Brand Presence In The Future

Being a brand in today's day in age is difficult. Why? Because so much is changing. David, CEO/Co-Founder of Chipmonk Baking tells us that being ready to pivot will keep you in the game. That's whats most important after all, right?

View Video Podcast Here.

Michael Maher  00:00

Welcome to The Longer Game, where we talk about retail reimagined, what the heck does that mean? Essentially, we're looking at what's happening in retail today. We know that there have been changes over the past five years, a decade or so. But the pandemic has increased some of those changes. And so we're really diving into what does success look like for brands in this day and age? So we're talking about the here in the now and we're also looking to the future. Today, I have David Downing. Okay. David Downing. Yes, I can do this. Michael, you got this. He is the CEO and co-founder of Chipmonk Baking. A really awesome, baking company that is based out of Houston, Texas, and I'll let him tell you a little bit more about the story. But I personally have these products and I will vouch for them. They're good. I've got some in a Tupperware container on my counter. I've got some of the banana chocolate Kido bites that are inside of my fridge. Those are nice little treat to pop in. But um, yeah, it's tell people hello. And just tell them a little bit about yourself, David.

David Downing  01:05

Yeah, sure. So I'm David. Again, I'm co-founder and CEO of Chipmonk Baking. We started in early 2019 actually started the company with my roommate, Jose Hernandez still works alongside me as my business partner. Basically, Jose has type two diabetes. And so when we were living together, he was trying to figure out ways to eat sweets without spiking his blood sugar, and ended up creating these low carb sugar-free cookies, gave them to me, I thought they were delicious. And so we literally started a company around that. And yeah, that's what we do, we mostly make cookies. We're kind of a blend of eCommerce direct to consumer. Now, we sell on our website we sell on Amazon, or on walmart.com. And then starting this year, we started to kind of get into wholesale more so you can actually find us on some grocery store shelves, and, and we're trying to grow both, both areas as quickly as we can. But it's been a rapid ride. So far, we started, like I said, in our apartment, and now we actually have our own commercial bakery. We've got a team of about nine people helping you know, fulfillment, baking, marketing. And yeah, that's, that's where we're going.

Michael Maher  02:16

I feel like the most authentic way to start a business seriously is in apartment, in a garage in a basement. That's how I started my eCommerce business almost 12 years ago in a bedroom. And it's all the product that I was selling started flowing out of the bedroom into the hallway. And my wife and I were looking to move and she became pregnant. And so we're like, okay, we need to find a different house. So we moved into the house I'm in now. And the basement was business unfinished. That was my warehouse. So totally relate to that. But interestingly enough, I mean, I sort of relate to it, you're dealing with perishable goods. So I mean, that's it's a different story. But Jose is not an overweight gentlemen. He is is very fit. So him having type two diabetes is very rare. I mean, I would think or expect someone that is, you know, is not dealing with maybe a co, one of my I don't want to say comorbidities, but someone who's dealing with obesity, too. That's not usually we're seeing skinny people as type one. So you're saying he was type two, he never had a weight problem. It was simply, simply the insulin response, correct?

David Downing  03:32

Yeah. So I mean, Jose has always been really into fitness and exercise, but I think he's just was genetically predisposed. And, and, you know, when you're in your 20s, right, you can get by with eating a horrible diet and, and still look good. And that's exactly what he was doing. He was, you know, drinking beer and eating ice cream and birthday cake and all that stuff.

Michael Maher  03:55

And those were the days

David Downing  03:58

I miss it.

Michael Maher  04:00

I miss it, too. My wife and I talk about it all the time. She's on a low carb diet. That's typically how I've eaten I've made some adjustments in the past six months and have actually dropped a lot of weight, just really been tracking stuff more, but have been in the fitness for a while. And my daughter's eating cheese balls and all this other stuff. I'm like, Just enjoy it. Enjoy kid. It's enjoyable. Enjoy it while it last. But I think that the interesting thing is that there's a lot of low carb products out there. And what a lot of people don't know, is that insulin response. It's something I've studied a lot about. And just being a lover of the science behind nutrition. Probably one of my favorite books ever is Good Calories, Bad Calories by Gary Taubes. That was very influential in in my outlook on nutrition and he doesn't really say do this one method. He's saying here's all the research you kind of need to make the decision for yourself which I like. But there are A lot of products out there that are not technically sugar, but they still give your body an insulin response. Why? Why does that? Why does that insulin response matter?

