The Slow Burn Strategy to Massive Retail Success

0:00I should have started the meeting with, hi, what can we do to help you? What would you like to know about our company? Would you like me to jump into the history? or is there something specific that I can answer for you straight out of the gate? Hey everyone, welcome to Shopify Masters, your companion for starting and building a business. I'm your host, Schweng Estershan. When you find a problem you're passionate about solving, it's important to start small, validate the concept, then adapt and pivot as needed. Simon Donato did just that with his company, Stoked Oats. From selling at farmer's markets to getting retail partnerships with Walmart and Costco and developing new product categories, Simon created a business that fits his lifestyle and he's here to help you do the same.

0:50Welcome to the show, Simon. Thanks so much. So I know that Stoked Oats isn't your first entry into entrepreneurship. you've constantly had new ideas throughout your life for new entrepreneurs what steps should they take to validate an idea and how did you know that oats was the thing for you yeah exactly who grows up wanting to uh run an oat company i suppose unless you're you're born in the prairies and uh have grown grain through your entire life which was not me i think when you consider striking out on your own? You need to think about a few aspects. The biggest one is, you know, is this something you want to do long term or is this short term?

1:37Do you see an opportunity to strike quickly and either make an impact, make some money versus, you know, I want this to be a career, so to speak, that I run and I'm okay if it takes more time. I think when you're evaluating any idea that you have, those are probably two considerations to make early in the game. When we started down the path of Stoked Oats, it was probably 2009, 2010 that we started having conversations, my founding partner Brad and I. And, you know, we were considering, do we want to have to educate a customer on something brand new that we've created? or do we want to put a little tweak on something that everybody ultimately knows about?

2:27Then we were saying, okay, let's have a look at our bank accounts. How much money is sitting in each of our accounts? How much will we be comfortable investing into this idea of ours that potentially it just evaporates into thin air after a day, a week, a month, a year, whatever. You might not get it back. Are you okay with that? And for Brad and I, we're actually evaluating craft brewing because we were both beer fans at the time or oatmeal. We arrived at both of them through different paths, but both were a lifestyle kind of passion and quirky interest kind of thing. we ran business case studies on both of them pretty high level but took a look at market size and did the analysis to see hey is there room for something new where we live which happened to be Calgary Alberta at the time uh turns out there was for both so then we went to the next step what's it going to cost us to get this idea up and running and it was you know a tenfold difference between launching our oatmeal company versus getting into the micro brew space.

3:40Neither one of them we really had any prior knowledge of, but the CPG space dry blending seemed a lot more achievable than, okay, now we have to figure out how to make beer and then make it taste good. We've already been making our oatmeal taste great for the last couple of years just for our own personal consumption. so you know i think it was a easier entry into the oats game it was less cost prohibitive i think we both went in for 30 or 40k each over the course of maybe the first year and a half to fund production and buy packaging and do all of those things well that sounds like a very thoughtful list and to your credit the two interests in oats and also micro brewing those are things that you enjoyed in life and also with oatmeal within your corporate job, you were known as this healthy guy.

4:38You were known as the oatmeal guy and people actually turn to you for like oatmeal recipes of sorts. Do you think it's critical to have this interest and also be somewhat considered as like the go-to person and a go-to expert for something before you try to turn it into a business? that's a great question and i would say it helps but it's not absolutely critical or necessary and it only helps in the sense of if you want to craft your business in a way that the owner founder is the brand is the primary brand ambassador as well which you know it helps in the early stages when you walk into your local whatever retailer and say, hey, I'm an oat guy.

5:31I'm in the same city as you. We make it here. Support local. Here you go. Versus, you know, e-com, it's a little bit more nameless, faceless. If you're selling through an e-com platform, if you don't want to be the face of your brand, you don't have to be. So I think with respect to that question, it works both ways. the way we chose to to build this out uh you know as a cpg brand we are we are still predominantly brick and mortar focused so yeah having having the front man me uh being that health guy and when when somebody thinks of stoked oats they think of simon uh well simon you know he's a you know was an endurance athlete in the day he had some success there whatever it's maybe it's aspirational for them.

6:17Yeah, it certainly helped us. It put us in the community. So we had a really strong community straight out of the gate of health conscious athletic individuals who were early adopters. We've since blown it wide open and now it's just health conscious consumers. But it certainly gave us our niche to expand from to start it. I think understanding where you want to position yourself out of the gate is probably more important. But then you have to get that knowledge. So whether you gain that knowledge out of personal interest, which just happens to evolve into a business, or you say, I want to be the widget expert and blow this up on e-com, you have to do the work to become the widget expert, right?

