This week, Teja talks with Eran Mizrahi, CEO and Co-founder of ingredient brothers, for our Founder to Founder series. They discuss the need to be hungry and communicative if you want to be an effective leader, the importance of hiring the best if you want the best, and how many parallels there are between sourcing great talent and sourcing some of the world’s finest ingredients.
(THE FRONTIER THEME PLAYS)
Yo, what’s up y’all? We have a cool conversation today with Eran Mizrahi, CEO, co-founder of a company called Ingredient Brothers. His company basically helps other companies find, locate, identify, vet good ingredient suppliers. So an example is, you know, sourcing the right coconut milk, noodles, things like that. We get into a cool conversation about sort of how he got into the food and bev industry, where he came from, how he and his co-founder started the business challenges in scaling the business, and he asked me some good questions, too. Really enjoyable podcast. This one was an hour and a half, and I think you guys will dig it. Would’ve kept going, but had to jump off for a customer call. So yeah, let me know what you guys think, and [I] feel privileged to keep giving you guys these shows. Alright, see ya. (THE FRONTIER THEME ENDS)
So, dude, I’m really excited about this. I feel like you guys have an awesome business, and I love the branding and kind of marketing vibe of the site.
I appreciate that. Yeah, I mean, I think, you know, we’re trying to do something a little different in the B2B space and be a little quirky, so I appreciate that it resonated a little bit on the research you did.
Totally. And so, you know, you guys know Chris Johnson on our team.
Yeah. We know Chris Johnson on your team. Yeah, yeah.
Awesome. That’s cool. He got me excited about this meeting, so I’m excited to learn more. It’s, you know, like, so we usually talk to like, companies that have, you know, some sort of software, technical type of solution, and like, I’m not a software engineer, so sometimes like, it’s a little bit hard for me to like, comprehend, but I was just talking to Chris, I’m like, “I’m excited about this, ‘cause I totally understand exactly what the company does.”
I started as a, my first job was a product manager, and then very quickly realized that [I’m] not a software person, and I’m like, software adjacent. And so, you know, I can appreciate that. But yeah, so excited to dig in and talk a little bit more on supply chain and product stuff.
So I feel like a good place to start is like, just about you. Tell us about like, your background, where you grew up, if you’ve always been interested in entrepreneurship, that sort of thing.
Yeah, awesome. So, you know, I’m Eran, founded Ingredient Brothers about two years ago. Originally from South Africa, so, grew up in South Africa, came here for grad school. I’d say entrepreneurship is in my DNA, to some extent. I’ve always been someone to try and sell something. (Teja: <Laugh>.) I lost it a little bit when I studied accounting and then went to work at Deloitte. (Teja: Mmm <affirmative>.) But I think, you know, as early as I can remember, I was like, selling coloring books to people at school when I was in second grade, and then was doing some catering at some point and organizing parties, and so it always had that flare. And, you know, I’d say also, my dad came from Israel to South Africa and started an import business there. And so, you know, had been exposed to it my whole life.
And so when I came here and really got bit by the bug of the ecosystem, which is, you know, really special in the U.S., this passion for innovation, passion for moving things forward, this desire to invest in things that will likely fail, but still that willingness to do it is really amazing. And it just allows people to, you know, explore things. And so I’ve got to do that, first within a startup, and then, you know, now doing it for myself. And so that’s, you know, it’s been a lot of fun. I, you know, my background, how I got into the food space here was I joined a startup called Plated.com, which was a meal kit company that was acquired by Albertsons. And, you know, that was where I first got to see some of the inefficiencies in let’s say B2B procurement, and then moved over to a company called Nuts.com, which is a very different company. It’s a family business, been around for a very long time, very successful, and I was there as the COO and also, again, as organizers and, you know, that company has a really well-developed supply chain, there was still a lot of opportunity, and so I kept seeing these, you know, sparks of opportunity within the B2B space that got me excited to start Ingredient Brothers with actually a former employee of mine at Nuts.com.
And so you got your MBA at Columbia, right? (Eran: Yeah.) And did you do undergrad in the U.S., or did you do that in South Africa?
No, no. So I did undergrad like, the University of Johannesburg, which no one on this podcast will ever heard of, but it was a great experience, but then came here and was very fortunate to get into Columbia and do my MBA there.
Ok, cool. No, we have a couple South Africans on the platform. This goes out to like, I dunno, 30 or 40 thousand people, so I’m confident there’s gonna be someone…
That someone will know. Okay, good <laugh>.
<Laugh>. Yeah. Okay. So you moved to the U.S., did you know that you, when you moved to the U.S., I guess, to attend school, did you think you were gonna do something in the food space or in entrepreneurship? Like, how did that interest come about?
It’s funny, ’cause I always tell the story, you know, I arrived at Columbia pretty naive about how, let’s say the “bigger world” worked and had studied a lot of finance. You know, was at Deloitte, did CFA, was in love with Warren Buffet, thought I was coming to Columbia to like, the head of, you know, finance, and that they were gonna welcome me in with open arms. And then it was a conversation I had just before school started, and it was with the recruiting people, and they said, “Well, if you wanna be in finance, you’ve got six weeks to decide, you know, ’cause on campus recruiting starts.” And I was like, “Well, what is that…I thought that we have…I thought I was here to figure that out and then decide what I wanted to do.” And so, you know, I had like, a misconception of what reality was.
And so, what what that did was, very quickly forced me to make a decision and say, you know, “Either I’m gonna, you know, jump into something that I have no idea if I actually wanna do,” or I’m just gonna say, “You know, no, I’m not gonna go that down that route and just, you know, trust my instinct and try and do something a little bit unconventional.” And so that’s what I did, and that, you know, almost allowed me to then explore through business school startups and, you know, get back into that rhythm of like, wanting to try and do something eventually.
Yeah, that makes a lot of sense. I mean, the finance world has a lot of like, cache and you know, it’s…yeah, that’s interesting. So I mean, Warren Buffet didn’t go to Columbia, right? Just like, Ben Graham. (Eran: Correct, yeah.) Yeah.
I mean, I was very, like, my selection criteria was not very thorough. (Teja: <Laugh>.) You know, I don’t know. I was, you know, I didn’t really know anyone who had done an MBA in the U.S., and I was just enjoying further learning, and I didn’t even realize how much learning there is at an MBA, right? It was a lot less academic and more social than I had expected, but, you know, still got out of it a tremendous amount. But again, like, yeah, came to Columbia for the finance side, but really left with a great, you know, I would say, some understanding of the New York startup ecosystem, which allowed me to, you know, be where I am today.
So you were at Plated and at Nuts.com, did you, like, how did you develop the interest in sort of maybe the sort of food, I mean, what’s the correct industrial categorization of this industry? It’s like, food and bev technology?
Yeah, food and bev. Whenever there’s those dropdowns, they don’t have what I’m looking for, (Teja: <Laugh>. Yeah.) so, you know, maybe there isn’t, but I would say, you know, develop it. Probably from an early age, I’d always loved food and so that was, and cooking you know, not just the consumption of it, and so had gone to culinary school. I’d dropped out of college after my first year, gone to culinary school thinking maybe I’d be a chef and maybe, you know, finance or you know, that that wasn’t for me. And what I realized was I wasn’t as good at cooking as I thought I could be, and I thought I could add a lot more value on the finance side. And so always had that hankering for being in the food space. But then really when I came here and just realized how big the market is, I mean, it’s just, every day it surprises me how incredible the food industry is in the U.S., and how much opportunity there was that, you know, coming out of B-school it was, you know, timing was also good.
There were a lot of meal kit companies that were raising a lot of money and needed people. And so you know, I was able to get in and almost get an education for free into the food supply chain, right? So, you know, very lucky from that perspective, you know, basically able to use, you know, someone else’s startup to learn and build, process and build, you know, an understanding of how things worked, yeah.
So you went through Plated, sold that, and then went to Nuts.com.
Well, I didn’t sell that, but…
Yeah, they sold it. You participated. Yeah, yeah.
They sold it. Yeah, I was, yeah, from the sidelines, yeah. Yeah, that was…
Yeah. You said, “That’s awesome,” <laugh>. Yeah. (Eran: “Good,” yeah <laugh>.) Cool. Where did you meet your co-founder? At what company?
At Nuts.com. So Nuts.com. Yeah, so I joined Nuts, you know, 2017 and, you know, came into what was a pretty lean team, and we were trying to figure out how to scale, you know, both the team and try, you know, start to really think about how do you, you know, protect yourself against like, the big behemoths that are coming after you every day, and so we started to hire and really build out a lot of the team. And so, you know, Aalap, who’s my co-founder, was one of the, I think it was like, the second employee that I had hired within very quick succession there. So he came and worked with me there and like, on sourcing some of our biggest products, and so we got to know each other really well. And he actually left you know, two weeks before the pandemic started, he went to go run operations for confectionary brands. And so we were both you know, going through the, you know, decision making of what was happening in New York, New Jersey, through the pandemic together in parallel, different places. And then at the end, you know, not the end, but in 2021, decided, you know, it would be a good idea to join forces and start something together.
Yeah, that makes sense. So you lived in New York during the pandemic? How was that?
