How This Addictive Cheese Brand Turned Startup Mistakes Into a $20M Empire | Entrepreneurship | How We Profit | E1

22:24And we dove right in and opened a restaurant in Austin. Wow.

22:29Hala Taha:But there had to have been steps before you actually opened up the restaurant. So I really want to dig deep there because I bet you there's a lot of young and profiter's listening out there who have this awesome idea, especially for a product because vegan cheese wasn't really in existence at that point. You were one of the first vegan cheese suppliers, right? So talk to us about how you perfected the cheese. Did you do any research? Did you do any testing? How did you come up with the restaurant idea? Why not go straight to e-commerce? Talk to me about how it all happened. Yeah, luckily I'm very OCD about things.

23:03This is where it pays off. And we still do tests in R &D now. We have someone who's dedicated to that. He's been with us for six years now. It's part of our DNA. It's very important to us. Even for our top selling items, we still have tests going to see if we can improve them even more, even if it's just by a margin. So when we decided to launch Rebel Cheese, we hired a chef. We were still both working full time. And we worked with the chef for a year on, you know, doing our development and testing and coming up with these ideas. And that's when our first cheeses were born. And we also defined our restaurant menu at that time, too.

23:48And then when we opened the restaurant, we hired people on the team to continue that R &D. We also brought in cheese scientists, collaborated with them. We've learned a lot from the dairy industry and dairy experts who've been working in the dairy industry for decades. We truly believed, because we've been vegan for a long time ourselves, that we needed to lean into that dairy expertise, including trying the cheese, giving us feedback on it, because we knew it had been too long for us to really know what good cheese tastes like anymore.

24:25Hala Taha:So you basically started as a restaurant. Yes. So talk to us about the challenges of having a restaurant. I know you no longer have the restaurant in Austin. Talk to us about the challenges in terms of like margin with restaurants and the things that if somebody wants to open up a restaurant they need to consider and why ultimately you had to close your doors? The restaurant was extremely hard. Well, one, we opened it three months before COVID hit. Oh, no. And, you know, when we opened the restaurant, we had no idea how it would do. It was such a unique concept, a vegan wine and cheese shop. Really nothing like it in the world.

25:04So luckily, we started small. It was only 1 ,100 square feet, which was a lifesaver during COVID because we didn't know. And when we opened our doors, we had a line down the street. So we're like, oh, we'll be okay. But then, of course, COVID. The challenge with the restaurant, and it actually set us up for success ultimately, is that the margins are so tight. and then you layer in, you know, vegan concept and that makes it even more challenging because you have a smaller demographic that's going to go to your restaurant. So you have to watch them like a hawk. You have to be careful with every single expense.

25:48From the get-go, I set up tools to watch these things and monitor and I'm so glad I did because had I not done that, I don't think we would have survived the six years that we did.

26:00Hala Taha:So for somebody who wants to open up a restaurant business, like if any of the listeners are interested in doing that, what are the guardrails that they need to put in place? Like what are some of the things that you were realizing that the money was just going away because it was getting spent frivolously in certain areas? Like what do they exactly need to watch? Margins, very, very important. I used a tool called Margin Edge. And one of the reasons that tool works so well was because if the prices went up on any of the ingredients, it would alert you. So you could see any price changes. You could say, this is what my margin needs to be.

26:38Send me an email if that margin changes. Because ingredient costs, especially now, are constantly fluctuating. And they really are a big factor when you're looking at your margins. So you have to watch that closely. Waste what's selling, what's not. And if something's not performing, make the hard decision to remove it from your menu or from your store. Don't keep it because you're attached or it was your grandma's recipe or whatever. If it's not working, cut it because that will eat away at your margins too. So monitoring those things very, very closely. You know, of course, making sure you have your schedules tight for when you're open.

27:25You know, opening hours need to match with customer demands. If there are hours where you're not busy, cut those two. So you have to watch every little expense very closely and act on things that aren't working well immediately.

27:44Hala Taha:So then COVID happened, you pivoted to e-commerce. At what point did you go on Shark Tank? Yes, we went on Shark Tank in 2023 towards the end, right before the holidays. We opened a restaurant in 2019. So it was four years after opening. And we applied during COVID because like everyone, we were trying everything. Yeah. I was applying to every competition there was. I love that. PPP. you name it. I was in survival hustle mode. I didn't think for a second we would get on. I mean, great decision. Thank God you did that. Yeah. And they told us all along, you may not get on, you may not air. Even when they told us we were airing, they said you still may not if there's an emergency.

28:34So we were excited, but holding our breath the entire time until it actually aired, but still trying to prepare for

28:43Hala Taha:this moment too. So you go on Shark Tank and Mark Cuban actually invested like right away, like you didn't even finish your pitch. Yeah. I think he's like actually passionate about, I think, veganism and the topic, right? So talk to us about how much money you made and what happened after the Shark Tank episode aired. Yes, it was his fastest deal ever. Wow. Mark is known for waiting until the end. And he tried the cheese and immediately made us an offer. And we were worried because we were like, were we out there long enough for there to be material for this to air? Because it felt like we were out there for five minutes.

29:24But the producers, they were like, no, it's okay. You were actually out there for 15 minutes. It just felt like five. and you know it's been amazing we are so grateful Mark is incredibly supportive and helpful we asked him to help us with some videos for marketing he said yes he gave us a whole hour of his time anytime I send him an update or an email he responds immediately I don't know how

29:53Hala Taha:well he does it for everyone because even when I email him he'll like answer and like I'll be like, do you want to come on Yap? And he'll be like, soon. Like one word answers. Yeah, sometimes they're a little cryptic. I'm like trying to turn it upside down to decipher what he's trying to tell me. Because it's like one sentence. But he's been fantastic. And he has a team that's also very supportive and helpful. And we're very grateful for this opportunity. That's really cool. So you got$750 ,000. Was that your... So talk to me about how you funded your company. Yeah. Did you use your personal money?

