Advice Line with Brett Schulman of CAVA (July 2024)

26:22So I searched everywhere for the right allergy accessories, but I honestly couldn't find anything that didn't feel cold or clinical. So I channeled my creativity and I decided to design her own allergy accessories that would essentially make me feel confident in knowing that at every touch point throughout the day, whether it be snack time or lunchtime, her allergy would be kept top of mind for teachers, family, friends, essentially anyone that came into contact with her to keep her safe. Cool. And so I'm looking at the website. So you've got stickers, waterproof stickers that you could put on, I guess, clothing and patches, even those bracelets.

27:06I call them Livestrong bracelets, but they shouldn't really call it. They're just rubber bracelets with allergy, whatever allergy is on it. Exactly. And so you would know. Like if there's a five-year-old and they're going to summer, you know, like a day camp on their backpack, you'll just see it. It'll say, you know, sesame allergy, peanut allergy, shellfish allergy, and you're like, good. Because even though, by the way, a lot of kids who grow up with allergies are used to telling people these things all the time. But as a parent, it probably gives you peace of mind to know that it's out there.

27:35Yeah. And, you know, I think allergies among the really young population, like newborns even, and six-month, a year-old, who are really still learning to speak, to advocate for themselves. And so this kind of provides a kit for parents and families to at least feel confident in knowing that as they're sending them to camp or grandparents' house or school, that their accessories are going to do the work for them to keep them safe. Yeah. And you launched this in July of 2023, so about a year ago. Yes. Yeah. So we're really new. And how you're new. And so I'm assuming that it's not easy, that easy to get the word out because your website and do you have any, you probably put all your own money into this so far?

28:24Yes. Yeah. Yeah. I do have a daytime job, which affords me to do this in the evenings. So it's my evening job after the kids go down. Do you mind telling us what your other job is? Yeah. So I work for a tech company and I lead creative for 3D design. Nice. So this is your side hustle right now. It is. And who knows? Who knows, right? I mean, this is how a lot of great brands start, a side hustle. Sam Adams Beer started as a side hustle. Yeah. So presumably, I mean, because you're in design, you design all these things, all these patches and do all the artwork? I do. Yes. I did all the artwork for all the top nine allergens.

29:03And then we do like a design your own section for those with multiple allergies as well. Cool. And how have sales been in year one? Are you – have you hit 25 ,000 or still below that or – I would say still below that. You know, we have been getting really great feedback as soon as people find out about us. And we've also been partnering with more established brands. We just did a partnership with Planet Box and Abe's Allergy Friendly Muffins, which turned out to be really, really wonderful. So my goal is to continue kind of on that path to really get our name out there. Planet Box is a – it's like a bento box sort of, right?

29:46Yeah, it's a metal bento box for lunch. Oh, and perfect because you can use the magnets on the bento box. Exactly. Nice. Okay, Brett, any questions for Sophia before we dive into her question? Yeah, Sophia, when the allergy issues first came up in your home, when you said you went out and you started to look, what was instinctively the first places you started to look for products like this? You know, I honestly, it was just Google and it would bring me not a ton of companies that provided allergy accessories. And if there were, it was very piecemeal. There's lots of also like Etsy makers that do kind of one-off things.

30:28It could be a sticker or a patch, but not a full kit or collection. And my goal was to really create something where a parent can come to the website and say, okay, I need all of these things for school rather than kind of figuring it out on their own, which I had to do. But again, you know, in my search, everything that I found was just really cold and clinical and just felt almost like a, I don't know, like a badge of shame in a way. And it's hard enough, obviously, for kids to deal with having food allergies. I didn't want their accessories or their labels to make them feel othered in a way.

31:08I think your question is about marketing reach and sales channels, right? And you have essentially, basically allergies are mainstream. It's a mainstream issue, right? This is something that affects a significant percentage of the population, one or more allergies, right? Like, I don't know the number, you might, but a lot of people. So this is not a niche thing. It's not like a lot of kids have peanut allergies, very common. I feel like there's a world, and I'd be curious if Sophia was looking to expand, maybe, is there a world where like going to a gift, like a gift trade show, you know, one of these trade shows that's for gift shops.