Well, I, yeah, I was based in New Jersey, and (Teja: Gotcha.) I would say that it was, you know, being in a warehouse with 200 people, having to make a, you know, and obviously it wasn’t just me, it was the whole leadership team together, because at that time, every day, information was coming in, and I just remember moments where it was like, “No masks, you know. We’re not wearing masks today,” and then tomorrow the announcement, like, “Everyone needs to be wearing masks, and we can’t get masks.” And it was, you know, I think having to make decisions as the country makes decisions was incredibly tough. And then you’re also at this really interesting juncture, where you have people, customers relying on you, who’ve relied on you, and also new customers who, you know, if you can help them during this time, you can build a lot of loyalty, and then that, you know, you need to keep your people safe, and how do you do that responsibly? Right? So, you know, it was, you know, not conflict, but there was, you know, just a lot. It was super tense and super scary, but, you know, I think as a company, I’m very proud of what we were able to achieve and the scale we were able to do, and how we were able to keep people safe was, you know, I’d say you know, life-changing experience for me, you know, coming out of 2020.
You guys started Ingredient Brothers, basically as the pandemic was like, in full swing. Is that right?
Yeah, I mean, May, 2021, June, 2021. Yeah. We decided to do it. In hindsight, you know, maybe timing was a little weird, ’cause, you know, every port, you know, it had like, crazy congestion, and people had stuff on the water. But, you know, relative to 2020, I think with, you know, relative to 2020, it was you, you know, I think I was like, “Well, how much worse?” You know, that was really, you know, relative to that. You know, I think it was, felt like a no-brainer, but then in hindsight, when you look at it, you’re like, “Oh, well maybe not the smartest idea.”
No, I mean, I remember like, March through, I think August, basically, we just thought, “Okay, like, we’re all dead soon anyway, so fine.” (Eran: Yeah.) “You know, let’s try to do what we can,” and then I think things quickly turned like, Q4 of 2020, to like, this insane growth, it seems. (Eran: Yeah.) Like, that’s my memory of it, but I can’t believe that’s like, three years ago now. So…<laugh>.
I also can’t believe that. It does feel like yesterday, right? So, (Teja: Yeah <laugh>.) it really does feel like yesterday.
Okay. So you guys started Ingredient Brothers, and like, you know, walk us through kinda like, what the “a-ha” moment was. Like, how you guys sort of thought about the opportunity, why you guys started the business.
Yeah, I mean, again, I [have a] strong finance background, like, always looking for inefficient markets. Like, that’s like, my number one thing is like, where is there less information available? And so that, you know, in the retail world, there is so much information available that, to be competitive, you have to really differentiate, or it’s a race to the bottom. And so you know, I think in the B2B space, I always say to people, the example I give is like, buying a one pound bag of almonds. If I give you an hour, you’ll come back with like, a hundred different options, and flavors, and delivery times, and all these different attributes. And then I go and say, “Go and buy 40,000 pounds of almonds,” will probably take you a week, and you won’t have the right answer. And I think that, you know, I saw that firsthand throughout my time.
And then you also, you know, again, like, there’s just not enough time in a day for buyers and sourcing people to go deep into certain commodities. And so there’s just information that’s left on the table and there’s, you know, because of that, there’s margin available, and you also have a lot of, I’d say, incumbents who are, you know, have been at this for a long time, have got great businesses and, you know, the desire to innovate as much, you know, in terms of tech technology and some other things. I think I felt like we could maybe, you know, we don’t have to reinvent the wheel, but let’s just do things just a little bit, you know, better or just try and do things well, right, regardless of what everyone else around us is doing. And, you know, maybe we could build a business, but I mean you know, I didn’t, you know, I was telling someone today, you know, I think when we started I told Aalap like, “It’s gonna be the two of us in a room for many years, before we can afford to hire anyone.”
And you know, thankfully, now, we’re a team of almost 20. (Teja: Wow.) So things went a little different to what I had expected when we built it. So I don’t think there was like, an “a-ha” moment. It was just like, “Let’s go try and sell some coconuts, and maybe it’ll work out.”
<Laugh>. And I mean, in prior roles, I think you sort of took like, a front row seat to building a company. Was it a pretty easy transition to sort of being the final decider in your own?
Yeah, I think, I mean, I think certain aspects of it have been easy, because I’ve have so much, you know, I have a lot more experience, and it’s a traditional, you know, people starting out that are a lot younger, who haven’t gone and been in the industry for as long as I have. So I think some of those aspects that, you know, I got to learn through other experiences, in terms of leadership and decision making and maybe some organization. But again, you know, when you start a business, I’m sure you know right? There’s no checklist, (Teja: Mm-hmm <affirmative>.) and so, you know, you start day one, and you look at your calendar, and it’s empty and you’re like, okay, well I mean, you know, you like Google like, “what do you do when you start a business?” ’cause like, how are you supposed to like, you know, how do you get the ball rolling and like, start to build that momentum? I think that doesn’t exist anywhere, and I think it’s, you know, that’s what, you know, that was, you know, that was fun, you know, it was really fun to start to try and figure out what to do, but I guess, you know, so that wasn’t there. I didn’t know what to do at the beginning, but yeah, once we started to get the ball ready, I think, you know, my experience has helped a lot in helping us scale.
Mm. Can you remember like, the first time that you were like, “Ah. Like, this is what I should be doing as like, the co-founder and CEO?” Like, do you remember that moment?
I mean, there’s been a lot of those moments, but I think that the first real deal we got was amazing. It was like, euphoric, ’cause we got it from a, I’d say, a much bigger company than we expected. It was also like, you know, peak pandemic freight rates, and we were super competitive, you know, everywhere, but we were still able to, you know, get people to take a chance on us. And I think, you know, when we, you know, when we managed to do that, I was like, “Wow. Like, if, you know, this is, you know, if we can do that with them, then who else is there?” And so that was really, (Teja: Mm-hmm <affirmative>.) you know, having, you know, started having fun. But, you know, I also just love being in the food space if I get to talk about food all the time. It’s always a good place to be.
Yeah. Why do you think they ultimately chose you guys?
I mean, I think in this industry, if you are communicative, and you’re fast, and you care, I think that you, it goes a long way. And so when we were two hungry guys, just the two of us trying to win the deal, we were on top of things, you know, and we were able to like, really move. And I think we’ve kept that mentality with, you know, as we’ve grown. But I think that that really did help. You know, in B2B, it’s very easy to get lost in people’s inboxes. Food is super regulated. There’s tons of paperwork that needs to get done. And so, you know, if things get lost, you know, a three month onboarding can take 6, 12, 18 months, and so I think our ability to move fast, and you know. There was also some, I think people were looking for something different during the pandemic, right? Where they had issues and a lot of suppliers weren’t there for them or like, weren’t communicating, not maybe because they didn’t want to, but just because they were super overwhelmed with everyone’s containers being lost, that I think, you know, coming in and being like, just a fresh voice you know, allowed someone to, you know, allow people to take a chance on us.
So what is Ingredients Brothers’ approach to like, finding and identifying the best ingredients?
Yeah, I think that’s a difficult question to answer, right? ‘Cause, you know, I think the problem is that “define ‘best’” (Teja: Yeah.) for every company that we work for is different, (Teja: Of course.) you know, when we started I was like, “Okay, we’re gonna source coconut milk, and it’s gonna be amazing,” and then, you know, we realized that like, there’s like, you know, 24% coconut milk, and you can get it from five different countries, so we’re gonna source it, and we’re gonna have options for people, and we’re gonna have one standard coconut milk, but we’re gonna give, we’re gonna source from these five different countries. And then suddenly you realize that all five of those coconut milks taste, look, feel very different. And so when you ask what the best is, well it depends on what the customer’s requirements are. And so I think what we’ve started to, you know, what we knew before going into this, and I think having experience, you know, in both of, you know, both Aalap and I have come from roles where we’ve had to source many, many products.
And so being an expert in any product is impossible, right? You can know a lot, but you can never be an expert. And so I think a lot of what we’ve spent time doing is figuring out how to identify the right supplier with the right supply chain who can be that partner, right? Because like I said, “best” for one person may not be “best” for the other. And, you know, when you’re using products in manufacturing, where there’s, you know, variability is not your friend, (Teja: <Laugh>. Yeah.) you want to make sure that you have the right partner on the other side. And so our role really is to go through that validation and that betting stage to find the person who is the expert, (Teja: Mmm <affirmative>.) who knows, you know, what the best is, who knows how to control those parameters that you’re looking for. And so I think once we realized that, that gave us a lot more confidence in what we were doing and our process to sourcing.
Mmm <affirmative>. So on coconut milk in particular, like, why is there so much variance? Is it just like, native…
I mean, variety, time of year, you know, the processing methods, you know, could be different. The age of the machines can impact the taste of the product, right? (Teja: Oh, sure.) Like, there’s just a lot of differences that can happen. And I think that, you know, again, for manufacturing, you know, if you’re just repacking it for a consumer, consumer has a lot more tolerance. You know, when they’re cooking, they can adjust, you know, they can adjust a little bit. They can do things. When you’re manufacturing millions of pounds of product, you really don’t want to be on the line and say, “Hey, why is this different from last time? How are we gonna adjust the recipe?” So, you know, that’s something we learned upfront.
I mean, it seems like you guys have to scale like, the taste that you guys at leadership initially have, you know, how have you done like, the ability to be like, a tastemaker and identify these different qualities? Do you guys have a rubric that you’ve implemented in the company to kinda enable your team to identify manufacturers and such, or…?
