SkinnyDipped: Breezy and Val Griffith. The Flourishing Snack Company That Almost Failed

27:36We knew that could contribute to the sweetness. And then we put this thin coat of chocolate on. We were super thoughtful about what kind of chocolate. But as you said, we had to figure out a way to protect it. And so we used an old culinary technique called truffling. And truffling is where you can take a chocolate product and you can essentially sort of dust it with something, usually cocoa powder. So with our original dark chocolate coated almond, that's what we did. So that way it basically creates a layer that protects the almonds. And people have had cocoa dusted almonds, people listening.

28:17Yes. And then that led to our subsequent two almonds that were part of our, you know, kind of suite of products initially. One was a raspberry almond, so chocolate coated. We dusted it in real raspberry powder. Just like dehydrated raspberries. Freeze dried raspberry powder. And then we did an espresso iteration. So, you know, grow up. Espresso beans. Yep. Yep. Where we had. Yes. Espresso dust. So we were getting real flavors from the get-go. Yeah. I mean, literally, when we were making these first iterations, we were making in the home kitchen, we were dipping them one by one on a fork, we were setting them on parchment paper.

29:00And so part of the next step was, how do we make more of them? And so we brought my dad into the conversation because he has an engineering kind of mind. And one of the ideas was, well, maybe we should spray them. So we went to Home Depot, we bought a paint sprayer, we filled the paint sprayer with chocolate, and the chocolate would start to harden so you couldn't actually get it to work. So we had to MacGyver some heat guns next to the paint sprayer to try to keep the chocolate warm while we sprayed these sheet pans of almonds. And let me just tell you, it was a complete failure. We just had like, it just, chocolate just atomized into the air.

29:44there was none on the almonds. It didn't work at all? It did not. And we definitely returned the paint gun to Home Depot. It's kind of an ingenious... Right? I mean, it's kind of an ingenious idea. You would think that that would work. So what did you... I mean, I read it took you like a year. Yeah. Or like around many months of experimenting before you landed on what actually worked. Tell me, maybe you've got trade secrets here, I don't know, but tell me what you can tell me about what eventually worked. So there's one more step before we got to what worked, which was that we thought maybe it could go through a process called enrobing where, you know, the nuts lay down and they go through a waterfall of chocolate.

30:24We found someone in Oregon, a family operation. We called them up and asked them if we could essentially come and trial making our product in their facility. And they were really kind and they said, yes, sure, come down. So we went down there and we spent, we'd brought like 10, maybe 15 pounds of almonds. And we spent four days on this line, individually placing nuts on a conveyor belt, letting them go through this waterfall of chocolate. And then hand sprinkling them with things like espresso powder, sea salt, taking them off and bagging them up. It's like Lucio Ball, like the chocolate factory.

31:03It's exactly what it was. It was that scene. Yep, we had Breezy on one end of the line, you know, feeding the nuts in, me on the other, desperately sprinkling them with Himalayan sea salt. There's a photo of us passed out, sleeping in the sun on this loading dock after 40. We were so exhausted and we had one cooler full of chocolate almonds. So that was also not the answer. And we knew that. When we come back in just a moment, the founders set up shop in a converted chicken coop and Breezy walks into a bar and meet someone who changes the course of the business forever. Stay with us. I'm Guy Raz and you're listening to How I Built This.

32:02Hey, welcome back to How I Built This. I'm Guy Rize. So it's around 2013, and Breezy and Val are in Seattle searching for someone to help make their thinly coated chocolate almonds. I started to get on blogs, like Reddit blogs, and I started to dig deep looking to see if anyone was putting this thin coat of chocolate on, you know, on fruit, on anything, any sort of center. And I eventually found, I was on this kind of like esoteric chocolate blog, and I eventually found this chocolatier who was writing these, commenting about how he was thinly coating, I think maybe at the time it was freeze-dried fruits.

32:41And so I figured out his screen name, found his name from his screen name, reverse looked his name up to find his phone number, and then called him at his house. And I essentially just asked him, can you make this for us? And he said, yeah, I think I can. And that was really kind of the first step. We formed a relationship with him and it was there. It was in that relationship that we commercialized our recipe. He was in Seattle? Just outside of Seattle. So it was just, yeah, good fortune. And you guys probably didn't have a whole lot of cash to, you know, I'm assuming you're working with some cash, but not hundreds of thousands of dollars.

33:21Definitely not. We were working with a stash of about, you know, I think it was pretty much our life savings of about$25 ,000. All right. So this is a challenge, right, because you can't find co-manufacturers to do this for you. But you do have this guy outside of Seattle who says, yeah, I can do it for you, but can he do it at – I guess at this point you don't really need scale. You just need to make enough where you can start to sell it. Exactly. So how much could he do for you? Well, it was a longer journey than that. So we started making very small batches with him, you know, 10 pounds, 20 pounds, 30 pounds.