30:28Hala Taha:Was it the first time you had an investor? And Lori also invested as well, right? No? Not in the end? She made us an offer, but then she had a conflict with another company. Got it. And Mark took her shares. Nice. Yes. Mark is our only investor at this point. Amazing. Yes. When we started the restaurant, we worked right up until the day we opened. We actually got a HELOC against our house to open the restaurant. As I mentioned before, my husband has a construction background. He used to be a carpenter. So we were able to build that out pretty efficiently too with just this HELOC. And that's all we've raised until now.

31:07We're doing a capital raise now to continue our growth. But we've built a$20 million company from$750 ,000.

31:15Hala Taha:I love that. I love that. That's so, so inspiring. If you could do it all over again, would you take that$750 ,000 from Mark? $750 ,000. dollars from Mark Cuban, if you could do it all over again, would you do it that way? Absolutely. One of the challenges we face as a vegan brand, there's a lot of hesitation around vegan foods. People have been burned by vegan cheese before. They're always asking, is it actually really good? Is it truly healthy? Is it overly processed? And having the sharks share their delight and excitement over our products has helped us tremendously. Yeah. Convert those customers.

32:01Hala Taha:Yeah. So you guys blew up basically after Shark Tank. Yes. At that point, were you ready for that kind of business to be coming your way? Well, my husband and I, after we aired, we worked five all-nighters in a row. It's not an over-exaggeration. luckily the Navy taught me how to do that although I'm getting a little old for that now but we were determined and we you know really wanted to succeed and we get one chance with these customers you know so it's important that we deliver and we're very strict about our quality standards and everything being perfect so we got in the kitchen we made that cheese we over communicated to our customers, like if there are any delays or anything like that, we just made sure they knew.

32:54And because of all those things, it was a success. Although, you know, very well could have not been because it's a lot of traffic coming your way out of nowhere. Yeah.

33:05Hala Taha:You've really branded yourself as this like gourmet vegan cheese. And one of the things that comes across this interview is you're really into quality and everything's U.S.-based. You're doing everything by hand. You've never really outsourced it. What are like the pros and cons of doing that? Oh, gosh. The pros, you can pivot quickly and you can always be testing and learning. If we outsourced our production, if we wanted to try a new idea, it would take weeks to months to do so. Whereas, you know, we can turn around a new idea in a couple of weeks, like, or even less than that, depending on what it is.

33:48Hala Taha:Yeah. So that's a huge plus. Quality, like you mentioned, is another one. I've heard of companies going to Comans and then having quality issues, especially with cultured products like ours are. It can get complicated fast. You know, our brie only has five ingredients, but it's 20 steps to make. And that's one of the main reasons we want to keep all of that in house. We just don't trust that someone will understand our process like we do. Yeah. Rebel Cheese is a cool name. I mean, that's one of the reasons why I saw the name and I was like, this sounds cool. Like, I want her on Yap. What was up with the name and do you feel like it's helped you?

34:36Hala Taha:That's one part of the question. The second part of the question is, how do you think people find you now? Like, it's been a couple years since the Shark Tank thing. Like, how are people finding out about you? The name was such a process. My husband, he's the executor. I love to analyze. I definitely, if it wasn't for him, I'd probably still be analyzing things now. But she would have never started. And I was like that with the name and the branding. You know, we went through so many iterations of names. and we wanted something sentimental. So we started with pet names and family names and they all just were just weird.

35:13They didn't work. So then we moved on to things that we felt like defined what we were trying to accomplish. And that's where Rebel Cheese came about. And, you know, we've used the same techniques as the dairy industry, like I mentioned. Yeah. So that's why we wanted cheese in the name. And that's why we kept the spelling the same. And many vegan companies will change the spelling, like they'll put a Z in there or something like that. But since we use the techniques, same techniques, we wanted to keep it.

35:43Hala Taha:Oh, that's so smart. That's such a good hack. Yeah. So it's like, don't get fancy with your name where you have no SEO. Right. Exactly. There's that too. And then your second question around keeping customers coming back, we invest a lot in marketing now. We didn't used to. We started that with Shark Tank. We have a pretty substantial email list that we've been building. That's very important to us. We've learned a lot along the way about that. We also advertise on Meta. That can be challenging. You're doing like paid ads. Paid ads, yes. And again, we watch our numbers daily with that because that's another thing like the restaurant that, you know, can become very expensive.

36:30and before you know it, you're not profitable if you're not watching that very closely. So that's another way we reach our customers. Plus, we're big into community. So we love to get involved with our community. We do a lot of events. We're doing a market in California this month. We're partnering with a restaurant in LA to do a wine and cheese night. So we believe, you know, in the world of AI that connecting with your community and customers is more important than ever. So we put a lot of emphasis on that too.

37:07Hala Taha:Are you leveraging podcasts or influencers or doing like a lot for me, like as an influencer, I'm getting a lot of influx, especially for consumer-based products for like UGC and whitelisted ads where basically I'll have a video and I'll promote the brand and then the brand will put paid ads on it. And that's becoming really popular. Are you doing things like that? We just started looking at that. We haven't done a ton of that historically, to be quite honest. But we are trying to diversify, and that is certainly one way to do that. We're testing out a tool called ReFunnel that we discovered through our Shark Tank community, which helps you find influencers and do whitelisting and so on.

37:52But we just started like a month ago. We're also looking into podcasts, too. We really want to diversify. We don't want to be as dependent as we are on paid ads and meta specifically. Yeah.

38:06Hala Taha:Well, the community events are really smart. How do you think about your personal brand when it comes to marketing of Rebel Cheese? Personal brands? Like myself? Yeah, like yourself. That might be the answer in itself. Is that like you're just all about pushing the product brand? Is that right? Interesting. So my husband and I, we want to do more, you know, like be online more organically and do more behind the scenes. Because again, you know, in the world of AI, that authenticity and the story and the people behind the brand is so important. I started a few months ago doing founder emails every week, and those have been really popular.

38:49So, yeah, putting yourselves out there so your customers can see, you know, where their dollar is going, I think is incredibly important.