Yeah, I mean, I think we definitely have a, again, it comes down, if you take taste out of the equation for the beginning, it comes down to like, how are we evaluating and onboarding vendors, right? (Teja: Mmm <affirmative>.) What are we looking at in terms of like, who they are, what the capabilities are, you know, how good, you know, in terms of like, their QA process and their measurement process. How, you know, how good is that? And so we have, obviously, our QA team and our sourcing team go through that. And then, you know, in terms of taste and preferences, like, we’ve started to, you know, we’re definitely a young company and still learning, but we’ve started to develop, you know, opinions and understanding on certain ingredients, and you know, what people may be looking for. So if we’re working with certain customers, and we understand, oh, they actually wanna mask the coconut flavor, because this is a product that they don’t want the coconut to shine through, maybe we should look over here.
Whereas, okay, they’re looking for like, a really big coconut punch, this is what they want. Or if they’re, you know, it’s a coconut water product, and I’m talking a lot about coconut, we do a lot of other products, but like, it’s just an easy one to latch onto, but, you know, coconut water, the same thing, right? There’s sweetness levels, and you start to understand like, okay, if this person is mixing it with other things, maybe they, you know, can get a coconut, a more mature coconut and maybe less sweet. And so, you know, there’s definitely some criterias there. So there’s definitely some criteria.
Do you guys work with this one? It’s…
Yeah, sure. No, no <laugh>.
<Laugh>. There seems to be a lot of exception handling. Is repeat scaling, repeatability, internal to your operation, something that you guys think about? Or there’s enough like, long-term relationships where you don’t have to worry about that as much?
You know, the success here is long-term relationships, and making sure that you’re, you know, we’re building out supply chains for key accounts, because (Teja: Mmm <affirmative>.) you don’t want, the onboarding time just takes so long. You want to be able to build and like, you know, foster these really great relationships. But, you know, supply chain is about managing problems. It’s, you know, I think if you try and build this perfect supply chain that never goes wrong, I think you’re in denial, and I think that, you know, our success is in our ability, our process to manage issues. Not necessarily to, you know, we aim to try and execute perfectly every time, but to assume that that’s gonna happen, I think, is wrong. And so, you know, having the mechanisms throughout the supply chain to react really quickly and then, you know, provide the customer service that we need to, I think that that’s really important. And, you know, we’re pretty honest about that upfront.
Mmm <affirmative>, that’s cool. I mean, I cannot, I mean, we sort of have a similar issue, since we’re placing talent in companies. (Eran: Yeah.) Like, the people sort of exist on a supply chain-esque (Eran: Correct.) type of, you know, approach. And one thing that I’ve found is like, having Slack in the supply chain is like, a necessary thing. Especially, when you’re dealing with people where, hey, I may have a baby or surgery (Eran: Yeah.) randomly come up. Do you think about that?
Yeah, I think we think about that, both from a supply perspective, right? So, you know, we don’t try not to have [a] single supply for anything, and we have backups, of backups, of backups. So I think, you know, in general, that’s really important. But even from a people perspective, right? You want to be able to support your customers. If you don’t have Slack in the system, if QA questions come up, if logistics questions come up and everyone’s slammed at getting the next order out, then you’re never gonna be able to react. So I think, you know, our business is as much product as it is people, I’d say, arguably more people in process than it is product. And so having Slack in that system is incredibly important, because when something comes up, and you need all hands on deck, you know, if you don’t have the hands, then you’re left, and you’re, you know, the customer’s gonna get disappointed at the end of the day.
Is this a space like, in ingredient sourcing, where like, private equity and venture capital have like, taken an interest in? Is it like, a well-funded space generally?
Yeah. I mean we’re, so we’re bootstrapped and continue, probably, to be bootstrapped for a while, but there is definitely a lot of private equity in the space. I think, you know, it’s prime real estate for private equity, ’cause you have a lot of, I would say, older businesses, family businesses that have been around for a long time, and maybe [the] next generation is not as interested in coming in. And so you also have a lot of fragmentation, right? There’s tons of room for consolidation. You know, you’d be surprised how many people import coconut into the U.S. It’s not a small number, right, for a small market. And so it’s, you know, I think that there is a lot of investment opportunity, and there’s a lot of people looking at the space as time goes on. Yeah.
Is there like, a specific reason you guys haven’t taken outside capital? Is that something that you guys wanna do in the future?
I mean, I think at the beginning, when we spoke to a few people, just casual chats, we weren’t as sexy as maybe we are now. (Teja: Mmm <affirmative>.) And then, I think that, you know, having a little bit of control as we grow is gonna be helpful. You know, I think it’s been really nice to, you know, just answer only to ourselves, and you know, and I know you’ve raised money, so I don’t want to touch on sensitive points of like, what it’s like to have, you know, investors, but I think investors are great and not strategic, but it’s definitely outside pressure. And I think, for us, we’re trying to position ourselves as our employees being our biggest stakeholder and not our investors. And so, you know, can we make that work? We’ll see, right? You know, maybe in two years, you know, things will change, but we’re really trying to position ourselves that way. And, you know, it will likely mean that we grow slower, but it could also mean that, you know, it’s more sustainable. And I really, at the moment, couldn’t see myself doing anything else with my time other than sourcing and selling ingredients. So, you know, the thought of an exit is not even on the horizon. So, you know, that’s also probably a non-starter for many people.
Cool. No, I mean, we can get into it. Like, I think we can edit out anything sensitive. (Eran: <Laugh>.) No, we bootstrapped the company for like, eight years. (Eran: Ok.) I mean, we took some angel money from some friends who sold their companies, you know, small checks, and then we got to a point where we had some serious like, acquisition interest, and we were like, well, there’s a lot of opportunity out there to like, continue to go and scale into and market share to take. And that’s when it made sense for us to take some outside capital. But yeah, the pressure’s real. I mean, (Eran: <Laugh>.) they can be really nice, but all I have to do is look at the deal terms and be like, this is constructed in a way where this is not an accrued investment (Eran: Yeah.) unless there’s some real scale, (Eran: Yeah.) you know, scale that you’re able to get with this balance sheet. So, totally.
And so like, eight years in, like, do you think you should have taken the money earlier or, you know, are you happy with the time that you took the money?
You know, yeah. It’s funny. I feel two ways about it. I mean, I started the company when I was like, 23.
Oh wow. Ok.
So I think, had we taken the money earlier, I think we probably would’ve just blew it. Part of me thinks. Now, I think that’s because, you know, it’s like, my second job. I’d only worked maybe for two years. And so I’m pretty just like, grateful for the time to like, learn how to be a good leader and like, manage people and not like, blow up when things go wrong, ‘cause if you don’t have guidance around that, it’s real easy to kinda descend into some sort of, you know, I don’t know, let’s say like, dispositive habits. (Eran: Yeah.)
So for us, I think from like, a culture cultivation standpoint, I’m pretty happy that we waited. I think from a market opportunity standpoint, like, had I had the reps in to lead a company, I think it probably would’ve been financially better for us to take money sooner. (Eran: Yeah.) You know, looking purely at the financial metrics, I think it probably would’ve been…but it’s hard to know, because you’re like, relinquishing control. (Eran: Correct, yeah.) You know, you have a board now with an outside stakeholder versus just management, you know? So, yeah. I think, in our case, I’m pretty happy we waited, but if we were looking at solely the financial metrics, I think that we probably could have like, we’ve been growing maybe 50% a year, which is pretty solid, you know?
Yeah. I mean, that’s amazing. Yeah, exactly.
But then, you know, you think like, “Ha, you know, we could have been growing 150% sooner,” or something like that, you know? (Eran: Yeah.) And so, but we ended up with like, a really great firm that has like, a control. This is recorded, so I have to say nice things. No, I’m just joking <laugh>.
That’s fine. Go for it. I don’t mind.
No, no, no. I’m just kidding. Nah, these, I mean, there’s still venture. Like, there’s still pressure, (Eran: Yeah.) and they still wanna win. But I mean, we ran a process, we got a bunch of term sheets and, you know, talking to like, the West Coast funds, one thing that really stuck out to me is I was like, “What happens if we don’t grow 100% a year? Like, just what happens?” They’re like, “Well, you have to grow 100% per year or more.” And I’m like, (Eran: Yeah.) “But the company has never done that. Like, I don’t even know if we’re like, we have the right leadership structure to be able to do that. Like, I’m gonna have to reorganize the whole company.” And they’re like, “Yeah, well, you just gotta grow.” These guys, I felt like they were excited about what we were doing, and they were able to come to the table with a deal that made sense for us, because we could stay on our plan and take a couple of bets to accelerate the growth, and if they hit, that’s great, but if they don’t, like, nobody’s really (Eran: Yeah.) upset or concerned about it, so…
Yeah. I think I spoke to some, a lot of at the beginning were like, looked at the business and were like, “Why didn’t you turn this into a tech play?” And I was like, “The last thing I want to do is build software. I respect software, but I don’t understand it well enough to build a software company. And everyone told me, “Oh, this, you know, you’re moving containers of product. Don’t do that. Sell software.” And so I think that that was like, the, you know, I think a lot of, and the margin profile of a B2B ingredient business is super low compared to SaaS, and so that’s also, you know, even though the volume’s really good, the margin profiles are great, and so that shied people away. But I think as we’ve grown, there’s been a lot more interest from people that you mentioned, right? Like, similar people who are like-minded who understand the business. It’s, I think, you know, I need to do that calculation in my head like, to your point, which is, you know, if I got this injection, how much could I accelerate growth and what would that mean for me and the company? And I think, you know, for now, we’re good where we are with it, you know? Every probably three, six months, you’d be reevaluating based on what you know, new information.