34:02And then, you know, we would sit at a coffee shop with him and we would kind of brainstorm about, you know, how could we get to 100 pounds, 200 pounds. And I think at the time we were trying to make a roadmap, a plan that got us to about a thousand pounds, maybe two thousand pounds of product. And originally when we met him, he was working out of his, you know, he was making this in his garage essentially. And then he leased a very small facility to essentially start producing for us. And when I say small, this was a converted chicken coop. we bought an oven off of ebay one single oven that sat on the floor we washed all of our dishes outside on the loading dock on the hood of our car with hose with hose water so this was like a serious like you know kind of makeshift first facility where we partnered you know with this person to start to create a, quote, commercial version of our recipe.

35:06He had the one essential piece of equipment and the skills to do what we needed. The piece of equipment is called a pan. Looks a bit like a cement mixer. And when you put a certain number of nuts in there, they rotate around and you add the chocolate and then, you know, then gradually, gradually, whatever layer you want builds up on the nuts or the centers. But yeah, this facility had no heat, had no hot water, had had one pan and one semi-functioning oven in the middle of the facility. A facility seems like such a big word for, you know, which we, the place we fondly refer to as the coop. Yeah.

35:54All right. Let's talk about your, and your, you mentioned your co-founders. You, you bring in, I think your two childhood best friends to join you, to help you with this project. Yes. This is Lizzie and Chrissy, Lizzie Resta and Chrissy Holler. Yep. So kind of right after my mom and I come up with this idea and these kind of first samples, Lizzie joined us. Lizzie is my oldest, dearest childhood friend. We met in preschool. We grew up together. She's the one that I would, you know, build tree houses with when we were young. And so, and Lizzie was just really excited about the idea. So she jumped on board.

36:32And then shortly after, Chrissy, who had become kind of my soul sister when I was living in New York, Chrissy's fiery. She's like a kind of a racehorse. She was really excited about it and she wanted to do sales and she joined us. So So Chrissy moved from New York to Seattle, moved into the house with the parents, myself, her dog, and Lizzie lived about two blocks away. Okay, let's go back to the process of making them. So you've got this guy who is making small-ish quantities for you, and you've got something that tastes good and it's thinly coated almonds. And then how are you going to sell them?

37:18Were they going to be like individual snack size or was it going to be like a big bag of almonds? Like how did you think about packaging them up at first? Yeah. So we wanted to put them in essentially kind of like a single serving, right? Because part of the idea was this grab and go, on the go. So I eventually reached out to someone in Spokane, Washington, who was a co-packer. And I think we convinced him to give us a chance. So, I mean, he was bringing truckloads of nuts in. You know, it was a pretty decent scale. And, you know, here we were with, we wanted to show up with 250 pounds of almonds and pack them out or 500 pounds.

37:58And we convinced him to let us drive a truck to Spokane, work on the line, and pack them into packages through the night when he was the quietest. So it was the night shift. And he employed a lot of ex-cons and people that had had a really hard time in life. And it was a pretty eye-opening experience because we would go and we would work through the night on the line with all these different kinds of people. And we would hear their stories and we would see that manufacturing is hard work. I think that was such a lesson in sort of what goes on on the line, but also just kind of diving into the world of manufacturing that not a lot of people ever get to see.

38:50When, you know, how is our food made? Who are the people that are putting their hands on our food? You know, how many times are they doing that? How long do they have to stand on their feet? without a break. Yeah. All right. Here's I'm curious about the chicken and egg question, which is, did you be even before you had packaged these up? Did you start to reach out to potential retailers and shops or did you was the plan? Let's just make, you know, we've got 20, 25 grand to work with or whatever. Let's just make as much of this as we can and then try and sell them. What was the approach? I mean, originally when we were making them on the dining room table, we would pack them into little clear baggies and put a label on them that at the time said skinny nuts with a Z.

39:44And it was those that we handed out to friends, family, and like honestly anyone that we would meet to just get like feedback, right? And it was very positive. At that time, I don't think we took those to retailers. This was like, during this time, it was kind of the beginning of disruptive brands and challenger brands. So I had spent a lot of time reading about Larabar's story, Popchip, some of these, you know, challenger brands. And so we knew a piece of it, obviously, a very important piece was the product. But we were also aware that the brand was equally important. And so we wanted to put them in a package.

40:30We wanted to have a look and feel. Yeah. And so now you're manufacturing them or you're packaging them in Spokane. Did you already have commitments from people or were you going to just collect all the bags and then start to figure that out? Yeah. I mean, when we started going to Spokane, we were going with a regular car size, a few cases of nuts in the back. And we would take those. We would pack them all up, bring them back to Seattle, and we would essentially sell door to door. We would pack them into, you know, these were grab-and-go single servings that we would put in a box of 10. We would go march into a mom and pop corner grocery store and wait for the manager and give them a sample, have them try it, and hopefully sell them in to sit near the cash register.

41:22And, I mean, when I tell you, like, we would only take cash or check. We had no other way to take payment. And then we would go and we would demo them. We would ask this manager, can we just, you know, can we come demo them? and we would come demo for four hours, five hours, six hours, however long they would let us demo for. And then we'd sell through them. And then the next time we went to Spokane, you know, we would rent a sprinter van and we'd fill it. And eventually we were driving 25-foot box trucks there and back. Where were you keeping all the inventory? Like at your house? Oh, my house.