7:03It's not just a moniker you wear without doing your due diligence behind the scene and researching and understanding. And that goes into how we're producing, where we're producing, what's our costing, how do we get it to market, how do we solidify our supply chain. I mean, all of those things will let you be the best widget person out there. I mean, that personal connection is so important. You have this extreme sport mountain biking background, and you also, this O business ties in perfectly with that. Um, but how did you even begin to start this brand outside of people who known you, people who've known you in the office, people who've known you through the mountain biking world and actually convince a stranger to try your oats?

7:50Yeah, that's, it's always the, uh, the truth test right there. If you can get somebody who's not friend or family to try the product and actually like it. so you know again in the early days when I was bringing this product into my corporate job I was seen as the healthy guy right and there was a little bit of aspiration there from some of my colleagues and well I want to see what he's eating and they tried it and obviously they liked it from there we took it to the next level up which was we ran big taste test with my running club and had everybody show up on Saturday morning. We had our clipboards.

8:30We had our samples. We had our hot water. It was in a parking lot down in South Calgary. And we served tons and tons of various oatmeal and took their responses down. And from there, we narrowed it down. So we then had an understanding of what the customer wanted. The next step was going to complete strangers, and that was through farmers markets. And what we found really worked well there was hitting the senses. And what I mean by that was we would cook a big pot of what is now our Buckingham Oatmeal blend. It has apples, mulberry, cinnamon, and a variety of other products in it. But it smells fantastic.

9:13My wife, Chanel, calls it, you know, apple pie in a bowl. And so that smell would just kind of drift, permeate through the crowd as they would walk through. and draw people over so oh what's in there i mean you already have a crowd i mean this was 2012 where we started doing farmers markets and they were great because it was a cash-only business people would go to the bank machine ahead of time pull out their farmers market spend right it was an outing for these people so much like you would do dinner and a movie right what's going to cost 50 200 bucks whatever it is they would allocate a spend to farmer's market every saturday or once a month on saturday so you had these people with cash in hand who weren't value shopping they were looking for cool unique homegrown local items so we were selling 20 oatmeal back then big like peanut butter style tub of it and it was the smell that hooked them in they would come over try it and they loved it.

10:18So that was the feedback that was so valuable for us in the early days. And one of the stories that I'll always tell is like the athletes were easy, right? Many of them knew me. I had just started my television show, Boundless. They'd seen me at all the races. Back then I was a lot fitter than I am now. So often hitting the podium and, you know, a little bit of notoriety at the time in that community. Then you had a lot of the healthy mums, right? And they'd come through with their kids. Oh, here, let me feed it to my child. Oh, the kid loves it. Great. I want to take this. It's got no added sugar.

10:54It checks all the boxes. This is wonderful, right? They'll spend anything. But then I'll never forget this. First year we were doing it, I get this old farmer, lives down in the area. I mean, easily in his 70s and his hands were like baseball gloves, you know, just thick. And he comes over and he goes, yeah, doctor tells me that I need to start eating oats for my cholesterol. So I give him a sample. He loved it and drops 20 bucks just like that on a tub of oatmeal. Now here's a guy I can guarantee had never heard of gluten-free, wasn't interested in gluten-free, but was more interested in supporting a local brand, getting something healthy for himself, following doctor's advice, right?

11:40And I knew at that point, if I can sell$20 oatmeal to old farmers who are probably used to eating the competitor's oatmeal for their entire life, then we really got something here. It's one thing to sell it to your congregation, so to speak. It's something entirely different to your point to get out on the street, get in front of a stranger and go, you don't know me, but I've got something here that you would love. Give it a shot. And to me, that gave us the confidence, it gave me the confidence at least, you know, to push hard and, you know, continue to climb over the barriers along the way, because I knew I had something that was both helpful for people's health.

12:25It was delicious. It solved breakfast problems, but people appreciated it and loved it. What I pick up on from your response is the fact that you were selling oatmeal. It's something that is very homogenous, and yet you're able to differentiate and make people come to your stand and try your oatmeal. So for any new founder, regardless of what industry they're in, what steps they should take to make their products stand out? The competition has heated up for sure. Amazon's driven it. Like the barriers to entry continue to come down in many respects. I mean, e-com has blown that wide open. My e-com in the early days, I would get an email saying, hey, I'd like to buy your product.

