Kettle Chips: Cameron Healy. The Wild Bet That Made a Brand

15:23Cameron Healy:Well, it was, yeah, I think by, let's call it maybe 1980, you know, I had a little, nice little factory in Salem with a warehouse. I had a broker. I was buying all my peanuts through. And he tipped me off that there was going to be a big crop failure that year because of drought. And so I went very bullish. I speculated, which was really crazy. And I contracted way, way more nuts than I actually was currently producing. And sure enough, I was sitting on all these valuable contracts and the market for peanuts essentially tripled. So I ended up selling truckloads of, you know, 50 ,000 pounds of peanuts.

16:17Cameron Healy:And I was making like$25 ,000 a truckload. And that, that effort capitalized my little business, which prior to that was extremely thin on working capital. All right.

16:33Guy Raz:So you've got this nuts, mainly nuts business. And I'm not sure this is really the story or if it's apocryphal or maybe it is the story. I don't know. But from what I've read, around 1982, so you're about four years into the business, you are in Hawaii and you are on the beach and you have some of these. Someone gives you homemade potato chips, which if anyone's made homemade, you should make them. They're amazing. You just use a mandolin. You slice them on the mandolin. You fry them. I've done it for dinner parties. People are amazed when you give them homemade potato chips. They're delicious.

17:09Guy Raz:You tried these and you already, from what I understand, you were thinking about what other products could I sell? and this was like a light bulb moment. Is that true? Is that what happened?

17:22Cameron Healy:It's a good story. Not exactly true. I had read about the Maui Potato Chip Company. I'd read an article in the Wall Street Journal that had gotten my attention. I'd planted a seed. And so I was considering the idea of making handmade potato chips because we had oil roasters we made nuts in. And, but yeah, I went to Hawaii for a vacation, but also to check out the Maui Potato Chip Company.

17:58Guy Raz:Interesting. But it's a, this is the early 80s. This was a potato chip that was thicker, crunchier, right? It didn't taste like a Lay's chip. Like, and it was totally different from anything else out there at the time.

18:14Cameron Healy:Exactly. and I called up this gentleman and told him who I was and I'd like this is the owner of the Maui chip company yeah I'd like to meet him and he said sure come over so I showed up at his little this little industrial estate and it was in this little metal building and he came out and greeted me very nice man Filipino man I had a grandchild on his hip couple dogs running around and had this little factory he was making potato chips and you know I got to ask him a few questions he would not invite me into the factory though I never got to see how he made them but the one big takeaway was I remember reading the article and it talked about these special Maui potatoes he was using and I said so tell me about these Maui potatoes here you're growing potatoes here and he laughed He goes, no, that was a misunderstanding.

19:12Cameron Healy:There's no regular potatoes grow in Hawaii. All of my potatoes come from Klamath Falls, Oregon.

19:19Guy Raz:Wow.

19:20Cameron Healy:So the light bulb went off. Well, if this guy can make such a splash and be in the Wall Street Journal and have this kind of cult following, and he's bringing his potatoes all the way from Oregon, and I'm based in Oregon, I can do this.

19:38Guy Raz:When we come back in just a moment, Cameron learns how to fry potato chips through careful trial and error until one error ends in disaster. Stay with us. I'm Guy Raz and you're listening to How I Built This.

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22:22Guy Raz:Hey, welcome back to How I Built This. I'm Guy Raz. So it's early 1982, and Cameron has just met with the owner of the Maui Potato Chip Company in Hawaii. And after that meeting, he's convinced that making potato chips in Oregon is the best way to grow his business.

22:40Cameron Healy:Chips are a very high turnover product category. People are also very committed to their brand, particularly with potato chips. So that had been registered in the back of my mind a few years before. And I enjoyed the nut business, but I knew it would always be limited geographically. And I also knew, I sensed that natural foods would grow beyond just the natural food store. It would eventually go into the mainstream. And I wanted a product that could bridge that gap and be in the supermarkets.

23:19Guy Raz:Because you're thinking, hey, this could be interesting, this crunchy small batch potato chip, right? Because, again, potato chips, like I grew up on ruffles and, you know, big bags of ruffles and, you know, friolets. And that is basically from what I now dove into potato chips while I was researching the story. And I guess the way those are made is it's like a continuous fry process. So basically the chips run through a vat of hot oil and then they're getting dried and they're on a conveyor belt and they're very thin. And but when you eat a like one of these Hawaiian chips, it's totally different.

