R&D Radio: Commercialization, Pilot Runs, and Scaling Food Products the Right Way with Jamie Valenti-Jordan

0:02We know founders are craving real, honest feedback on how they can improve their products, and now's your chance to make it happen. No waiting for an email or a callback. No worrying about your feelings getting hurt. Get feedback in real time on the spot. Join us for Sardis CPG's Founders and Formulators event on July 12th from 2-4pm, an afternoon of mingling and structured speed dating with the top food scientists and product developers coming to town for IFT First in Chicago. You'll meet several product developers featured on R &D Radio including Rachel Zemser, Brian Chow, and of course, me, Adam Yee There's no better time to improve your product than the present Head over to our Eventbrite page and snag your spot now Link is in the show notes See you on July 12th

1:08I have to coach a lot of folks around, hey, you can go this route. This other route is going to be more effective if you can't let go of that one element. And for some people, they need to hold on to that element. It resonates with their brand. It ties into their larger marketing strategy. Cool. Great. That is a decision that you make for yourself and for your company. But commercialization, you learn a lot along the way. For example, you may learn that your formulation has a water activity of 0.93 and that trying to bring your water activity down to make it more stable destroys the product characteristics that resonate with your consumer.

1:45Great, then that means we can't necessarily control off of water activity, which means that we need to look at other ways in order to scale our product that make it safe for people to eat. So the higher the number, the closer to one it is, the more likely you are to have growth of not just spoilage organisms, but pathogens, things that can make people sick and possibly kill children and grandparents. So when we say, hey, watch your water activity and watch your pH, we're not screwing around. Hey everyone, this is Adam Yee, food scientist and podcast host of Startup CPG's R &D Radio, where we interview food scientists and product developers and what they do and how they can help you build your CPG business.

2:25Today, I'm interviewing Jamie Valenti Jordan, founder of Cannibal Commercialization, on the top three watchouts when it comes to commercializing and scaling your food product. Jamie has been with Startup CPG since pretty much the beginning, and we get into how he's been helping startup founders over the years in Startup CPG. He's appeared on this podcast before, but now he's in my domain, talking to a technical geek about the common commercialization issues that he's seen in the business. In this episode, we talk about the importance of setting up a pilot run, the hard and green decisions you have to make when you're scaling your brand, and what Jamie sees in the Fowler to succeed.

3:03They're the ones who listen. Enjoy this episode with Jamie Valenti Jordan. I'm sure you'll learn a lot.

3:13Hey, everyone. Welcome back to R &D Radio. I'm here today with the returning guest of the podcast, but first time interviewing for me on this podcast, Jamie Valenti Jordan. How are you today? I'm doing great. Thanks, Adam. Where are you based, Adam, right now? I am actually right outside Milwaukee in a little town called Wauwatosa. It's a suburb. Yeah, it's a great place to be. Awesome. Love it. Yeah, so we're going to try something a little bit different for R &D Radio. And so kind of the structured story, we're going to have this really interesting talk about commercialization. I think, Jamie, let me just hear first the history you've had with Startup CBG.

3:45I know you've been there for a long time. You've informed people on the Slack about some of the issues they have. I'd love to hear kind of the history you have with this organization that I'm newly part of. Absolutely. So I'll go all the way back to the beginning before Startup CPG even existed. So I worked with Daniel many years ago, a group called Hampton Creek. Now it's just Egg. But we worked well together. We both went our separate ways from that organization. And about the same time we realized that COVID was a real thing, that's about when Startup CPG got started was really centered around how do people adapt to the absence of an Expo West?

4:22Because it disappeared overnight. People already had booths set up in Anaheim. And so when that opportunity disappeared, I was already in the airport headed out there with my family. They were going to go to Disney and I was going to do Expo West, as crazy as that sounds. I pulled an audible, canceled my hotel, moved into a Disney hotel because I knew they'd all be empty. And we went to the park and we rode all the rides with my family. And then we had lunch and did them all again because that's how empty Disney was. It was a once-in-a-lifetime thing. But at the same time, Daniel was fielding a lot of different requests from different brands looking for ways in which to help each other.