Yeah, totally. I mean, one of my friends, he took a look at our business, and he was like, “Dude, I think you guys have under invested in the opportunity,” and that was like, “Oh shit. He’s probably right. You know, and there’s a tendency, I think for like, founders to, you know, like, you wanna be bootstrapped and be profitable, because it creates optionality, (Alan: Yeah.) you know, and that’s awesome. But there is a sense of like, “Hey, are we maximizing this…what the business is capable of?”
I struggle with that every day. (Teja: Yeah. <Laugh>.) You know, like, you know, I definitely struggle with that as a founder every day, because I do think, you know, you don’t wanna miss the boat either. And so, you know, you don’t, you know, suddenly you’re not growing anymore, because you didn’t have the capital injection. Now it’s gonna be difficult to raise. And so, you know, there is a timing aspect of it that does come into play. And I think about that, you know, quite often, but at the same time, always come back to that optionality, and what are we trying to build here, and what’s gonna make me happy selfishly, right. And so, you know, that’s, you know, what’s gonna make me happy is what I’m doing now, ‘cause I’m happy doing it. And so why change it for now? Right?. So I think that that’s…
Totally. And like, I don’t know, waiting and like, continuing to grow the business and getting a better sense of the levers that really drive growth, like, that only helps raising from a more favorable position,
(Alan: Yeah.) I think. That’s been my experience. And so, yeah. And I also think like, this “winner take all” dynamic like, that is, I don’t know, sort of believed by some other venture class, like, I don’t think that exists in most markets.
Oh. I mean, when people say to me, “Who is my competition?” I say “It’s myself.” (Teja: <Laugh>.) Like, it’s, the food industry is so big if, I mean, the U.S. is incredible from that perspective, and I echo that a lot, right? Where, you know, you’re just in an industry where in a market that is so big and you know, to some extent, feels really open to new people and new players and giving people a shot. You know, and I haven’t done this in other countries, so I can’t speak, but if this is what it feels like here, that I, you know, I feel like, we’re the only people that will, that lead us to failure is ourselves, right? Because of our execution, and not focusing, and not setting the right priorities, and unless someone coming in, now, I’m not trying to be an Apple and dominate the cell phone market, right? I’m just trying to sell more ingredients. And so maybe that’s, you know, what investors are thinking about. But you can build an enormous company that no one even thinks about is a competition in this space without, you know, having to worry about a market share problem.
And I’m assuming in software engineering, it’s the same thing, right? Like, that equation just keeps changing for you guys.
No, I mean, so much of what you said about like, opacity and markets creating opportunity for margin and they’re not being like, a standard, like, even how to think about software engineering or software engineers’ like, capabilities. There’s no rubric. You know, one person’s senior engineer, maybe totally different from Facebook to Google, and it’s different, you know, at a small company versus a large company. Their rates are totally different, you know, public market, you know, public companies are driven basically by interest rates for comp packages, you know, smaller companies. It’s basically options, which are driven kinda by the value of, you know, venture capital around. So yeah, there’s a lot of opportunity for us, and I think like, who we compete with are like, recruiters that are basically running their businesses on like, pieces of paper. So it’s just, it’s just, you know I think it’s similar in that like, if we fuck this up, it’s probably we mismanaged something like, for like, a very long time. Like, two years of mismanagement, you know?
Exactly, yeah. And that’s how I feel, yeah. Similar to you. Yeah.
Yeah, that’s cool. Okay, so where’s your team located, by the way? Are they mostly in like, New Jersey and New York area, or you guys have spread out?
No, so, you know, obviously, low margin business, you know, we started importing some stuff from the Philippines, and I started reading about people in the Philippines working for U.S. companies, and it wasn’t, (Teja: Ah.) even on my radar. And I say this a lot too, because I was like, the anti-remote person. I had like, a (Teja: <Laugh>.) I had a work from home policy documents, where my employees had to like, give notice. And like, I was like, I was very deliberate about getting people into the office prior to the pandemic. And then, you know, when we started, things had changed, and I think, you know, there were a couple things that had, you know, evolved to an extent that, you know, I had to open my eyes to. And so we were importing, and I was like, you know, “What’s the big deal?”
“I’ll meet some people, and let’s just see.” And you know, we met, you know, Jacqueline, who was our first employee, we met her and it just, you know, she accelerated the growth of the company tremendously and helped us so much. And, you know, from that spark, we just started to, you know, think about, obviously, we’re building a global company, right? It’s, you know, we’re bringing ingredients from like, eight or nine different countries, you know, the time zone, you know, our suppliers are, most of our suppliers are in Southeast Asia, and so, you know, the time zone is really important. And so, you know, these products are also consumed by people all over the world, and so you can find people all over the world who have, you know, experience in sourcing those products. And so it’s been really great for us to build a, you know, truly global team. And so we have, you know, people in the Philippines, we have some people in South Africa, Columbia, Argentina, and so, you know, we’ve got a pretty, you know, diverse group of people that work together on solving these supply chain issues.
That’s awesome. So has your philosophy on remote work changed?
Yes, I think it’s changed to some extent. (Teja: <Laugh>.) I think, you know, not…to some extent. I think that if you’re not, if you’re remote-first, and when I mean remote-first is that, you know, I think there’s a difference between having like, a team of people who are outsourced to do a specific task that are remote, versus building a team, global team that are all leadership and decision makers within the company. Whereas, if you have some hybrid or other models, I think that can get, you can get into trouble for a number of reasons, but you know, if you have an office somewhere where some people are making decisions, you know, like, a corporate spill and like, there’s like, a central office where, you know, you’re not involved in the decisions, ’cause you’re sitting remote somewhere else, I think that can get a little bit dangerous.
And then I think that, you know, doing hybrid is really tough, because you’re spending a lot of money on rent that you could be spending on other things. And so I think that, you know, my perspective, which is probably not the right perspective, but at least my perspective is, if you go remote, go remote and like, invest fully in it, and I think you can find, not everyone loves remote, but you can find enough good talent who appreciate it and will give, you know, as much, if not more effort within a remote setting. And if you wanna be in person, be in person. And there is as many people who want that setting to be successful too. And so I think it can work, and, you know, we’ve learned a lot of lessons along the way, but it’s been an incredibly rewarding experience, you know, building this team all around, you know, from everywhere, so…
That’s cool. And so Ingredient b=Brothers is remote-first?
Correct. Yeah, that’s it.
Ok, ok. (Eran: Yeah.) So are we, I like it. And I actually tend to think like, remote is a form of compensation that is easier for smaller companies to pay than bigger companies. I think it’s like, a competitive advantage, actually. (Eran: Yeah.) That is, that’s good. You know? (Eran: Yeah.) ‘Cause big companies suffer from coordination problems, which we don’t have to.
Yeah, exactly. Yeah. There’s certain decisions that are a lot easier for me to make (Teja: <Laugh>.) than for a big company with thousands of people. And, you know, having to deal with all the HR stuff that I wouldn’t, you know, we’re doing, but not to the extent that you need to do it at a big company.
Yeah. There’s like, basic like, HR and admin things that become like, a nightmare to do remotely and to not come across like, a total asshole in doing them. Like, you know, I’m sure you’ve heard of like, the Better.com riff that was like, done purely over Zoom, you know? (Eran: Yeah.) And that’s an example where like, you know, there’s probably a more humane way to do that, but it’s hard to do something like that over remote in a humane way <laugh>.
Yeah. We haven’t bridged that gap. Yeah, we haven’t bridged that gap.
No. Just as an example. Yeah.
Yeah. I agree. I agree.
What ingredients do you guys actually source now? So coconut and coconut related products, what else?
Yeah, so we’re doing a lot of different products. So we source cassava flour from Brazil, tapioca starch from Brazil and Thailand. We do a lot of spices, mainly out of India. We do coconut milk, coconut oil, lots of different kinds of coconut oil. We’re starting to do noodles, even. We do a lot of freeze dried products, so like, you know, freeze dried fruits and vegetables, both in like, powdered form, pieces form. So, you know, there’s a bunch of things that we’re bringing in now from all over. So it’s a, you know, we’re somewhat product agnostic, you know, we have like, our core catalog of things that we’re very good at, but we enjoy building good relationships with our customers and then allowing them to dictate to us, almost, you know, where they are having issues, or where they see opportunity where we can help them, you know, just improve their supply chains. So that led us to, you know, sourcing noodles, which is something that I never thought I would source in my life, but, you know, here we are. And I think it’s, you know, that’s been, again, like, another “a-ha” moment was like, being able to close something like, that just gives me more conviction, in terms of the service and what we’re trying to do and what we’re offering.
So when you think about the future of the company, do you think about it in terms of like, what products you guys will have in your catalog? Or do you think about it like, from a growth standpoint?
Yeah, I mean, I think about it in terms of, you know, how do we organize this database of, you know, natural ingredients that we’re building and expose it to people. And so, you know what, you know, as we’re going along this journey, you know, we do have our own software, you know, be it like, you know, not the most complex software. We are building our own software.
