The Donut Biz She Started in Her Kitchen is Now a Bestseller at Erewhon

0:04Hey, Business Festies. Before we get into the show today, I have a quick reminder for you because we are less than five weeks out from the big end of year female founder world summit. This is happening on the 2nd of November in New York City. We're filling this 35 ,000 square foot space with hundreds of people who can change the trajectory of your business and of your life. We have the most incredible speakers and I'm going to just reel off a couple of them. I've got the founder of Beauty Blender who's going to teach you how she built that iconic, iconic company. the founder of Gia, Megababe, Love Wellness, Hyper Skin, Chill House, so many more amazing speakers.

0:45If you've been thinking about it, just click the link in the show notes. Go and secure your ticket. I don't want you to miss out. This is our biggest and best event of the year, and I cannot wait to see you all in New York City on the 2nd of November. Hey, business festies. Welcome back to the Female Founder World podcast. I'm Jasmine. I'm the host of the show and the person behind all things Female Founder World. Today I am chatting with the co-founder and CEO of Glow Nuts, Kristen Schiavo. Kristen, welcome to the show. You are now entering Female Founder World with your host, Jasmine Garnsworthy.

1:18Thank you so much for having me. I'm excited to be here. Give us a little intro to Glow Nuts. You guys are creating clean, healthier donuts. Give me a little bit more. Yeah, so we call them healthy, yummy donut things. We say things because they're not exactly like a one for one replacement of a donut. It's more to give you the feeling of eating a donut without the feeling you get after eating a donut. And they're made from clean ingredients that help you glow from within, like coconut, almonds, sweetened with monk fruit sweetener. So there's no impact on blood sugar. And they are gluten-free, vegan, and one gram of sugar each.

1:54Amazing. And you started in 2019. You had been working in sales and like the hotel industry, why did you start a food brand? Great question. I ask myself that every day. We, so my boyfriend is my co-founder and business partner. He and I really wanted to do something together. We wanted to create a lifestyle business that we could grow together. And so we had this idea to create a coffee cart as a side hustle. So we created a, it was going to be a full coffee shop, but we created a coffee cart to start with nitro cold brew on tap. We made glow nuts to go with the coffee and we thought we just gained some traction in LA before opening a brick and mortar.

2:35Well, glow nuts took off. They essentially went viral on Instagram at the time. And it was very clear early on that we needed to pivot and become a donut business. But why we made glow nuts the way that they are is really part of my personal health journey. I grew up eating a lot of junk food, eating a lot of hostess donuts and had a sweet addiction. I had polycystic ovarian syndrome. And when I was 22, I had a football size cyst on my ovary that had to be removed along with my ovary. And when I was sitting in the hospital saying to the doctors, how do I make sure this never happens again? They just looked at me and they said, well, you just stay on birth control.

3:21That's all you can do. And so it took me quite a bit of time to understand how much of a role diet and lifestyle can play in your personal health, not just from a weight perspective. I had gained a lot of weight and was over 220 pounds at one point. And that's really when I stopped and said something needs to change. and what took a look at my diet and my lifestyle and saw how it was affecting how I felt. And I started to cut out processed foods and eat a cleaner diet, low in gluten and sugar. I want to understand how you made this switch to figuring out, okay, I'm not a coffee business. I am a food business.

4:03You landed a big account and that kind of helped shape that for you. Tell me that story. Early on in the journey, Grover and I were, we did not know how to ship this product because it is a refrigerated donut, because it is made with whole food ingredients and we wanted to keep it fresh. So because we didn't know how to ship it, we didn't go direct to consumer like so many brands were doing at the time. We only knew to go door to door in Los Angeles and find wholesale accounts where we could retail our product. So we started doing that. We went to Erwan and Alfred. And we actually had a lot of success getting into these doors early on in our journey.

4:43I know it's very different now. It's extremely difficult to get into these doors because there is so much competition. Luckily, when we started, we were able to get in before the rush. And they were two very pivotal accounts to our growth. And without a marketing budget, we were able to really get in front of the right people that wanted to share the product and tell their friends and created this flywheel effect of word of mouth marketing. So interesting what you say about 2019 getting in before the rush, because sometimes I'm just like, is it me? Am I just seeing that there are so many new brands starting, I think like post 2020, it just feels like things really just got dialed up or is it just because I'm embedded in this?

