260. Building It Better the Second Time: Scaling a Smarter CPG Brand

0:01Smári Ásmundsson:Welcome to Startup to Scale, a podcast by FoodBevy. I'm your host, Jordan Buckner. Join me as I talk to aspiring entrepreneurs, seasoned industry experts, and everyone in between as we unlock the keys to growing from startup to scale.

0:18Smári Ásmundsson:My guest today is Smári, who is the founder of Norse Code, and it's a really great protein brand, which I'm excited to talk through today. But before this, Samari spent more than a decade building Samari Organics, which is an Icelandic style yogurt brand that reached national distribution in retailers like Whole Foods and more. Then COVID hit and the business unfortunately didn't survive, which we'll hear more about. After more than 10 years of building that company, Samari found himself starting over but not starting from scratch because he was able to learn from all of those mistakes, wins and hard lessons along the way.

0:53Smári Ásmundsson:So I'm excited to talk with him about everything that he's learned and how he's building his business differently. Samari, welcome to the show. Thank you much, Jordan. I'm super excited to be here. Big fan of your show and then what you're doing and excited to dig in. So as we're starting, give a little bit of an overview of what Norse Code is today, the product, to get started. Absolutely. So Norse Code is a plant protein powder. We have two skews today. We have chocolate and vanilla. we are protein powders is a is a crowded space but we have found a spot in the category where nobody is is playing we are going for relief buyers meaning that buyers that have given up for the category are about to give up the category the best analogy is pcs versus apple apple is a premium product that just works and so people that were given up on pcs you know they they don't ask about the price of an apple, they just buy it and they stay as consumers for a very, very long time.

1:51And that's what we have. We have a product that we have our own proprietary technology called Smooth Blunt. So it mixes incredibly easily. We have prebiotic fibers. So we have, you know, gut health is an asset of ours. So this is a functional product that tastes indulgent. The chocolate tastes like, you know, the powdered chocolate from my youth, Nesquik back home in Iceland. So vanilla tastes like happiness, you know, vanilla ice cream.

2:17Smári Ásmundsson:Absolutely love that. So Zmaria, I'm really curious because you moved to the U.S. from Iceland when you were 20 to go to college. You stayed, spent 15 years as an advertising photographer, and then decided to start a food company selling Icelandic style yogurt. Take me back to that decision and what let you into the CPG food world. Absolutely. So I was, you know, I was an advertising photographer. I was living in Boston at the time, doing high-end advertising work. My pictures were in like, whoa, Crawling Stone, magazines like that, Billboards Nationwide. 2008, I moved to Perloma, which is where I'm living now.

2:542009, I became a dad. And I very quickly realized that I'm not even going to know my kid's name if I continue with the same career. I'm traveling two, three, four weeks out of the time. And I want to try to be a decent dad, you know, be a good dad. I was also becoming more and more passionate about food. Chobani was a rocket ship at the time and with a Greek yogurt. And I always thought Icelandic yogurt was even better than Greek yogurt. It's trained differently. So it's creamier, it's lower in sugar, and it's higher in protein. And so I decided to kind of do a 180 with my life and start a food company.

3:29Smári Ásmundsson:So you did because you wanted to spend more time. But as we know, food is also a very challenging business to get into and running it day to day. And so tell me about some of the biggest challenges and also the big successes of bringing an Icelandic yogurt brand to the market. So I think for me personally, I had no experience in manufacturing food and selling food. Like I have a branding and marketing has always been kind of a, call it a hobby and it's becoming more of a, more than a hobby right now. So I talked to everybody that I could. Google was my best friend at the time. You know, you didn't have AI back then.

4:05So it was kind of a different world. But it was just kind of like I had no idea what needed to be done. And so I just made sure every day that I took one step forward and, you know, just kind of got closer and closer to it. I got connected with the right people. Whole Foods Nationwide was our first customer. And so we, you know, grew quite fast in the beginning.

4:26Smári Ásmundsson:That's a really wild journey from doing that, like going from just creating the product to going to Whole Foods. What was that like? Were you ready for it? Did you have stumbling blocks and challenges as you were growing with them? Yes, we were ready for it for sure. But yes, there were all kinds of stumbling blocks and challenges. This is inherently difficult. And any overnight success that you see, there are at least 10 years in the making. And people don't really talk about the challenges. But inherently, this is an incredibly challenging environment to run a business or to create a business.

5:06And then we had every challenge, you know, you could think of for sure.

5:11Smári Ásmundsson:So take me back to me around 2019. You were many years into growing the business. After that point of having nine, 10 years for the business, did you feel like you had a pretty good track record? Like you knew the path to grow, the business was doing well. What was that kind of year like just before COVID happened? 2019, actually, it had become apparent that being organic with the yogurt was our Achilles heel. Martins were incredibly tight. Retailers were dropping organic products to bring conventional product on space. And so we had to face a decision to either launch a conventional yogurt or go into something else.