41:55Like in the garage's boxes and stuff. Like in the basement, in very flimsy boxes that, you know, came from China. Yeah, but you probably had to keep it cool-ish, right? Yes, but this was Seattle. So it was. Yeah. Okay. You've got the packages. You're going into mom and pop stores. And how are they doing? I mean, you're sampling them. Are you getting reorders? Are they selling? Oh, yeah. I mean, first of all, we believed that demoing was really important because it's food. We wanted people to try the food. So, you know, we would go in. It would either be four of us or two of us. and we would demo five or six, sometimes seven nights a week, sometimes double demos.

42:37And in a single demo, we could easily sell 40 bags, 50 bags. So you were seeing these store managers go, wow, he sold through four or five boxes in a few hours. And then we would start to get slightly bigger purchase orders. Instead of buying two boxes, they would want 10 and And we eventually put our, you know, our small flimsy boxes into, quote, master cases. And we started delivering bigger cases to the store. So it was very organic in that way. All right. So you guys are doing mainly mom and pop stores. But I think you also get into the local Whole Foods in Seattle at some point. Yeah. At this point, Chrissy was, our co-founder, was leading the charge there.

43:26every morning she would take off at pretty much the crack of dawn with a backpack full of samples, and she would go sit in a Whole Foods, you know, where oftentimes they would tell you a manager's not available, and she would just wait. I mean, we're talking, you know, one Whole Foods at a time, one mom and pop at a time. You know, actually Google, the Google campus in Seattle was probably one of our first big accounts. And Chrissy snuck into their cafeteria, found the chef and convinced him to bring the product in and offer it to their employees. And sort of reading between the lines, it sounds like this is when at least the two of you, maybe the four of you start to talk about, we got to raise money if we're going to do something, if we're going to make this bigger.

44:10Is that more or less what happened? I think that's true because I think it was reaching an unsustainable place in terms of, you know, obviously no one was being paid. Everyone was living at my home at the time. You know, I think we had to look for an alternative then. And so, yes, it was clear that we needed to raise some money. Okay. So you guys decide to raise some, to raise a round of seed money. I think originally looking for a million, a little bit over a million. And one of the people, This is just – I'd love to hear the story. Who invests in the seed round is this guy, Rohan Oza, who's been on Shark Tank.

44:51And, you know, he helped with vitamin water, poppy. I mean this guy is kind of legendary in beverage and other products. How did you encounter him? Yeah, this was a complete chance moment. Right after I'd moved to Seattle to do this full time, I would still go back to New York every once in a while. I had friends there. It's still where a lot of my social life was. And so one night, I was just out at a bar, and I got to talking to this guy. He was asking, you know, what I was interested in and everything. And I said, oh, I'm starting this business. We're going to be the next Pop Chips. Oh, by the way, do you want to try my nuts?

45:31And he was like, absolutely. So I give him this, you know, probably half-melted bag of, you know, our dipped almonds. And he said, wow, this is a really good product. This is a really amazing product development. What's your plan? You know, and I was like, so, you know, I had so much confidence. I was like, we're going to build a big brand. You know, we're going to disrupt the industry. I had no idea who this was. I just thought this was like a random person who I could get feedback from because we were passing these out to anyone we really could. And he was like, you know, what are you doing about money?

46:07I was like, oh, we're going to raise a friends and family round. We're going to raise$100 ,000. And he said, I think you're going to need a lot more money than that. And so he ended up giving me his contact. I still had no idea who he was. I went back and, you know, and researched it. And at the time, you know, he was a huge part of vitamin water, pop chips. And so that led to a very early mentorship with Rohan. And at that time, we were going to set out to raise this friends and family round. We had brought a little bit of money in. And actually, one of our very first investors was Bill Nye. Thank you, Bill Nye.

46:55You gave us some seed money, despite his financial advisor, I think at the time, telling him it was a terrible idea. and uh and so we'd raised i don't know i want to say maybe 65 000 and it was big for us you know it meant that we could continue to make product and sell product and rohan came in on that very first seed round i you know if memory serves i think he put 150 160 000 into the into the business and that really kind of like started to make things feel real. One of the earliest things he said to us is, he said, what makes a brand successful is, comes down to three things, product, people, and package.

47:41And he's like, you have the product, you have the people, and this is a real founder-led brand. Let's work on the package. Yeah. I mean, the name Skinny Dipped also is interesting. I mean, there was Skinny Girl Vodka or cocktails and anything still around. And I wonder if it's also a way, which I think is smart, to appeal to, you know, maybe, again, originally you were thinking about what do we like to eat? What are, you know, snacks we like? Was there thinking like this could also appeal to women being called skinny dips? I think we were really careful about that. We didn't want to look at skinny in any sort of pejorative way.