4:58And there were underground things happening around how to donate food and things like that. But Startup CPG really got founded around helping those founders help other founders. Well, Daniel let me know that this is what he was working on. And I was like, hey, I know that you're dealing with like triage right now, but there are some things that like I can leverage. He's like, hey, you know, I don't really want a whole lot of service providers jumping in and selling things. I'm like, no, I really just want to help. Right. And so that's where the Slack channel got started. I was somewhere in the, I think, sub 100 member range.

5:29It's gone up a little bit since then, but basically just trying to help people with answers. A lot of the time, I found that founders really have plenty of drive to get there, but they lack the information and the industry understanding on how to engage the industry in such a way that they can get the things done that they want to get done. So my goal with commercialization is to help them understand how the industry already has supports in place and just tie them into it to help them to bring their products to market. Love it. And, Jamie, just really quickly, just tell everyone who's new to you what you do.

6:01Oh, sure. So I run an organization called Catapult Commercialization Services, about 80 members spread across the U.S. We have about 40 product developers, half dozen engineers, packaging quality, regulatory. We work with a lot of different commands, about 80 percent of the brands or so that we work with end up in commands. But we also build plants. So I'm building four. I have AutoCAD open on that machine right there. Two different plants that I'm building right now. So really when it comes down to it, it's really how does the food interface with a business model and how do we make all of those sorts of things tie together to scale into something that can be profitable.

6:35Could you give me a roughly a ballpark of how many companies you've kind of helped just throughout your career? Oh, sure. Let's see. Throughout my career, I've worked with over 400 different brands. I've helped to commercialize several thousand products at this point. I've installed over 100 million in capital equipment in various facilities all around the country. and yeah, I like to think that I've made a decent impact on the folks that I'm working with. Very cool. So that means you probably have a lot of common questions that you kind of get asked and say over and over again. I'm sure you have like an FAQ on your website, but I'd love to hear just on a podcast, the common commercialization tips you have, especially with people who are just kind of starting out the business, right?

7:15Because I have my own consulting firm and I've noticed I've been repeating a few things myself, and I'm sure you have done this ad nauseum. So I'd love to hear these common commercialization problems you have, because I think in the food industry, it's pretty hard to go step by step. Like every step is essentially completely different and really hard to get the information to succeed on the next step. Right. And I think that honestly, when we think in a large scale about commercialization, it's not a linear process. Many times what you find out in a later step turns out to be something that you need to then influence something from a previous step.

7:52So what I mean by that is when you're first trying to get your business plan together, what your product is, how long it's going to last, where you're going to sell it, and all of these things, you have to hypothesize or use limited data to validate what it is those assumptions are. As you step through that process of first developing the product, making sure that it resonates with the consumer that you said that it was going to resonate with, and things like that, you'll need to go back and update everything. And I think a lot of times we latch on to one piece of our business model that can't change.

8:25And if it changes, then everything's out the window. And I think that's where I have to coach a lot of folks around, hey, you can go this route. This other route is going to be more effective if you can't let go of that one element. And for some people, they need to hold on to that element. It resonates with their brand. It ties into their larger marketing strategy about working on a number of different things, not just this one particular product they're trying to launch. Cool. Great. That is a decision that you make for yourself and for your company. But commercialization, you learn a lot along the way.

8:58For example, you may learn that your formulation has a water activity of 0.93 and that trying to bring your water activity down to make it more stable destroys the product characteristics that resonate with your consumer. Great. Then that means we can't necessarily control off of water activity, which means that we need to look at other ways in order to scale our product that make it safe for people to eat. And for those that don't know what water activity is, I'll just drop a quick note in here. It is a measure, actually a ratio of fugacities, which I'm not going to tell you anything about, but it is a measure of how much free water is available for the reproduction of bacteria within your products.