David Downing  05:13

Like I get Jose on here, I mean, I mean, if you're like, basically diabetic, your body cannot produce the insulin to control your blood sugar levels. So like, if you're eating things that are spiking either insulin or blood sugar, it's just it can lead to really bad stuff for you, if you, if you are diabetic, and then also a lot of diabetics use medication to help to control some of those things. And so if they eat something that causes like an unexpected change in their level of insulin, then it can mess up the dosage that they might be giving themselves. Yep, which you know, could lead to

Michael Maher  05:56

We lost you for a second. It's a great, great video shot though. We're hanging in there people, we'll see what happens. One thing I will say, when it comes to spiking blood sugar that causes the insulin response. Insulin is a storage base hormone in your body. There are I think that's honestly, the only one. We lost David, not physically, but not his body, or his mind or his soul. But he's physically been kicked out of the room for some reason. So we'll let him come back in we keep it, real people, we're just going to keep rolling. The insulin response happens when your blood sugar goes up. And insulin is a storage base hormone. So too much of that it can take the food that you're using, that you're intending to be used for fuel, to do regular activities, walking, exercising brainpower, all that stuff that is meant to be in your bloodstream and processed for your body. But if we're going to get down to cellular level, cellular level, I'm not going to get down there because I don't know that I know the science that will help right now. But when your blood sugar goes up too high, you start to store the food. And that causes can lead to obesity and obesity can lead to other complications like heart disease, stroke, anything cardiovascular. So it's a big problem. For someone like Jose, hey, hey, now you're back. I just was explaining stuff about insulin. So don't even need to worry about it. You're in the kitchen now. So let's talk about your ,this is very real. And I actually am enjoying this. You got the red velvet keto bites behind you. Yeah. So this is what the life of an entrepreneur and CPG CEO, co-founder looks like people this is the real deal I'm sitting in, in my home, and David's out doing the real work. So tell people, your multi-channel commerce, meaning you're on many different channels, you're on Amazon, that's how we originally connected, you're on walmart.com. But you're also on your own eCommerce site. And you're now getting into stores or, the stores you're getting into more regional to Houston or are some of them national? What does that look like?

David Downing  08:31

It's it's really all over the country. It has more to do with the type of store and the size. So most of our distribution is two independent specialty food stores. These are stores that are typically like 1-3 store chains, like where you pick up the phone, you call the Google Maps number, and there's a high chance like the actual owner is going to pick up and talk to you. Right. Which for us, like when you're a small food business, that's kind of where you have to start because you can't go through big distributors. And you literally have to just build these relationships one store at a time. You call them you talk to them, send them some samples, if they're interested, hopefully, they love it when they taste it. And then they order that first case. And then you just build a longer term relationship where they become a repeat customers. And that's really how we've built our wholesale business from the start just one store at a time. And then over time as you as you get more volume and you start to build deeper connections in the world of like brokers and distributors and you start kind of banging on the doors of bigger chains, then you hopefully start seeing some wins there too, which is that happened with us a few months ago, we got into Central Market, which is like a chain of 10 stores here in Texas, where we actually work with a distributor and now all of a sudden, instead of maybe like one or two cases for a purchase order we're seeing you know, like a pallet, two pallets, you know $10,000 $20,000 at the time, and then that's like, where you really see growth start to accelerate.

Michael Maher  10:07

I mean, you're really doing relationship-based selling, you're talking to the owners. And I think, honestly, the benefit of that is, you're getting buy-in from someone who has influence regionally. And you're building an audience there locally, so that when something does get into maybe one of the bigger stores, there's already kind of a built-in audience, people are going to know about you, there's going to be word of mouth there. And you've now got a hold on the market that when you do, I'm just gonna say when you do go, you're naturally, you've got that built-in audience, it's honestly like, imagine being on American Idol. So many of the people that were number one did not that that won, the competition didn't continue on. And there could have been a lot of reasons, but one of them is, there was no audience for them before, most of the time. So people like Kelly Clarkson, just had to fight tooth and nail and keep going and be a great singer. But a lot of them didn't have a bass. So when things started to, you know, the hype wore off, it was back to whoever was in the spotlight. So you're doing the exact opposite of that you're really building something that I believe is sustainable. Yeah.

David Downing  11:14

Yeah. When I guess the interesting thing, too, with a lot of those small specialty stores, is often the buyers for larger chains will shop there, because they're looking for like the next small like emerging brand.

Michael Maher  11:25

Wow, that's, that's a great insight.

