769 Blake Niemann: Founder & CEO of Levels

0:00Kara Goldin:I am unwilling to give up, that I will start over from scratch as many times as it takes to get where I want to be. You just want to make sure you will get knocked down, but just make sure you don't get knocked out. So your only choice should be, go focus on what you can control. Hi everyone and welcome to the Kara Goldin Show. Join me each week for inspiring conversations with some of the world's greatest leaders. We'll talk with founders, entrepreneurs, CEOs, and really some of the most interesting people of our time. Can't wait to get started. Let's go. Let's go. Hi, everyone, and welcome back to The Kara Golden Show.

0:44Kara Goldin:Today, I'm joined by Blake Neiman, who is the founder and CEO of an incredible company called Levels, which is a, or I should It's a company leading natural whey protein, W-H-E-Y protein, that is quite tasty and doing really, really well. So Blake started Levels from his apartment in 2016, bootstrapping it into a national powerhouse brand now sold in the likes of Costco, Walmart, Target, Kroger, and Amazon, as well as his own D2C platform. What makes Levels stand out is its commitment to clean ingredients and transparency and performance. No shortcuts, no hype. So I'm super excited to dive into how Blake has not only founded the company, but built it in scaled levels, a self-funded brand that's made its way into major retailers and the lessons he's learned about leading with quality and staying mission driven and playing the long game.

1:56Kara Goldin:So, Blake, welcome to The Carol Golden Show. Thank you. Appreciate it. Thank you so much. Super excited you're here. So, OK, so let's start with the founding. So like what inspired you to start Levels and what problem were you trying to solve? Sure. It's everyone wants like a romance story for me. Like I couldn't find something for myself. But honestly, I saw an opportunity in the whey protein category to to build a new product. And I think like contextually, like it's good to understand my my upbringing or background is like I grew up as a tech head, like grew up at the dawn of the 486 computers.

2:36dial up. I was a gamer. I was a gamer nerd. I never played any sports. Like I played zero sports, but I was into like fitness and the dawn of the internet really. Um, and, um, and so I was very aware of, of whey protein, but my, my background was always, I was, I built computers in high school and sold them to local businesses. I built websites. So it was always very kind of entrepreneurial and tech focused, but also like hustling something. I was trying to like build products and sell it. So I was very interested in product. And so I, when I got into my, my college background was in supply chain management.

3:11And then when I graduated, I spent time at Lockheed Martin and Hewlett Packard Enterprise in high tech sales, as well as manufacturing. But I was always an entrepreneur at heart. Like I knew I couldn't like follow the corporate path. And so while I was doing that, you know, I was still into fitness and being a nerd. and I saw an opportunity in the whey protein category where basically whey protein has always been the king of the sports nutrition category. It's been the tried and true supplement. And in 2016, when organics and non-GMO were really, really gaining steam in food and beverage because you even saw Costco bringing in those products, I said, I'm pretty sure this is gonna happen in supplements.

3:53And whey was so big, but everything looked the same. And so that was my immediate reaction was on a digital shelf. Like everything was in a black canister and a neon had neon branding and it looked very like ice cream was on it. And it was like very row meathead like, if you will. And and I'm not against the bros or the meatheads, but it just had this pharmaceutical kind of look to it. And so when I assess the category, I was like, hey, I'm going to make this look like food. I'm going to make it look like dairy. That's what it is. It's a dairy product. I'm going to do I have all these things that I did with branding and packaging on on purpose to tell the consumer something because you need to tell the consumer something right away on your packaging.

4:33But I said, I'm going to make this look like dairy going to make it look like food. I'm going to make it affordable or digestible for the American public. It's not going to be overpriced, but it's not going to be cheap. And I'm going to do with minimal ingredients and make it taste well. And that was sort of the business thesis to to launch the brand. And I launched it in 2016. and yeah and launched it digitally first I think I'd advise anybody who has a shelf stable product to start digital first basically take the Silicon Valley approach to building tech products and take it to consumer goods so they call that MVP or minimal viable product digital allows you to do that and so digital allows you to see if there's product market fit before spending money on physical retail.

5:18And it allows you to iterate in the early stages by consumer reviews and seeing like what you're doing right and what you're doing wrong and improve the product before you go even larger. So digital was the name of the game when we started. And we just grew from there. It sounds easier than it was, but I bootstrapped it. I never took venture money or private equity. And I did, I think I started my first purchase order to my contract manufacturers, maybe 10 grand. And now we cut purchase orders that are millions of dollars. And we are now this year, a nine digit multi million dollar brand, all emerging out of an apartment in Jersey City.

5:59It just took a decade to get there.