13:17I was like, great, bring 50 bucks, here's my house, and I'll leave it on the porch or something like that. Or I happen to be in the area, I'll drop it off, right? That's what Ecom was for us over 10 years ago. It's changed so rapidly, and there's been great opportunities along the way. For other products, be they food-based or not, I think you absolutely have to understand your niche. you need to make decisions right all all i do day in day out is solve problems and make decisions i don't think of myself as somebody who sells opay superfood products i think of somebody who solves problems and in solving problems i have to make a lot of decisions and you're going to make right decisions some days and you're going to make incorrect decisions some days and you got to take stock of both and learn um you know as you go through and you can't be afraid you know to break eggs in this journey.

14:16For us, we targeted runners early on. That was my background, runners, endurance athletes, cyclists, and branched out from there. So we had those early adopters who were influential and it helped us through our trial and error phase as we branched out to this group. Well, maybe that worked, maybe it didn't, right? But you always had your home base or your beachhead, as I like to call it. The last few years, protein has been huge in CPG as a whole, especially in breakfast cereals. And that's been a differentiator for some brands as well. So, you know, there's also many ways to get there. Are you going on a brand play where you have a ton of money behind you and you can build a brand where you can walk into the room and the buyer says, well, why should we pick you up?

15:05And I say, because we're stoked oats. That's why. and you've got thousand customers a week who are going to be coming in looking at breakfast dials who know who we are what we represent what our brand promise is don't even need to read the back of the box they don't want to they're too busy stoked oats i'll take it right that's a brand play or are you going to say we're the first guy to include this ingredient or we're the most protein or we're the lowest sugar the most fiber like what are you going to hang your hat on You need to do the research and then you need to evaluate whether is it a trend that I'm playing, in which case, you know, you've got a limited lifespan or do I have some runway with this where I can build this over time?

15:51And then that'll affect, you know, again, brand play, you need a lot of money. If you've got a longer build out, you can probably bootstrap it a little further. I think it's sometimes hard for new founders to think about because they're eager to get that mass appeal and have a lot of customers love their product. But to your point, you need to focus on your niche. You need to get the early adopters, those influential early adopters to like your product before you can go to a farmer's market, before you can pitch a retailer. And I think Stoked Oats have such an impressive list of retailers. So within Canada, you got Law of Laws, Sobeys and Costco.

16:36What was it like having the initial pitch meeting and actually getting that relationship developed? Yeah, I mean, it's nerve wracking in the early days going into these sales meetings because like a lot rides on it, especially with the bigger retailers. They're busy. They operate on a very predetermined calendar. So there'll be a category review period, typically annually. Sometimes it's twice a year, but usually it's once a year. So you've got one shot in 365 to land your product. Otherwise, you're waiting another cycle, right? When you land with the major retailers, it's big volume. These are the big steps up the stairs.

17:25so these are you know you need to you need to be able to manage that growth um and deliver on it but yeah it's it is nerve-wracking to go in these meetings um ideally you've got some mentorship that will will help prepare you um we did in the early days and frankly i wasn't even in these meetings in the early days it was you know our senior more experienced partners on the distribution and sales side of things who were doing a lot of these meetings. But eventually, I started taking the meetings over as, you know, I understood the business a little more and really wanted to be driving the bus, so to speak, which I think is critical in the evolution of any business.

18:07You know, you need to immerse yourself. You need to be ready to get shot down and just do it again and do it again and do it again because you will win if you believe in what you're doing. But for us, I think the biggest learning I had was with Costco. Costco is a huge retailer. They do tremendous volume. They're fantastic to deal with. And we really appreciate our long-term partnerships there. But it started with an email, a simple introduction. Hi, I'm Simon. I run this company. Here's what we do. We'd love to have an opportunity to chat with you to learn more about what you do. And, you know, I've given all sorts of different sales pitches.

18:53I've had different sales styles. I, you know, test things as I go in. And, you know, I think I've learned that just being genuine, having that passion about what you do in the brand, having knowledge as well, and being able to help solve issues for them is the most important thing. there's nothing else that i do now when i go into a sales meeting beyond you know how can we help you right what would you like to see where are the gaps on the shelf for you what are you seeing your customers asking for or looking for is there something that we don't make yet but we could make for you you know we have those capabilities too as opposed to you know trying to pound it in and And like force fitting something, it should be, you know, a very smooth process where we walk out of it going, this is awesome.