David Downing  11:28

It's a Yeah, so it's, I mean, it's a great place, if you are that small player, like get out there. Because you never really know, farmers markets are the same thing to like, you might just be at your booth, and then a buyer for whole foods might walk by or we're like an executive chef that has 10 Restaurant hotels underneath them might come by and it can really those like coincidental meetings can make a big difference for your business,

Michael Maher  11:53

Or are they coincidental?

David Downing  11:56

Well, I guess you have to like, you have to put yourself out there. Yeah,

Michael Maher  12:00

Yeah. I mean, the, I love this quote by Michael Scott by Wayne Gretzky that says you miss 100% of the shots, you don't take. And when it comes to goal setting, I've aim for the ground. And let me tell you, you can hit the ground every single time. But if you don't, if you don't step out, and like the, the potential that's there, if you don't turn that into kinetic, if you don't turn that into something that's actually happening, there's never going to be a chance that you're going to get out there. So I think you're right, you have I mean, there's being strategic, being in this grocery chain being at this farmers market, etc. But if you don't risk anything, the reward is going to be pretty small or, or nonexistent. Yeah, definitely. So you've seen an increase, I know you've seen a little bit of a, an increase in some of your eCommerce sales over the past year that's synonymous with what a lot of people are seeing, during the pandemic, I know, the clients at my agency, we've been able to grow them successfully, because of the demand going up. But you said an increase in the wholesale business, you're seeing an increase in-store orders. What I mean, what would you attribute that to, besides you're going out and selling, you're doing the work, and you're a newer company? So you're really, I would say, you know, quote, unquote, pounding the pavement, you're getting out there, and you're making the sales calls that you need to, but what does that look like? And maybe what's the environment in wholesale right now, because of one the, the initial wave of the pandemic, and now some of the Delta and move variants and other things, the, you know, a second rise, talk about what that environment looks like, because I think that's very different than some of the experiences I've heard other people having.

David Downing  13:41

Right. I mean, I guess the main caveat here is our base for wholesale revenue is effectively zero at the start of the year. So you know, anything on a small base, any growth on a small base always looks great. So I would say the, the main driver of our revenue growth is just the expansion of, of number of doors or like distribution that we're at just new accounts.

Michael Maher  14:04

And then I think, by the owners to purchase a new or invest in a new product.

David Downing  14:10

Yeah, I mean, there always is, especially, you know, like in more competitive categories, like cookies, but okay. I think usually, you know, you if you believe in your product, like the taste and the quality, I think that obviously is a huge help. I think another like interesting tactic that we've been seeing success in is there. Sure, like keto is everywhere, right? Like it's a trend that's it's widely adopted, but there are parts of the country where it is much newer or harder to find good keto products then than say, like New York or California, and we've actually seen some great success in like Middle America, you know, places like Iowa, Missouri, Illinois, and a market there. Yeah, but there's people you know, looking for the product, there's grocery stores there. And so we, we just call them and ask, Do you have a product like this. And if they don't, it's usually a quick win for us. And then it's a great, great way to build up kind of a loyal following. The same thing applies to like, smaller communities. So you don't have to be in Los Angeles, right? Like, I would say, in some places, or some ways, a city that's maybe like 5-10 000 people, it can be so valuable for an emerging brand, because you can come in and be like, the dominant keto brand or cookie brand there. And that you can actually become well known among the community versus in a big city, you're just going to be one of like, a million other brands.

Michael Maher  15:41

Have you read the book, Purple Cow by Seth Godin?

David Downing  15:44

I haven't, I haven't read it. But yeah, I've heard of it.

Michael Maher  15:46

You're explaining it exactly. It's essentially go people talk about specializing. And of course, if you look at certain people in specialties, they make more money. It's not necessarily the case with you know, a founder or new accompany I'm sure you can attest to that. But what he says is be a big fish in a small pond, don't just be another fish in a huge pond. For instance, there are ton of Amazon agencies that are helping people out in Seattle, go figure where Amazon is based, but here in Cincinnati, there are some here, but there's a lot less people out in the Midwest. So there we were able to stand out more. So being that Purple Cow means once you see one cow, and you're driving for three hours, and like, Oh, I see a cow, okay, wow, I haven't seen anything, it's been nothing. And then you say your cow, and then you see a group of cows, and in a couple minutes, you're like great cows, and they just blend in, you see a Purple Cow. Amongst those brown cows, I'm assuming they're brown, they could be black, white, whatever the case might be. But you see that Purple Cow that now sticks out? That's what brands and anybody who, who wants to, I think, be effective as a company and not just make revenue, but be impactful. You have to be that Purple Cow. Yeah, that's exactly what you're talking about. You're talking about going into small communities and being a Purple Cow.