38:59Hala Taha:Yeah. Okay, let's talk revenue. Let's talk money. Yeah. This is young and profiting after all. And I think everybody wants to understand, like, how to profit off a CPG business. So talk to me about, like, year one, how much did you make? Year two, year three, like, and when did it really, like, start to take off? Yes. So year one, we were like 750K, year two, 1.2. And then it went up like 500K each year after that until we were on Shark Tank in 2024, which is still great because that was all organic growth. And it was mostly the restaurant and during COVID. So it proved the demand. We did launch our e-commerce too, but we didn't do any kind of marketing with that.

39:45Hala Taha:So that e-commerce really took off once Shark Tank hit. Yes. We were in the New York Times before Shark Tank, and we learned a lot from that. We got a huge influx of traffic, but then we didn't do anything with it. Yeah. So all these people came in, and then they went away. And we're like, oh, no, come back. Yeah. So we learned a lot about email and SMS marketing, and we implemented those learnings when we were on Shark Tank. Because the same thing could have happened there if we didn't do more with our marketing. like are paid and email. Yeah. So how about currently, how much are you making a month?

40:20Hala Taha:How many, like, what do you call your units of cheese? Like, how do you class? Cheese wheels. Cheese wheels. How do cheese wheels? Are you selling for a month? It depends on the month. We're very seasonal. The holidays are the busiest time of year, Mother's Day, Christmas, Thanksgiving. We're on track to do 21 million this year. And a big chunk of that will be quarter four and quarter one because of the special occasions people are celebrating with her cheese. And then you asked year over year. So last year we did 15. The year before that we did seven. So we've pretty much doubled year over year the last couple of years.

41:04Hala Taha:What would you say is the reason for doubling? How did you double? Well, sticking to your values like ours, quality, very important. So we have a very high returning customer rate, around 40 to 45%. And that's with investing a lot in marketing, because that obviously drives that down because you're bringing new customers in. um so quality having new product launches so there's a reason you know another reason for them to come back has definitely um helped us grow our sales and then you know the marketing things that i've mentioned um you know that's without a doubt fjorda growth because if people don't know about us obviously they're not going to buy us yeah and even with that i still hear all the time.

41:55I didn't know about you. I wish I did. Even with us reaching millions and millions of people with our meta ads. Now, where are you? Where's your website house? Are you using like Shopify or what are you using? Shopify?

42:08Hala Taha:Yes. Yes. Another Shopify user. I love this was not a sponsored plug, but Shopify is going to be very happy about this. I love that you're using Shopify. That's what you've used from the start. We were using something else called Chargebee. before Shopify, but then we outgrew them and moved over right before Shark Tank. We saw like all the traffic that was coming and we recruited our friend Paul. He used to work at Amazon to help us with our Shopify store. He's been with us a few years now. So he got us ready for Shark Tank. He made sure everything was stable. All the integrations were set up correctly with like ShipStation and, you know, all the other shipping tools.

42:52And he's been helping us ever since.

42:54Hala Taha:Love that. Yap Fam and business communication is part of... What's up, young in-profiters? When you start a business, nobody warns you that you're about to become the creator, the marketer, the finance team, the customer support team, and the person who's chat GBT-ing why checkout is not working. That's exactly why I always say start with Shopify. Shopify has been a real business partner for me as I've grown Yap Academy and launched products like my LinkedIn Secrets Masterclass. It powers millions of businesses worldwide and 10 % of all e-commerce in the US. Whether you're a household name or just getting started, Shopify has got you covered.

43:34Hala Taha:Because let's be real, your business should not require 17 tabs, five logins, and a minor emotional breakdown just to sell a product. Shopify lets you build your store, market your products, manage payments, track analytics, and handle shipping returns and inventory all in one place. Shopify does this all so you don't have to do it alone. Start your business today with the industry's best business partner, Shopify, and start hearing. Sign up for your$1 per month trial today at shopify.com slash profiting. Go to shopify.com slash profiting. That's shopify.com slash profiting.

44:12Hala Taha:Yeah, fam, in business, communication is part of the client experience. Think about it. when you need to buy something or book a service urgently and the first business doesn't answer, do you sit around and wait? Of course not. You call the next business on your list. And that's exactly what your potential clients and customers are doing when you miss their calls. And by the way, your voicemail is not a sales strategy. That's why today's episode is brought to you by Quo, spelled Q-U-O, the business communication system built so you can never miss a call. With Quo, your team can manage calls and texts from one shared business number so every customer conversation lives in one place.

44:48Hala Taha:The full thread, voicemail, transcript, and contact details are all there for you, which means no more, wait, who talked to this client last? There'll be no more confusion. Your team is on the same page. And Quo's AI makes it even easier by logging calls, creating summaries, and flagging next steps automatically so your team can move fast without losing context. Because to your clients, fast, organized communication doesn't just feel convenient. It feels professional. Money's on the line. Always say hello with Quo. Try Quo for free, plus get 20 % off your first six months when you go to Quo.com slash profiting.

45:20Hala Taha:That's Q-U-O.com slash profiting. Quo.com slash profiting. My mind goes, okay, LTV is very important to her. And you mentioned like upsells and new products. So what are the KPIs that you're tracking? Like what are the most important KPIs for you when it comes to what you sell? Absolutely. We're psycho about KPIs. It's everything. We watch our marketing data daily. And we're looking at our customer acquisition costs. We're looking at our conversion rates on our website. We're looking at new versus returning customers, what our lifetime value is, what our average order value. And we're looking at our MER, so our marketing efficiency ratio.

46:10Ooh, I never heard of that. What's that? That one's really important because it encompasses all of your marketing costs. So the challenge with ROAS, if you look at that single-handedly, is you may still be losing money. Your ROAS may look great, but if you're spending a ton on content or these platform fees, you actually may not be doing as well as you think. So MER accounts for our team, our marketing team. It accounts for all the platform costs, basically everything. If we're spending a dollar on marketing, it's being accounted for in that ratio. And we target a MER3 and we adjust our spend based on that.

46:56So if that starts declining, then we reduce our spend.