19:50They view us as a potential partner who can assist with what they need, which then makes them look good within their corporation and helps them with their own personal goals. And, you know, you hear it on a lot of podcasts and, you know, all over social media. You know, nobody cares about anybody but themselves. I always take that with a grain of salt. I don't think it's entirely true. However, you know, we all have to be aware of our self-interest. And you have to be aware of the buyer's interest too, right? You know, I'll give you one of the most memorable sales experiences that I had. It was a few years ago.

20:31and we went down to Benville, Arkansas to meet with Walmart. And it was myself, I probably would have been 45 or 46, six foot tall white guy. I had our sales manager, you know, another six foot tall white guy. He was getting closer to 60. Our brokers, all old white guys, right? Who was the buyer? Fresh out of college, young female. okay i remember i we flew down to bentonville we sit at the table uh with our broker and i say all right who's our buyer what are her hobbies what do we want to talk to her about we don't really know never worked with her before i'm like so we're going blind into a meeting that we've just flown across the continent for um you know to pitch her on something i mean it's all relationship based.

21:28Like you're not, you're not selling product per se. You're selling a relationship again, right? How can we help you? How, how can you trust us to assist you? And so that was a little frustrating that we didn't have that insight. And then we go into the meeting and it was like four or five, like I said, old white guys walking into a room. I'm including myself in that group. And then what do we do? We talked at this young buyer for the first 10 minutes, you know, here we go here's the stoked oats story this is why we're so great and 10 15 minutes into a 30 minute meeting i wrapped my pitch up and i said all right do you have any questions do you have any thoughts well what i really wanted to know about was this line that you have and at that point i was just like shit i should have started the meeting with hi my name is simon I'm the founder of Stoked Oats.

22:24Thanks so much for having us here. What can we do to help you? What would you like to know about our company? Would you like me to jump into the history? Or is there something specific that I can answer for you straight out of the gate? All my meetings now start this way, as opposed to, let me tell you about why we're so awesome. And the other side of it was, I was so annoyed that we knew nothing about this young lady, that we went in with this group of white guys, which was just so blind in terms of trying to build a relationship that now, before we have any buyer meetings, we try and understand who we're speaking to.

23:08Am I the best person to go down there and build their trust and build a relationship with. If not, I have no ego. We will send the best person that this person's going to want to deal with. As the organization grows, the founder, they've got to accept the fact that the team they build becomes the true representation of what the company is all about. And that not everybody wants to speak to you. Like, yes, I created some oatmeal blends a few years ago, we now have 20, 30 skews out there, like well beyond oatmeal. And I get that not everybody wants to speak to an old semi-retired jock. You know, some people want to speak to a young, engaging mother of two who's a working mother and, you know, has a lot more in common with them than somebody talking about their mile splits on the last marathon they rode or what their carbon mountain bike is made out of.

24:12So we've learned that you need to understand who your buyer is and adjust your strategy to build that relationship. Yeah. Well, it sounds like a reflective process, right? You're learning a lot from each pitch and you understand that it's not a pitch or a presentation per se. You're turning it more into a conversation and actually engaging with the buyer to understand what they want and have that flexibility in that conversation. And the one thing I wanted to pick up on is the fact that you actually didn't do a lot of the pitching in the early days because you were focused on your athletic career and then you adjusted the business and made it really fit into a lifestyle.

24:58How do people actually do that where they're able to build a business that fits seamlessly into the life that they want to build. Yeah. I mean, it's, it's tough. Um, the, the biggest decision, uh, which you've alluded to is like, when do you go full time on, um, a business that is probably not going to be paying you for a while. So obviously a lot of considerations to make there, um, on the financial side, you know, what's rent or mortgage monthly? What do I have in savings? What's, what do I have three months before I need to start paying myself three years? um you know for me i was able to to run this part-time because we had you know some good distributors uh working with us um who were able to manage the business quite well that kept it to really less than 20 hours a week um my founding partner you know he's fairly involved in the business uh in the early years so we were able to split the load because like during the boundless television period.