6:02Kara Goldin:I love it. But you know what? It's I think we've heard this from many, many founders, especially ones that maybe did go the route of taking capital and having to kind of continue to grow and do things that maybe they wouldn't have done. So you can always slow growth down. And I think that you're a great example of that. So the early days, you're in your apartment, you're building out levels. You didn't have experience other than your own personal experience and getting the packaging together, like going to market strategy, all of those things you decided that you were just going to launch a store online and see what would happen how many SKUs did you launch with and how has that changed today I did everything myself in the beginning for the first like couple years I even did the packaging design and that was all the minimal viable product type approach is like let's see if this works first before spending a ton of money in different areas so I was doing all these different things but when we launched We maybe had six SKUs, but three of them were these weird sort of fruit and vegetable flavors.

7:19One of them was like pineapple, apple beet. It was like orange carrot. And then we had our traditionals too, like an unflavored, a chocolate, and a vanilla. But the main thing we found right away through the reviews online was there were some people who loved those weird flavors, but everyone wanted the standards. So like we cut those really quick. We also had this like we thought we were going to be inventive on pack pack, like actual packaging. We did like a almost like a cereal box bag in box type packaging, you know, where cereal box has a bag in it. And we thought, oh, we'll be different.

7:56We'll put in a box and it'll be a bag inside. But people were like, no, we don't really we'd rather have it in a bottle. And there's a traditional format for protein that is widely accepted by consumers. And that's something they didn't, they didn't care. They wanted it that way. But we did find really quick, like what the price point should be, how the flavor should taste. And usually when out of the gate, the American public is generally, like they're generally good people and they'll leave like honest reviews. Like there's always going to be bad reviews, but you'll start to emerge and notice right away.

8:32Like if you actually have product market fit, because the good reviews will outweigh the bad reviews. If you have a good product, the good reviews always outweigh the bad reviews. So we found good critical feedback in those things that changed those, those, those weird things we did in the beginning to, to improve. But we found out also that we had something going. And so we had six to start, then we reverted back to three. And now we have, I don't know, but different pack sizes, 35 SKUs maybe. So, but our focus is in our flagship, our whey protein powder. And we are, for all intents and purposes, a dairy protein company.

9:10So those 30 to 35 SKUs exist strictly in whey protein powders and in different pack sizes and flavors.

9:19Kara Goldin:So you talked about customer feedback. And I always say that the customer feedback, of course, the awful feedback is, you know, it hits you hard, right? But it also keeps founders going, right? When you hear that people, you know, they write to you and they, where have you been all my life? And thank you so much for creating this product. Do you remember one of your first, I call them love letters, right, that you got that really said, okay, you are doing it right, Blake. So I'd love to hear what that was. Yeah. Actually, one that stands out is not even a lot. It's like a negative review about our packaging.

10:03When we made a significant change to our packaging the way it is today, there was this review about it. And I read it and I said, did we interpret what we were doing here wrong? Like, you don't know. It was almost like that Tropicana moment. If Tropicana has this, everyone in the design community knows about Tropicana changing their packaging and what that resulted in. And so we, that was one that stood out, but only review ever got on it. And so, and from there, the product, the company just went up like a rocket ship. So everything you got to take with a grain of salt. But what I really look for, I've read on Amazon, we have something, maybe 18 ,000 reviews right now.

10:39And I've read every single one over 10 years. and the one thing you'll notice is a consistency in proof on a certain flavor like you'll see you'll see just positive comments of the same type over and over again it's clean it's got minimum ingredients i love the richness of the chocolate uh the vanilla is tastes like real vanilla and so it starts to assert your belief in the product and skew that you're doing it right and then you'll run into those those reviews that are like very pointed critical feedback um that you're like yeah you know what this was actually a fair and legitimate critical feedback maybe we should improve here and one such example is when we move to the bottles most protein powders have under the lid is an induction seal and a lot of those seals are paperbacked and the experience always from my my standpoint is the paperback once you tear it off there's like paper around the rim and I just hated it.

11:35And a lot of consumers were like, I wish there was a better seal or it was just more consumer friendly until we moved the seal to it, what we call an easy peel seal now. So the seal comes off completely clean. It doesn't leave any paper remnant. It's the smallest little thing. It's a micro change, but everything you do in a product is consumer perception and experience from the customer service and the office to every little detail. And that's a deposit in your brand. If the experience is good, people are depositing into your brand. And if the experience is bad, they're withdrawing. And so we look at all the time, like, what's the smallest thing we do to just make this experience better?

12:13Because the holistic experience is your product, not just one thing.