23:59Guy Raz:So you go back to Oregon and like with this idea is sort of percolating now, really thinking, OK, I got to figure out how to do this.

24:08Cameron Healy:Well, actually, on that, I'm just trying to remember sequences. is I had already created a brand on paper, and I had spent, I remember,$1 ,200 with a graphic designer in Salem, Oregon, which at that time seemed like an absolute fortune. I was going to originally call the product Pot Chips, P-O-T.

24:36Guy Raz:Pot, like because it's in a kettle pot.

24:38Cameron Healy:In a pot, yeah. So I thought that would be a good name.

24:42Guy Raz:You thought it would be good calling it Pot Chips. Yeah,

24:48Cameron Healy:thumbs down. Everyone said that word, that's just not the word you want to use. It can mean a lot of different things, you know, that it was a stupid idea. So when I got back from Hawaii, I went to this same designer. I said, I want you to, same design, I just want you to change pot to kettle. That's how Kettle Chips became a brand.

25:13Guy Raz:So here's my question. You were roasting peanuts, right? And so was it sort of a, you know, this is like in an era before you could just go on YouTube and figure out how to do things, right? There weren't easily like internet manuals. Like today, we have had founders in the show are like, I had no idea how to make clothes. I just went on YouTube and learned about it and then started a brand. Like literally, these are stories we tell today, which is crazy. Was it a big leap to go from roasting nuts to learning how to fry potato slices and make them into kettle cooked potato chips? Was that a big sort of leap or was it easy?

25:53Cameron Healy:Well, it was and it wasn't. It wasn't because we had these fryers. fryers. We knew for oil temperatures and it was a big leap because potatoes don't behave like nuts behave. It seemed like every load of potatoes we would bring in would be a little different in the way they fried. It was completely trial and error. I had a little team and we started in the late spring buying russet burbank potatoes and we chose the russet burbank potato because it's it produces the highest natural sugars it wants to caramelize with the temperatures and you get a darker colored product but there's more flavor interesting um did you have equipment that

26:45Guy Raz:automated any of this or were you literally hand peel it was a team of people hand peeling potatoes and then hand slicing them on a mandolin and then hand frying them?

26:55Cameron Healy:Well, in the very beginning, we only made potato chips at night because our factory was making nuts during the day. And so we had two oil fryers, which was a vat, maybe four and a half feet long by four feet wide. and I purchased a food service potato slicer, which was not adequate, but we made it work and we would hand feed the potatoes. We bought them in 50-pound bags.

27:29Guy Raz:And this is a four-foot vat of hot oil.

27:32Cameron Healy:Yeah, you would monitor the temperature of the oil and when you slice the potatoes in, the temperature drops and then it gradually comes up And what we later learned was that temperature variation is what really creates the character of a hand-cooked chip and that extra crunchiness. So starting out, we could make 40 cases a night, so 12 bags to a case. But it was all very much by hand. And I have the photograph that shows me holding the first two bags of kettle chips off the line, this young guy in a turban in late July of 1982 with a big grin on my face.

28:20Guy Raz:And I imagine, I mean, this is a premium product, right, because it's handmade potato chips. And how much, do you remember, how much did a bag cost in 1983?

28:30Cameron Healy:Oh, boy. Um, less than a dollar. I think, um, you know, I think 99 cents was, was a very sellable number.

28:41Guy Raz:But probably still like a bag of Lay's was 25 cents, right? At the time.

28:46Cameron Healy:Maybe, you know, how much, I don't think we were that much of a premium from Lay's. Okay. I would say we were probably 25 % premium. And how were you making sure people tried them and bought them?

29:02Guy Raz:Like, what were you doing to get people to buy one of these bags? Were they put by the register? Like, what was the strategy?

29:10Cameron Healy:Initially, Guy, there was no marketing. We just put them on the shelf. We did within six months. We started doing tastings in stores and things when we had more capacity. But initially, the stores promoted them.

29:28Guy Raz:So there were the Maui chips in Hawaii that were probably only available in Hawaii. Was there anything like kettle chips in the U.S.? I mean, I know there's Cape Cod brand. I don't know if that was around yet. It might have been. But were there other, as far as you knew at that time, anyone else making small batch, sort of thick cut, super crispy, crunchy potato chips?