48:20We want women to feel great about their bodies And we were never, ever intending to imply, you know, I had two daughters. I raised two daughters. I wanted my daughters to feel good about themselves because they were strong and resilient and intelligent and not because they were skinny. So I have to say, for me, there was a little bit of trepidation. Using that term. Correct. because I knew it could be maybe misunderstood. It's a double-edged sword. There's an attraction to it that you're sort of pointing out. I mean, I love the name because of what I love about the name Skinny Dipped Almonds is it is the product.

49:08And we still to this day in our products are always aiming for this balance, this thin coating. So it's a very literal name. I also love the idea of skinny dipping. I do it myself. Yeah. There's a double meaning there, right? It's naked baby, basically. But it's wild and free and like, you know, it's got some cheekiness to it. Okay. So now you've got some money that you've raised and clearly – and three products still. It's basically the chocolate-dipped almonds that are rolled in raspberry and in salt or in espresso powder. Is that right? Correct. So we were very focused on those three for the first few years.

49:54And, you know, after we'd spent, call it, you know, a year, year and a half maybe selling in kind of all these regional stores and smaller places, we caught the attention of Target. Yeah. How did that happen? Yeah. Was it a trade show? Did you guys go to a trade show? No, we actually got introduced to a broker who was from one of our kind of early mentors. We got this introduction to a broker who specialized in Target. So even though it felt early in many ways, this broker at the time loved our product. And he felt like we should present it to the Target buyer to see what they thought. So we did.

50:38We flew out. You know, this was in the day of where you got to go sit with your buyers in person, right? So we flew out to Minneapolis and we sat with this buyer and we sampled our product and we talked about our brand, shared our story. And then we went away, we went back home. And the broker who was helping us at the time said, you know, listen, I think I feel good about this. I think we might get, you know, a hundred store test, a 200 store test. And so he gave us a call and he said, okay, you know, she wants to have another meeting. So we flew back to Minneapolis. We sat in front of this buyer and her name was Tanya.

51:17She gave us, thank you, Tanya, because she really gave us a chance. And she looked at us and she said, I absolutely love your product. And she said, do you have any supply chain issues? And I just looked her dead in the eye and said, nope. And meanwhile, we were still in the coop producing very, very small batches. And she said, okay, then, well, I'm going to bring all of your flavors in chain-wide in three months. So 18. And chain-wide is how many stores? 1 ,800 stores. Wow. Yeah. And so I'm pretty sure I was like, you know, immediately clammy, sweating. It was a mix of, you know, fear and excitement all at once.

52:01And we really couldn't believe it, right? Because in our minds, we'd set the high bar at 100 stores or 150 test stores. And we didn't even have a distributor. We didn't have a co-packer. We did not have a co-manufacturer. We were packaging in Spokane. We were producing nuts in the coop. And we had three months, and it was the holiday season. We didn't even know how we would get this to Target, let alone make it. So you have three months to get enough product. And I mean, I can't imagine how many pounds of this stuff you have to make. So what do you do? I mean, you've got some cash. You've raised about five, well over$5 million.

52:41So you've got some cash, which is great because you're not, you're going to need the cash to finance this. Where, what do you do? Where do you go? We made a lot of tracks really quickly. we reached out to a co-man in Seattle that was actually a confectioner, you know, co-man. Doing big quantities of things? Yes. Doing big enough quantities of things. Yeah. And so we, yeah, we started working with them. And they had the capacity to do the thin coating. They had those giant like cement mixture machines? They did. And we had to essentially convince them and teach them how to do that. But they were amenable to that.

53:27But it all didn't go quite as planned. The guy who was sort of their head guy, who was sort of my contact, I'd been, you know, out on the floor coming back into their little office. And he brought some finished nuts out to me. And he said, I don't think they taste quite right. and I said okay and I started tasting them and he was absolutely accurate something was wrong and something was really wrong and I was able to identify what the problem was which that was that our nuts were rancid and you cannot make a rancid nut taste good so there we were we were sitting there with 40 ,000 pounds of rancid nuts and three days to produce, package, ship.

54:21But we had one mission. Target was our opportunity to have a selling story so that we could then go to Kroger. We could then go to whomever and say, hey, we've done this in Target. So this was going to be our selling story. This was our big opportunity. And Rohan had been hell-bent on making sure, forgive me, but he kept repeating one mantra, which is, don't fuck this up. when we come back in just a moment how breezy and val overcome the crisis of the rancid nuts but soon face something even worse they're spending much more than they're bringing in stay with us i'm guy roz and you're listening to how i built this

55:27Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2017, and Breezy and Val are racing to fulfill their first big order from Target when they hit a snag. 40 ,000 pounds of rancid almonds. All I could think was, I literally was paralyzed. So I called Breezy, who was on a plane to Denver. and or I guess you were just off the plane. You had just stepped off the plane. And I was I sat in paralysis not knowing what to do. We landed and mom just kept calling my phone over and over again. And I pick up and I was like, what's going on? And she's like, we have a crisis, an absolute crisis. And she explained what was going on.