46:59Hala Taha:If it goes up, then we increase our spend. So walk us through like an actual like example. Like what does good look like for these KPIs? take like maybe like one customer order and like break it down for us, like the cost of the order, how much it costs to get that customer, what you expect that customer to do in a lifetime, like walk us through like what good looks like for a customer lifecycle for you. Yes. One thing I know for sure, lifetime value to your customer acquisition cost is a very important number to be monitoring. Our customer acquisition cost averages$50. And our 30-day lifetime value is 208.

47:41So that's a four-to-one ratio. The industry standard is three to one. So we're above that, which is good. So you want to make sure you're getting a return on your investment. And that's one way to look at that. It is going to be costly to acquire those brand new customers. That's the unfortunate reality. But as long as they're staying with you and you're getting that return from lifetime value, then it's okay to make the upfront investment. The other thing that's really important, you know, when you look at the unit economics, because shipping is so expensive for e-commerce, making sure your AOV is good, you know.

48:23What's AOV? Your average order value. So ours hovers around 107. So that, you know, allows us to absorb those shipping costs, packing costs, fulfilling, and then also that customer acquisition cost. So depending on the time of year, we may actually be profitable with our first order or at a minimum break even, which is, you know, challenging to do.

48:50Hala Taha:It blows my mind that people are going online and buying$100 worth of vegan cheese or$200 in the first month you said. Yeah. What kind of people are these? Like, describe your customer. I know you did before, but like, what need do they have for$200 worth of vegan cheese? So this is where things get really interesting. Dairy is actually addictive. It has an ingredient in there called casein, which is addicting. I know that sounds crazy. So when people are forced to give up cheese because of high cholesterol, or they had a heart attack, or they have a new allergy to it, they still want cheese. and you know that's where we come in and they will do anything for good cheese I've found they will drive 10 hours with a cooler and fill that cooler up they will spend$400 you know for a special occasion on just cheese because they miss it and they crave it and they're yearning those experiences that they used to have around cheese so that's I didn't know this when I started Rebel cheese.

49:59I've kind of learned this over the years. That's really lucky. You got an addictive replacement. Yes.

50:07Hala Taha:So that's really good. So seasonality was something else that was really interesting with your model. And I think a lot of CPG brands have seasonality. How do you like prepare, make the most out of those seasons? I'm sure you're like gearing up for them and trying your best to capitalize on everything. So like, what are the things that you do to prepare for that? We start planning six months, nine months out, depending on what's going on and, you know, our capacity. Quarter four is the most important time of year for us. So it's crucial. We're prepared. It's also important for our customers. They're celebrating with our cheese.

50:46We don't want to ruin those moments because there are special occasions, right? They're getting their family together. They plan in their family dinner around our products. So we need to execute and deliver on those moments. And there's a lot of moving parts, you know, we're dealing with outside shipping partners that may get delayed. And, you know, the last couple of years, the holidays fell right in the middle of the week, which meant we lost a lot of our shipping days during the main holidays. So we had a plan around that. So planning is crucial, having backup plans when things go awry, because they will, they always do, despite all of your best efforts, is really important when you're dealing with a seasonal business because you don't want to lose that revenue.

51:40Quarter four, you know, that's the bulk of our revenue. So we need to make sure we do everything we can to provide, you know, an amazing customer experience.

51:50Hala Taha:Now, I know you mentioned that every month it's kind of, you know, you're doing 20 million, you said, this year. Every month you said it varies. You're making the most money in Q4. I have a couple questions around that. The first is, like, what is a good profit margin every month for you? Like, how much profit are you making every month? Right now we're hovering around 61 % profit margin. Wow. That's really high, right? Like, compared to most businesses, I think my business is like 40%. 60%, that's really, really great. So what do you account that for? Why do you think you have such high profit margins when traditionally this industry has very low profit margins with the shipping?

52:25Hala Taha:What are you doing differently? I honestly believe it's because we do everything ourselves. So we have, you know, full control of the end-to-end process. And when we see something is becoming expensive, we can do something about it. You know, when you don't have control, like we don't have control over the shipping, you know, gas prices are fluctuating now. So that's going up. the solution to that would be let's launch our own shipping. Obviously, that's not going to happen. But, you know, for the things that we can have control over, that's been a huge plus for us. Yeah. Because we can pivot and make adjustments, you know, when we see prices going up.

53:06Yeah.

53:07Hala Taha:So you also mentioned that you're in grocery stores. Which business model do you like better? Like, what's a better business model? Oh, my gosh. E-commerce by far. And, you know, we just launched in Whole Foods. Oh, congrats. Yeah, the California region. Retail is very, very challenging. It goes back to having control again. When the products leave your building, you lose control. And there's so many things that can happen along the way. For example, we just had an order that shipped to the East Coast. It was supposed to take two days and it took two weeks. Oh, no. And then, you know, it's arriving late and they're charging us back for that order.

53:50So they're saying it got here late. We're not going to accept it. And that product goes to waste. And there, you know, we lose thousands of dollars. And there's, you know, so many other things that can go wrong. You know, they leave it sitting outside too long. They don't store it correctly. And then that's your brand reputation when people eat the bad cheese. Exactly. They don't display it, you know, well, or they put it in a bad spot in the store. You know, so you don't have as much control with retail. So the margins are a lot smaller. However, with that said, our customers want to see us in retail.

54:31It's the number two thing search for on our website. They go to a fine near me constantly. They're always looking, when are they going to be near us? They don't want to necessarily get perishables shipped to their door. Got it. So like you don't want to do it.

54:47Hala Taha:It's not better for your margins, but your customers are demanding it. Do you feel like it helps you with your branding and your trust as well? Yes. And here's why. For customers that have never tried us before and they're hesitant, they don't want to spend you know$80 to get free shipping or$20 on a wheel of cheese plus the 20 for shipping you know that's a huge commitment yeah for something that you've never tried before so it is good for them they can go in their local grocery store buy a wheel of cheese give it a try and go okay I like this I'm ready to commit to a larger purchase now that makes a lot of sense That makes a lot of sense.