29:52Cameron Healy:There were some makers in the East. Cape Cod had started, I don't know, probably a year or less than a year before us. And so they existed. There was one in New Orleans, I think, called Zaps.

30:08Guy Raz:Oh, Zaps. It's still around.

30:10Cameron Healy:Yeah. You know, they started about the same time we did, I believe.

30:14Guy Raz:Got it. Okay. So it's the summer of 1982 and you guys are making 40 cases of potato chips a night. So what was the next step? Were you thinking about expanding or making more?

30:27Cameron Healy:Yeah. So I talked our landlord into building a building. This is in Salem, Oregon. In Salem, which he did.

30:35Guy Raz:Yeah.

30:36Cameron Healy:I then got a bank loan. I ordered all new equipment. And by, I think by December of 82, we had moved our production into this new factory, which could produce a whole lot more kettle chips. And so by January or so, Safeway Northern California division came calling and they were very enthusiastic and they wanted to put them in all their stores. But to fulfill that, we had to go to a second shift, a night shift. And I was actually in San Francisco on a certain day getting ready with my family to fly to India. I was going to make my trip to India.

31:25Guy Raz:Because you were still a Sikh at that time.

31:27Cameron Healy:Yeah, I was still a Sikh. Practicing, yeah. And one of my main people at our factory in Salem, Jim Green, you know, there were no cell phones in those days. and I was at the terminal waiting to catch a Pan Am flight and I got paged and it was my guy, Jim, sounding pretty stressed out. But when Safeway Northern California got their product, they tested them and the oil was rancid in the chips and they were rejecting the whole truckload. We didn't understand the management of fryer oil and how it degrades. And it just so happened when we went to the second shift that threw the balance off. And so I was literally about to step on this flight and I had to tell my guy, I said, I'm sorry, you got to figure it out.

32:25Cameron Healy:and so I went to India amidst this kind of this disaster you know I it was hard to make phone calls even from India but I was able to kind of stay in touch but we had to take a lot of product back and yeah by time I got back you know we had shut down the plant demand had kind of evaporated for the moment and it was kind of an existential situation because I'd taken out some large loans to set up this new plant. But fortunately, the nut operation made a small profit and it buoyed up. Kettle chips would have never made it had not the nut operation.

33:09Guy Raz:I imagine Safeway canceled its contract. They did not come back to you. Yeah. So you had one shot with Safeway and you blew it.

33:16Cameron Healy:We blew it and the reputation. And so I went up to Seattle for a little regional natural food trade show to talk to our customers to tell them that we were fixing the problem. And on the drive back, my then wife was driving and I was pretty, pretty depressed about the whole situation and pretty down about it. And my wife fell asleep at the wheel on I-5 and the car went out of control and skidded across the southbound lanes and then rolled up on the very outside onto a grass bank with all the windows breaking out of the car and we were all fortunately okay i was a bit bruised and battered but wow so that was kind of a wake up we were kind of blessed by not getting hurt.

34:14Cameron Healy:And it kind of jolted me out of my, you know, bit of depression about where we were. And so it just said, okay, you know, we were going to figure it out. And so we got it together and started making good product again. And we managed to get through that period.

34:32Guy Raz:Wow. All right. So by the time I think the company is, as I understand, in like 1983, Overall was doing 3 million in sales. In 1986, the company was doing 4.5 million in sales, which is nice. It's growth, but it's not explosive growth. But I think it makes sense now hearing about the challenges and the crises that you face with kettle chips because you took on a lot of debt to finance it. I want to turn now to 1987 because this is sort of the backdrop to where you are. You got kettle chips. You've recovered from the crisis, but it's still a pretty small regional brand. And you go on a trip to England, a motorcycle trip with your 19-year-old son in 1987.

35:26Guy Raz:And this is going to become a very important trip. But you were just going there to have a vacation. Am I right? to motorcycle around Europe or motorcycle around Europe?

35:35Cameron Healy:Yeah, in general, things were by then going well with our kettle foods operation. I had a good team, I had a management team. I'd never been to Europe, and I wanted to sort of experience the food cultures of Europe. That was an interest. And also kind of a coming-of-age trip with my son, who was 19. and in a way, without admitting it, it was sort of a coming of age for myself. I wanted to get out into the world and explore it a little more.