56:14I got off the plane, went to the same podium, you know, when you step off boarding and deplaning. And I just said, is this plane going back to Seattle? And they said, yep. And he said, how do I get on it? I don't care where I have to sit. I'll sit in the bathroom. I just need to go back. And they were very nice. I got loaded back onto the plane, flew back, went straight to our manufacturer, which actually kind of close to the airport. I will never forget the image of my mom sitting there. I walk into this kind of dark conference room and she's sitting at the table with like hundreds of nuts that she's bitten in half and this pale look on her face.

56:57And she just said, there's nothing we can do. They're rancid. Immediately, I started calling the supplier. I was like, we need a new shipment. They're like, the earliest we can get it to you is, you know, whatever it was, 10 days, a week and a half. We would have missed our window. So I called everyone I could think of to say, you know, what other suppliers are there? You know, I begged anything we could do. And honestly, we just kept hitting roadblock after roadblock. We got to the point where we started to do the math on going, we're just going to have to go buy these from the grocery store.

57:31We're going to have to create an army of friends and family who all go to the grocery store and just essentially deplete the bulk bins. And how many can we get? How many can we get from Costco? Whatever we had to do. And so eventually I reached out to somebody or I got connected to somebody who had been kind of in the nut world. And he's like, I think I may be able to pull in, get a favor here and get you a truckload. And he came through. We got a truckload. And we were, in fact, able to produce for Target. but just barely, honestly, just barely. Wow. So the thing about Target also is that it is, it sounds amazing, right?

58:19From, I think most people listening are like, wow, amazing, you're set. But it's a huge risk because if you do this and then your stuff doesn't sell, you're done. You're kind of out and you're not gonna get another chance, right? I mean, so that's a risk. Like you could put this product in Target as good as it is and it might not sell, right? Because what tends to sell, like end caps and things with massive promotional dollars behind them. And so what were you able to do to make sure that they would sell? We were aware that it was a big risk. So we had been told by so many people, you should just say no to them.

58:56Like you're exactly what you're saying. You're going to fail. You have exactly 0 % brand awareness. And there's no way you can be successful at this. And obviously, you know, the usual way of entering a retailer like Target, right, is that you have these segment of test stores where you go to see if the product will turn and sell. And we were going from zero to 60. And so we had, you know, someone say to us, like, you should at least try to get an end cap. That way you'll get more visibility when you launch. So we went back to Tanya and we essentially said, is there any way, anything that we can do to get an end cap, you know?

59:35And she said, do you have any other flavors that could be exclusive to Target? And we said, we literally just developed a peanut butter almond. Peanut butter is like a double coated, coated in dark chocolate, coated in peanut butter. We can give you that if you will give us an end cap. And she agreed. And I think that the end cap really helped us initially. So you made it exclusive to Target. We did initially. Because an end cap you usually have to pay a lot for. To be honest, I'm sure we did pay for it, but because we had no idea what was going on financially in our business, we weren't tracking deductions at the time or all of this.

1:00:14We were just surviving. It was super messy. We were just like, this is an opportunity. How do we make sure that we just absolutely – we do everything we can to be successful in Target? And that worked. Clearly it worked. Right. So that's a major test that you then, you not just survive, but it works. I mean, they're selling there. Yeah. I mean, that was really a springboard for us in so many ways. It had forced us to kind of this accelerated, you know, not just growth, but like growing up period. And we had proven that we could, you know, that the mass market loved our product. Yes. Clearly, we were beginning to accelerate, and there was kind of an amplification of the brand.

1:01:04So in addition to the co-man we worked with right around the time that Target came into our lives, this guy's name is Jeremy. Jeremy was also building out his facility. We really birthed the product with Jeremy. So we were in the facility all the time. It is a very different kind of relationship than I think a lot of folks have with their co-mans. And today, do you work with multiple co-manufacturers or do you only work with one? Multiple. And what about the margins on a product like this? I mean, are they pretty good? I mean, people, I think, are more willing to spend more on almonds because they're used to spending more on almonds.

1:01:43Yes. So we have quite a colorful gross margin history, which is that our brand was born in this time when everything was about growth, right? Growth at all costs. Just grow, grow. Don't worry about profit, just grow. Exactly. No one had even asked about our margins or profitability, forget about it. No one was considering that. And then you have to remember that we didn't even have a finance background. I mean, originally we were doing our finance on like, you know, sticky notes and, you know, I had no idea what cogs were. I didn't even know what gross margin was. So at a certain point, you know, the business had seen a tremendous amount of growth, right?

1:02:28We're available in probably at the time 20 ,000 plus retail doors, right? We were losing money. We were still losing money. Were you underpricing? No, we weren't underpricing. We were focused on growth. We were focused on brand. And we really had not put our focus on, you know, what are our gross margins? Are they sustainable? Are they healthy? And we had gross margins in the teens. We hadn't focused on it. We didn't have the expertise or the know-how. And it wasn't until the end of 2022 when essentially the funding dried up, right? Like we were going going to raise another round of funding. It wasn't available.