And as part of that, like, you know, we are building this incredible data trove, you know, of vetted and, you know, understood, you know, vendors as well as products from all over the world. And so because we’re, you know, demand-focused and we’re, you know, taking on what customers are looking for, we’ve, you know, our product catalog has just grown tremendously. And it’s, you know, how do we slowly expose that to customers over time to, you know, build the business and really grow into like, a platform where we can, you know, almost democratize the sourcing process for a buyer, right? How do we reduce that friction between the supplier and the buyer? Right now, there’s just, you know, we are a middleman, right? And so our job is to facilitate sales between, you know, to showcase the supplier, right?
You know, our job is to be an advocate for our suppliers. And right now, that is between, you know, there’s so many barriers between, you know, the supplier and the end customer. And so a lot of our focus is just breaking down those barriers one by one, in terms of just how do we make it as seamless as possible, so that our customers feel like they’re buying from the supplier and not from Ingredient Brothers. And so, you know, that’s, I’d say that’s like, the long term, you know, pie in the sky, really what we’re trying to get to over time, and something that we’re, you know, or every day working towards.
Mmm <affirmative>. What’s your view on like, how to forge long term relationships?
I mean, it’s communication and trust, right? It’s like, the simple, you know, the simplest thing is, you know, when you identify a good partner, usually it’s based on the fact that they’re communicating with you, and they want to communicate with you, right? You know, you can have the biggest customer in the world, but if they don’t answer your emails, and they don’t, you know, they’re not good partners. It just doesn’t, it doesn’t work well. And so I think, you know, being able to one, be communicative and also like, the two-way data communication and not, you know, I think that that it’s understated a lot, where, a lot of times like, our suppliers will feel in the dark with like, “What’s happening? Does the customer like the product? How are sales? We see the orders, but like, give us more context. Like, what can we do better?”
I think that, you know, again, like, being that partner who can easily provide that information with the systems that we’re building, I think will help forge that relationship, because I think a lot of the time, when you don’t have the software, and you don’t have the data in front of you, you spend most of the meeting trying to put that together for them versus giving that to them, and then spending 80% of the meeting actually talking about things that matter and moving the needle forward. So, you know, that’s what, you know, that’s what I hope, you know, we can do, you know, with our supply base. And also just in terms of, you know, building a, you know, good relationship with suppliers who wanna grow with us, but also see the value in growing with us.
Awesome. So you define relationships as, you know, they’re dependent on communication and trust. How do you, what does trust mean to you? Like, how do you define that?
I mean, I think it’s just doing the right thing, right? And as, again, I think it’s super simple, but there’s just, you know, there’s decisions that you’re gonna be presented with every day, where you could kind of snake around or, you know, take a shortcut or do something. And that, you know, may, I think in the long term, will hurt you. And if you’d rather think long term and say, “You know what? Like, we’re just gonna tackle all of these things head on and be completely transparent about it,” I think you can get to a really good place versus, you know, taking shortcuts and then suddenly finding yourself a few years down the line, where you’ve lost that trust with suppliers and all customers, and that just doesn’t win with everyone. So I think, you know, maybe it’s like, sacrificing short-term profits for long-term gain (Teja: Mmm <affirmative>.) is one business way of saying it.
Mmm <affirmative>. That’s awesome. Yeah. There’s so many parallels between our businesses. That’s cool. (Eran: <Laugh>.) <Laugh>. It’s the same thing with devs and with companies. You know, I’m still taken by your definition of trust. That’s a really good one.
It was a good one? Okay, I’ll have to watch it back and write it down to make sure I remember it.
<Laugh>. Like, so is this like, a values thing in the company? Like, how do you make sure that, as you guys scale, like, this is maintained across the organization?
Yeah, I think, you know, I don’t know if it exactly comes through with this value, but we try and like, take an approach of like, a no-blame culture, right? (Teja: Ah.) And like, in a no-blame culture, you are responsible for admitting that something went wrong, right? And to feel safe that we all solve this together, right? And like, we gotta learn from it, and there’s accountability still, but in the same time, like, you’ve gotta create this feeling that like, it’s better to say something and get it out there than to hide it, because you’re nervous about what the ramifications are gonna be. And so if you continuously do that, then I think you can improve on all aspects of relationship building. And so that goes to, you know, being completely honest and transparent with the customers when things go wrong.
Same thing with the suppliers, and same thing internally, right? Where, you know, you try and expose things as quick as possible, you know, take accountability for it, but then also be able to, you know, utilize the resources around you to move forward and build something better. And so I think that that’s where it comes through, you know, the most within what we’re doing is like, how do you create the safe environment where you’re almost like, you know, you’re almost, you know, cheered on for saying something so that we could, you know, we can all learn and move forward rather than holding it in. Easier said than done.
Easier said than done <laugh>.
Easier said than done. You know, I would say that we’re nowhere near perfect, and we’re a very small, young organization that every day is learning and every day, figuring out things that we didn’t know about ourselves.
What are maybe the most surprising things that you’ve learned, sort of, being the chief decider in this past two years?
I think I love hiring people, (Teja: <Laugh>.) and so, I mean, that’s probably gonna be a problem at some point, but I think that that’s been, you know, if it’s, you know, I thought like, “Hey, if I’m just selling ingredients and buying ingredients, that that would be the most fun,” but then I spend most of my time recruiting and meeting people, and I think that that was probably the biggest you know, like, you know, “How do I build this business,” or “All I’m doing every day is just hiring and developing the team more than, you know, selling the ingredients.” So I think that was probably the most surprising. (Teja: <Laugh>.) Just really enjoyed it, and the fact that now I get to meet people from all around the world, you know, that’s even more fun. So, you know, I think that that’s been very surprising. And again, like, a blessing, ’cause when we started the business, thought it was just gonna be me and Patel in a room. And you know, I think he will say, (Teja: <Laugh>.) “Thank God that we have a group of people around us to you know, basically like, barricade ourselves around, you know, so we have some safety nets.”
Yeah. Why do you think that’s so gratifying to you?
I don’t know. It just gets exciting when you find people that you think can add so much value and are just driven, and you see that spark, and you’re like, “Oh, wow. Like, you know, if you can put yourself in, if you can put them in a position to succeed and give them the keys, it can be a lot of fun, right? And I think selfishly, it’s just, you know, some people have hobbies outside of work; work is my hobby. I love, you know, love working. It can be super stressful and anxiety-prone at many times, especially as an entrepreneur., but at the same time, I don’t think there’s anything else I’d wanna be doing with my time. And so if I can do it with like, driven, amazing, thoughtful, curious people and provide them with some opportunity to, you know, have fun and build their career. Yeah. Just you know, selfishly, that’s, you know, adds to my fun and hopefully adds to their fun and, you know, my, you know, fulfillment in life, I guess.
I like, work too much to have like, a long list of hobbies <laugh>.
<Laugh>. Well, I have the hobbies, I just don’t do them, right?
Same here. I manage to like, get to the gym. I have a gym near my house. Maybe I get there like, once a day. That’s about it. Twenty minutes, and then I’m back at it. Yeah.
Yeah, yeah. Exactly the same.
You mentioned some sort of like, call them “ingredients” and a good hire, like, do you have a list of sort characteristics and traits you look for? Like, beyond the skills? I feel like that’s the easy part.
I mean, I think curiosity is like, number one trait. You know, every role in [a] company is different for what you look for. And in a startup where you will likely have people that have, you know, will get less direction than they would’ve gotten at a big company, less oversight, and definitely less, there’s no playbook for a lot of the roles you hire, and you are coming in, and you’re like, expected to develop things from scratch. And, you know, usually it’s something that someone else has been doing before but not been doing it well, (Teja: <Laugh>.) or has been doing 20% of what they should have been doing, because they’ve had no time, and now you bring people in, and you’re like, “Hey, you need to just go and like, this is the objective, but how you get there, I don’t, you know, I can’t tell you.”
Right? “And I don’t have time to tell you,” (Teja: <Laugh>.) so finding people who are curious and understand that and can, you know, take that on and be excited, right? And look for the gems, you know, and look for those, you know, I think that that’s really what I look for, in terms of, you know, other than the skills and some of those things which are also really important, right, and, you know, understanding someone’s previous experiences is really digging into those moments where, you know, they saw opportunity at companies, and they grabbed it, and they went for it, and they drove it and they can really talk about it. When they talk about it, their eyes light up, like, this is the thing that they wanna be doing next. (Teja: Mmm <affirmative>.) I think those are the things I try and look for in people.
Awesome. Yeah. That’s so cool. Okay, I have a selfish question. Like, as somebody who like, basically works in like, food and bev, how do you identify like, a good restaurant? What are your tells?
I’m gonna, you know, I’ll answer this, but it’s definitely not gonna be the right answer, (Teja: <Laugh>.) because I think it’s a difficult one. I’m also someone that I’m like, I love food, and so if it’s decent, it always feels like the best meal I’ve eaten. I’m always just overly excited about the food. But I think you can tell a lot, you know, to some extent by the menu and the complexity of the menu. And I look for, you know, if it’s simple, and it’s clean, and it feels like, you know, there’s been some thought put into it, you know, that’s really what I’m going towards. And I also just have bias towards certain cuisines. I love spicy food, and so, (Teja: Mm-hmm <affirmative>.) you know, it doesn’t matter what the restaurant is, if it’s got, you know, spicy szechuan food, (Teja: Szechuan.) I’m usually enjoying it. And so, you know.