5:31Is it just because I'm embedded in this space or is it really happening? Are you, as you look out at the food and beverage, particularly like landscape now, how does it feel? Do you feel pressure and anxiety around new brands coming in? Do you feel like you guys have carved out your space? Like, I'm really curious about how you feel about that now. I feel anxiety every day. I think being a founder will, will just create a level of anxiety that you have to get comfortable with because I say you have to, you have to get comfortable with being uncomfortable because it's just it's a very difficult journey.

6:06I think not just in the food space. Any kind of entrepreneurial journey is that way. I'm inspired by all of the brands coming into the space, especially Better for You brands, because as someone with health problems, I really want to see a change in our food system. And so I hope that we can flourish. And I hope that even And other donuts that are coming into the space are just proving that there is demand and a category for better for you sweet treats. And we can eventually take down hopefully big food someday. That's a big goal. But I think my ultimate goal is just to see healthier products available to everyone at an affordable price point because I think that will help people live healthier lifestyles.

6:57Right. We just have to make it accessible and affordable. I think people want to do the right thing. They want to make good choices for themselves. Just sometimes they don't have the options. It also needs to taste good. That's a major key. Like it can't be too much of a sacrifice. Yeah. Okay, business besties. I want to just pause for a second. I've got Natalie here on the Female Founder World team. And I want to ask, Nat, are you ready for the holidays? Honestly, no. And I feel like it's coming up so quickly. It's coming up so quickly and that's why I wanted to take a second to chat about this season's presenting sponsor, Vistaprint.

7:33It's honestly the best place to start holiday shopping and right now Vistaprint is giving all female Founderboard listeners an early holiday gift, up to 50 % off holiday cards, wall calendars and more. Oh wow, 50 % is a pretty good deal. How do you even have time though for all this holiday shopping? I know, honestly, like I'm usually pretty disorganized, but I've been quite on it this year. And we've also been sending out these really cute thank you packs to different founders who have been on the podcast, speakers who have been at the events. We've printed really cute, like little fleece blankets.

8:09We have embroidered caps and also stuff for my family as well, because you know, everyone's going to be wearing the Female Founder World merch. Oh, of course. You got to bring the family into it. And I personally love a branded tote bag, but I also didn't know that they did embroidery. That's pretty cool. The embroidered caps are particularly cute. Oh, I love that. Highly recommend. So everyone go and get your holiday shopping buttoned up with up to 50 % off custom holiday cards, wall calendars, and more at vistaprint.com. Use the code HOLIDAY50 at checkout. Okay, let's get back into the show.

8:42You've had this turning point where you'd been making these donuts from home. And then at some point you had enough traction that you're investing. I think you invested like your wedding budget into the business. What was that? What was that decision? Yes. Great question. So Grover and I, in our first year in our home kitchen, we made packed and delivered over a hundred thousand donuts, just the two of us. You delivered them as well. Yes. Literally everything. We would get up in the morning. We would coat the donuts that we had made the night before. Grover would stay back, clean the kitchen. I would go deliver the donuts we had just made, we'd come back at four o 'clock, we'd get back into the kitchen and we would start making the donuts for the next day.

9:25Wow. And it was like that pretty much all of 2020. But what it proved to us is that we had significant product market fit, that this product was really resonating with people. It was extremely differentiated. There wasn't a product on the market that tasted really good to your point, had less than one gram of sugar and was made with clean ingredients that you felt good eating. And so we were getting tons of messages on Instagram, in our email, and people were just keeping us going during this process. But it also proved to us how much a product like this needed to exist. With all of that information, we felt comfortable investing our wedding budget into the brand.

10:04That's when we hired Dayjob, a local LA design agency who's incredible. We worked with them on our website on new packaging made more for retail. At the time we were in plastic deli containers that you can, we literally bought on Amazon and they designed a better package for us that would help us get on more retail shelves and be better for distribution and shipping. So that was the catalyst for us into the next phase of the business, which was our commercial kitchen phase and growing our distribution. That was probably the hardest time of our life working in a commercial kitchen. I still can't get over this handmaking and delivering a hundred thousand donuts from your home.