1:03:08And everyone told us, you are never going to be able to take a business that has gross margins in the teens and make it profitable. This is really critical, right? Because 2022, you couldn't raise money. And this is the thing I think a lot of businesses don't realize is that, you know, you might be doing extremely, I think in 2019, you guys were already on the Forbes, like, or Inc 5000 list, You're number 32 on this list for the fastest growing business in America. I mean, 6 ,000 % growth, you know, revenues grow. So on paper, it looks like you guys are everything. You got everything figured out, right?

1:03:46And but in 2022, you have a hard time raising money, which is a lot of businesses did. I think some of the jeopardy is that you go so fast. And if you are founders who are not grounded, say, in finance, you may not understand that it's really critical to know something about cogs. It's really, really important that you find another source for your caramel powder other than Brittany in France. And I think we were so fixated on, certainly speaking for myself, on developing a quality product that kind of blew it out of the water in terms of flavor that we just didn't have the discipline or the know-how to kind of hold ourselves to some of the limitations.

1:04:39And that was a big challenge because we did not want to impact the flavor of our products. I mean, it reminds me a little bit breezy of your time selling sorbet, right? Right. Because you were just going to Publix or whatever and buying the best stuff you could because you want it to taste great. But, you know, naturally, this is what we all want to do. But we don't always think about, well, am I actually with the labor costs paying for everything? Is it all good? Is it is a retail price paying for all this stuff? Well, and I mean, listen, we didn't have a leaky bucket. We had a bucket with big holes in it.

1:05:13And we had to figure out, you know, the ship was going down and we had to figure out what to do and we had to do it quickly. and it came from, you know, the supply chain and finding domestic sources for things that were coming internationally that were just as delicious. It came from picking up every single one of our, you know, warehouse, like essentially where we are warehousing product, finding more efficient places in the country to put it. It was working with all our retailers and moving them from delivered to FOB. It was, there was a time when, I mean, when I tell you we did not have money in 2022, to, I asked our entire leadership team to put their salaries on hold just so that we could try to make payroll for the rest of the company.

1:05:58Wait, so that's amazing, right? Because again, from the outside, you're just crushing it. You're in all these stores. You're in Costco. I mean, you were trying Costco and Costco was eventually, you guys figured it out. But I mean, you've got celebrities coming at you wanting to invest. Like, this is a hot brand. And was any part of you worried, like, we might not make it? Like, we might have to sell this business for, like, pennies in the dollar? There was a moment where we hit absolute rock bottom. It was in November of 2022. I think it was the first time in the history of the brand when I remember I was in New York trying to raise money, and I just absolutely lost it, just sobbing in my teeny tiny shoebox hotel room.

1:06:43My husband got on the plane and flew out to come support me. And I just thought, I don't know what to do now. Like, this is, we are in a hard place. It was the first time I had ever had that feeling. And then somebody said to me, she said, she said, I have never met an entrepreneur who was ultimately successful that did not hit rock bottom. And this is your rock bottom. And you're right. We had a brand with a lot of things were working for us. We had retailers picking us up. We knew that our consumers loved us. We had all of these things from the outside that looked great, but we had a sinking ship behind the scenes with our financial situation.

1:07:27And so we had two options. It was either like when people say a soft landing. It's like the worst words. It was either find a soft landing or get your finances to match what you have built from the outside looking in. And that is what we decided to do. How did you do it? Because, again, I'm sure people are like, Breezy, Val, you guys, it's amazing what you've built. Wow. And people are assuming you guys are rolling in cash and you're freaking out. How did you, and you can't raise money, because I know you would eventually raise money, but it would be not until September of 2023. And again, this is a tough time.

1:08:082022, tough year to raise money. Very hard. Can I just mention here, too, that we had a grown-up in the room. We had hired, and he had been with us for several years by this time, Mark Mortimer, who is our president. And I do think that, you know, arm and arm with Breezy and our CFO, there was a concerted effort to address every aspect of the business, to be ruthless and to figure out how to get out of the pickle that we were in. And not only that, Mark came in with some added capital at a time, you know, just to at least make payroll. He made a personal investment to help to support the brand.

1:08:49But when I tell you ruthless cutting, we cut every single thing that we cut to bone, essentially, is the way I think about it. Everything. I mean, starting from top to bottom, even in our trade spending, we cut every bit of trade that we feel like wouldn't put us in jeopardy of losing an account. We cut every single bit of marketing that was costing us anything. I mean, we had no money, zero money. We reformulated our chocolates. We reformulated our peanut butter cup feelings. We reformulated anything we could put our hands on. We found new chocolate suppliers. I mean, we just dug deep. And the one thing that we tried to protect was the team.

1:09:35So we knew that we had worked really hard to build an amazing team. And I think we felt like if there's one thing we are going to protect, Let's try to keep our team intact so that we can go do the work that needs to be done to get our gross margins where they need to be. We did that. And we did that over the next year and a half. How much money do you think – do you estimate you saved? Were you cut? Gosh. Like millions? Yes. And at that time, I was also working to raise money. But when I tell you working to raise money, I mean I talked to hundreds of people. No one was deploying capital, you know?