9:36So the higher the number, the closer to one it is, the more likely you are to have growth of not just spoilage organisms, but pathogens, things that can make people sick and possibly kill children and grandparents. Most of the time, you're not going to put something out there that's going to kill college students. You're more likely to kill children and grandparents. So when we say, hey, watch your water activity and watch your pH, we're not screwing around, right? Yeah, these are very, very hard-line food safety mechanisms, right? Exactly. Yeah, and it is probably dependent in some work better than others, like a cracker has to be dry.

10:08Right. And pudding has to be wet, right? Yep, yep. So this is a good topic because actually, and very topical. So Caitlin actually asked me to write in the R &D Digest that is launched every month about natural flavors. and it's natural flavors is something I would say like someone who's just getting started in the food industry doesn't really know a lot about and then once you discover it they essentially have a choice to use them and sometimes what I generally have to do is just tell them the benefits of let's say using natural flavors versus not and I always have to say this is your choice on what direction you want this company to go to I'd love to hear your thoughts on specifically that topic but also just that type of decision that you have to make as you grow a food company.

10:50Sure. I'll talk about natural flavors in two lights because I'm seeing a shift right now that people want to get out of things listed as natural flavors on their label. So let me go back in time just a minute and say before artificial flavors, in many cases, we use the word spices and we still can in many cases to obfuscate some of the things that we're putting into our product. So back in the day when it was grandma's recipe for pasta sauce, we could put spices on the label and that would just be understood that that's grandma's family secret. We still can do that, but people want to know what's in their products clearly.

11:26And so we've moved away in a lot of cases from spices to calling out the garlic and the oregano and things like that that grandma used to put in there because that communicates to your consumer what's in there. They feel happier knowing what's in there because they know what they're putting in their body. This is where we've seen the categoric shift in the marketplace and in the consumer set is that the vocal element of our industry has very much come out and said, hey, we want to know everything that's in the product. Cool. So in going through spices, we got into artificial flavors. Nobody likes those.

12:03We understand why the word artificial is toxic. People have gotten to the point of natural flavors wanting to know what's in it. Now, natural flavors are isolated in a certain way to be safe and effective in accomplishing the flavor that they need to. But the flavor companies don't want to divest their IP. They don't want to give you grandma's recipe, right? Yep. It's their grandma's recipe in a sense, right? Exactly. In some cases, they spent millions or hundreds of millions of dollars developing that technology, and they really don't want to give that away, especially for a small brand. So they would like to label it as natural flavor.

12:40We are seeing consumers push back against that as well. In the same way that they want to know what's in spices, they want to know what's in natural flavors. So we have people now pushing for, I want something that I can call a whole ingredient on my label as my flavoring compound. Well, okay, you can use the whole ingredient or you can use an isolate of that, meaning we somehow strip some pieces away to make it more flavorful at a lower concentration so that we can have more structural components, the texture we can control better when we don't use the whole ingredients in there. So what I mean by that is like if you put up a whole bunch of sweet potato in there so it tastes like sweet potato, you may destroy the structure of your cracker because it's just hard to get the moisture back out again.

13:25That doesn't mean you can't have a sweet potato flavored cracker without natural flavor listed, but it does mean you're going to, say, have sweet potato concentrate or something like that. We just pull the extra water out so it's easier to make a cracker out of it. So there's a lot of different moving parts in this, but from my experience right now in the last 12 months, I've seen more and more folks ask for, I don't want natural flavors. How can I just have this be whole component? And in some cases, it's doable. And in some cases, the flavor and the structure that you're looking for are not available without the use of concentrates, extracts, oleoresins, or others.

14:02And sometimes people don't like the way those label. So you just have to keep in mind, like, we are trying our best here from the food science side of things, but we do have to, as a first step, as table stakes, make a safe product. For sure. I always give the example of a cheesecake protein bar because you can't shovel a cheesecake into a protein bar. You have to... Yes. Right. It just doesn't make any... You just can't. If you can, then great. Out-innovated me. But in general, I think it's like it's an example I always give to people who are kind of just starting up is not only that, but also I think introducing them to someone who works in flavors or even spices and kind of having them like show that there's a human component to it and that they're humans working on it, too.