55:28Hala Taha:This has been such an awesome first interview of how we profit. Like, I feel like we've just covered so much ground. And it's just been so interesting to learn, to be honest. Like, I'm blown away by like everything that you're teaching me because I have a totally different agency and a network and totally different business. So it's so cool to kind of like pull back the curtain. Now, I found out that you're actually a Yap listener. Yes. So I guess like how do you learn as an entrepreneur? How did you find Yap? Like just curious because I think it's really cool. One of the premises of the series is to actually interview other Yap listeners.

56:05Hala Taha:I'm sure you listen to try to grow your business. So how do you learn as an entrepreneur? Oh, I love podcasts. Actually, I'm going to Dallas tomorrow and I'm like so excited because I get to listen to six hours of podcasts. I love that. It's a great way to listen, to listen, to learn on the go because I'm always driving around or cooking or, you know, doing stuff in the kitchen so I can have a podcast going and feel like, you know, I'm being productive at the same time. I also enjoy newsletters. That's how I spend my free time because they're quick. I learn a lot. I can focus on what I'm interested in, which right now I'm reading a lot about that and learning a lot about that.

56:54So yeah, most of my learning comes from those two things. Yeah, I love that.

56:59Hala Taha:Newsletters are really awesome because sometimes you'll find, like, the most expert people are writing a newsletter, right? And they're not necessarily published in, like, newspapers or whatever. They're on Substack. Yeah. Or you're just on their email list and they're sending you, like, really valuable information. So I agree. Newsletters are kind of, like, underrated. Everybody talks about podcasters, but not nearly, not usually newsletters. Okay, so let's talk tech and software. AI, I know that one of the ways that you caught that big shipping mistake, that$400 ,000 shipping mistake, was actually through AI that you built.

57:34Hala Taha:Yes. So talk to us about how you use AI in your business. Like, what are the ways that you use it today? Oh, how much time do we have? Yes. So it all started with that shipping mistake a couple years ago. We had just completed our busy Q4. You know, we were heads down, focused on that and getting, you know, boxes out the door. And we come up for air in January, February. And we're like, why isn't there more money in the bank? We just had this super successful quarter. What's going on? So I started digging around and I realized we'd been overcharged on shipping by a quarter million dollars. And that's not an over-exaggeration.

58:16And I was like, oh, what am I going to do about this? So I turned to AI, I gave it all the data, I had to analyze it, and I was able to get most of that quarter million dollars back because of that. So I was hooked and sold. And I was also worried about the future. So I was like, okay, great. I got this money back. But now what do I do to make sure this doesn't happen again? Because it could very easily. So I turned to Vibe Coding and I created a tool using, you know, Manus and Claude and lovable different AI tools that are out there. And we use it all the time now. So every month what this tool does, we upload our invoice for the week and we upload our contract and it compares them side by side and it spits out any discrepancies that I can then take to a shipping partner.

59:12Saved another$150 ,000 with that. And the overcharges have gone down over time because they know we're watching. So, of course, now I use AI for everything. Yeah. Cash flow analysis. I just did that this past weekend. Yes, we have a finance team, but I wanted to get more granular. I wanted to do what-ifs analysis, and I could use AI for that. I use it. I'm doing a capital raise right now. I use it to manage my investor pipeline, to create the investor deck. I love it. To do research on our investors before we meet with them so we're not going in blind. I encourage my team to use AI and I do trainings with them so that we're all on the same page and getting the most out of it.

1:00:08so yeah obviously you can't you still need a human in the loop you can't have it run your entire business but where it makes sense data analysis you know anything that's repetitious some of the more mundane things that you maybe the team doesn't enjoy or you don't enjoy

1:00:28Hala Taha:is great for that yeah now I know a lot of listeners are probably trying to figure out what tools they actually want to use. For me, I'm constantly flipping between Claude and ChatGPT. I kind of use them for two different things. I've kind of liked ChatGPT more lately, which is just so funny. It seems like these tools will start to suck and then get better. Which tools do you love to use? I personally am a huge fan of Claude. And part of the reason why is because I'm so deep in there now. I've built out all of these projects and skills. And I have all of these connections to, you know, meta ads and all of these different systems.

1:01:10But what I like to do is every now and then I'll compare them side by side. So I'll put the same prompt in chat, Claude, Manus, and, you know, see what they come up with to test their strengths and weaknesses, to see what's changed. Is chat GBT improving in an area I may not be aware of. Yep. So doing the same thing in, you know, all the LLMs, I think is a good thing to do every now and then. Yeah.

1:01:39Hala Taha:So I know you said that you are raising another$20 million. You're not raising 20? How much? Not 20 million. Oh, okay. How much are you raising? We're raising 5 million. You're raising 5 million. Well, why raise so much money if you're 60 % profitable and making money every month? Like, why do you think you need that money? That's a great question. It goes back to shipping. That's one of the big reasons why we want to open our own fulfillment centers on the East and the West Coast. That will cut our shipping costs in half, which is significant, and it will help us mitigate some of the rising shipping costs with fuel going up.

1:02:19We also are heavily focused on innovation this year. We're creating a new cheese with vegan casein. So I mentioned the dairy casein earlier. There are European companies that have created a vegan casein, which is a clean protein, and it's responsible for the stretch and melt in cheese. It's like the missing piece of the puzzle. We've been waiting for it for years. So we're going to be heavily focused on that this year. And we'll be able to create like a gooey camembert and a melty, stretchy mozzarella. So that's why. And we also, we're growing our retail as challenging as it is. In retail, it costs a lot of money to do that.

1:03:07So we want to make sure we can support that growth.

1:03:11Hala Taha:Now, this will be your first investment after Shark Tank. Mm-hmm. That must be such a different feeling because Shark Tank came with like all this promotion and branding and Mark Cuban's stamp of approval, whereas this investment, it's more money, which means more of your company, right? And potentially. And not all the exposure. So like, how are you thinking about it? Was it a big decision to make? Yes. is very important to us that whomever we partner with, we're aligned on values. We really don't want someone coming in and asking us to cut corners or jeopardize our product in any way. So we've been very picky about who we meet with.