36:09Guy Raz:And I guess it was during that trip that you met up with an American guy that was living in the UK named Tim Meyer, who I guess you had been introduced to a little earlier. And I'm jumping a little bit ahead here, but I guess you ended up kind of starting to talk with Tim about bringing kettle chips to the UK. And, I mean, how did that idea start? Like, what's the story?

36:34Cameron Healy:Right. Well, Tim was a gentleman from Salem, Oregon, originally. But he'd gone on to become a banker in London. And we hit it off. He was a really interesting gentleman. And he had left the banking world very recently in London and was figuring out what he's going to do next. But, yeah.

36:57Guy Raz:And how did the two of you start to talk about maybe bringing kettle chips to England to start selling them there?

37:05Cameron Healy:Well, you know, being interested in the food cultures, I was eager to, you know, look at some stores, look at some, what they call the crisp market in England. Tim made a list of stores to go to and collect certain brands of English crisps. I remember we were all at a big table with all these bags spread out and opening them and tasting them and talking about the flavors. But, you know, I began to feel, you know, kind of a cultural change afoot. What drove the natural food movement, particularly on the West Coast of the U.S., A lot of those lifestyle values around health and fitness and all those things, I started to sense that that was just beginning in the UK and London particularly.

38:01Cameron Healy:And that kettle chips as a natural foods product, it would be an opportunity to really pioneer a category.

38:11Guy Raz:Okay. I want to break this down a little bit because you're coming off a year of doing around$4.5 million in overall sales. You're a very small company, and Kettle Chips is a very small brand. And you are in England in 1987, and you're noticing there is a – and anyone who's been there will see. There's like ham and pickle flavor and beef and mustard flavor chips. Right. All these – like they have had weird potato chip flavors for a long time, crisps, right, what they call crisps. So you see this and you think, hey, there's nothing like kettle chips here, you know, and maybe we can enter this market.

38:49Guy Raz:Is that that's what you start to think?

38:51Cameron Healy:Yeah. Being an entrepreneur, I saw an opportunity. I mean, it was a would be a very large leap to pull something like that off. But I felt that the brand, the product would have potentially good acceptance. Yeah.

39:07Guy Raz:OK. That I understand. But this is – here's what I don't understand. And I say this because this is going to be pivotal to your business. But 1987, you are a tiny regional brand in Oregon and Washington State. So thousands of miles away from England. This is before the internet. This is before cell phones. This is before email. This is like fax machine era, right? You're thinking, hey, the next logical move for us is to go to the UK. I would have thought somebody would have said, Cameron, you know, maybe you should think about expanding to the East Coast or maybe the Midwest of the United States first.

39:47Guy Raz:Like, why would you even think about going to the UK? Like, did anybody, anything in your brain say, you know, maybe we should expand to the U.S. first?

39:56Cameron Healy:Good insight. And, you know, my my best answer to that is I really enjoyed being in Europe. I really enjoyed in the UK and I had a hunger for more. I felt there was an opportunity, but I also wanted to have an excuse to have to keep going back.

40:18Guy Raz:Fair enough. Okay, but again...

40:20Cameron Healy:Not a good business strategy, but yeah, it was naive. It was completely naive, but I'm also a believer that really very few good things happen without a level of naivety in the beginning. Otherwise, if you knew how hard it would be, you would never do it.

40:39Guy Raz:Yeah. So you decide, I want to go into it. Actually, on so many levels, I should now play devil's advocate to my previous argument. On so many levels, this actually makes sense because there was a potato chip culture in the UK that was stronger than maybe anywhere else in the world. Exactly, yeah. Because people went to pubs, they drank beer, they want a salty snack. And if you go to a pub, there's always a big wall of crisps that you can order and they'll, you know, or get a nice pint of beer, some salted crisps. Great. So in many ways, this actually made a lot of sense because you were going to introduce this interesting, different kind of potato chip.

41:18Guy Raz:And into a culture that was already primed to want to like this thing.

41:23Cameron Healy:But I also felt that because of that tendency for the product to generate through word of mouth this kind of mystique, I somehow felt that this would be very possible in the UK and that its population was very concentrated.