10:50Yeah, that's crazy. Okay. So how do you make that shift to a commercial kitchen? It was challenging. However, I would say there are now more businesses that are set up for emerging brands to work in commercial type kitchens. So we used Amped Kitchens, which is a popular place that a lot of smaller emerging brands work out of. What's great about it is that it is turnkey. So you can get your health permits pretty quickly, like within 30 days. It's also great because you have like your own, essentially like an apartment, but it's your kitchen, right? So your own lock and key and they provide storage and some other amenities for you.

11:33But the cost of it was very high to the point where I'm not really sure how many businesses could actually afford it. And you started to see that the companies that were going in there and taking up larger spaces were raising quite a bit of money to do that. Okay. Yeah. So then how do you, what's the decision then, or what's the process to find something that is affordable, is scalable for your production? Because now, you know, years have passed, you've scaled up significantly. What does the manufacturing look like for you now? So I would encourage anyone trying to do this to skip the commercial kitchen phase if they can and ideate, learn in your home kitchen in an affordable way.

12:14And you can get permitting for that too, right? You can, absolutely. In the state of California, you can, it differs by state. And then once you have a minimal viable product and you give it to some friends to get feedback, then I would say start looking for a co-manufacturer. Co-manufacturing is complicated and challenging for quite a few reasons. Number one, they're difficult to find. Sometimes their minimums can be quite high. And so the investment it takes to work with a co-manufacturer off the bat can be significant. So if you can gain any kind of traction before going to a co-manufacturer, that's just going to work to your benefit.

12:49For us, our product, even though it's a donut, which seems very simple to create and there would already be infrastructure for it, there was not. Our product is made in a completely different way than any other donut is made. And so we had to design sort of our own custom manufacturing line and process for this product. And that took us almost four years to figure out. So we were hand-making donuts in the process while we were also working to solve our manufacturing and scaling challenges in evenings and anytime that we were making donuts. So that was really hard for us. We did end up having to hire a consultant at some point to help us figure out what exact machines we're going to make the product, other types of tooling we needed to do.

13:40How do you find someone to do that? Yeah. That's a great question. How did we find such a specific skill set? It is. It really is. It's you have to talk to a lot of people. And that's what I learned is you're you may not get to the right person right away, but eventually you'll find them. Our greatest resource was talking to other founders. Yeah. And we weren't shy about doing it or even early on in our journey. We were reaching out to the founders of Coconut Cult who were super helpful to us. And we were still in our home kitchen. The founders of Dream Pops were helpful. So I really love those brands so much.

14:14And I have so much respect and gratitude for those founders that helped us so early in our journey because they didn't need to, and they did take the time to talk to us. And so much of what we learned came through introductions from other people. Yeah. That's just personally, as I've been building Female Founder World as well, there are a handful of people that I think about, And I'm like, there is just no way that I could have done this without having just pure like kindness. And it's because somebody helped them. Exactly. And then they want to pay it forward because they're like, this is how this works.

14:48And this is how this ecosystem builds and grows. And yeah, I just think it's so powerful. And exactly what you said is you've got to be willing to also share your idea and like what you're doing. And I think that the more I find that the more that I, when I get on a call or I meet someone and I have that just like gut intuition of, okay this is a good person I just I'm a pretty open book and then I find that people reciprocate 99 % of the time and so it's just worth being up front like that I feel the same way yeah I'm generally an open book it is difficult to know how much to share and not share sometimes especially when you have something proprietary but yeah you just have to feel it out I think to your point Yeah, I agree.

15:33Something that's really interesting about Glow Nuts is I look at the brand and if people haven't seen your branding, they should go to your Instagram, go to your website, check it out because you look like a DTC brand, but you're actually mostly wholesale and you've built up these like pretty significant retail accounts. First of all, why? Like why did you decide to go that way with the branding and the presentation and how has that translated into retail? We chose to lead with a very fun, colorful brand. It's really cute. Thank you. And we wanted it to feel like a little fun and quirky. I think when it comes to health food, and I'm saying health food with quotations because it doesn't taste like a health food.