1:03:59And there's actually some innovative ways to raise capital. We're doing what's called an SPV and our VIP customers are investing in that. Can you explain what that is? What does that stand for? It's a fund in which customers and angels can invest in. Okay. So it's really cool because, you know, your mission aligned. And, you know, we reached out to our customers to see if there was interest. And hundreds of people responded. Wow. Which blew us away. So we're doing that. And then we met with a syndicate today. So it's like another type of fund where we're going to pitch to sports athletes and see if they're interested in investing.

1:04:49So there are all these creative ways. I didn't know about them until now. To find mission-aligned investors, you don't have to just do the VC path.

1:05:00Hala Taha:Yeah, that's really, really interesting. Have you considered teaming up? I know you mentioned sports folks, but have you considered teaming up with like influencers who are in that like health space or who talk about not eating vegan influencers? It's a good idea, but we haven't. I mean, maybe we should. Yeah, maybe. Maybe we should go look at that. So I know you're big on AI. One of the things that I'm finding with AI is that it's helped me not hire as much. And I find that like I'm more involved in finance now. I'm more involved in certain aspects of the business where in the past I didn't have the capacity to be involved.

1:05:40Hala Taha:But now I'm really able to just like dive into the numbers and like basically have this like support system that helps me if I'm stuck or I don't know the words or what, you know, like how to navigate things. What does your leadership team look like? And do you think AI has helped you kind of keep a small leadership team? Yes, absolutely. And, you know, funnily enough, most of our team, they were our friends. You know, we knew, but they still are. But we knew them before Rebel Cheese. We have multiple couples that work for us. We're a couple too. My husband and I run in Rebel Cheese. I swear it's going to get us in trouble one of these days.

1:06:23We have five couples, a family. Oh, my God. Yes. So it's very, very much as a family office in the literal sense. And it's been fine. It's been that way for years. So we have our sales director, Kyle. You know, he was a friend and still is a friend. I don't know why I keep saying that before, rubble cheese. Yeah, but he was a friend and then you hired him. So friend before work. Okay. Yes. And his husband works for us, too. as our chief technology officer. So he helps us with Shopify, all the integrations, the shipping tools. We have our customer service manager, our marketing creative director.

1:07:08She's been with us since day one. Our procurement manager, she started as our dishwasher when we opened. I love that. And she's now our procurement manager. So she's been with us since day one, so nearly seven years. and her brother works with us and her daughter did at one point. So we like to have families working with us because we know them and friends. We know them and we trust them and their mission aligned too, which is, of course, very important. That must be hard, though.

1:07:41Hala Taha:It must be hard because mixing personal and business, have you ever had to let go a friend? Was somebody ever like not pulling their weight where you had to let them go? Absolutely. And it is challenging and it's something we're always cognizant of. And, you know, we're getting away from, you know, hiring friends. So there's more balance. Yeah, and boundaries. Yes, exactly. And boundaries as we grow. But it hasn't been a huge issue, to be honest. Like normally we're very transparent in our office about everything. So normally when that happens, they understand and, you know, there aren't any huge surprises, even if it is a friend.

1:08:26So they get it.

1:08:28Hala Taha:Okay, so talk to me about how you compensate yourself as a business owner, because I think there's so many different ways to do it. A lot of entrepreneurs, like, don't actually pay themselves for a long time. So in the beginning, how did you pay yourself? At what point did it change? How much do you own of your company? Yeah, talk to me. We didn't pay ourselves for years. Really? And, you know, that was very challenging because even though, you know, we're profitable, we have been reinvesting into the business for years now because we've been growing. So we had to build this factory that costs money.

1:09:04And then we had to add on to the factory. We needed to add some automation and so on and so forth. So for years, we didn't pay ourselves. We just kind of figured it out. luckily when you're working around the clock like we do you don't really spend much money so it wasn't an issue but you do need to pay yourself if you want to do a raise at some point or if you ever plan to have a bank or an investor looking at your books you have to pay yourself really I would think that they wouldn't they'd be happy that you're not paying yourself no why They flag that. So that's a red flag to them because it looks like you're trying to make the company look more profitable than it is if you don't pay yourself, which is, you know, that normally isn't the reason why.

1:09:58Normally, founders aren't paying themselves, you know, because they want to pay their team more benefits or grow or whatever. There's normally a million other reasons, but they frown on that, I learned. So you have to pay yourself no matter what. in my opinion.

1:10:13Hala Taha:You're getting a salary, I'm assuming. Are you also getting distributions? No, not right now. Just salary? Yes. At what point are you like, I'm deserving of distributions, or is it because you have investors? It's like different. How does that work? This year, we're focused on our primary goal is to get options for a team, especially the people that have been with us for a long time. So they're part owners too. So that's our priority before anything else. We want to make sure we're set up for that, you know, before we do the raise. And then the other stuff like distributions, we're going to worry about that later.

1:10:48Hala Taha:Yeah. I'd love to unpack that a bit. I know I'm like getting like so nerdy and so deep, but it's the stuff that you don't get to talk to other entrepreneurs often about, right? So how much percentage of the company do you have versus Mark Cuban versus your husband? So we're majority owners. So we own 90 % and Mark Cuban. Oh, wow. Yeah, 10%. He's the only person on our cap table. Okay, so 90 % and 10%. Yeah. You never gave equity to anybody else yet. No. And how are you going to, like, you mentioned options. So, like, how are you structuring this equity to your employees? We're very excited about this.

1:11:26We've wanted to do this for a while. So they'll get some company shares. So there'll be part owners in the company. And we're going to do that, you know, for the employees that have been with us for a while. And that's a lot of them. So we're really excited to do this. Is there like a certain percentage that you're like, okay, this 10 % is for employees or something like that? We do have a percentage allocated, but it's shifted. So I can't remember exactly what it is. I want to say it's like 5 % for employees or something like that. Okay. Yes. Yes, I don't remember exactly because it does get complicated when you break those shares down and, you know, you're making room for other cap raises because that will shift the whole table.

1:12:12Hala Taha:Yeah. So how much are you going to give away to investors for this$5 million? That's a great question. So we're doing it on a$40 million valuation. So, you know,$5 million. But some of that, this is where it gets complicated again. And some of that's Mark because he's investing again. And there are some other small offices. So it's really that whatever that percentage ends up breaking down to of the$40 million will be their percentage. Man, you did really good. $750 ,000 to kickstart for only 10 % of your business. And that drove you to$20 million. And you still own 90 % of your business. It's incredible.