14:45I think that has really helped them if they want to choose to go this natural flavor route, for instance. Absolutely. I think at the end of the day, AI is not generating natural flavors. That's not how we're working right now. We do have people on a bench developing these things. Yeah. You have a funny, you said the word artificial is toxic. And I was thinking, oh, AI is the word artificial. That's funny. We might get into that topic later, but I'd love to hear your thoughts. Do you have any other common commercialization questions that you get? I get a lot of chicken and the egg questions like, how do I do this before knowing this?

15:18Or how do I do that without knowing this? I think it just goes back to knowing that this is an iterative process. You have to, in some cases, guess and then check and validate as you go through the rest of the commercialization process. So what I mean by that is you may think, hey, this is what I think my formulation is going to be on the bench. And when you take this to a pilot scale, which is kind of your first step up from what you're doing on bench, which is our definition for like kitchen level, pilot scale is the furthest we can scale equipment down. So this is the large-scale industry trying to make an attempt to make it easier to scale things up by scaling things down.

15:55So when we move from kitchen and benchtop to pilot scale, that is where we're going to learn how the product's going to change. Now, that's not saying we have to throw the baby out with the bathwater. There's oftentimes to just make a minor tweak or, more often, just the order of ingredients or how we shear them together or what temperature we do that at. in order to build a product that still meets the gold standard of what was developed on the bench. So the bench step can't really be skipped and go straight to pilot. The pilot also is much more expensive because you have more materials in motion.

16:29But we can learn a lot at that level that makes it a lot easier to go from pilot scale to full scale. I think a lot of people right now really, really want to skip that pilot scale. Oh, why is that? Because of the cost. A lot of people want to go straight from bench top to a co-man. and they don't know how their product's going to change as they go to that scale. And they have to learn how to scale at a much higher level. So 10 times the amount of materials are at risk and are in motion and things like that. And in the event that they can't make it into final product, well, they have to throw all of that away.

17:02And so a lot of people are assuming that risk, whether they know it or not, in jumping directly from benchtop to a command at full scale. And they're trying to get by on MOQs, right? Yeah. So what I get asked is, hey, do you know anybody that can do an MOQ of like 500 units? One, you can do that in an afternoon, oftentimes at Benchtop. Yeah, that's true. I tell somebody, they tell you, you can do it. It's like a week in the kitchen if you really wanted to do this, right? Correct. In which case, you should not spend six months trying to spin up a Coman to do 500 units, because that is what you're talking about doing.

17:36There is a substantial amount of investment in time and energy and money to go from Benchtop to full scale. So don't do that lightly. Don't try to skimp by. Don't try to cheat. Learn where you can. So suggestion is have a quick chat with somebody who's scaled things up before. There are a ton of them on our product development database. Go through and pick a few and chat with them about what your product is and what the appropriate way to scale it up is. You want to chat with a few so that you have a good average interpretation of how to do things. I'll give you my shortcut. But if you can figure out what manufacturer makes the equipment that you need to scale up into, meaning you can call maybe even a co-man and ask them what equipment they have to run your product, you can call that equipment manufacturer and often run in their pilot lab for free.

18:25All you need to do is show up with materials, which means you can learn how to do that pilot scale from the people who understand their equipment because they literally built it and know how to walk into a command that has that full-scale equipment and know exactly where to put the settings to make your product the right way the first time. So that's my hack, and you can get them to do that for free if you just call them and tell them, hey, I want to just run my product on your system and understand it. Now, I will say they're not going to do two weeks of trials with you because at the end of the day, their goal is to sell more equipment.

19:00The reason why they have their test slab is so that you will use up all of the available capacity on a co-man's line because you're so successful that the co-man has to come and buy another piece of equipment just like it from them. So that's where their ROI is. They're playing the long game. At the end of the day, you need to understand how all of your players in your entire supply chain play with each other and what their business models are so that you can answer the question of, wait, why would I help you? Because there's a lot of people that are going to ask you, why would I help you if you don't understand how they make their money?