31:50Because I think about going into a gift shop or even a card store and seeing cool things like this there. It's the kind of place that I would imagine buying something like this. Like my nephew's got peanut allergies and I'd see that and I'd say, oh, he's now a grown man. So I don't think he needs it on his lunchbox. But I can imagine going to a gift shop and seeing these little patches or stickers or magnets and thinking, oh, that's cool. Brett, do you think there's something to that, to go into a trade show? Yeah, that was going back to my original question about instinctively, were there any kind of bricks and mortar places that you thought about going?

32:31Because certainly what we've seen post-pandemic, the cost of acquisition or just awareness on the internet or being a DTC brand has gotten really expensive. And people have gotten back out in the world. And even with the changes in third-party data, privacy laws, it's restricted the ability to drive awareness online solely. So where are there potential bricks and mortar outlets that you can be in front of where your consumer, your parent that has a child with allergen issues or maybe have them themselves, are trafficking and where is that need state happening, whether it's Target, whether it's a gift shop.

33:14I think often in any of these industries, going to a trade show is such a great idea. And just understanding the landscape, the lay of the land, what the marketplace is, what the potential avenues of distribution are, how it all works. I remember when I was working with my wife on a snack food company, we would do that. We'd go to the trade shows, and it helped us really understand the industry and how it all worked and where our product or offering could fit within that. Yeah. I would love to be at a target at like, even if there was an end cap that was for back to school, allergy friendly end cap that partnered with other allergy friendly, you know, foods.

33:55I think that would be really awesome. And even though, you know, allergies are everywhere, and it's become some, you know, mainstream in a way, there's still kind of, you know, it'd be nice at a Whole Foods to have an allergy-friendly section. I think I still have yet to see things like that, but would love to be a part of that. And these retailers will do small tests and small market or regional tests. So at Target, they will do a 30, 50, 100 store test. If you can cold email, contact the right person and pitch the idea, because I do think it's a viable idea, especially for a lot of times they'll do like an in and out for back to school season as a test.

34:41Right. Yeah, definitely. Guy, I had a question for you because I know you have podcasts that's geared towards kids. Do you find yourself marketing differently or doing things differently for kids versus your, you know, more podcasts that are geared towards adults? A hundred percent. Yeah. I mean, with kids, there's all kinds of rules on how you, you know, you can market to them and on, wow, in the world, unlike on this show, on how I built this, I don't read ads. We do have ads on the show, but my voice is not as an ad reader because kids don't differentiate between, I'm a character on the show and they wouldn't differentiate between my voice on WoW in the World and me reading an ad.

35:20And so we're really careful about that, but we do have ads and we do, obviously these ads are designed to appeal to the parents because we have kid parent co-listening on that show. And so that's really what you're going for. You're marketing to the parents, not to the kids. and that's who's going to be interested in this. But, you know, that's a great channel to think about too, you know, but there, you know, there are millions of podcasts out there. And I think that you start with, you know, take a page out of Tim Ferriss's world. You start with a thousand people, a tribe. You build a tribe of a thousand people that you can gather around your brand and those become your force multipliers.

35:58And so maybe it's like, I think about my sister who's, you know, who had a kid with really deathly peanut allergies, now a grown man, she was constantly vigilant. I mean, before they went to a restaurant, she would call up to make, well, in airplanes, she would call up to make sure they insert peanuts in the plane. So this is the kind of thing that somebody like my sister, when her kids were younger, would have said to other moms, you got to get this thing. You put it on the backpack and on the lunchbox. And that's really where you're going to find the momentum. Yeah. I was going to say, I love partnering with the allergen-friendly food brands.

