From Hand Sanitizer to Tomato Sauce - How Sauz Went From 10 Doors to 3,500 in a Year

22:39And we went all in. We kind of looked at each other one day and said, if we're going to do it, we have to do it. And there's no turning back. So that really is the, I mean, that's the brief version of the origin story. But it went from an internship to really dropshipping for our first business. And then a real pain point, which sounds crazy that tomato sauce could ever be a pain point for anybody, but a lack of excitement. You know, when you're sitting in front of a computer screen all day, and I say this often about our consumer, but for us then, sitting in front of a computer screen, getting denied by most that we would email and losing deals and having to really fight to win.

23:18There's something about being able to be excited by your meal and to be able to take a deep breath and to enjoy and have this semi-serotonin boost when you take a bite of hot honey marinara that makes the day a little bit better. And I think when I look at our consumer, for example, at Target, you go to the average shopper in Minneapolis shopping at Target. They've had a long day of work. They're supporting a family. They don't go home and think to themselves, I wish I could bring my family to a Michelin star meal in the West Village for a couple thousand dollars. I think they're more conditioned to consume the way fast casual has been built or in ways that are convenient but still enjoyable and exciting.

24:01We've never bought into the notion that the consumer in Toledo, Ohio is craving a Michelin star meal from a New York restaurant. And so I think what we had felt then, the consumer still feels today, and it's that we're focused on excitement and the experience on the palate and all that we can build to drive a lasting impression for the shopper, right? That's what it all kind of came down to. And that's what drove us to take the leap and start the business. I think the opportunity was one that was almost more emotional than anything.

24:32Hannah Dittman:Yeah, so well said. And wow, so much that just got laid out that I was just so impressive and interesting. First of all, food is definitely joy and dopamine. And it makes sense. Like a lot of people derive so much happiness. And if it's good for you and tastes good and feels good and is accessible and easy, I mean, you're ringing all the bells. It makes a lot of sense. So intuitive. And what enterprising minds. I mean, my gosh, the business sense that you both had at such an early stage in your career is so impressive. And to even understand the ways in which you need to look and analyze a business and the foresight you need to have to understand where things might fall off the wheels and what fundamental business model change would need to be implemented for something to be a viable, successful, long-term enterprise, I think is just really impressive and takes a lot of people learning the hard way or a long time of learning to figure that out.

25:24Hannah Dittman:So going kind of back to the beginning days, were you guys using the capital that you earned from your hand sanitizer sales to then bootstrap and fund the sauce and the sauce journey. That's correct. We actually so what we did was we almost split the net proceeds in half and we began investing in early stage consumer deals. We'd never started, of course, a food business in our lives. We'd never worked at one. We wanted to find a way to look under the hood and one to be able to see what works and what doesn't and kind of get a look behind the curtains at different categories, but also then get to know various founders and be able to learn from them and tap into their networks.

26:03And so we took about half of it and wrote small angel checks into early stage consumer brands. And we were able to build a network that way pretty quickly. And the other half went entirely toward building SAWs. I had sold, I had a Mazda Miata that I loved. I wish I never sold it. And I sold my Miata and Winston sold his Ford F-150 and we went all in. And so we really split the proceeds in half. And I think we were pretty tactical in being able to accelerate the path to building. As you know, CPG is such a small, small world and such a small industry with a lot of great people who are entirely willing to help.

26:38And I think as a result of us tapping into the industry early, you know, far, far pre-launch, it shortened the learning curve a bit. And so that's how we approached it. We went early stage consumer checks that were very small, but that allowed us to have information rights to be able to take a look under the hood. And then full speed on building and commercializing saws.

27:02Hannah Dittman:Gosh, again, just so smart. Your guys' business strategy and the business acumen is so impressive and very clear differentiator. I'm just like blown away with how structured your thinking was and how logical the approach was. And a lot of wisdom actually shown in your early days that I'm sure has helped you avoid a lot of pitfalls and allowed you to get to the traction that you're seeing so early on. What point was it no longer just the two of you in the business? What was the milestone moments from launch to that point forward? Or maybe if it was even pre-launch of when did you think about institutional funding and what was the journey and the milestone rollout of your business from you guys saying, OK, we're angel investing.