1:10:15and so I had to find a solution and we ended up finding an amazing partnership and it was a really important piece of like kind of the next chapter of our story and we partnered with David Grutman who had been a friend of mine from my Miami days who had gone off and while we were building skinny dipped he had built a really well-known and successful hospitality business in Miami and And we raised a round from all of these celebrity investors that like genuinely loved the brand. I think I just had this like feeling deep down that this was it. If we could overcome this obstacle, then we would be there and or we would be on the other side.

1:11:02And I have to say, like when I raised that money, that was not a, you know, that was not a syndicated fund. that was individually from each celebrity investor, 65 individual celebrity investors, one at a time, multiple calls with each. I mean, you know, and - That's a lot of time. Yeah, but they have been great advocates for the brand. And David for us was, as I said, he has been a believer because he believed in us in a time when he could see, he could see that we had built this brand that people loved and we had products that people loved. And I convinced him that all we needed It was a little time to get our finances to match the brand.

1:11:43Yeah. And I know I read that in 2024, you become profitable for the first time, which is normal. I mean, right. It often takes 10 years for businesses. But now I imagine, and as you describe, Reezy, like that became like an absolute obsession for you. Oh, it's a game changer for us. That being said, I do think that there's a balance between growth and profitability. And I think, you know, the pendulum used to be too far one way, right, which was grow at all costs. But then it swung the other way. And then what happens is you can't – it's too hard for a challenger brand to break through because it is expensive to go into CPG.

1:12:26You have to fund inventory. You have to – you know, you're doing something different. You've got to pay slotting fees, all kinds of things. So I'm a believer that, like, I think it would be very difficult to be profitable from the start. I think you just, you know, at a certain point, it is important to know that you can get there. And, I mean, for us, it was a game changer. It means that now we have the funds to be able to invest more heavily in marketing. It means that we can invest in our philanthropic program, which has been something that my mom and I had wanted to start from the very beginning.

1:13:00and it took us 10 years to get there. So it's certainly, it's definitely a little more relaxing to be profitable. Yeah, I bet. You know, I mean, now you are in, I think over 25 ,000 stores. Breezy, you're the CEO still? And Val, what's your official title? I head up our innovation. And you're very much involved in this business. I mean, do you consider it 10 years old or 11 years old? Like, what do you guys think when you think about how long you've been doing this? Yeah, I think of it as a decade. Yeah. And, you know, people say to us all the time, oh, my gosh, you know, it's like an overnight success.

1:13:41And I always will remember this interview that I saw with Daniel, the founder of Kind. And he said exactly the same thing. People would go to him and be like, overnight success. And he's like, it took a decade to get here. It took a decade. You know, this didn't come overnight. It's been, we have had our fair share of up and downs. And but, yeah, so I think of it as a healthy decade. And look, Val, I mean, you were I think I said late 40s and it doesn't matter, but I think you were in your early 50s when this started, right? You're my age and here you are, a very youthful, you know, 60-something.

1:14:18But like that's awesome. Like when you were 50 years old, you would not have known that by the time you're in your mid-60s, you're going to be running a business that's doing 100 million plus a year. Yeah, totally. I mean I had none of that vision. And when I was 40 years old, you know, I would have like fallen over backwards if I'd looked into my crystal ball and seen myself standing in a hairnet next to my daughter who was also in a hairnet with a tray of nuts. I mean, really? Yeah. You know, people will ask us sometimes what kind of or will ask me what kind of advice would you give an entrepreneur?

1:14:57And part of it is holding the course. It doesn't mean that you don't, you know, make some compass shifts or, you know, you don't tack from time to time. But holding the course and to do it with my daughter has been, you know, the great honor of my life. And not only with her, but with our two other co-founders who are also like daughters to me. So, well. And your other daughters also. And my other daughter. And, you know, here I am at the ripe old age of 66. Ugh, shocking. And I used to think, wow, there's so many father and son businesses. But you so rarely hear about a mother-daughter business.

1:15:40And I think part of me wanted to set out to change that, you know, to be a part of a successful mother-daughter business. Yeah. I mean, it is so cool that, Val, I mean, I just— I keep coming back to you as a parent because I just think it's so cool that you trusted your child's vision and instincts. And to me, it sounds like you really let Breezy lead this thing. That you were not sort of making assumptions about your experience and your wisdom. It was like, okay, kind of let her lead it, and I'm there for the ride. Yeah, totally. Yeah. I mean, that was a leap of faith. You know, it wasn't, I mean, at the time that the business started effectively or at least conceptually, I mean, we were paying her cell phone bill, you know.

1:16:33And this was not like at that time, you know, a kid, a young woman who had like an incredible amount of financial savviness. So it was a leap of faith, but it became clear very, very quickly that she was absolutely the one destined to lead the company. That is not my skill set. But I would just say, yes, I think that part of what I bring to the business is this kind of unlimited jet fuel, right? Sometimes there's a cost to that, and my mom's an amazing counter to that too. But what my mom has brought is she's a visionary of the business and has been from the beginning. She has an ability to see long-term consumer trends coming before they're here.