Yeah. That’s cool. Yeah, I used to live in Shanghai, and so we went over to Chengdu and got to eat some good mabo dofu and (Eran: Yeah.) all that good stuff.
Yeah, it’s amazing. And thankfully, in New York, you know, I mean, I haven’t had it in Chengdu, so I don’t know, but I mean, in New York you get, you know, incredible tasting food that feels like, you know, as authentic as I hope it is. And so, you know, if it’s any better than, you know, then I’m on the next plane. But (Teja: <Laugh>.) really, really great food here to explore.
You know, the funny thing about eating in China is that like, the food was pretty good, but I love like, their culture around eating. Like, you know, nice, long meals, they’re kinda messy. And like, you’re drinking like, these, you know, $2 beers that are basically water, and you’re having like, 10 of them over the course of a meal. I love that. And New York, that’s tough to do. That’s like a hundred dollar meal if you have like, five beers <laugh>.
Yeah, you’re not doing that in New York <laugh>. Yeah, definitely not doing that in New York. But yeah, I sip my one beer very slow, so…
So it takes me the same amount of time as your 10, but, you know, very slow.
<Laugh>. Awesome, man. Well, where can people find you on the interwebs and find your company?
Yeah, I mean, we’re very active on LinkedIn. I mean, I think that’s, you know, that’s our platform of choice. And so, you know, you can find us on LinkedIn and then IngredientBrothers.com. We’re always willing to take a call, and if anyone wants to chat about any ingredients, we’re happy to chat. We’re growing, we’re curious and looking for new business, as always.
Yeah, that’s awesome, man. What a great conversation. And there’s probably more selfish questions I can ask, but we’ll spare <unintelligible>.
No worries, no worries. (Teja: <Laugh>.) I’m not the best food rec person, you know, I think you know, I’m used to sourcing like, containers of things. It’s, you know, yes, I think about it a lot, but we’re bringing, you know, like, the volume is so different, and you know, I’m not as connected to the restaurant game, and so people will, you know, ask me those questions, and I’m like, “I don’t have the real answer.”
I’m still gonna ask you, ok, is the Michelin star overrated?
Oh man, I think it’s similar to art, right? And when I go into an art museum, I don’t know anything about art, so either it looks nice, or it doesn’t look nice. (Teja: Yeah <laugh>.) I think there are people that go in and understand and maybe have more of an appreciation, and so they can understand and dissect what was being done. And I think with food, you know, you will get like, three Michelin star restaurants that are incredibly tasty and great, but, you know, sometimes I’d even say that the tasty ones or, you know, those ones that are known for being incredibly tasty, still, like, if you haven’t like, eaten your way through a bunch of others or like, worked your way up, you may not have as much appreciation. Like, you know, if that’s your first fine dining experience, you may not, I mean, not that I’ve eaten in three Michelin star restaurants, but you know, that’s what I assume. And so I think with some of like, the really avant-garde, you know, really like, you know, trying to, you know, pull the culinary world in a direction you can go in and just be confused by the story. (Teja: <Laugh>.) And I think it’s similar to the art, where you just maybe, you know, you’re just not, you know, we don’t have as much experience to understand, whereas like, someone who’s a Michelin, you know, judge will have eaten at many and, you know, has a better, you know, understanding for food and the composition than we do. So, you know, I don’t know if that’s a good answer.
That’s a great answer. No, it’s a great answer. Do you like, ok, this is another strange question. Sometimes, when I go to really nice restaurants, I like to eat beforehand like, a little bit, so I’m not starving when I go to the restaurant and like, you know, ‘cause I more than enjoy the food. I’ll just stuff my face, and I don’t care when’s the next course, you know. Do you do that? Or like, do you like, prepare the appetite, and like, you try not to eat until then?
Yeah, I mean, like, I’ve been an entrepreneur for two years, so it’s been a while since I’ve had anything that resembles a fancy meal. (Teja: <Laugh>. Yeah, totally.) But I’ll say that, yes, at some point, you know, I probably wasn’t the person to eat a slice of pizza before the meal like you were, (Teja: <Laugh>.) so yeah. I try to appreciate the food a little bit more, but I, you know, I don’t have, you know, definitely haven’t been to a ton of fine dining restaurants, but at some point I’ll, you know, I’ll let you know, you know, what I do when I get, you know, get the opportunity. What’s your favorite restaurant in Nashville?
Okay. That’s a tough one. Have you been to Nashville?
Yeah. Well, I’ve done Nashville, like, very tourist Nashville, so I’ve had, you know, that experience. But I, you know, absolutely love being there. The food was great. So, you know.
The food’s great. I mean, and there’s some fine dining here, as well. I think, of the restaurants that I’ve been to, my favorite one is this place called Lockeland Table, and it’s in East Nashville. It’s in a neighborhood called like, Lockeland Springs, and it’s like, a husband and wife duo, small restaurant. And I feel like, you know, they have the whole farm-to-table shit, (Eran: Ok.) and it’s good. It’s tasty. Yeah, they got it down. It’s really good. The big like, food thing here is like, Husk and basically all those related restaurants by these two guys, I forget their names, but they, I think they also…no, I think it’s different people that own Catbird Seat. (Eran: Okay.) And Catbird Seat’s like this, I don’t know, fine dining, multicourse thing. It’s like, $250 or something.
Have you done it?
I have not done it.
Now that you’ve said the price, don’t <unintelligible>.
No, no. See, I personally, like, for me, I love eating well, and we both cook at home and eat well, but number one, it’s a lot of time to just course out, and I don’t know, it’s like, I try to be open to it, ‘cause some people like fine dining experiences, but I’m a more simple guy. I like eating street food outside. Mobo dofu.
And I think that’s the beautiful thing about New York, and you know, New York, you have fine dining and it exists, and it’s amazing, but this, you know, I would say, the affordable, you know, mid-tier restaurants that are, you know, from every, you know, every type of cuisine that you can find, is incredible. And that’s, you know, that’s something, if I ever left the city, [I] would really miss, because you can wake up in the morning and want szechuan, and you’ll get incredible szechuan Chinese food, and if you wake up and then you want Ethiopian, you get incredible Ethiopian food, and there’s just, you know, there’s Little Egypt and, you know, Little India, and then Chinatown. There’s so many different places to go, and it’s accessible-ish, right? It’s like, (Teja: Yes.) it’s not what, you know, like, I would say you would, in other places, you may have to pay for some of that food and that’s, you know, that’s pretty special about the city.
Totally. And there’s like, almost like, an ethical dimension to this. Like, if you’re like, building a business, and you know, like, everybody’s sacrificing, you feel kinda ridiculous being like, “I’m gonna go to like, a fancy nine course meal.” You’re just like, “What am I doing?” You know <laugh>?
Exactly. Yeah, I completely agree.
It just is ridiculous, you know? (Eran: Yeah.) So I would say by volume of like, calories consumed the place that I’ve gone the most is this place called House of Kabob in Nashville. It’s like, a Turkic kinda kebab spot. It’s fucking good. They have like, their kubidehs, you get a Diet Coke, you get some, you know…
Oh, that’s it. You’re done. I’ll come join you one day. That sounds good.
Oh, it’s so good. Like, when people come visit, I’m like, “Alright, we’re going like, to House of Kabob. We’re not going to some fucking high end spot <laugh>.
<Laugh>. That’s amazing. I have a question for you, before I forget. You know, when we started the business, we basically stumbled upon like, no-code, low-code platforms, and we built everything on Airtable, which has been completely, you know, I would say game changer for us, as a small business. You know, have you found any growth in people requesting software engineers who are focused on these low-code, no-code platforms like Airtable?
Yeah, there’s been a lot of growth there, and I mean, we built our whole business on like, Google Sheets for the first like, five years. You know, the database was basically, we used like, an off-the-shelf applicant tracking system, and we would track all the billing through Sheets, and we would kinda do like, I mean, we had a CRM to like, manage the sales pipeline, but it was all basically very low-code. We built our own app and actually ported all the data to like, our own database only because we were like, “Well if we wanna expand the business to do more than hiring, or if we actually wanted to like, augment some of the like, human decision making and matching companies.” That, we found really hard to do with a low-code solution. You know, because when you have it in your own database, you can start to do things like track why retention on a specific company account with these three developers is doing better than another company and start to, you know, pull out some characteristics of, “Oh okay, we see why,” you know, and the analyses are much easier to do when you’re doing retros.
But yeah, there’s been a lot of devs that like, typically, what a company would hire us for on that or hire like, us to find them devs and that scenario would be like, they’ve hit the limit of scale with a low-code, no-code solution, and they now wanna move to an environment where like, they have a Python-based app, and they have their own data based in Postgres or something, so…
Yeah. Yeah, (Teja: Yeah.) I think that’s where, not struggling, but that’s where I think about, you know, ’cause we’re building only on Airtable, and we’ve, I think, you know, we’re hacking our way through it in a way that, you know, we havn’t, you know, the data structure we have is really great, but, you know, to find or to understand what you’re recruiting for, ‘cause, you know, as someone who’s done only software engineering for the last couple years may not wanna come into an environment where it’s in Airtable, and they’re, you know, building upon a platform like that. But, you know, that’s been definitely the struggle to figure out like, you know, what the right profile is, as we scale to build that tech stack. ‘Cause, you know, I like Airtable, selfishly, ’cause I can see the database, and (Teja: It’s easy.) that visualization allows me to help and build things, you know, in a way that I would never have gotten, if we had just built a software platform. So, you know, that’s been really nice for us, but how we scale that, and you know, when or if we move on to another type of, you know, backend and, you know, start to develop our own front end, that, you know, that’s, you know, another big thing that we’re always thinking about.