27:42Hannah Dittman:We're in our diligence mode. We're going to learn and really just soak up everything that we can. All right, we're ready to press go. Now what? You know, we launched in July of 23 and I graduated in 2022. So we started building the business in 21. We didn't get to market until 2023. And, you know, I think there was a ton of, I mean, from our family and friends and those we told we were starting this tomato sauce brand, I think a question mark about if it would ever come to market. But one, we were hyper obsessed with product and we took a long time to launch and we were definitely delicate with what we were going to introduce as a first impression.

28:21But we also lined up an Air One launch, which was huge. And so we launched the brand in July of 23 at Air One. We didn't know what to expect, but we sat in those stores and demoed and demoed and demoed week after week after week. And we effectively manufactured this data story that was unbelievable by virtue of one, demoing tons. I mean, spending as much time as we could doing so. And then, too, we saw a ton of organic lift and retention. And I mean, even today, our vodka sauce sells almost. I mean, don't quote me on it because I haven't seen the data last week. But if you look at the last six months, we've probably sold 30, 40 percent, maybe twice as much vodka.

29:00Like we've sold a lot more vodka sauce in that store than any other SKU from any other brand. And it began when we were in the store getting to know those who actually shop routinely at Erewhon. And we took that data story and we were able to gain central market and town and country market distribution. And I think the question mark for us was, of course, it works at Air One, a consumer that is not highly price sensitive in our backyard where we can demo. But will it work between the coasts and especially at Central Market was a big question mark. And we launched at Central Market on BOGO. I think Central Market expected us to move like a thousand jars and we moved 5000 in four days.

29:45And so we saw a huge lift at Central Market. And from there, we packaged up all of the data we had, and we pitched Whole Foods, and Whole Foods authorized us for soap pack distribution. And from there, it was kind of off the races. I mean, we really went from 10 Air One stores to 3 ,500 doors in the span of 12 months. So it was wild, wild growth. I mean, we pitched Target in January of that year. So we'd only been launched, call it like four months, five months, really. And we gained chain wide target distribution. And I think what the buyers were really willing to buy into without a ton of data to support it was that we were going to be as incremental as any brand had ever been to that category.

30:29When we pitch the vision just the way we would to venture to buyers, I think they understood and resonated with the fact that we can do things in a fundamentally unique way to drive Gen Z and millennials to store. We're not going to cannibalize existing dollars. We're going to build new dollars. We're going to plan a unique vertical in the category. And in doing so, we're going to build cart value in categories that otherwise wouldn't see overlap with tomato sauce. I guarantee you, if you pull some of the shopper data on our consumer, they're buying more skincare products than what the traditional 50 plus consumer might be.

31:03Or there's overlap that is far unique and also entirely incremental to adjacent sets. And so that I think was, aside from the fact that every time a buyer sampled our product, they generally enjoyed it and felt it was so different. I think the fact that we could bring an entirely new demographic, a far younger consumer that is soon to be the majority of purchasing power in the U.S. to their stores, it was an easy sell at that point.

31:29Hannah Dittman:Huge congrats. I mean, wow. Rollout story of a lifetime. And I can't imagine what behind the scenes was like. And the co-man was probably like, oh, my gosh. In many ways, a nightmare. And that's really when the team began to grow. To answer your question, when we committed to Target, we ran the numbers and said, one, how are we going to make this much product? We have one line. We were cooking in LA and we have no ops team. I was booking our freight. Winston was actually packing pallets and loading them up on trucks. I've done the pallet, Jack. I've done it. Yeah. And I was booking all the freight.

32:03I was communicating with DCs. I was talking to buyers. And we realized really quickly that wasn't sustainable. And so the team grew from there. We hired in ops, which I think is just so critical early. And actually, I didn't mention, we did hire Cameron, who was still with us, is our head of brand, pre-launch. So she joined pre-launch. We were always focused on marketing. Cameron was at Doe for a long time. She really built the socials at Doe, the edible cookie dough company. And I think when she joined Doe, it was like 500 followers. And when she left, it was 100 ,000 or something organic. And she's incredibly talented.