41:41Guy Raz:But the challenges now are insurmountable in my mind. Like you've got to now find a place to make them and find distribution channels. And like you have no – so where did you start? I mean because I should say you launched this thing less than two years later in the UK in 1989. But until you get to that point, how do you start to make this into a reality? Well, in the last couple days that my son and I were in the UK, we were in London and we agreed that the following spring I would come back to London and we would investigate

42:23Cameron Healy:this with more seriousness. So I went back, you know, got back involved in life and business. And I think January or so, I went and bought a suit and tie. I hadn't owned one because I figured you do business in England. You got to dress up and got on a plane and packed some samples of kettle chips and flew over. and Tim had organized a meeting with a potato supplier up in the Norfolk region, which is northeast of London, a couple hours. We'd also made contact with a company called Derwent Valley Foods. They'd begun making tortilla chips, the first tortilla chips in the UK, but doing pretty well with their brand.

43:17Cameron Healy:What was their brand called? Phileas Fog was their brand. Oh, I remember those.

43:23Guy Raz:I named after the guy from the Jules Verne book, but I remember that brand, Phileas Fog.

43:28Cameron Healy:They had their own distribution company. Tim had made a connection with a small group of convenience stores inside London train stations. And they'd agreed to let us put kettle chips, display them, give them the product for free. and they could keep all the revenue, but they had to give us, be willing to be interviewed about what their experience was. And so all the product sold out in all three stores that first weekend. And we had very positive feedback from each of the managers. And so that was the extent of our research. We said, okay, we're, the consumer wants the product over here.

44:13Guy Raz:And on the strength of that, I guess you go to a food convention in London.

44:18Cameron Healy:They were introduced at the food convention.

44:20Guy Raz:And so that was there significant demand to order this, these bags of chips from the get go? Well, we, you know, we didn't know.

44:30Cameron Healy:Our main goal was to set up a network of independent distributors, small distributors to get our products in initially the smaller stores. Yeah.

44:41Guy Raz:Okay. I, so from what I understand, And you initially, the first few months, you managed to get small distribution, mainly on the shelves at Heathrow Airport, which is actually a great place to be. Then things went quiet for a while. There were no reorders for some time, which from what I read made you quite nervous.

45:02Cameron Healy:It did. We, through these small distributors, we got initial production. But then there weren't new orders coming because we had no marketing. you know we were counting on the consumers discovering the product on the shelf and so we didn't really anticipate though how quiet things would be but it went quiet and you know I had literally bet the farm with loans to set up a factory over there and I figured either it's just going to take time for word of mouth and then it will take off or we've misjudged this and they don't want to pay a premium price or maybe they don't want the product, but it was one of the two.

45:46Cameron Healy:And so, yeah, I was sweating bullets.

45:51Guy Raz:When we come back in just a moment, as Kettle Chip starts to take hold in the UK, Cameron decides to launch a new venture about as far from London as you can get. Stay with us. I'm Guy Raj, and you're listening to How I Built This.

46:22Guy Raz:Hey, welcome back to How I Built This. I'm Guy Raz. So it's around 1989, and Cameron has risked his whole company by expanding into the UK. But with no marketing budget, he's counting on word of mouth for people to discover his kettle chips.

46:39Cameron Healy:You know, some orders started coming in, but they were small. And the beginning of June, suddenly the product just switched on. It just word of mouth clicked. And we just got deluged with orders. And that's when all five of the supermarket chains all called in that same week. They all wanted it. They all saw it as a symbol of this kind of new wave of natural foods that they wanted to get into.

47:10Guy Raz:Did people know that it was an American brand? Was that part of what made it exciting?

47:14Cameron Healy:Yeah, I think it was evident it was American brand. The package was, however, adapted to the UK somewhat, but we still called them kettle chips, not kettle crisps.

47:27Guy Raz:So it's interesting because the brand grew very, very fast in the U.K. It took off like a rocket. It took off and it very quickly surpassed the sales you were doing in the U.S. You were selling more kettle chips in the U.K., much more than you were selling in the U.S.

47:47Cameron Healy:Yeah, we had jumped over the ocean, you know, and skipped the East Coast.

47:51Guy Raz:And I think there was like a TV host in the UK at the time, an American woman who lived there named Ruby Wax, who was very popular TV show. I think she always had kettle chips like she was eating them and she wasn't even paid. She wasn't like a paid influencer. She would just eat them on her show, right?