5:49And we decided to launch a high-protein coffee product that we launched in summer of 2019. And so we decided to get out of the yogurt business, launch a coffee product that was not organic, by the way. So better margins, better price point. We, you know, did really, really well. Second half of 2019. 2020, bring on nationwide distribution, internet brokers. And we're starting to, you know, really scale this up fast. March 2020, COVID hits, you know, sales went down 95%. And so we never recovered from that. And so we actually, you know, bound on the business responsibly in the next, over the next couple of years after that.

6:30So bad, bad timing.

6:31Smári Ásmundsson:Yeah, you know, I hear you because with my energy bar company, T-Square, as I was running, I felt like we were just hitting our stride at the beginning of 2020. We actually pivoted away from retail into food service, selling our energy bars, and primarily to corporate offices. And we were getting accounts where we actually shipping pallets of energy bars to Washington State to Silicon Valley, getting our bars into offices and then COVID hit. Right. And the entire business just went away overnight with no semblance of when people might even be coming back to the office. So I know kind of what I went through going through something similar like at that time.

7:08Smári Ásmundsson:For you, what was that experience like personally having to, you grew the business, you knew there were probably some challenges for the actual product mix, but you're pivoting. And then COVID hits kind of blocking all that momentum. What was that like going through? It was, you know, for sure it was devastating, but it was also there was clarity, like the decline was so massive and there was no question like, can I keep going with this, you know, because of the kind of exterior circumstances. So the only thing to do was, you know, to move forward and then figure out how do I regroup and how do I take everything that I've learned, you know, from this.

7:50Then once we're out of this COVID environment, once we're back to normal, how do I restart was kind of the only option.

7:58Smári Ásmundsson:You know, I think that's I feel it's a good clarity moment, I think, for a lot of companies to realize, like, this is a very unfortunate but natural reset point to decide what's my conviction. Do I continue going? Can I continue going? Or is it a chance to pivot and change into something else? I mean, as detrimental as it was to my business, T-Squares as well, it created the opportunity to start FoodBevvy and what I'm doing now, which I absolutely love. So, you know, from that, that definitely comes rebirth. And you've gone through a similar experience in building Norse Code from the work that you did.

8:31Smári Ásmundsson:So tell me with Norse Code, what did you learn from your kind of first experience in the CPG brand that led you to building Norse Code differently? And what are some of those key decisions or the key ways of running the business that are different from your yogurt brand? Absolutely. So the yogurt, we started working on that in probably fall 2011. We launched in January 2013. We launched nationwide brokers, distributors nationwide. This company, I've been working on this for four years this May. It took two years just to develop the product and took a little bit of time figuring out exactly what the product would be.

9:11And then we launched the product and we're bootstrapped. And it's essentially me. I have a guy who is a certified food scientist. He's in terms of formulation. You know, together we manufacture the product. So we self-manufacture. We control everything. We took two years selling at events like marathons, triathlons, where we'd give people samples. We'd see the reaction as they tried the product. We talked to them about what works, what isn't working, and made changes on our messaging and the product. and just making sure we had solid product market fit. One of the biggest differences are yogurt is refrigerated.

9:47This is ambient, so much, much easier. Yogurt has a 60. The shelf life is made to order. Our shelf life is much, much longer for this. You know, yogurt is in plastic cups, like they're fragile. These are pouches that you can put in any way, easy to ship. You know, it's a much, much higher value. Margins are significantly better for this product than for the yogurt. And so there's a lot of time spending, how do I design this business to maximize the chance of this being, you know, not just surviving, but becoming a significant business. And, you know, it's a crowded category, but we found a spot that we think we can make our own room, so to speak, in there.

10:29Smári Ásmundsson:I mean, I love that because in some ways, right, like this product is almost the complete opposite of the yogurt business, but it's still based in your Icelandic heritage as well. And so it still comes from that same values point, just a different way of manifesting. And I think you're so smart in how you're thinking about designing the business, not just the product itself. Because I found a lot of people get into this space and you're like, oh, Chobani's big. Like, let's bring an Icelandic form of yogurt without understanding how the industry works, the business model and all the decisions that come with it.

11:05Smári Ásmundsson:And what kind of business that means you have to have. Because if you're selling a yogurt, you have to be a high volume, large business across many doors in order to get to a sustainable revenue figure. Versus if you're selling the protein powder, you can make a couple of bags, small scale, sell those online, direct to consumer and get to a point where you can become sustainable relatively quickly because the fixed costs are a lot lower for that business. And so I think that's one thing I always advise anyone getting into space to really take a look at is what's the business model that you're going after?

11:44Smári Ásmundsson:What are your decisions? What impact is it going to have on the business model so that you can design the business that's right for you? Not saying that one's better or worse, but your decisions you make has an impact on the type of business that you're going to run and build. Absolutely. And there's no one right way to do this, right? I mean, you know, there is so many different ways. And I think, you know, one of my fears going into business, so to speak, from the creative fields was like, this is going to be boring, but this is so creative because you are creating something out of nothing. And you are every day you're making a decision like, who are we?