25:56I was traveling in and around 100 days a year for shooting for that. We also have the Adventure Science Organization, which we still operate. And that's the nonprofit where we do scientific and endurance based projects in really remote locations. So that would be typically two to three weeks a year of travel. So I was gone a lot. And I think we started to realize that somebody needed to be manning the helm full-time probably in and around 2016 2017 that's that's when we started picking up some larger Canadian retailers that's when you know we started getting outside suggestions from business mentors we picked up some shareholders around that time we took a little bit of investment and you know nobody was forceful in it but uh they would say you know like when you guys think about going full-time we think that a full-time presence on the business would really help accelerate it we actually did dragon's den which is you know the canadian equivalent of shark's tank and one of the questions we got there this was 2016 as well was you know we're not so sure about investing in a business where nobody's working on it full time.

27:17Like until you commit, we don't necessarily want to commit. So, you know, we took all that advice with a grain of salt and continued to run the business as we saw fit then. But it was, it would have been around 2017, Boundless had wound down. We had gone for four years at that point. And I was looking at, you know, what is my future going to hold? Am I going to go all in on Stoked Oats? What do I see the potential as here? Or, you know, do I want to pursue a career in television doing other things? Do I want to, you know, try and grow the nonprofit and put all my effort there? But I chose Stoked Oats, and it's paid off.

28:03I mean, the growth has been quite rapid since 2029, which is really the first year I was almost full time. 2020 was the first year I went full time on it, again, having started selling in 2012. But yeah, it has paid off in spades. And having that full focus on the business, I mean, you see the results. Mm-hmm. Yeah. More investment equals more results. And I think this is something that a lot of consumer packaged goods brands are thinking about just because fundraising is difficult right now and it seems like any category, any shelf, there's new entrants every single year. So it's gotten even more competitive.

28:52um i guess like what advice would you give new business owners who might feel a little bit intimidated about just how the market is right now with respect to new entrance to the game there's no perfect time you just if you want to do it just do it i mean i got into this because i'm a guy who likes to see his ideas through i'm passionate about if i have an idea to do something I just find out a way to do it. And we see if it works. So my advice is just, if you want to do it, do it. It's like buying a house. If you want to make the move, you're not going to necessarily guess market conditions. Things always change.

29:33But if you're a young brand and you're not running high volumes, little fluctuations in the market could be enough to push you out. So you can't predict the future. On the positive side, for example, Loblaws in Canada has just implemented a small business program, making it way more affordable to get on shelf. I mean, to list through these majors now in North America, you have to dole out big dollars, right? So if you want to put a couple of products on shelf, you could be on the hook for tens of thousands of dollars to do that, which is prohibitive for new brands. So the market is always changing, but sometimes when a door closes, a window opens.

30:23That is a brand new program with Loblaws in particular this year. So you can't count that out. Costco has returned to doing roadshows, which is something they used to do years ago, which is a much more achievable way to test product with Costco for smaller brands. You only need a few pallets of product and you shoot around to a handful of warehouses to run these tests. So you're never going to find a perfect time if you wait and wait and wait. And also, So, you know, there's what, pushing 8 billion people on the planet now. Like somebody else has probably had that idea, is having this idea, or will have this idea.

31:05And if you've identified a market need and you think you can address it with a certain customer group, then why would you wait? That's my advice. Just go for it. Well, it sounds like stoked oats is your ultimate endurance because it has lasted over a decade. There has been many challenges. How do you have that mindset in terms of business for staying with this idea, even though there are challenges along the way? I think it's just been ingrained in me over the years that quitting is always the last option. And we've had our back against the wall many times, and we always find a way. There's always a solution.

31:51Sometimes it just takes a little bit of time. an effort to look at problems differently, be they, how do you finance a corp? How do you solve a production issue? How do we reduce our cost of goods? You know, you have to get very creative. You have to be patient to be brick and mortar. As I'd mentioned earlier, like it's a waiting game of sometimes years. So you have to be prepared to go down that path. And if you're not prepared, then you shouldn't be playing. And, you know, as an endurance and ultra endurance athlete, I've just always enjoyed, you know, the longer, longer efforts. I personally enjoy the roller coaster ride because I get to learn about myself.

32:38I, you know, when you, when you hit those, those troughs and you're, you know, you think you can't go forward anymore and, And life's difficult if you just give it enough time. You know, the sun will shine again. And, you know, I always say we never do this alone. We may not recognize that other people are part of the journey or helping us out, but we never do anything alone. There's always somebody helping along the way. Yeah. Well, it's fascinating to hear about your career and also your mindset and looking forward to all the ways that Stoked Oats will grow even more. Thank you so much for being here, Simon.