32:37And we also do, oh, that growth story does not happen without the incredible brand that Cameron was able to build and still to this day continues to build. I am not a marketer. I'm not a brand guy. The reason Saws is cool is not because of me. And so Cameron was our first team member to join in October pre-launch. So she joined in October. We didn't launch until July. And then we hired in ops by the turn of that year. So from there, the team grew quickly. I mean, today it's 13.

33:08Hannah Dittman:Incredible. At what point were you guys feeling the need to pivot away from the bootstrap self-funded journey and decide you needed some more serious capital muscle to get in the business? Yeah. You know, we had raised pre-launch, we raised a little bit of cash from a fund called Palm Tree Crew. And Palm Tree Crew is Kygo, the DJ's venture arm. They're incredible awareness partners. And we saw that as highly strategic to be able to launch with a bang, a huge impression, and to drive a ton of virality. I would say when Whole Foods committed and then Target, we knew we needed cash to fund growth.

33:48I mean, it's no secret that my category is not incredibly high margin. It's highly price sensitive. If you go to the tomato sauce category at a Whole Foods tomorrow, you'll probably see a lot of yellow tags. I think the consumer has been trained in the past to buy on yellow tag because there hasn't been many outsized value propositions for the consumer to be willing to part with their hard-earned dollars at full price. And so we knew we would need to fund the business with venture. And so we actually met Coefficient Capital at Expo West that year. So our first real Expo West. And Coefficient loved the category.

34:24They loved the product. And similarly, we really enjoyed the Coefficient team. We thought they were, and they to this day continue to be incredibly thoughtful. They're very talented investors and were able to paint a vision for us as well that we could buy into. And it was that this business can be a huge category player and not only can compete with those who are in the category today, but can be, you know, that brand that is incremental to any store, any account, any food service partnership, any channel we play in. And so, you know, I think it's a two-way street, of course, always when you enter these partnerships with venture, but it's been great.

35:04Really, we did know though, you know, the minute a handful of big kind of blue chip retailers committed, we would need to fund with venture.

35:11Hannah Dittman:For sure. I mean, that is just such a capital intensive move. And I hear you on the margin. It makes a lot of sense. I'm not super familiar with the category, but conceptually, like when I think about the psychology of it, historically, pasta sauce is dinner on a budget. You know, it's like got to feed the whole family in a cheap way. It's not high on people's list of like, oh, I'm craving this. So I'm really willing to spend on it. It's like a functional budget purchase typically. And it's transitioning now into more of a treat mindset. So you've got to grapple with obviously bringing an interesting option, but not being so far and away on a price that you're losing the beginning of the customer journey that's originally getting them there and slowly getting them to change their mindset or psychology of what that purchase really is for them without kind of sticker shocking them too much.

35:59Hannah Dittman:So it's a tight walk to walk. So you've done two institutional funding rounds and then a pretty sizable bootstrap as well. What do you think, you know, reflecting back on your fundraising journey, obviously, you're so well spoken, have a really compelling story and a lot of traction to show and proof points. I'm sure even you're in the best case scenario in a lot of ways of fundraising, but I'm sure there was still challenges. For others listening that are pursuing this or thinking about it in their own businesses, what do you think the biggest challenges of fundraising are? And how did you all overcome them?

36:32Yeah, you know, it's tough. I think There's always, whether it's with the consumer or with an investor, it's always difficult to get somebody to part with their dollars, right? We've learned that for sure. Fundraising just generally is not easy. It's high stress. It's massively time consuming. It's this mixture of data aggregation and while also painting a picture and selling a vision. I think what's likely most difficult is one, like it's not easy to drive best in class velocities, right? And investors are looking for best-in-class velocities. Velocities are the North Star for, in many ways, whether a business is investable.

37:10And so I think that's one note, though it's maybe fundraising adjacent. It's such a critical piece of how simple it will be or how streamlined your fundraising experience might end up. I know a lot of founders that have incredible velocities that have had dozens of term sheets being thrown at them. And I know founders who also have great velocities, but have still had a difficult time raising capital. It's this, you really, there's a balance of a large enough market, a massive TAM, and great data within that TAM to be able to communicate an opportunity that venture can't ignore. I think also in my mind, many founders, it can be difficult for many founders to feel like they're giving up a piece of their own business, which so many are so emotionally attached to.