36:33And especially when you think about social collaborations and giveaways for the back-to-school season to help amplify what you're doing and be a trusted partner. Because that is your target customer. They are already an allergen purchaser, an allergen-free, friendly purchaser. And it's almost, again, like a validation and a friendly referral that you can partner with them. And whether it's through influencers, creators, or the brands themselves, I think those are powerful channels to help amplify with an audience that already has that built-in passion for what you're doing. Yeah, absolutely. Yeah.

37:13Awesome. The brand is called Little Me Allergy. Sophia Bowden, thank you so much for calling in. Good luck. Thank you so much. So grateful for this opportunity. All right, Brett, we're going to go ahead and take another quick break. But when we come back, the founder of a Midwestern coffee brand who's found a really interesting way to stand out in the crowd. Stay with us. I'm Guy Raz, and you're listening to The Advice Line right here on How I Built This Lab.

37:43This episode is brought to you by Klaviyo, the only CRM built for B2C and the key to making Black Friday and Cyber Monday your biggest wins yet. When the holidays hit, your competition only gets louder. That's why the most successful brands use Klaviyo to cut through the noise and build personalized relationships that drive more revenue. With Klaviyo, you get marketing, service, analytics, and all your customer data together on one AI-powered platform. It's everything you need to build lasting customer relationships. Send exclusive email offers to your VIP customers. Deliver perfectly timed text to high-intent shoppers.

38:27Maximize your ad dollars with precision. Join the more than 176 ,000 brands, including Away, Patrick Ta, and Dollar Shave Club, already growing with Klaviyo. Make this holiday season your best yet at klaviyo.com. Shopping for eggs should be simple. A happy hen makes a happy egg. And that's why eggs from Happy Egg are so delicious. Happy Egg partners with family farms across the Midwest to raise happy hens outdoors. The proof is inside the shell. A tasty orange yolk. It's the difference you can see and taste. I just made an incredible omelet with eggs from Happy Egg. It was delicious and so fresh.

39:18Once you crack open a Happy Egg, you can see and taste the difference right away. It's obvious. Visit www.happyegg.com slash built to find Happy Egg near you.

39:43Welcome back to the Advice Line on how I built this lab. My guest today is Brett Shulman, co-founder and CEO of the fast-casual Mediterranean restaurant chain, Kava. All right, let's bring in one more caller, Brett. I think it's Sean is on the line. Sean, are you there? I am here. Hey, Brett. Hey, guy. Hello, Sean. Welcome to the show. Tell us your name, where you're calling from, and just a tiny bit about your business. Yeah, my name is Sean Murray. I am the founder of Rootless Coffee Company, and we are in Flint, Michigan. So Rootless Coffee, we're a roasting company, and we make craft coffee.

40:20Not boring. Ultimately, we bridge the gap for consumers that are looking for better coffee than they can find at a chain or in a grocery store, but are a bit intimidated, maybe put off by the sometimes pretentious and dull nature of third wave coffee. And are you at the coffee roastery right now? Because it sounds like you're in a loud place. I am. Okay, nice. Not an airplane hanger. That is a coffee roastery behind you. It is, yes. It was between this and my home, which is right on a main road, which can be even louder than this. It's very appropriate. Tell us what question you have for us today.

40:57Yeah. So Guy and Brett, basically my question is, how can I be certain it's the right time to seek growth funding for Rootless? And what is the best method for doing so? All right. Lots of questions. As you know, Sean, we've done a couple of coffee brands on the show, of course, Starbucks, and we've done La Cologne. and Dutch Bros Coffee too, which is a big, big chain. So how did you get into it? How did you get into this business? Yeah. So it actually started with the craft beer business in the early 2000s. I was a bartender and brewed beer at home, and I really wanted to start a brew pub. That was like my dream, my goal.

41:38But I ended up removing alcohol from my life for various reasons. but you know when I was I still had the dream I've been kind of that entrepreneur shovel you know people's driveways in the winter I had a couple of businesses when I was in college and stuff so I had that drive in me and I was like all right what can I do and I was just like let's do coffee I love coffee I'm gonna roast coffee and I just started pursuing that. So so you pivoted to coffee or you sort of kind of moved towards coffee and decided to start a coffee brand. And tell me about the brand. I mean, it's obviously roasting it in Flint, but are you sourcing it in a special way?