16:13Yeah. But when it comes to health food, people are so used to things not tasting good, being boring, dull, just not excited to eat it. And so we really wanted to lean into fun, make this something that anyone would be excited to pick up off the shelf because it's so beautiful and colorful and playful in the way we talk to you. And we hoped that would resonate and get people to be excited to eat something that's good for them. That's why we went that direction. As far as why we went the retail route, it was because we were a refrigerated product. And so shipping required gel packs, liners, insulated liners that would keep the product cold and express FedEx shipping.

16:56So all of that was really expensive. At the end of the day, our margins for retail, even with a distributor included, they were way better on the retail front versus D2C. We're still primarily retail focused, even though we do have D2C as an option. we're now in about 450-ish stores or stores around the country and growing. And long-term, that's really the route that I think any CPG product wants to go as they want to be. And retail stores just to make it easier for people to get the products. What are some of the stores that you're in? So in LA, we're in Erewhon, Alfred, Bristol Farms, Lazy Acres.

17:38In the Northeast, we've launched recently. So in the New York tri-state area, we're in Citarella, some select shop, right? In Texas, we are in central markets and we're scattered in some great shoppy shop stores around the country. So the best way to find out where we are is on our store locator. Talk to me about working with the distributor and what that process has been like. And also what comes first, like the big retailers or the distributor? Oh, that's a good question. So it can work either way. I would say generally there's different types of, let me start. There's different types of distributors.

18:16There are larger national distributors like Kehi and Unify. And then there are what's called DSD distributors, more regional specific distributors. As an emerging brand, I prefer a DSD distributor for a lot of reasons. Number one is the direct relationship where you can have with the team. I never know or I never question who I need to ask. There's always someone to ask, someone that's going to pick up the phone and help me. They're pretty good about paying on time and they are just in the stores more. So I think they have better relationships with their stores on the ground level. I also think that they can really help you saturate a region and some of the smaller accounts where a KHE or Unify may not go because they can't meet the minimums.

19:04And I like those types of accounts because I think that's where people are shopping in their neighborhood market and a lot of these larger cities where I consider key markets for Glow Nuts. So with our distributors, our DSD distributors, we had a good amount of accounts before we handed our business over to them, specifically in LA. In New York, we worked with a DSD distributor that we didn't really have a lot of accounts, but they felt like the brand had a lot of potential and that they could put it in a lot of doors quickly. And so that relationship in New York worked out really well for us.

19:42With Kehi, it's tough. I would say don't do a national distributor until you're ready, until you have a really strong anchor account that's going to bring you in and just know that. As in like a Whole Foods. A Whole Foods or Sprouts or for us it was like Central Markets until you have a good anchor account because it's really expensive and there's a lot of fees that you're not prepared for. That's really good advice. In I think it was pretty recently you did the Target Accelerator program. How did that come about? Yeah so we were in the Target Accelerator program last year, which was honestly one of my proudest moments that we were selected for it because only 10 businesses per year are selected.

20:29I didn't realize it was that few. It's pretty, pretty small. Yeah. And it was an incredible learning experience for us. So the packaging that you see here, that's our latest and greatest packaging. And if you watch, you can watch this on YouTube and see the packaging if you can't see the video. Yeah. So this is our two pack and Target was really a driver and helping us redesign our packaging so that it spoke better on the shelf in retail so that the front was just more organized. It got the benefits across really quickly and still stood out on the shelf where you could read it. The other thing they really helped us get across the finish line was price.

21:12so we knew that we were going to have to change our price at some point and reduce our cost so we were in a three pack selling for$7.99 these now retail for$3.99 and Target was a huge kind of eye opener for us where we learned that to be in mass retail like our price point was going to need to be cut in half essentially how do you do that it's so like all well and good to be like oh we need to cut our price in half, but like how? I know it's really hard, especially when you're young and not profitable. Most businesses of our size are not. And so to give up margin is a very scary thought, but there are ways.