48:08Cameron Healy:Well, it was similar to what we'd experienced in the U.S. where we got product placement, not anything that we'd engineered. And so people started talking. And then there was a photo of Princess Di with a bag of kettle chips and a grocery bag. She would go shop in those days.

48:29Guy Raz:Can't beat that. That's better than her HRH seal on the side of the package.

48:34Cameron Healy:Yeah. And so it just started to get this mystique. And then Tim Meyer became ever more involved, and he has a finance background. He insisted on putting a more premium price on the product than I would have. He said, well, if it takes off, we will be able to gain profitability much quicker. And so it did, and we had to keep expanding the factory and buying more equipment. And those were big investments, but we were able to, you know, we had a small banking relationship, but largely we were self-funded in our growth, which was pretty amazing, actually.

49:19Guy Raz:I would think the success of this product in the UK, it's almost like a backdoor way to expand in the U.S. Did that then make it easier for you to say to go to a Kroger or another supermarket brand and say, hey, do you guys want our product? Or did they start to come to you because they had heard about this product in the UK?

49:41Cameron Healy:Well, I think less so that, more so we had a way more sophisticated sales team in the UK. And so, you know, we ultimately got to the East Coast and did well. But I think the education we got doing business in the UK was absolutely key.

50:04Guy Raz:And you probably also had to, or had to, but you probably introduced like some unusual flavors in Britain, right? for that ham and pickle. We did.

50:13Cameron Healy:I mean, we didn't go totally crazy, but yeah, flavors we wouldn't do in the U.S., but actually one of the most successful flavors even today is the crinkle cut in the U.S., salt and pepper, and that flavor we originally pioneered in the U.K. and then created a version in the U.S.

50:36Guy Raz:Okay, let's now pivot to something is so totally different. And I guess not weird, but you are seeing incredible success with kettle chips in the UK. You take another family vacation to Hawaii. This is in around 1993. And while you're there, I guess you, this sort of the craft beer boom is just going to start at this moment. And you are from Oregon. A lot of long standing craft beer tradition in Oregon. And you, I'm assuming love craft beer, but you're there and you realize, hey, no one's making craft beer in Hawaii. Why don't we do this? Like you've got this whole business kettle. I mean, were you just restless?

51:25Guy Raz:Did you feel like, OK, I've done that. I need to start something new?

51:27Cameron Healy:Well, it actually has a link all the way back to my time in England and that being a yogi and a Sikh, you didn't drink alcohol. Right. But while, you know, I was beginning to transition out of that and I, you know, discovered real ales in England. And with Tim, we would go to his neighborhood pub and have our planning sessions and enjoy a pint. And so coming back to Oregon, I became aware of the craft brewing movement, which really was analogous almost to the natural food movement. It was an alternative to the industrial approach to making beer. and yeah, my son had, same son that I went to Europe with the motorcycle had gone to.

52:14Guy Raz:This is your son Spoon, right?

52:15Cameron Healy:Spoon, yes.

52:16Guy Raz:And is Spoon his nickname or is that his real name?

52:18Cameron Healy:Spoon's his nickname, yeah.

52:19Guy Raz:Okay.

52:20Cameron Healy:And he had gone to Hawaii on vacation with his Portland girlfriend and didn't come back. They said they found paradise and they found jobs on the big island of Hawaii in Kona and I decided to come over for Thanksgiving and we rented a large house on this bay in South Kona. But while there, I just had this epiphany that I had to figure out how to live part-time, not only in Hawaii, but on that bay, in that specific area. It spoke to my spiritual self that by then was no longer a Sikh. But out of that same trip, there was no beer being brewed in Hawaii. And very little craft beer being imported.

53:10Cameron Healy:And I just, you know, talked to my son. I said, why don't we together start a brewery and I'll mentor you. Yeah. So I contracted an advisor in Portland to design the brewing equipment.

53:25Guy Raz:And what, I'm just curious, what was the idea of, I mean, Hawaii, I love Hawaii. I live there in a second. But it doesn't produce hops or malt. I think it's too tropical to produce those two things. What would a Hawaiian beer, I'm thinking like a crisp lager, right, like that you have outdoors when you're, like a Mexican beer a little bit. Was that the idea you had? Like what would a Hawaiian beer taste like?