42:21Is there something about the way you're presenting the coffee that's different or that is kind of influenced by your time in craft beer? Yeah, absolutely. That was a strategy coming in. So we work with artists, primarily comic book artists, you know, locally, but also across the country. And they design our packaging. And it's really like what I saw in craft beer was people were like, Hey, that looks kind of cool. I'm going to try it. And then all of a sudden, they come back to it and they come back to it. And I've seen the same thing happen with rootless where, you know, people will see this cool artwork.

42:59And they'll be like, All right, a damn fine cup of coffee that looks cool. They try it and they fall in love with it. Yeah, it's cool. I'm looking at it now. It's it's like the artwork is super cool that one that you mentioned that that bag a damn fine cup of coffee is like an owl's head on a person with a wearing a business suit at a cafe drinking a cup of coffee with a slice of cherry pie a really really cool artwork and so the the entry point to you for for people like it was you knew that you were making good coffee but it's hard to kind of distinguish good coffee because some people don't really know you know and they don't really know what to look for but but your entry point was just creating these eye-catching beautiful pieces of artwork on the bags Absolutely.

43:38So my thing was, let's just give people that quality, give people that craft still. I mean, we're small batch. We, you know, we source our coffee beans. It's all ethically sourced, specialty grade coffee. And you can still deliver people the highest quality product, but just in a different way. How many, do you have a coffee store? Or do you just distribute the roasted and sell it elsewhere? Yeah, we have a bunch of channels, actually. So we are, of course, online. We started with e-commerce. It was like smack dab middle of the pandemic. So nothing was open. And then we moved into wholesale. So we do B2B stuff with coffee shops, businesses, all sorts of places.

44:20And then our third channel is grocery stores. So we picked up our first like four grocery stores two months after we opened. It was insane. And we are now in a regional chain here with like 30 plus stores. And then we also have a coffee trailer where we do events. And how many employees do you have now? Including myself, there are 10 of us. Wow. Okay. So you start in 2020. You're in more than 30 retail locations in and around Metro Detroit, Flint area. You have 10 employees. And you're trying to figure out what you need to do to grow. Should you bring an outside investment? Before we get to your question, Brett, do you have any more questions for Sean about the business?

45:04Yeah, I'm curious with those four different channels, is there any one channel that stands out? What's the kind of channel mix of your revenue? Is it equally weighted? It used to be e-commerce was the biggest by far. It was like 60, 70 % e-commerce, 30 % wholesale. Those two are kind of neck and neck now. And then the event part of it is very low, very, very low. So it really is between e-commerce and the wholesale retail part are pretty neck and neck. And are the profitability of those channels pretty similar or do you see any differences between them? They actually do work out to be very similar.

45:45The wholesale is a little bit more profitable and it's also a bit easier to fulfill because it's, hey, give me 50 pounds of coffee. all right, here's 10 bags versus here's 50 orders from individuals who want different grinds. So wholesale is absolutely where I have been doing my best to focus on, particularly this year to grow. Yeah, I think this is like the age old question of what do you want to be when you grow up? Where do you ultimately want to take this business? Because you're going to be the best one to answer how much you want to grow, when you want to grow as far as taking on investment or not.

46:26And so I'd love to hear from you how you're thinking about that. Yeah. So the vision is quite large. I'm actually very inspired by the Dutch Brothers episode of how I built this. I would love to eventually have shops all over the country, whether that be a franchise model or whether that be kind of the corporate model that we're doing that. But I love marrying quality and efficiency. I think, as you know, Brett, like Fast Casual did that where they took something where there was only fast food and it's not like, hey, you can get really good food and you can get it fast, but you're not sacrificing that quality to do so.