1:12:54Hala Taha:It makes me feel like I've been giving out my equity willy-nilly. I mean, I own like 90 % of my company still, but I'll be at 85 % because I give it to my early employees. I gave a lot of equity away. But it's interesting. It's really smart because I've had clients who've gotten kicked out of their own companies. Yes, that's terrifying. And also, I have friends that own so little in their companies, even though they work so hard. They need to get some massive exit in order to make any money out of the deal. Yeah. And so like they get caught in this like cycle. So I think you've got to be really careful.

1:13:31You do. I, you know, it's challenging. I go back and forth on this all the time because, you know, we have made sacrifices to get to that point. You know, we had to work. We've had to work seven days a week since we've started. Long hours, multiple roles, because we've been very careful about hiring to keep those costs down and stay profitable. if we had done a raise earlier, you know, we could have made those hires and maybe had, you know, a little bit more freedom. And, you know, so there's trade-offs. You know, maybe we could have hired someone to build our factory instead of us doing it. I go back and forth on this all the time.

1:14:12So I definitely understand the desire to do raises earlier on. I get it. I can see the benefits of doing that, but it does come with some risks.

1:14:24Hala Taha:So you are a co-founder of a$20 million company. I hope that you are buying nice things for yourself. So what's the nicest thing that you've bought so far? Oh, well, I do love to receive stuff in the mail. I'm not going to lie. I tell my husband it's market research so I can see whatever e-com companies are doing. So I'm trying to think. Like, you know, I've been traveling a lot. I do love, there's a company called Petite Ave, and I bought a coat for New York because I'm in New York a lot. Through there, it's sustainable, and, you know, I'm petite, so I knew it would fit well, and it's high quality.

1:15:12So that was like a treat that I got for myself. We're petite twins. Yes.

1:15:18Hala Taha:Love that. Yeah. Okay, last couple of questions is about general entrepreneurship. So what do you feel like is the thing that you love about being an entrepreneur? And what do you hate about being an entrepreneur? Oh, my gosh. I'm a control freak. So I love having full control. I don't think I could ever work for anyone again, to be quite honest. I love creating and building and implementing new, you know, ideas. And that's everything to me. And when you work with someone else, even if they're an innovative company, you can still be restricted on, you know, how much you can do. So I love that part.

1:16:07I love our team, you know, that we get to pick who we work with. and there's great synergy there, you know, because that's important. That's who you spend your days with. And, you know, that I get to work with my husband every day. I wouldn't be able to do this without him. There's no way. So there's that, too. In terms of what I hate, it can be really stressful and hard. I mean, there's definitely been moments, even with all of this success, where I wondered, are we going to make it? And, you know, I haven't been able to sleep. And are we going to get through this? How much longer do we have?

1:16:52I've had many of those moments, and they're hard. Some of the hardest moments I've had in my life. And because we're a value mission-driven company, I was able to come out, you know, on the other side of those moments. If we started this for money, for material reasons only, I don't think I would have, you know, because they were just too hard to navigate for just money.

1:17:20Hala Taha:Now, speaking of rainy days, how much money do you have saved in the bank for a rainy day or how much months runway are you keeping for a rainy day? Yes. So six months is, you know, a rainy day runway, but I'm watching that constantly. And, you know, there's a lot of things that can impact that, like, you know, CapEx, building, you know, our new fulfillment center. If that ends up costing more, you don't know what can happen. Terrorists overnight. So I'm watching our cash flow weekly. It's so important. Six months is really good. I feel like a lot of people have three months. So six months is like going the extra mile.

1:18:01Hala Taha:But to your point, you're really seasonal business. So it's like you kind of don't even know how much money you're going to make until the end of the year. So is that why you save six months? Yeah, seasonal. And then we always have these projects we're doing where we're reinvesting in the business. And even though we plan for those and my husband has a lot of construction experience, there still can be a lot of fluctuation there that can impact the bottom line. So that's the other reason why. And how do you and your husband like divvy up responsibilities? This is really important. If you work with your partner, it's important you have some lanes defined each day in your lanes.

1:18:42That's a hard and fast rule we have. He's not allowed in my lane. I'm not allowed in his lane. So I'm focused on R &D, quality, sales, marketing. Those are my big things. And my husband, Fred, he's focused on operations, production. Those are his strengths. But anything related to execution, he crushes that. And he also does some of the marketing and sales too.

1:19:11Hala Taha:What part of entrepreneurship has surprised you the most? Did you think that you were going to be the co-founder of a$20 million company? Never. I don't know why. I guess I never really sat down and thought about it. I'm very much a heads down kind of person. I just get in there, figure it out. And then occasionally I'll come up for air and be like, oh, wow, I can't believe I'm here. So I've never really thought about it. I've always dreamed of starting my own business and being an entrepreneur ever since I was a little girl. So I knew I would do that, but I didn't think about the specifics, like the size of the business or anything like that.

1:19:55Hala Taha:You know, on this podcast, I often interview like celebrities and influencers and people who created like billion dollar companies and they're super well known and they're really big personalities, which is why they're so well known. They put out books and, you know, but here you are like this extremely successful entrepreneur, so well spoken, was able to kind of like just like distill down all these things for us. We learned so much from you. Thanks. What's your advice to the person out there who's listening, who wants to start a company, who doesn't have a personal brand yet, who doesn't even want to be in front of the camera necessarily, but just has a really good idea, but has not, you know, typically been like the captain of the team or the president of any sort of club, which I feel like a lot of the entrepreneurs that I talk to are like those types.

1:20:45What advice do you have to that person? That's a great question. The things that I'm most proud of came out of nothing. So it came out of nothing and it came from putting myself out there. I'm, you know, I'm an introvert myself. I did not want to go on Shark Tank. I was terrified. You know, I thought I was going to puke. I was so scared. but I did it anyways and I put myself out there and there have been tremendous rewards from that experience so my advice would be put yourself out there just do it even no matter what even if you think it's a bad idea you don't really know if it's a bad idea until you put it out there it could be brilliant it could be the next thing that everyone's looking for and if nothing else you'll learn and then you can pivot from those learnings or build something else.