Yeah, totally. Have you guys had trouble like, finding somebody that is excited about like, building on top of Airtable?
I mean we definitely had some trouble. You know, the pool is, you know, the pool is not huge. I think, you know, we’ve tried to, I’ve been, you know, we’ve been a little bit creative, where there are definitely consulting companies out there that offer Airtable consulting. (Teja: Yeah.) And so I usually try and poach people from those companies, (Teja: Smart.) right? So like, that’s, you know, that’s number one. So there are some of those that are, you know, coming up, and you find a lot of, there’s some really large companies building incredibly complex things on Airtable. (Teja: Yes.) So there are people that have done some great projects and then, you know, if you find people who are really good analysts and, you know, have done some SQL and you know, maybe, you know, are curious to develop that skill further, then I think, you know, something like, an Airtable is like, the perfect platform to, you know, learn on. And so you know, maybe it’s not, you know, they haven’t got a tremendous amount of experience in on the platform, but they’ve got a lot of that thinking of how to build the database structure and you know, what, you know, how to build the platform and then, you know, they just have to learn how to use Airtable and, you know, develop on top of that.
Yeah. I’m looking at our database right now to see if we have any folks that have familiarity with using Airtable, like, to basically solve like, (Eran: Yeah.) a technical problem. And we do, I mean I could always, yeah, I could introduce you to some, if you want. (Eran: Okay, yeah.) If you guys are hiring. Okay.
And how big is your team now?
Right now? Like, 30 people. Not too much. Not too many people internally. I think in terms of people we have on projects, like, through the platform, about a hundred or so? (Eran: Okay.) Yeah, we’ll do about, I don’t know, $14 million this year in revenue, so…
Yeah. I assume the margins are pretty good in the business.
They’re pretty solid. Yeah, totally. But you know, there’s this thing about like, pigs get fed and hogs get slaughtered. So margin to me is, you know, meaning like, you don’t wanna take too much margin, you know?
The margins are good, ‘cause the opacity is there, and I think there’s so much demand for software engineers, so…
Yeah, definitely. And also I feel like, you know, well, technical recruiters at companies need good partners, ’cause they’re overwhelmed, and then a lot of times, CTOs are responsible for hiring, and that becomes like, a whole shit show, ’cause they don’t have time.
And they don’t wanna do it, a hundred percent. Yeah, yeah. (Eran: Yeah.) Yeah. No totally. I mean, so the way that I think like, we have been successful, and this just happened earlier today on like, a sales call, we’re scaling our AE team, so basically the whole team’s pitching in on taking some leads. But I love when like, we get a referral from like, an engineer to like, a CTO. That CTO comes in, and they’re like, “Hey, I heard you guys are good,” and that’s only because that engineer, we probably got hired through the platform at one point, you know, and heard about us. And so I feel like the engineers and the companies, usually the stakeholders technical, they want us to make money, ‘cause they know that we’re treating people well. So, you know, I feel like that’s good.
Yeah. It’s very similar to our business, you know, in a way, ’cause it’s just, it’s that B2B, you know, same thing on the margin side, right? Where, you know, we gotta be fair, from day one, so that we can scale and not, you know, like, exactly what you said, I forget the saying, but yeah, exactly what you said. Like, not take it, you know, it’s short term gains, you’ll lose it in the long term, right? Like, doesn’t matter. And so then I think the same thing with referrals and just, you know, keeping that like, service going and just being true to that. And then, yeah, people move, you know? Like, (Teja: Yes.) people move, new people start new things, and then, you know, you can just continue to build that flywheel.
No, totally. I mean there’s on like, a metrics level or like, even on a P&L, there’s like, an inverse relationship I found between margin and retention and, you know, finding like, that point on the optimization curve, (Eran: Yeah.) or like, the two are at peak, like, that’s the left and right lateral limits for pricing, you know?
Yeah, agreed. Yeah, agreed. Like I tell everyone, you can get to price parity on coconuts very quickly, (Teja: <Laugh>.) and so, you know, once you’re there, just stay there. Don’t try and gouge and then, you know, work on the other things around it, and it’ll come. But, (Teja: Yes.) you know. And do you have people overseas on like, your teams? Like, sales or any of that stuff? Are you using people overseas or…?
So, core team, let’s see, I think most of the company is based in the U.S., but we do have folks like, our, you know, head of all tech, product engineering, even the vetting function on the talent side is in Brazil. (Eran: Ok.) And I actually, I find that like, from a communication disruption standpoint, Latin America is like, really nice, because they’re in the same working time zones as us, generally. But we had an engineer who was with us for a long time. He was a British guy, but he was based in Thailand. He was a really good dev. And so like, that worked for us for a while, but I think what we have found is like, I dunno, from a philosophical standpoint, it’s important for us to be really good at like, cross time zone, remote collab, ‘cause like, that’s what we’re selling. You know, like, our devs are based all around the world, so…
That’s the biggest struggle I’d say we have, especially right now, as we’ve built the team, and we have, you know, let’s say, you know, I was doing the sales before, and my partner was doing some of the supply chain stuff with the team in mostly in the Philippines and doing the supply chain work, and as we’ve scaled now, we’ve got like, you know, biz dev people in Argentina, and they’re working on deals, and then the people sourcing the products are in a different time zone, nd that asynchronous communication is what we’re spending, I would say, majority of our time building out in terms of process, because if the handoff isn’t good on Monday night, you lose so much time. And that has been very, I would say eye-opening, you know. Didn’t expect it to be as challenging as it would be, but the upside is so incredible that, you know, you gotta figure it out. It’s just, it is tough to figure out with the time zone.
No, totally. I mean, pre pandemic, we were like, a team of like, 10 all in the Nashville office, and I was like, a stickler about working in-office.
Sounds familiar. Yeah.
Yeah. I was like, “Listen, you gotta show up to work. Like, this is like, we’re here to work like, you show up, you know?” But the irony would be, I would have to like, take calls outside in my car that were sensitive, because we had an open floor plan. So I was like, “Something is fucked up here.” But then <laugh>, when the pandemic happened, I was like, “Dude, ok. I don’t want people to get sick.” And like, also, you know, the regulation sort of prevented us from going in-office, and so we just sort of adapted to going remote. And I think that has generally been positive for the company. But you know, my tendency is like, “Hey, when something is wrong, I wanna talk to somebody immediately,” and that is difficult to do in a multi-time zone business. You know, you kinda have to just sit in the anxiety and trust that somebody else will figure it out when they wake up <laugh>.
Yeah, I mean, exactly. Exactly. I mean, I think that that is very true, and I’m sure for them it’s not great to wake up to all these messages like, you know. (Teja: Yes.) And so there is this handoff that is, you know, that needs to be built. And I think that, I think big companies have solved it, right? You have massive companies that have huge offices overseas that obviously have solved some sort of handoff that, you know, over time have built that out, that it’s possible, I think, for small businesses, especially if you’ve never done it before, it definitely can cause a little bit of like, anxiety between the teams, too. But if you build it, yeah, if you build it well, and you can figure it out, then the upside is, you know, is, you know, it’s almost infinite, because, you know, you figured out communication, and that’s really hard.
Yeah, totally. I read something a long time ago by Brian Chesky, the Airbnb founder, and it’s something that I try to remember, myself. He said something about like how like, you can trade off culture, and process, and like, the stronger culture, like, the more you invest in culture and the stronger culture you have, sometimes like, you actually don’t have to go that heavy in the process, because like, you can only really build process retroactively like, when you’ve identified a problem and you wanna fix it, but if you have a strong like, you know like, driven attitude at work, where people wanna make sure that like, things are done well, that takes some of the pressure off of you to like, constantly be in a position where you’re like, “Ok, like, what’s the right way to hand this off, exactly?”
Yeah. Yeah, that’s really powerful (Teja: Yeah.) and something that I guess we don’t, I mean, like, we think about, I don’t think of, you know, we think about process all the time. I mean, I guess supply chain world maybe, you know, it’s important, but I guess to your point, like, that is true, right? Like, if you can foster this culture of communication, of getting stuff done, then I think, you know, I think a lot of the issues with the communication now is probably driven by leadership and some, you know, little bit of like, let’s say, you know, not pure focus on certain things and not like, you know, trying to spread the team too thin and then having to like, always reprioritize to ensure that like, we’re getting the stuff done versus, you know, building, you know, building that culture that you’re talking about.
Yeah, totally. Like, one of the, I mean, one of the observations that I’ve made is, so we’re gonna probably be at like, 40 people by the end of the year, and one of the observations that I’ve made is like, if we get a really tight training program, like, it’s done well, it’s packaged right, there’s like, almost like an indoctrination process, like, “This is how we see the world, this is why we exist, this is why you’re here, this is the collection of the team,” and then you’re really clear about your values, and like, every meeting you’re in, you basically find a way to mention a decision that ties back to the values, what you end up getting is like, people are making just generally more aligned decisions and that actually requires less long-term paperwork, less long-term operational decision making from leaders.