1:17:19And so I really think it's been that combination of jet fuel meets visionary that has been, you know, part of why we've been successful. Yeah. When you think about where you got to now, 10 years on more, and you've got a great product and brand and people know it and it's visible. It's at Starbucks and here you are, over$100 million in sales. How much of this do you attribute to the work and the grind you put in? How much do you think it had to do with just luck that people wanted skinny almonds and chocolate covered almonds? They wanted these products now and it was just the right time and place.

1:17:57I would tell you 98 % hard work and 2 % luck. I mean, seriously. And you use the word grind, which is what it is. It is a grind. It is relentless amount of hard work. And not to say it's not fun and all of that, but it is a lot of hard work. That grind that we were talking about was not just about us. That grind was our co-founders, Lizzie and Chrissy. So much of this is, you know, when one was down or two were down, there was somebody else to stand up and be a cheerleader. You know, and that's been, I think, incredibly important. And I'm a very peaceful person by nature, but when people say to me, wow, you guys have been so lucky, I can feel the violent side of my personality wanting to emerge.

1:18:55We've absolutely had some serendipitous moments and some important breaks along the way. But yeah, it has been a hard-earned 10 years. But it's a labor of love, right? You keep doing it because you love the people you're working with. Again, then that circle extends to this little mighty team that we've been lucky enough to have surrounding us for the past number of years. That's Val and Breezy Griffith, co-founders of Skinny Dipped. By the way, their website has some pretty good advice in case the chocolate almonds melt on their way to you. You just take the bag, you smash it, put it in the freezer, wait for about a half hour and boom, instant chocolate nut bark.

1:19:41Hey, thanks 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. This episode was produced by Kerry Thompson with music composed by Ramtin Ereblui. It was edited by Neva Grant with research help from Chris Messini. Our engineers were Robert Rodriguez and Kwasi Lee. Our production staff also includes Alex Chung, Andrea Bruce, Casey Herman, JC Howard, Sam Paulson, Catherine Seifer, Rommel Wood, and Elaine Coates.

1:20:17I'm Guy Raz, and you've been listening to How I Built This and Don't Stop the Podcast just yet. Because right now, you're about to hear an amazing small business story that you don't want to miss. This segment is presented by American Express. With a business platinum membership, the best just got even better. This week's story starts in 2009 when artist Ryan Burkhardt left his job at a non-profit screen printing press to try and start his own printing business. I was kind of adrift for a few years trying to figure out how I was going to rebuild something from scratch. Ryan felt like an imposter because he didn't have a traditional background in business.

1:20:59I had no plan B. My expectation was that I would be an academic. And he kept having the same thought. If he was going to start a company in his adopted hometown of Austin, Texas, he needed to start building relationships with other entrepreneurs. So he joined a local co-op meant for screen printers, where he met Bruce Brayden. One of us took a job printing something we didn't know how to print and went to the other one and said, hey, I got this job and it's due very soon and I don't know how to do it. Would you help me? The two of them took on a few gigs together. and found that their skill sets complemented each other pretty well.

1:21:37It was just like so obvious that we were going in the same direction. We thought, well, let's go together. So Ryan became a co-owner of the company that Bruce had recently launched, Kong Screen Printing and Design. And in the beginning, it was a pretty bare bones operation. We were printing everything on a manual press, meaning no mechanics. You loaded the screen onto the press. You pulled the squeegee by hand. You did everything by hand. For the first couple of years, they weren't making much money. But then in 2013, right before South by Southwest, Kong Screen Printing got a special t-shirt order.

1:22:16There's kind of a trope in our city that everybody comes to South by Southwest for a week or two, and then they move here the following week. And there is some resentment within the community. and we were approached to design a shirt that basically says, welcome to Austin, please don't move here. The shirt they wound up printing became a huge hit, locally and nationally. GQ picked up the shirt and published it in an article about how to look like a local when you're going to South by Southwest. And there was so much demand that Kong screen printing could hardly keep up. Well, we learned an awful lot about fulfillment and mailing and shipping really fast.

1:22:57It went crazy and we were totally unprepared for it. So they hired some help and bought an automatic printing press with more colors. Buying this press was really a marker for us at Kong because it allowed us to do a lot more for our customers. And it also allowed us to gain a lot of efficiency in production. Today, about 15 years into their business, Ryan and Bruce have printed designs for local restaurants, businesses and nonprofits, but also for big brands like Coca-Cola and Topo Chico. Their business is now bringing in roughly$3 million annually. But unlike bigger printing facilities, which might have multiple shifts and run all day, they've made a more intentional choice.

1:23:41We keep it 8.30 to 5.30, Monday through Friday. We both have families, and we really want to have a rich quality of life. As for that shirt that put them on the map all those years ago? I still see it out around Austin from time to time. People still ask us about it, and I find that kind of amazing. That's Ryan Burkhart, co-owner of Kong Screen Printing and Design. His small business story is presented by American Express. To build a business like no other, you need a card like no other. There's nothing like Business Platinum.

1:24:25If 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.