47:12And that's like my big, big dream. I've really been like, hey, how do we get there? How do we do this in the next like five or so years? it's really a matter of like we need the revenue to fund things in order for me to be able to kind of put off like all right wholesale is now managed by this person etc etc can you give us a rough sense of what what your ballpark revenue is are you under three a year what roughly where are you we are actually under a million okay yep um we've seen really great growth though um And in our first year, we did just about a quarter million, and then we did a 65 % year-over-year growth.

47:53And then last year, we had 35 % year-over-year growth. Wow. Brett, there's some parallels to where you guys were when you joined Kava. I mean, small business and still at the beginning of its journey, but with potential. Well, I think there's a lot of interesting parallels here. I love your vertical integration. We have our dips and spreads production facilities to supply our restaurants, as well as we sell in Whole Foods markets and other grocery stores across the country. And you've got your roastery and you're leveraging it through a few different channels. And one of the things we quickly realized early on is that we were going to focus raising capital to grow the restaurant channel.

48:37And we've kept the consumer packaged goods channel growing slowly, but we focused our efforts on the restaurants because we found it very challenging to grow multiple channels at once. And so we tried to lean into where we thought the greatest opportunity was to bring this food to people across the country. And I think it also presented a clear story for investors. It gave them a clear understanding of what we were going to do with this capital and connect those dots clearly to the return. Because ultimately, when you're raising money from investors, we're ultimately stewards of their capital.

49:16We're good stewards of capital. We'll continue to attract capital. But that allows us to do what we love to do and build our brand and bring this great food to folks across the country. So how are you going to do that? How are you going to focus that? And I think it goes back to the question I posed to you earlier. What do you want to be when you grow up, right? What pace do you want to grow at? And that's going to determine how much money you raise. Because I like to say scaling restaurants is not like scaling SaaS software. It takes people. It takes process. It's building physical restaurants.

49:49You're building physical roasteries. So that takes capital. And it's hard to scale these things. So being able to afford the capabilities, the talent, the infrastructure before the business necessarily affords it for you through your profits allows you to scale faster and grow faster and do it sustainably and successfully. Yeah, absolutely. I mean, my advice to you also would be – and you may have done this already, but to think about finding a consultant on just a short-term basis. I mean, that's how these guys found Brett, right? And it was serendipitous because it was like Ted's cousin said, hey, this guy Brett, and he came out as a consultant.

50:28So I wouldn't jump in and just hire somebody right away. I'd look for somebody who could maybe do some consulting. I would look out, especially because you're in the Midwest, I would really look for somebody who has experience in the food and beverage industry in the Midwest, who understands what your values are, where you come from, how you think about what you're trying to do. I mean, maybe there are some retired executives who are on LinkedIn who might be willing to do some consulting for you that you could find. Yeah, that's actually a really great idea. I think that what I've found with people who have been in business for a very long time is they love giving back, love working with smaller businesses.

51:11Yeah, exactly. And yeah, that's a great idea. I actually, I do have a question for Brett, if I could. Yeah. Yeah. Brett, how did you focus Cava when you had all those channels and you decided on the restaurants that was going to be the growth? My fear is that I'm like, okay, if I want to do coffee shops, am I going to neglect my wholesale or my e-commerce? Or did you just kind of bring people in to manage those things and let them have their natural growth? How did that work? Well, yeah. I mean, if you think about it, the channels operate very differently, right? Dealing with grocery stores or wholesale distributors is a different channel and value chain than a retail shop and different than DTC.

52:01So you would often need different capabilities, which would then be something that you'd have to hire more people for, right? So I think if you're trying to stay nimble and agile at a small stage and be cost-effective and capital-efficient, hiring folks that can do everything you need in the channel you're trying to grow is how we thought about it and how we looked at it. And even today, we opened our new production facility, so we have capacity now to get more intentional about growing the consumer packaged goods business. But we've talked about if we're going to do that, we need to really hire a focused, dedicated team that's fully integrated with our larger team because it operates very differently than our restaurants do and that whole distribution channel.