David Downing  17:08

And I mean, I won't give us a bunch of like credit for being geniuses and figuring it out. I think it was more like, hey, as a small company, you know, just broad distribution in big cities just wasn't on the table for us. So it was like, just something we discovered along the way, because we did call and talk to all of these independent stores. Yeah, and then saw success.

Michael Maher  17:30

Well, I will pat you on the back. Because there's a lot of information that's out there. Not everyone takes the bait that's there. And so you're getting out there and saying, Hey, let's, let's do what works. We're not necessarily trying to be the biggest or the greatest per se, and maybe you are and I think that's a good goal to have to be the greatest and the biggest, but you're doing it in a very sustainable and smart way.

David Downing  17:55

Thanks.

Michael Maher  17:56

You're welcome. What's one of the biggest as a brand right now in this environment, pandemic eCommerce, increasing lots of capital in going into CPG companies, bigger CPG companies starting to launch smaller brands and then kind of suck them up. What's, what's the vibe, like for you as a brand owner?

David Downing  18:24

It definitely seems like five years ago, a lot of this would have been easier in some ways. I know. So like, in terms of the role split between me and Jose. Jose is actually very focused on like the sales outreach and kind of management and then I'm, I'm more of the administrative so I see all the operational issues. And so my, my biggest thing is like all these supply chain problems that we've seen, like ingredient cost going up that stuff from overseas, just taking forever to get here. It makes it nearly impossible to plan especially if you're growing at like 50% plus, year over year.

Michael Maher  19:00

?What ingredient has gone up the most for you

David Downing  19:03

Our sweetener allulose. Yeah, again, which is, again, it's just like a really rare, it's kind of a really rare ingredients. And that not only did it has it gone up, probably like 2x in price. But we had a period of time earlier in the year where we just couldn't even get it. And it got to a point where like we, we were looking at shutting down everything because it's literally in all of our products.

Michael Maher  19:28

Wow.

David Downing  19:28

We had to we ended up discovering like there's a syrup version of allulose which is just literally water and allulose. We use water in our cookies already in crystal and allulose. So we figured out like what ratio to use this year about to get the same product and the syrup was available, the crystal and wasn't and we survived.

Michael Maher  19:48

That's ingenuity, man. That's what being an entrepreneur is about. And that's what I think brands these days because there's so many shelf spaces. There's so many opportunities for you to get out there but you have to make smart decisions. So being resourceful like that is I mean, that's kept your doors open that's kept all those boxes piling up behind you.

David Downing  20:06

Yeah. It was a little scary at the time. But I mean, I guess when you're back up against the wall, it's either do something or die. Right? So,

Michael Maher  20:15

Yeah, so go for it. What's the biggest challenge for you right now as a brand owner?

David Downing  20:22

I think biggest challenge for me, it's, it's like maintaining kind of like, quality and, like reliable operations. As we scale up, like, as we grow, a lot of that's on the labor side. And just like finding reliable employees, where, you know, if I get if we get a giant purchase order, say, from Central Market, I need to know that I have a team and I have, you know, the processes and the equipment in place to get that out on time. And it really high quality. Otherwise, things just fall apart really quickly. And the mistakes at this scale, versus like when Jose were in, or an apartment, they're there, you're talking like real money now and like real, real issues. Like, we're just talking to the baking team. If someone like, puts a rack in our oven, and they forget the timer, and it burns, that's like $1,000 loss. And we're doing maybe like 80 to $90,000 in revenue a month. So that's, that's significant. Yeah, it's like the difference between like profitability, or like bonuses and things like that. And then when, when things do start to fall apart, that's when like, Jose and I have to get really down into the weeds again. Yeah, which prevents us from focusing on, you know, like, Okay, what's our wholesale strategy? Like, how do we continue to grow? How do we map things out to avoid larger risks, kind of that higher-level picture? So that's what I've been struggling along with right now, is kind of keeping the train on the tracks while we grow. You know, without things just going crazy.

Michael Maher  21:57

Do you think that's just part of I mean, it is part of being a startup being a CPG company being a brand that's trying to scale? But do you think that it's more a product of, you know, scaling? Or does the pandemic have anything to do with that? Because I don't, you know, there's a big difference between correlation and causation. And so I don't want to conflate the two. But you know, what are your thoughts on that?