37:57And I think some advice for young founders for me would be that being non-territorial is your best friend. You have to, of course, do diligence on your venture partner or those who are investing in your business. But Winston and I have always been in the camp that we would love to grow this business in a way that builds value for everybody involved. And I think that particularly as a first time, really am a first time founder, is most important because like I would love to be in this industry for 30 years. And if I could build an incredible outcome for so many, I think it would only give me incredible future opportunity to fundraise either from the same parties or from others.

38:35And so I think the most difficult part is semi-emotional as well in that founders really do feel like they have this love and passion for what they've built. And it can be really difficult to be diluted or to feel like you're giving out outsized rights to somebody who maybe you don't know that well inevitably. And the second piece really is building an incredible data story is not easy. I tell founders often it was almost easier to raise money pre-launch than it is post-launch because you have no data to check you. You can really sell this vision. If you have to raise against your data, it's going to be incredibly difficult.

39:07If your data is a tailwind, it'll be an amazing process.

39:11Hannah Dittman:It's all really helpful and hard won insights for sure. Is there anything looking back now that you have all of this learning and experience that you wish you knew when you first started your company as it relates to funding or capital management specifically? I wish I had more and we'd grown so quickly that I would say I wish I could have focused more on pushing my unit economics to a place that would allow me to not have to capitalize the growth or fund the growth so much. That being said, it's always easy to look back and say, oh, I wish I could have bartered a better contract for my tomatoes in 2023.

39:49Right. Like it's easy for me to say it, but in practice, it probably wouldn't happen. I do think your unit economics are the lifeblood of your business. You will live and die by your margins. And so if I could go back, I would make it even more of a core focus than maybe it was then. I would have likely hired sooner. I think I would have hired in ops a lot sooner than I had. And that to me is kind of a different side to the same coin when it comes to unit economics. having somebody who knows better than you at what they specialize in is an incredible lift for any business. I love, somebody said to me the other day, and this isn't, he didn't mean it literally, but he said, some of the best founders I know make themselves obsolete.

40:32And it stuck with me. I've been thinking about it a few days because like not obsolete in the sense that, you know, the founders off in Saint-Tropez, but more so like, I think building a high trust organization is so important. Each individual leader in their department at my business acts as the CEO of their department, right? And I can learn from those CEOs. I can learn from every individual departmental head at my business. And it's made me such a better operator and such a better founder. And it's helped me better fundraise and do all these things. And so I would say I had a lot of great industry friends and founders who we'd invested in early who helped me learn things that I otherwise would not have been able to quickly.

41:13But I wish I had had the team internally maybe a bit sooner to do so. And I think some hires really do pay for themselves. And that's something that was difficult for me to learn early on, specifically in ops. If you have a great ops system, it's the best advantage you can build in CPG in my mind. If you're living in grocery, is on the ops end.

41:33Hannah Dittman:So true. And especially with food products, because it's a different animal than some other categories for sure. And there's no perfect scorecard. I mean, their business concessions have to be made all the time in the same way that, you know, you don't get in 100 % of your wishlist when you go to a co-man. You're either going to eat it on time, quality or cost. You're going to pick one of the legs of the stool that's going to have to give a little to get some of the other stuff. And that's business too. And hopefully investors who are thoughtful and operationally minded have some knowledge about that enough to find the right companies to work with.

42:06Hannah Dittman:And I feel like that's also kind of just a testament to the investment partners that you choose, the ones that understand all the different ways you're navigating the business and what the reality is like boots on the ground for you. Before we pivot into a case study from Slack, I would love to just ask you, you know, you've had this exciting, incredible journey so far with Saws. The past seems like chapters and chapters book in itself of all of those exciting things and different obstacles and roads you've walked. What does the future have in store for you? What milestones are you working towards with your current investment partners?