12:21How do we show up for the world? You know, how do we communicate? How do we behave? All of these little decisions kind of compound and make you into something. And if you do it smartly, it makes you into a brand that, you know, people will hopefully, you know, kind of lean towards or lean into.

12:40Smári Ásmundsson:Yeah, I think it really shows up because I read in one of your posts you share, your Amazon repeat purchase rate is around 43%, which is incredibly strong. And, you know, what do you think is driving that level of customer retention? I think it is the best product in the space. And, you know, it took us two years to develop. And me and Matt, we're both very much tie-bane. were never happy. And it's been two years and I was like, dude, we got to get this out of here. And neither of us were sure we had something that was really, really good. We both liked it. So we did a double-blind study with 89 people.

13:13And it was us against Golden Whey, which is the top protein powder on Amazon, and then Orgain, which is the top plant protein on Amazon. And out of every nine people, five preferred Norse code, two preferred Orgain, two preferred Golden Whey. And so we were like, OK, we've got a minute. We've got to put this out there. And so I think it is, number one, it's a product that just works. You don't have to think about it. It's effortless. It's delicious. And it makes you feel good. And so it's kind of easy to continue buying it again.

13:45Smári Ásmundsson:I love that. As you think about expansion and distribution channels, what's your thought in terms of how long you'll continue to focus on D2C as your primary growth driver versus expanding into retail? Because with your yogurts, you're in thousands of shelves. And so how are you thinking about that expansion differently in the blend between direct-to-consumer and retail? So direct-to-consumer is very, very high in marketing, right? And you can pay within five days. Versus retail, you get paid less and you get paid much, much lower. Retail is where you're going to scale. And so as time progresses, D2C will be lesser and lesser as a part of the business because we're going to scale this business really in retail.

14:27We've been bootstrapped up until now. We've just started our first external fundraising round. And so we're starting to go a little bit into retail now. We have other products in the pipeline that we're working on, but retail is just the first, or D2C is just the first step for us because we're building a business that is as capital efficient as possible. And so it becomes a matter of balancing scale with capital efficiency and how we think about retail versus D2C.

14:56Smári Ásmundsson:No, I think that makes a lot of sense. And so as you're doing that, you're starting to scale advertising spend, broader retailers can grow up, you're going to build out a team. What infrastructure are you thinking that you'll need in place before you can make all that come to fruition? I know you're looking to raise money right now. So if anyone listening is interested or knows someone is, definitely reach out to Samari. But what kind of infrastructure are you starting to build to get ready for that scale? So we are designing this company to be super lean. We'll have, you know, there's going to be three of us in the beginning.

15:26And we can scale quite a bit, particularly with the use of AI and outside contractors. There's a lot we can do with not a lot of overhead. We have our own manufacturing facility that is going to, you know, we can fully be there for the next couple of years or so. And then at that point, we can make a decision whether to use co-packers as well or, you know, expand on manufacturing facilities. We're in a good place to scale responsibly. The point is not to scale super fast in the beginning. This point is to scale a little bit slower in the beginning, but accelerate as we get more learnings and we see, okay, this is working.

16:06We can go a little bit faster and faster.

16:08Smári Ásmundsson:I think that's really exciting. I'm kind of curious in terms of how you see the vision and growth. what's your goal for for the company you looking for something that is going to like because i think it does have a lot of potential especially being in this protein space to really take advantage and like grow as large as you can and you know hopefully one day have a larger company maybe buy out buy you out are you looking into kind of growing it into a kind of sustainable profitable business has your outlook changed just in terms of how like what the business can become and how you want to get there?

16:41No, I think the outlook has stayed consistent. You know, we see this becoming a significant player, not just in the U.S. space, but, you know, we'd be interested in expanding outside of the U.S. So we're definitely designing this to become a major player in this space.

16:58Smári Ásmundsson:I think that's really exciting and definitely has the opportunity to do so. So for founders listening today who are in the early stages of building their CPG brand, what are the lessons that you learned the hard way that you would like to share that might save them years of mistakes? You have to go through it yourself for a lot of these, but any key lessons that now you've taken away from your journey so far? I think, you know, a lot of people kind of keep their call it dreams close to their chest because they think people are going to steal them. I don't think anybody's going to do that because it's so hard.

17:32Talk to everybody, tell everybody what you're trying to do, the more you talk about it, the more you kind of punch hold into it yourself and you never know who can be able to help you. So I think that's the, and you'll need to support as well. So increase your network, tell everybody, you know, this is what I'm working on. This is what I'm trying to do.

17:53Smári Ásmundsson:Can you help? What do you think? I love that, Samari. Thanks so much for being on and sharing your journey of building Samari Organics and Norse Code. I think there's so many valuable lessons that Founders has, they are listening to this. And if you are interested or know anyone who's interested in being part of Samari's vision and you want to get on board, feel free to reach out. We'll put info in the show notes to help build the next phase of the company. Samari, thanks for being on. Thanks so much. Really appreciate it. Great to chat.