Correct. I mean that’s it, right? If you, as you were talking, I was like, “Yeah, that’s exactly it.” It’s like, you know, we have, you know, so I have a guy named Pedro, and he’s always like, “Eran, my job is to make sure you’re not involved in anything,” (Teja: Yes <laugh>.) and I’m like, “Yeah, exactly,” right? Like, that’s, you know, how do you build that? And I think, at the beginning, it’s just allowing people to go and do, and, you know, not fail, but you know, learn as they go, right? ‘Cause, you know, we’re hiring people from different industries, totally different experience, but have the ability to execute incredibly well. And so it’s just about, you know, giving them that room and having the time to give them that room, and then on the training side, yeah, I think, you know, budget is always such a, you know, there’s like a list of a million people you can hire, (Teja: It’s a thing.) and it’s like, the training is so important, because it is. Like, if someone comes in, and they don’t understand how the business works, and you spend six months, like, you might as well have hired someone else to teach them, because the next person is spending six months being ineffective, because you haven’t trained them properly.
No, that’s totally it. And I would say that’s the benefit of having raised a little bit is like, when we were bootstrapped, you know, it’s like, every dollar mattered, but if you fully load the cost of training and of equipping them into your industry like, when you’re on the other side of venture…
The ROI is like, yeah.
Yeah, yeah. You’re maximizing that time, and so you’re like, “Hey, you can spend an extra 5, 10, you know, 10% on the comp to make sure that they come in solid with some priors, you know? But yeah, I dunno. You could ask like, my leadership team. I would be such a hardass about like, “This is the right way to do things. Like, don’t fucking do this any other way.” And I would find myself like, working, I mean 80, 90 hours a week, constantly, ‘cause I would feel like anytime there was an operational gap or a decision making gap…
Yeah, you play whack-a-mole.
Yes, totally. And we hired a, you know, we hired like, a sales leader. He’s funny. I give him shit about this all the time, but he was on my ass from the minute he started. He’s like, “Dude, we don’t have like, a compelling unifying vision. Like, we need to have a company story. We need to be articulating this like, every chance we get.” I’m like, “That’s bullshit, dude. Like, I don’t care about that. I care about the P&L, I care about growth, and I care about getting people fucking hired. That’s like, what we’re here to do,” right? And I would just shove him off, and he stayed persistent. And finally I was like, “Dude, okay, like fuck it. I’ll spend some time on this,” and I spent like, weeks and it still sucked ass. And I’m like, “This is bullshit.” I did it again, and finally, we came up with like, a thing where I’m like, “Whoa. Like, these values and the story like, feel like, honest, and they feel like, aligning to where I can say these three things.” Like, for us, it’s like, simple, efficient, human. Like, every decision we make has to keep those three things in mind, and you can force rank things you wanna do by if they meet those three things. And it’s like, freed up so much cognitive bandwidth for me, so…
Yeah. And I mean, you’re eight years in, I guess like, was there a moment in the business and just asking selfish questions, (Teja: <Laugh>.) where like, where you felt, was there a tipping point where you felt more in control? Where you felt like, today, you know, like, you came in with a bit more confidence in terms of, you know, let’s say I don’t have confidence, but I definitely, you know, you’ve got that uncertainty every day, and like, when is the tide gonna turn to you, and when do you feel conviction that, you know, you’re gonna be able to sell? And like, what you’re selling is like, not, you know, snake oil. (Teja: It’s not bullshit.) like, people find out that, you know, (Teja: One hundred percent.) you’re not full of shit.
A hundred percent dude. Ok, so I think that if, you either have imposter syndrome or like, you’re a sociopath. So I feel like, if you have like, a high personal standard for yourself, you’re, at least this is me, I just have accepted that like, that fear is gonna always be in the background.
‘Cause It doesn’t go away, is what you’re telling me.
It never goes away, dude. It never goes away, and the bigger the business gets, like, the more commitments you’ve made, ’cause you’ve now committed to a larger group of people, and more suppliers, and more companies, you know, more devs. And so you just, like, I had this conversation actually with like, our head of ops, I was like, “Fuck, dude.” Like, I just, it hit me today that like, I’m making so many commitments, and like, in my personal life, I’m even careful about being like, “I’ll show up at this time,” ‘cause I don’t know, you know? But at work, you just do it. You just accept it. Your name’s on every contract, you know, and I just accepted it. And so I think for me, like, I have good and bad days, but I think the confidence probably comes like, it’s like, such a bullshit answer, but it kind of comes like, from internal, where you’re like, you know what, like, I’ve generally made smart decisions over the course of my life, and I’ve generally made positive decisions in the company to date. I’ve made some mistakes; I’ve rectified them. And if I keep making like, generally good decisions, there are like, it’s gonna turn out okay.
So not comforting, the answer, (Teja: <Laugh>.) but definitely, you know, I would say it, you know, obviously pushes you more towards self-reflection and, you know, being comfortable with yourself, right, more than the things around you, which I understand. I just wish it was the other way around, right? (Teja: No, no.) There will come that day where like, you’ll wake up in the morning, and you’ll feel (Teja: No.) okay with everything that you’re doing <laugh>.
No, I don’t, I mean, but you look at like, Warren Buffet, you know, and like, him and Charlie Munger, like, they talk about decision making. Like, you could tell that they, you know, there are a lot of 51/49 decisions, you know, in that business that they’re in. But like, they’ve still levered up. You know, the scale of their decision making is like, to the tune of like, hundreds of millions, if not billions, you know? But they have like, an equanimity about it. Like, a peace about it, where like, they accept like, “Hey, like, we’ve thought through this It’s the right decision. Let’s go for it.” And, if anything, I will say the venture fund that we’ve partnered with, the board member in particular, Robert, he pushes me to like, have a lot more conviction in my decisions. He’s like, “Dude, you’re gonna know 80%, and you need to be fucking okay with that, ‘cause you raised the money to grow. Just fucking go.” And that has been like, a very helpful voice in my ear, because like, I’m the same way as you. Like, when you build a business from scratch, and you’re kinda like, “Oh shit, I can’t believe this is working,” you tend to, at least I tend to be like, it shouldn’t be working. It’s gonna fuck up one day, obviously, you know?
Well it feels like I’m playing a computer game, (Teja: <Laugh>. It does.) right? You know, when is it gonna be like, “Game over,” you know? And that’s like, especially in this new world, right? Like, they’re just numbers on a screen, and in my employees, I’ve met two of them, of the 20, you know? And so it’s all very, I think that also makes it less concrete, ’cause there’s nothing to look at, (Teja: Yes.) you know? I’m not staring at a container, right? The most I’ve seen is like, a packet of coconut milk today. And that’s, you know, it doesn’t give you any sense of like, realism and that…yeah, it’s just, it’s bizarre.
No, no, totally. Like, you’re like, I mean, I’ll tell you the first day I drew a salary, I’m like, we built a fucking website that pays me a salary. And like, you know, I’ll get messages from devs like, “Hey, I bought my Jeep Wrangler because of a contract that you guys hooked me up with.” I’m like, “What? This is crazy,” and I’m sure you feel the same way, but I dunno, I think that like, it lets you get into a space of like, alright, this is gonna sound super woo woo, but the more I focused on like, gratitude and being like, “Holy shit. Like, what a blessing. Like, this is awesome,” the less anxiety I generally feel about any of my decisions. And like, you know, if I can keep myself in a space of like, thankful for the team, thankful for the opportunity that we have, thankful to serve companies and devs, and like, focus on that, generally, I’m okay even when shit is going wrong. I’m like, (Eran: Okay.) what a privilege it is to even solve these fucking problems.
No, I agree. Yeah, I think that’s a good way of putting it, right?
Like, people who are getting their MBA would dream about having the problems that we have. They like, go to sleep…
Oh, the me of 10 years ago would’ve dreamt about having this problem. I couldn’t even think of a business idea 10 years ago. You know, I was like, coming up with like, you know, “What if I built the next,” I don’t know what it was, fill in the blank, and like, [I] had no idea what I was doing. So yeah, I agree with you. I think that you have to reflect, and it’s living in the moment, and especially as a, you know, when you have, you’re getting thrown stuff, and it’s, you know, every day is something new, that it sometimes is more difficult to do than then it seems.
Yeah, focus on gratitude. That’s been like, really help[ful]. Like, every week, it sounds so stupid, but it’s like, every week we do a thing where like, you know, obviously, every day people report on, “Here’s what I’m doing today,” but every week we make people be like, “What are you grateful for?” And like, we try to, even in meetings, be like, you know, “Look, we’re thankful that this has happened, so we can fix it, and it’s a good problem.” And having that culture, I think, I dunno, man. It helps me like, not maybe worry so much about like, the burden that we carry as entrepreneurs, you know? ‘Cause I always tell…
Just turn this into like, a mindfulness podcast for founders.
Dude. Dude, well, I tell my like, head of ops, I’m like, “Dude, okay. If this company collapses, everybody else gets a job, except the dipshit CEO.” (THE FRONTIER THEME FADES IN) The dipshit CEO gets asked for the rest of his career, “Why the fuck did you fuck this company up? And how did you make so many bad decisions?” (Eran: Yeah.) Right? Like <laugh>, but everybody else…
That’s the imposter syndrome talking. Yeah.
<Laugh>. Exactly, exactly.
Faith, via previous recording (01:26:37):
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(THE FRONTIER THEME ENDS)