12:17Kara Goldin:That's so, so, so true. So I've heard you say that Levels was built on clean, natural ingredients and no artificial sweeteners or fillers. So was there a point when you had to kind of make a decision about maybe the product you knew was going to be better in some way? Maybe there was a non-negotiable that you sort of thought about, whether it was around sweeteners or fillers that you were weighing whether or not it was the right thing to do? Yeah. Yeah, it's a good question. I think back in the, I was always been an ingredient reader. So today, even if a product has all the macros in the right place, say protein, carbs, fat, the T's and C's of the contract with the consumer now is the ingredient statement.

13:06And no one, big brands don't seem to understand that, that that is the terms of the contract. So everything could be right. But if the ingredient says something weird in it, even if it's natural, the consumer will say the deal's off. and one such example is xanthan gum xanthan gum is a natural ingredient it sounds like it's from a different planet um so we made conscious decisions both on actual artificials and things that sounded artificial so no xanthan gum um no gums in general gums in my opinion in whey protein are just a way to thicken it and give it a like a almost an um an art of a non-artificial way of making it feel like you made a smoothie.

13:46So one thing early on, it was like, we're putting no gums in our product, no guar gum, no acacia, no, even if it's natural, we just don't want any gums in our product. And then the real mission statement on formulation was like, how do we do this with natural sweeteners like stevia and monk fruit? But then how do we build this whole formulation with the least amount of ingredients possible to make it taste good and have the efficacy or protein content that most customers want. So that's the main thing we thought about when we're building every flavor is like, how to, so our double chocolate flavor, there's not even natural chocolate, like natural chocolate flavoring.

14:23It's just cocoa powder flavoring the chocolate. So we made that conscious decision where we can, can we just do it with say the powder? Can we just do with cocoa powder? Can we avoid even natural flavoring in here? Is that, is that possible. So that's some of the mantra.

14:40Kara Goldin:I love it. So you came from a supply chain and operations background, not in this industry, but still you knew enough about that side of the business. What has been maybe super helpful by having that experience, but also where did you feel like you were kind of, you had a lot to learn? I probably had a lot to learn in general because my degree was in supply chain, but degrees are only really today feel, to my personal opinion on degrees is, I don't remember a single thing from supply chain class. It's all been experience. So even my time at Lockheed Martin where I was in supply chain, it was a different industry and you're kind of a cog and a giant wheel there.

15:32So I think everything was learned from experience on the ground. And so over 10 years, you, you started to get more refined in your contract manufacturing strategy, you start to get more, I guess, more advanced in the way you approach risk and risk mitigation with your contract manufacturers. I was also very, very fortunate too. I ran the company to about, I think like$3 million in revenue before I left my full-time job. So I was at a full-time job and I built this to a place where I could actually leave my job. So I didn't take financial risk leaving. And the first person I hired was a supply chain manager.

16:17And now that gentleman, Max, is our chief supply chain officer now. And he came from Amazon and Blue Apron. And he was, you know, my first person here who helped me build the company out further in supply chain and operations and took that off my plate so then I could go focus in other areas like marketing or sales and so forth. So there's probably more I learned on the ground getting hurt or learning from my mistakes than there was in any prior job or college that I had.

16:52Kara Goldin:Definitely. So do you remember the first, I'm sure you do, but share the first major retail deal? And obviously you went from a D to C company and expanded out. I mean, that takes a lot of courage because that takes investment. And it's all very exciting when you get that email or the phone call, but then you have to deliver, right? And I know that that is always, you know, a big challenge, especially the first one. But can you share a little bit about what that moment was like and how long into after launching did that come about? Yeah, pretty long. So I waited almost seven years after launch to go into physical retail.

17:37One, because I was pretty happy doing what we were doing digitally. Like we were making good money and we were building out, you know, a sophisticated team. And while I could have gone in physical retail probably a few years earlier, say year five, I just waited longer because I don't know, something instinctually in me said I'm not ready. I think it was finding my right hand person in sales. Like I really needed to find that person that I could trust because they're going to be the most important person for the next phase. So we waited about seven years. And then I brought on my vice president of sales today who came from another large supplement manufacturer.

18:11And I remember our first big deal was with Walmart. Walmart, you know, they're highly competitive with Amazon and they were they're much more forward thinking in looking at Amazon competitive brands than, say, other traditional grocers because they know that's where the playing ground is now for new brands to emerge. And so, you know, having seven years track record and being at that time, we're the number five whey protein brand in the entire category on Amazon. So even artificials and established brands, we were we were the number one insurgent brand. and so that decision was more easy easy easier for them to make than to say other grocers and I remember that it was just we went down there for the category review my my VP of sales was like we're in and I'm like I don't I didn't see anything I didn't I didn't see anything to say we're in like um and then I think it was like Christmas Eve or Thanksgiving Eve I got a call from him he said Walmart Walmart said yes we're going in and we started at 2 ,000 stores and that was a year and a half ago.