52:46So I think it's trying to – we like to try and do fewer things better. It's hard. It's hard to pick and choose. But having that focus helped us have the energy to really make it what it is today. And other things I see a lot of small companies leverage is there's more and more folks who used to be executives at private or public companies that have gone on to become now fractional CFOs or fractional COOs that can bring that experience to you and not have necessarily the commitment on your end. And sometimes those folks go into full-time roles if they find an opportunity that they really hit it off with the founder or entrepreneur with.

53:29And it also gives you a chance to leverage their experience and leverage in a bit of an asset-light way. Yeah, that's great. Sean Murray, Rootless Coffee Company in Flint, thanks so much for calling in. Good luck. Thank you so much for having me, Brett and Guy. I really appreciate it. And yeah, I love the show. And Brett, I love what you guys are doing at Cava. So thanks again. Awesome. Brett, we are coming to the end of our time together again. And hopefully we can see each other and eat some tzatziki. I mean, you might be sick of the food that you make. I don't know, but maybe not. We can have like some lamb kebabs and tzatziki and...

54:07Some spiked root beer. Some spiked root beer. Throw back some... Some coffee. Yeah. Before I let you go, tell me, this is a question that I'm asking a lot of founders who come back on the show, which we may have touched on when you were originally on the show. But knowing now what you know about the world you're in, and you talked earlier about the stress of expanding, you know, when you guys acquired Zoe's, what do you wish you knew when you first got into this business that would have been helpful for you and maybe caused a few fewer sleepless nights? Two things come to mind. And one is right people, right roles is a mantra I say a lot these days.

54:51It's understanding what kind of capabilities and what kind of people you need at every stage of growth. And I think sometimes I wanted to believe certain things to be true that weren't necessarily true and wouldn't really force myself to see it as soon as I should have. And I think that the other thing was prioritization. What I said earlier about what you don't do is often more important than what you do do. And that really helped us turn the tide in the challenges of Zoe's is when I finally figured that out and we simplified and focused and did fewer things a lot better. And that helped us get out of the challenging situation we were in.

55:40And then, again, bringing in people with the capabilities that were needed at that stage of the business because you can't do it yourself. And being able to find people and bring in that you can lean on and that can be a force multiplier of you really helped us get to where we are today. Awesome. Brett Schulman, thanks so much for coming back on the show. Thanks, Guy. Appreciate it. And by the way, if you haven't heard Brett's episode, the story of Kava and how they turned it into this incredible chain, go back and check it out. It's an incredible story. Look for it wherever you listen to podcasts.

56:16Just type in Kava and how I built this or just go to the link in the podcast description on your phone. And thank you for listening to the show this week. If you are working on a business and you would like to be on the show, send us a one-minute message. Tell us about your business. Tell us about the issues or questions that you'd like help with, and hopefully we can help you. And make sure to tell us how to reach you, please. You can send us a voice memo at hibt at id.wondery.com or give us a call 1-800-433-1298 and leave a message there. And we'll put all this information in the podcast description as well.

56:51And thanks so much for listening to the show this week. This episode was produced by Carla Estevez with music composed by Ramtina Rablui. It was edited by John Asbelop, and our audio engineer was James Willits. Our production staff also includes Alex Chung, Elaine Coates, Neva Grant, J.C. Howard, Chris Messini, Sam Paulson, Devin Schwartz, Catherine Seifer, and Kerry Thompson. I'm Guy Raz, and you've been listening to How I Built This.

57:19if you like how i built this you can listen early and ad free right now by joining wondery plus in the wondery app or on apple podcasts prime members can listen ad free on amazon music before you go tell us about yourself by filling out a short survey at wondery.com slash survey how many times have you wished you could be in two places at once with wix you practically can Wix's website builder is packed with powerful AI tools to make running your business online easier. Build a full site just by talking with AI. Get an AI agent to manage your sales and marketing. Or work like a 10-person team, even if it's just you.

58:00So you don't need superpowers to get everything done. You just need Wix. Try it now for free at Wix.com.