53:54Cameron Healy:Well, an impression, again, another Hawaiian impression, was when I was 15 years old, I went to Hawaii for the first time, Waikiki with my family and I became aware of Primo beer which was the beer of Hawaii it was a big deal in those days and by the time we started Primo didn't exist it had been bought out and left the market and I just sensed that there was one not unlike launching kettle chips in the UK, there was a timing window to pioneer making local craft beer with a Hawaiian brand that would have that mystique, not unlike Primo Beer.

54:40Guy Raz:There are a lot of challenges of distributing beer, at least at that time in Hawaii, because even though Hawaii is, you know, each island is small. It's like 270 miles from Kona all the way to Kauai. And you've got to distribute the beer across the islands. It's very expensive. I think the taxes on liquor and alcohol in Hawaii are very high. A lot of challenges. My biggest question about the challenges is you were the CEO of Kettle. You've got a plant in Salem. You've got a thriving business in the U.K., and you're starting a beer company with your son. So were you flying like Kona to Salem to London to Salem to Kona?

55:17Guy Raz:Like, was that your life?

55:19Cameron Healy:You know, by that point, we had a really good team in the U.K., and we had a good team. in Oregon. And I was able to, you know, have a little bit of arm's length role. But also, having been a yogi, I still do yoga and meditation, that always balanced that kept me in a healthy mindset and helped the stress from overwhelming me, particularly in high risk periods but uh we got the the brewery open uh 95 we produced the first beer i thought you know we could figure out this manufacturing thing in hawaii but i quickly became aware of how expensive it is to manufacture in hawaii and why why there weren't any beer producers yeah uh in hawaii but It kind of plateaued at a certain sales that causing it to lose about$20 ,000 a month.

56:18Cameron Healy:And this went on not for months, but for several years.

56:23Guy Raz:Wow. So what happened? I mean, obviously, we know Kona Brewing turned into a successful brand. So what turned it around? I mean,$20 ,000 a month is a serious amount of money to be losing.

56:35Cameron Healy:Yeah, and I was the one that had to cover the cost. I think it got very stressful for my son. He did a good job getting it to a certain place. But at a certain point, he moved off island, left the business, and I recruited a young guy in Portland that we worked together. And it was tough for the first six months. But then we made some key decisions to move the bottle part of the production to the mainland, find a good contract producer, because that's where we were losing our shirt.

57:16Guy Raz:You know, it's interesting. I know, I mean, you start the brand. The brand officially launches in 1995, and it was sold in 2010.

57:26Cameron Healy:Partially sold, yeah.

57:27Guy Raz:Partially sold. But it sounds like it's still a tough business. Like potato chips, great. It was profitable. But the beer business, it took a lot longer to turn this into a profitable business.

57:44Cameron Healy:Well, it took three years to turn it into a profitable business. By January of 1999, we became profitable, went into the black.

57:56Guy Raz:Okay, so I want to go back to Kettle. And I guess by the early 2000s, you and your partner, Tim, who was really kind of, I guess, overseeing operations in the UK, you decided that you needed to grow or to scale, you needed a more professional board, you needed a, and I guess you brought on a private equity firm, you sold a chunk of the brand to them. What is the idea in 2004 at this point? Hey, you know, let's we've got this really successful brand. Let's start to look around for maybe an acquirer.

58:31Cameron Healy:Yes, we were, by that point, we were doing about$100 million in sales, scaling and scaled. But Tim and I were the board of directors, we were co-CEOs, and we were literally making all of our key decisions in pubs and restaurants. You know, we'd sit down, have a meal and make those decisions. And, you know, that worked well. But we realized we needed a proper board with some outside influence to help kind of guide the next coming years because we felt there were even greater opportunities. But Tim had a relationship with a gentleman named Michael Chu, Catterton Partners. Their specialty was building consumer brands.

59:20Cameron Healy:That was the focus of their private equity business, still is today. Got it. And so what we were going to do, they were going to buy a third of the business. And we were also going to recruit a top flight CEO, global CEO, and bring in a group that Catterton worked with to do strategic plans, which we'd never really done a comprehensive strategic plan.

59:46Guy Raz:So you sell a third of the company to this private equity firm with the intention clearly to sort of set the business up to get acquired for more money. And that happens within – I think by 2006, it's announced that the brand is going to be acquired by a UK-based investment firm called Lion Capital. They bought out Kettle Foods reportedly for about 300, over$300 million.

