great, having some nutritional advantage and being convenient.