1:21:42But, you know, unless you put yourself out there, you will never know. So that's my key piece of advice is just take a step, get out there, execute, learn, and, you know, build from those learnings.

1:21:56Hala Taha:Have you ever, I'm sure people are approaching you now and telling you their ideas. How do you decipher from like a good idea, like you had a great idea of putting out vegan cheese when vegan cheese was not a thing. Yeah. How do you decipher between like a great idea and idea that you should shoot in the shed? Well, you know, again, it's like there's so many ways with AI and, you know, e-commerce and all these platforms to get feedback. My advice would be put it out there and see what the response is. One way we test ideas, we'll put a picture of the product that we're dreaming up and we'll have a sign up button and we'll see how many people sign up.

1:22:45If no one signs up, that means there's very little interest. So we're not going to invest our time in developing that product. If we get thousands of signups, we're like, okay, hey, there's something there. We should develop this. So, you know, you could easily create a landing page with AI now to get that feedback. You could throw it up there or a Shopify store. Yeah. And, you know, just do a mock-up and put it out there and see what happens. See if there's a response and if there's traffic. I mean, that's all you really need to know. Yeah. It's like, are you going to get initial traffic before you go invest a whole ton of money

1:23:22Hala Taha:and raise money and do all these things. Like see if you can just do it yourself with the resources that you have before you just go all in. Exactly. I love this. This was such a great conversation. Thank you. What is your last piece of advice for any of the entrepreneurs tuning in who are, you know, thinking about starting a business? What's your last piece of advice that you want to part ways with? I guess do it. Just do it. Just do it. I mean, that's why I started Rebel Cheese. I didn't want to get to, you know, 60, 70, 80, whatever age and look back and have regrets and, you know, wished that I left that job and started that business.

1:24:08Because, you know, to me, that would be the worst thing in the world. So if you're thinking about something or if you think you would have those regrets, you know, when you're older, then that's your cue that you need to get out there and do it. Just, you know, just do it.

1:24:26Hala Taha:How did you prepare for entrepreneurship? Like, did you do it as a side hustle at first? Or did you just like, you know, you had a great job. So were you just able to quit and kind of just use whatever savings you had? We started developing the products before we launched Rebel Cheese. So that was kind of a side hustle. And we were figuring things out. We did a couple pop-ups. So we were able to get some feedback from our customers and see what the response was like. So we kind of started as a side hustle, but we did have very successful careers before this. And we lived way below our means. So that actually gave us the confidence to start this because we, you know, I see this quite a bit.

1:25:11I used to when I worked in corporate, you know, people would max themselves out and would feel like they were stuck in their jobs. Because of their lifestyle. Exactly. So, you know, that's another piece of advice I would give if you can live below your means so you have some flexibility and freedom to start other businesses. It will give you the confidence to take that next step, which was the case with us. You know, when we moved to Austin, we lived above a garage and then we lived in a townhome. And, you know, then our house is really small. So we always lived way, way below our means. So we had this freedom to try things like a business.

1:25:55Hala Taha:And what do you want out of Rebel Cheese? Like, you don't seem like somebody who's doing this for money, right? No, not at all. You don't seem very flashy. I asked you, what do you like to buy? You didn't give me like a real kind of like clothes. And I was expecting like a jet or something, you know. So why are you doing this? Like, what's the outcome? To get, that's a good question. Actually, I was going to say to get our cheese in as many mouths as possible. Yeah. But there's a bigger goal than that. And that is, it goes back to our original values and mission, which is to move the needle on animal welfare, our planet, our health.

1:26:35And we know that it's unrealistic to expect everyone to go vegan overnight. It's not going to happen. But if we could get people to eat our cheese, you know, one meal a week or one meal a month, the collective impact of that on the things I just mentioned is huge. And that's why I do what I do. I love it.

1:26:59Hala Taha:Thanks. Kirsten, this was such an amazing interview. Thank you so much for joining us on Young and Profiting Podcast. Thanks for having me. And that's how Kirsten Maitland and Rebel Cheese profit. it. Every business has a hidden engine. And today we learned that for a CPG premium plant-based food brand, the real leverage is not just making a great product. It's about aligning to a mission that's bigger than money, being efficient with shipping costs and understanding your key KPIs like CAC, LTV, and MER, leveraging technology like AI to catch mistakes that would usually take hundreds of hours or executive hires.

1:27:35Hala Taha:And lastly, taking big swings like pitching your business on Shark Tank, even when you're an introvert. This was an amazing first episode of How We Profit. Until next time, this is your host, Halita.

1:27:51Hala Taha:Hey, App Fam, we're about to launch something that might be my favorite thing we've ever done on the podcast, a brand new series called How We Profit. Now, I've been doing Young and Profiting podcasts for eight years, and my listeners are successful. We are real entrepreneurs with real businesses, and a lot of you guys are crushing it behind the scenes. You may not be super famous, you may not be a billionaire yet, but you've got a business that you've learned how to scale. And we wanna hear from you. One of the best ways to learn as an entrepreneur is from your peers. And I found it super helpful to be in these peer entrepreneurship groups and learn from other entrepreneurs who are at my level, but just in a different industry.

1:28:30Hala Taha:So that's what I wanna bring to this podcast. I want this to be our own peer group, but on the podcast. And so I'm going to be interviewing people who are making anywhere from$500 ,000 to$10 million a year. They're not super famous. They're not the typical billionaires that are on my show. These are real entrepreneurs who are crushing it behind the scenes. And we're going to uncover what they do to sell, how they get their customers, what their profit margin looks like, how they market, and so much more. If this sounds like you and you want to be featured on Young and Profiting Podcast for our How We Profit series, just head to youngandprofiting.com slash apply and share your story.

1:29:05Hala Taha:Let me know why you think you should be featured on the show. Again, that's youngandprofiting.com slash apply. And who knows, maybe you'll be our next guest on Young and Profiting Podcast.