1:00:18Cameron Healy:Yeah, we had grown the business by 50 percent. And as a board, we agreed that if a certain dollar amount offer came in, then we would consider it. It was sooner than what we'd planned. But, you know, I'd been at it for 27 years.

1:00:37Guy Raz:And an amazing outcome. I mean,$320 million and you guys still own 67 % of the business. I mean, incredible. You know, I don't think anybody would turn that down.

1:00:49Cameron Healy:Yeah, and I have no regrets. It was a good journey. I realized that my time had come along with Tim's.

1:00:59Guy Raz:They went on to sell it, I think, for over$600 million in 2010. The brand Kettle has gone through since then. Diamond Foods, which bought it, it was bought by Snyder's Lance. People may know their pretzels. And then Snyder's Lance was purchased by Campbell's for almost$5 billion. So Campbell's actually now is the owner of the Kettle Chips brand. And so now, you know, you go to any grocery store and there's like Kettle Chips on the shelves and basically now it's owned by Campbell's.

1:01:30Cameron Healy:Right.

1:01:31Guy Raz:So that was it. So was your time, I mean, you didn't at that point had no business interests in Salem. I mean, I'm assuming you stuck around for a little while to help with the transition, but basically that was it, right?

1:01:44Cameron Healy:Yeah, I didn't. You know, we were, Tim and I were given a small incentive to be advisors for a year, but we both sat in on the first conference call with the operator that Lang Capital had brought in to oversee the company, a Scotsman, very dynamic, forceful individual, and sat in on the first management call, which I've never done. I've always been in charge. And after that first call, both Tim and I said, well, we're not doing that. We didn't do all this to sit in the back of the bus. And we declined on that opportunity. So I basically walked away when it sold.

1:02:29Guy Raz:One of the things you were able to do with your newfound resources was to start a foundation. And I think a lot of your focus is on like environmental issues, I think even domestic abuse. And I read that the board of your foundation voted last year to spend the entire endowment down by 2029, which is like Brewster's millions. You've got to give away – how big is it? Is it$75,$80 million, this foundation?

1:03:01Cameron Healy:Yeah, in that arena.

1:03:03Guy Raz:Tell me about that. Why spend it now? Why not just keep it going for another 50 years?

1:03:09Cameron Healy:You know, I'm turning 75 this week and looking at it more than a year ago is that I didn't want to have to worry about managing a foundation through my 80s but also preparing it for the future. When I was gone, I just – I decided that's too much. And, but yeah, it's been a whole game changer. It's kind of turbocharged our organization. And we were given the award last year of the Outstanding Foundation in Hawaii, which was nice to have that recognition. That's awesome.

1:03:44Guy Raz:Cameron, you know, when you think about your story, right, I mean, you sort of started your early adulthood as part of this movement and living communally and for a variety of reasons, you went off on your own and then kind of stumbled into this idea of potato chips, which became a massive brand, right? I mean, it is an iconic brand today. And you became very successful and wealthy as a result of it. And when you think about how it all kind of worked out, how much of your success do you attribute to the work in The Grind? And how much do you think had to do with being lucky and being at the right place at the right time?

1:04:27Cameron Healy:Yeah, I think very much both. I think you can't be overtly risk-averse if you're an entrepreneur. or you have to be able to live with ambiguity and live with stress. Also at the core is having great teams of people. You know, they're the ones that really executed and made these various companies work. And yeah, it's the people that, you know, I was able to be the visionary and direct into opportunities, but it's really so many great people that heart and soul, they committed themselves to to make make that happen.

1:05:07Guy Raz:That's Cameron Healy, founder of Kettle Foods and co-founder of Kona Brewing Company. By the way, in the early 2000s, Cameron was looking for a way to make sure that all that oil used to make kettle chips didn't go to waste. So he funded a biodiesel startup in Salem that still exists today. And he did it with another old hippie who's also a vocal advocate for biodiesel fuel, Willie Nelson. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at gyros.com or on Substack.

1:05:49Guy Raz:This episode was produced by Casey Herman with music composed by Ramtin Erevlui. It was edited by Neva Grant with research help from Rommel Wood. Our engineers were Robert Rodriguez and Kwesi Lee. Our production staff also includes Catherine Seifer, Chris Messini, John Isabella, Sam Paulson, Alex Chung, Carrie Thompson, Noor Gill, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.