42:39Hannah Dittman:What's the real dream for the whole extended team that has been brought on board of where this company is going? I think proven that product works in tomato sauce at scale. And we've really made a dent, though still low ACV. We're about 9 % ACV. And the next competitors, I would say, are 45-50. So we have a ton of upward opportunity in tomato sauce. And I think we've proven thus far that flavored tomato sauce works at scale. Consumers are looking for experience and a way to excite their family or their friends in a category that most know and love. And that is such a huge, huge piece of even the American identity, right?

43:16And of culinary culture here. But also, you know, I think in the future, what is so exciting to me is that we have a product platform that allows us to play far beyond jarred tomato sauce. And though I promise we were just talking about ops, I won't execute on this in the near term. But I think we have permission to do things that nobody else in the category can do in a way that really does appeal to Gen Z and millennials and even a far broader spectrum of shoppers and can live in the daily life or in the pantry. And also, I think we have a means of I see a few verticals of the business today.

43:53One of them, its core is flavor innovation that, again, has been so true to what we stand for and who we are in building excitement and experience. We just launched a basic basil marinara, which is maybe the opposite of what you would expect to be when you consider flavor innovation. But it was an April Fool's joke that went viral. And we figured we could do basic better as well, right? So we've also, I think we have a means of doing the norms in a way that is actually also more incremental and more experiential. And if you try our basic basil, you'll know what I mean. But I think the third to me is that there is a world in my mind where the category needs utility.

44:32Is there a way we can even further a value proposition and communicate even more value through utility? You know, you see fiber trending everywhere. You see protein trending everywhere. And not that I want to capitalize on trends, but I think that your convenience and comprehensive solutions to nutrition gaps are important. And so if I can offer a means for a consumer to fill a nutrition gap by virtue of enjoying a jar of tomato sauce at dinner, I would love to. So those are things we're exploring. I think we have an amazing product platform that allows us to do things nobody else can. We're not restricted to Italian foods.

45:09We're a sauce brand. And more so than just a sauce brand, I think we own the tomato. I always say, like, we own the modern tomato. So anything tomato related, I think you might see us playing. But I really see three verticals. I see more flavor innovation in the future. I see actually a push to do basic better and to do things that consumers already consume highly routinely in a way that elevates the consumption experience through quality and flavor. And with basic basil, it is the most basil blasted marinara you'll ever try. And the third is utility. I think there is a world where, and I believe in today's world and in the future, you will see more utility in food than you ever have, just beginning with fiber and protein.

45:48But who knows where it will land? And so if there are ways that I can offer value there, I'd like to explore it. But for now, it's flavor, it's tomato sauce. And, you know, it's exploring basic basil and things of those sorts.

46:01Hannah Dittman:I cannot wait to try new flavors from you all. And basic basil, that sounds amazing. I am, like I said, a huge fan. And I think flavor innovation is so exciting for existing customers that already love your brand and can't wait to meet new versions of you as you try on your different outfits and the different things that you've got going on. I could sit here and ask you questions all day long myself. You've got a wealth of knowledge and are such an articulate, passionate founder that it's so fun to talk to you. But I would love to give the floor up to the broader audience. As you know, Startup CPG has the largest Slack community in the industry with now over 35 ,000 members.

46:38Hannah Dittman:I'd love to pull a question directly from our channel and have you answer it as a case study for any founders that might have a similar question. Today's question is, how do you decide which advice to take about your business and when to stick with your own gut and approach? I generally look to take advice from those who have done the things I want to do. And I mean that in a way that when I'm thinking about ops, for example, I know who I'm calling. I know somebody who has built the most streamlined ops system you could ever think of. When I think of finance internally in my business, I know somebody comes to mind who is as the strongest financial acumen I've ever met because I've seen them do it.

47:14You can measure tangibly what they've done. And so generally, I would say When I take advice about business, I like to look for those who have done pertaining to the specific advice I'm looking for, have done what I'm looking to do. But I think also, for example, when I look to venture, right, when we're fundraising, I like to put myself in the position of if I was in VC, how would I want to operate? What would I want to do? What stage would I invest? What size checks would I write? And I think taking advice from those people is always interesting, too, right? And so to me, it's really finding those who you admire, those who are in many ways the best at what they do and who have done what you would like to accomplish and take advice there.