21:56Now I will say when we were in our commercial kitchen, we had a lot of overhead. Our labor was quite expensive because we were trying to pay a proper living wage to our employees. And we were in boxes and we had just like beautiful packaging, but a lot of packaging. We were also ordering ingredients in really small quantities. When we moved to our co-manufacturer, it's in a different state. So we were able to cut our labor costs quite a bit. We were able to order in much larger quantities, our ingredients and our packaging. So that cut the cost down for us. And then going from our three packs to our two packs, there was an external box on the three pack that added cost to the product.

22:37So we were actually able to cut our price quite a bit by just implementing some of those changes. But it doesn't work that way for everyone. I will say that economies of scale as you grow, like your price on ingredients goes way, way down when you can start ordering in larger batches. Yeah, that makes sense. So is the goal to get into Target after you do the accelerated program? Yeah, absolutely. Target's definitely a goal for us. We have a great relationship with our buyer and Target overall. They're so good about not just, you know, cutting ties with you after the program's over. They really still carry on a good relationship.

23:17And so we're fortunate for that. So we just have to go now through the review cycle like all other brands do and hope to get in next year. The whole like wholesale building out your stock strategy thing, I think is one of those really like the last gate kept piece of business, I think, because it's just it's hard to go into the granular detail in any kind of like mass media platform. It's hard to do it on the podcast. And I'd love to know if there are any other resources or people or agencies, anything that's helped you as you've been figuring out your pricing and your margins or your packaging that other people who maybe won't get into the target program or hopefully will that haven't gotten in yet can go and check out anything specific that's been helping you and Glow Nuts?

24:04Aside from our relationships with founders and also we went through a round of fundraising from friends and family but also was fortunate to get some key investors that were also founders of food brands and having that that kind of guidance has helped us a lot. I can't point to any tools specifically. I would say startup CPG is a great tool for businesses that want to start a food business. There's a lot of resources there. I actually wish I knew about it before, like way earlier in my journey. The other thing I would say on the sales side, I would say I don't have a lot of resources I can recommend except just using LinkedIn to your advantage and know that you can find anybody's email by just, you know, putting the pieces together.

24:57You can hack your way. Yeah, you can hack your way. Absolutely. Finding an email address. And so I just think cold outreach on the sales side is the way to do it. But aside from that, I think it's really just having guidance from people in the industry. If you are starting a business from scratch and you have an idea, I think the best way to learn and put together a proper business plan is to just go to the store. Right. So if you know you want to create a candy, go to the candy aisle and five different retailers and see what does the packaging look like? What does the price point look like? What are the ingredients?

25:35And that's a really great starting point because we weren't trying to start glow nuts. we were trying to start a coffee cart. And so we didn't do that to start Glow Nuts. And so we're making up for that now. That's why we've changed our packaging again. That's why we've changed our price point again, because it wasn't exactly right for the area that we wanted to sit and where we wanted to grow to. So if you are trying to start a business from scratch, I think that's a perfect place to do your research. I want to talk about money for a bit because building a business is expensive. How you that original kind of wedding budget got you so far, but how have you continued to fund the business after that?

26:17And can you share, I don't want to put you on the spot and share what you're comfortable with, but like what you put in the beginning to get this thing off the ground and the momentum going? Yeah. So aside from our wedding budget, Grover and I invested our savings, like our 401ks into the business too. We then raised us. I'm going to say it's a small amount of money, but it's not a small amount of money. We raised$700 ,000, which is a large sum of money to go from our commercial kitchen into a co-manufacturer, do that research, keep both of those businesses running at the same time. It's an expensive business.

26:54And we needed to do that. We raised from friends, family, angel investors. That's how most businesses of our size are going to raise. It's an extremely difficult raising environment when we raised that amount of money in 2021, 2022. It was very hard. It was my first time ever fundraising. And honestly, like it was such a wild concept to me when I started fundraising, because I grew up in a like family environment where you just didn't ask for money. That wasn't, I didn't even know that was possible. Fundraising seems so crazy to me because I was like, who's going to just give me$100 ,000? And then it registered later after some coaching that this is, you're not asking for money, you're selling a piece of your business and there's value to that.