19:35I 100 % agree with that. And I think there's other stakeholders in making a food product, right? Yes. Especially if you get to the, so one is a contract manufacturer, of course. and then I would say a couple of other ones that to consider their business model is like ingredient companies. Like they will give you a sample, like a pound of their ingredient for you to test. And then they're also kind of playing this long game as well. To the manufacturer, that is a really, really good piece of advice. I've done that a couple of times myself. I don't think I've heard of them for free though, but whatever.

20:03Anyways, that's all the point. You got to have me come in and beat up on them for you. I know, right? Yeah, it is a negotiation. Like if there's anything, like all these stakeholders can be negotiated with, but you have to have really good negotiation skills, which is, you know, it's something you have to just learn. Logistics is also a huge one as well when it comes to stakeholders. So all these like core stakeholders when it comes to making your product is not just you and your customer. It is a lot more, especially in the operations end. Yeah, I think one of the things to remember is all of this effort, all of this is kind of one-off learning and things like that.

20:34I like to make the analogy. You're familiar with the stealth bomber, the Blackbird? Go on. Yes. So one of the things that people complain about it is it actually leaks fuel, I believe is the internet meme, until it gets up to speed, right? Okay. That's a lot like a new business. It's not going to look pretty. It's not going to work the way that it's supposed to until it gets up to a certain altitude and velocity where everything just all the seal and it goes ahead and actually starts to work the way that it's supposed to. So that means all this time and energy on doing one-off scheduling of trucks and one-off ordering of ingredients and all these things, they get easier over time because you learn how to use existing systems and automate.

21:17And this is why you don't want to have an ERP day one, because an ERP is built around your business information flow and you have no business information flow. At the end of the day, like, yes, this is a lot of work. This is a lot of one-off things, a lot of learning that takes place in the commercialization of any product. I still learn when I commercialize products. So don't think that this is something you should know everything going into it. You should ask for help. 100%. And so with that, then, I'd love to know your findings on founders or the key psychology for founder success. I do think there is something in that area where there's a balance between ambition versus stubbornness and also the ability to learn.

21:56I'd love to hear your thoughts on what you have found to be kind of the key drivers through all the companies you've helped on successful, whether project managers or founders. So I'll tell you what I tell other consultants around who's successful. Those are the founders that listen. What I tell founders is those that are willing to learn and not just learn from one voice, but from multiple are the ones that are going to be the most successful. And what I mean by learn is not listen to everything that we have to say, but start to build that structure and understanding of the industry as it exists today.

22:31Certainly welcome to ask why and a good partner within the industry should be able to explain just about anything. And then you'll get frustrated with the way things are because we all get frustrated with the way things are because we want things to be different. We want them to be easier. We want them to be simpler. We want the driving forces for why people want to help align with ours. So those that are willing to learn how the industry is and is willing to change it from the inside rather than from standing on a soapbox and yelling into the void and saying this is the way it should be. The ones that are willing to get into the industry and actually make a change from the inside are the ones that are very, very successful.

23:12So when you talk to poppy folks and things like that, they were willing to learn. They knew what they knew and they knew what they did not know. And what they did not know, they were willing to talk to people and get help and find the right people that aligned with their goals and missions and things like that in order to drive that help into their business and help them to scale in such a way that they were successful without having to go back and redo as much of their business plan over and over and over again. Right. Yeah. I think Bobby's a good example. If you look at like the beginning product, what I think was like something kombucha like, if I remember correctly.

23:51And it's totally changed into a different product, but it still retains some of the key components that they found valuable. Right. Right. So they were willing to learn from not just technical professionals and operational professionals, but they were willing to learn from their own buyers and their own customers on what would be successful and what would sell more and make the decision as to whether or not what the people willing to give them money wanted was something that they wanted to do. So that means not just customers, but investors as well. Investors also have obligations and interests, and they want to steer the company in a certain direction because they think they know better.