47:56Otherwise, you know, often even in fielding advice from those people, you got to trust your gut. Like I do. I like to stick with my own gut often, specifically when it comes to anything SAWS related, because I do feel like I tell founders this all the time. Like no one knows your business the way you do. You're living in it. You're breathing it. you're behind closed doors in the mud when things are great and when things aren't so great. So I think my gut generally will tell me whether to take their advice or to take my own. And so I kind of trust my gut, you know?

48:26Hannah Dittman:Your gut has a founder friend feature. Yeah. So I love that. I think that's kind of how I look at it. But yeah, I loved it. I mean, I think the best people to have around you for advice are those who've done what you'd like to do. So well said. And I think the humility you have as a founder also really comes through. And it's clear that you kind of started out your journey learning from so many different people. This was almost a perfect question for you without realizing it. You know, you started out with your data gathering and your diligence and understanding the world you wanted to live in before you stepped into it.

48:58Hannah Dittman:And it makes sense that you've continued on that intellectual curiosity and willingness to learn and grow and being coachable, but still being determined in what you're looking after, which is kind of the perfect founder profile. Thank you. Troy, this has been the hugest pleasure. Tons of fun chatting with you. For any founders that might want to get in touch or follow along on your journey or any investors that might want to reach out to you, what's the best way for them to get in touch or to follow along? And second part of my question, for anyone that is interested in SAWS in particular, do you have any openings or opportunities with your own company or advice for anyone that might want to get involved?

49:34Yeah, so I will say to follow along, our Instagram is probably best at GetSaws. That's fun. It's exciting. We post things that sometimes I look at and say, what are we doing? But they work, right? So fun content, a lot of team content, and you'll get to know the brand and people very well through Instagram. I think me personally, LinkedIn is always great. I used to be more active on LinkedIn. I'm not as active now, but I'm always checking DMs. And once in a while, I'm not posting personally as much anymore, but I don't think many care as much about what I used to post more before we launched the brand.

50:08And now I'm like, I don't think anyone really cares what I have to say, but I hope they do, Hannah.

50:12Hannah Dittman:We care. We care. You're here. But feel free. Anyone can DM me on LinkedIn. My email is my first name at getsaws.com. You can feel free to email me. It's just Troy at getsaws.com. And then in terms of advice or we're always, the team is growing quickly. We don't have any openings today, but I'm always happy to be introduced or to meet anyone aspiring to break into the industry. And I think one note, like you had mentioned, Hannah, we've been very fortunate. There's been a ton of tailwinds. It's great timing. I think our team is motivated. Winston and I have always had a shared vision for the category, but it's the people around us who have given us the opportunity, right?

50:54And so I am always happy and willing, open emails, open DM, to be a helpful resource any way I can. Two and a half years ago, I was in the same shoes as many of the pre-launch founders that I meet today, right? And so I would just say to anyone looking to build or to join a team, like so much can change in such a short period of time. Like just, it really has been amazing. And I feel fortunate to be highlighted the way you've highlighted me the last hour. So yeah, I'm always an open book and here to support.

51:25Hannah Dittman:Well, thank you so much again, Troy. This has been such a pleasure. Tons of insights, tons of learnings. I think a lot of people will be both inspired and also hopefully taking up some nuggets of wisdom away from your story and the journey that is saw so far. We're all rooting for the next chapter and excited to go out and try more of your products. Thanks again. Thanks, Yana. Well, friends, we've now arrived together at the end of another episode of the Startup CPG podcast, the top globally ranked podcast in CPG. And if you love this podcast, you'll love our Slack community even more. Here at Startup CPG, we're a community of brands and experts, and you should join.

52:03Hannah Dittman:Sign up at StartupCPG.com. You'll then get an invite to our online Slack community of over 35 ,000 all-star CPG members, hear about amazing events near you, and all our special opportunities to get you in front of buyers, investors, brands, and more. It's a free community. So what are you waiting for? I'll catch you on the next episode, and I'll see you on the Slack.