19:11And then we became the number one new brand that they brought in through that reset in the whey protein category from dollars per TPD and performance. So we were allocated additional 2 ,200 and something stores. So that put us up that 4 ,000, call it 4 ,000 plus stores with Walmart at about an 85 % ACV. And so that was the major milestone. And then everything, everything from that Walmart win started to cascade from there. You know, if Walmart has you, than other folks want your product to. So that was the most significant win as we moved to physical retail.

19:43Kara Goldin:So would you say that that was one of the bigger inflection points, you know, that first retailer that you experienced? Yeah, definitely. I mean, the size of Walmart and as well as like the weight it carries with other retailers and other folks that are trying to discern, other retailers that are trying to discern And what's the next brand? Probably the most important reflection point. The second most like after digital, it was the first most important point in our company history. So I would say that was probably the catalyst that took this hockey stick growth and then just continued it upwards.

20:25So, yeah, definitely.

20:28Kara Goldin:So when you you talked a little bit about this, you bootstrapped the company and, you know, there's tradeoffs and bootstrapping the company. I'm sure many outside investors have reached out to you, but I'd love your take on kind of the advantages and challenges of growing the way that you have. yeah the advantages is uh definitely control um and control is a lot in the beginning um control and leverage it also allows you to um be thoughtful about your approach and take time um on the way you're going to approach any decision you don't have maybe private equity or venture folks to report to um you're allowed to from a founder standpoint if you're a good founder operator or CEO, um, uh, innovate and, and create the vision that you hope this company, the company sees the, the, so I think there's a lot of that, especially if the company's generating good profit, like you're making money and, um, what's there to worry about.

21:28Um, the, the disadvantages, you probably just can't move as quickly as someone with an arsenal of cash. Um, an arsenal of cash, you know, unlocks a lot of doors, um, quickly. Um, but again, the arsenal cash has its disadvantages. It's someone else's money. And so are you as thoughtful with someone else's money that you are with your own money, right? Usually more thoughtful with your own money than someone else's money. So it's this either strategy has its pros and cons. But if you would ask me if I were to do it again, I would definitely do it to a point where you felt there There was truly product market fit and serious growth coming behind the company before I took on private equity.

22:15Instead of it being like the first year or seed round, I would wait a couple of years to really make sure you've got it going before taking money. That's how I would do it again. Yeah, definitely.

22:25Kara Goldin:Definitely. So you have shared that you've made decisions around reinvestment, obviously, to grow the brand. How do you make those decisions? Because I know that that's always, especially when you're going into retailers, whether it's slotting fees or marketing dollars versus adding staff. I mean, there's always this decision on I've got to invest somewhere in order to grow the company. How do you make those kind of calls? Yeah. Yeah, I mean, it can hamstring you a little bit, especially when it's your own money. So you don't have the sort of the, I guess, the mental state to be more free. You feel like everything's at risk all the time.

23:14but definitely the investment I would say our approach is we have to invest where we need to win and so if you're launching you finally get that that win at Walmart is don't just walk in and and set it and forget it you'd be better be ready to invest in either off shelves or PDQs or rollbacks or I bought a coupons and so where you really need to drive velocity and new trial and invest in a retailer that could change and make or break the rest of the retailers, that's where I would focus. And that's what we did is like, OK, since we're on Walmart now, we really need to invest here. And then we take that same approach at every large retailer that comes after.

23:56Kara Goldin:So interesting. So what's been some of the more surprising lessons you've learned as a founder starting your own brand? And it's been, you know, 10 years and you, you know, it's it's not like you're a brand new founder, I guess, at this point. But you've learned a lot over the last 10 years. What would you say is probably the the most surprising thing that you've learned either about being a founder or the industry or about yourself? I don't know. I mean, maybe I guess there's no surprises anymore after a decade. You're like nothing. Nothing surprises me at this point. I would say how advanced and complex the physical retail industry is, not from a logistics standpoint is, but the amount of, I guess, lead time and data driven type decision making that goes into bringing brands into retailers, how retailers think about product, their performance, not just on like units per store per week, but dollars per TPD.

24:59looking at performance and metrics that are, you know, different from what you typically see most folks talking about on say on LinkedIn and so forth. So I think the nuances and complexity of large retailers to make decisions to bring you in and continue with you is probably the, maybe not the most surprising, but the most, the one area that I learned the most in and was, I think my understanding prior to going physical retail wasn't as deep and complex as it actually is. And for those, how amazing those retailers are from an operating standpoint, like they to do what they do, Walmart, Costco, etc.

25:44Target like is not is not an easy feat to bring product to consumers. And so you you gain a new respect from for great operators that are retailers. Yeah, definitely.