David Downing  22:20

I definitely think the pandemic has, like, made parts of that problem worse. I mean, in terms of labor market, just, there's sort of like the safety issue, right. I mean, that's just made it a lot of people aren't available to work, or they were, we had to stay at home. And then also, because of a lot of kind of policy changes, and I think people spending time at home in general, like feelings towards work and like the, how people viewed like jobs in America is is shifting, probably, I would argue for the better. But that just makes the labor, like all the old ways of hiring and running a labor force to just they're not working anymore, right. Like we you have to adapt and change. And, you know, as a small business, like, well, we never figured out any of that stuff in the first place. So it's, it's like, there's no, there's no rulebook out there for us to read. We're kind of figuring it out. But in some ways, that's, that's better, too, because the at least we weren't doing things one way. And now we're having to completely flip it. It's more like we're growing with it. And then yeah, I think like scaling up from just product costs, ingredients, raw materials, that's made worse when the supply chain is like falling apart internationally. And, you know, we're already, it's already so difficult to sell our products versus like a fortune 500 CPG company from a price perspective. And now when all of our ingredient costs are going up, you know, 30,40 50% then is like, how do we even do it from there?

Michael Maher  23:48

You know we *inaudible* that so long.

David Downing  23:50

Yeah. And I've already I see a lot of CPG entrepreneurs out there talking about like price increases for your products, and that just like scares the shit out of me. Yep. Is I already feel like we're so premium priced? Like, how much further can you go? But yeah, at some point, you have to otherwise you're just not making any money.

Michael Maher  24:09

I think one of one of the most difficult things for being a business owner and my agency realizing a couple years ago, okay, what we're charging people is not equal to the service we're providing. It's a really high-level service. And of course, we're always growing and getting better, but we can't continue to survive and charge the same amount. So it's either are you going to shut down? Or are you going to, you know, raise your prices, and sometimes it's just, I mean, you're not having to go into the store and say 699 999 But I'm talking to people on the phone and saying, here's the price and, you know, I if I'm not used to saying the amount I don't feel comfortable doing that and maybe that's what you know, wholesale prices could be to you, you know, saying hey, it's this amount, per Carton or per case per pallet. Depending upon the amount that you buy, but it's just sometimes just getting comfortable saying that new number works or is helpful, and then you don't get so you don't have the shit scared out of you every time because you're starting to get some yes' in the no's don't bother you as much. And then you start getting to a place where if your product works, you get the money, you get the revenue, and you start taking on the people who are still willing to pay that.

David Downing  25:27

Yeah, I mean, I guess the other side of it too, is it's, it just adds a lot more pressure to kind of like accelerate the lowering any way we can be, like, more efficient, like any way we can lower our unit costs, like projects that I might not have thought about, because I was like, oh, you know, like, whatever, like UPS rates are, okay, not that big of a deal. But then in the current environment, it's like, oh, like, I need to look at every single piece of input, and figure out how we can be, you know, the most cost-effective, so we can maintain that price point, and still, you know, have a good margin, and it's led to some really good, really good things for us. You know, like, we have managed to lower some of our ingredient costs, because I wasn't thinking about them, you know, like a chop the cons, for example, I didn't even look at that price much. But going through all this, we were like, oh, let's look at like five, six suppliers, and we ended up finding one that could lower the price like 40%, just because we were now looking. So it's, I think the pressure helps.

Michael Maher  26:29

Oh, go ahead.

David Downing  26:33

Yeah, the pressure just helps, in some ways, like to force like innovation. Because, you know, like, when you're when things are working for you, sometimes you can rest on your laurels and, and just kind of chug along. It's like, oh, yeah, like the unit economics are working great. There's no need to try to find a new supplier. But when you're pushing in that environment that we're in now, it's just forcing you to kind of think more creatively. And at the end of the day, it's just better is what we should have been doing anyways,

Michael Maher  27:02

Being nimble is one of the keys to and maybe the main key to being successful right now as a brand. It's rolling with the punches in the changes. Would you say that? That's, that's fair to say?

David Downing  27:13

Yeah, absolutely. And sometimes like I, when I look at where we are, and we're, you know, such a small company, this is the ideal size to be during, like time of unrest like this. Yeah. Because if we were a billion-dollar company, there's no way we could move quickly enough to kind of deal with the new realities that we're facing, versus now. Those like harsh realities are actually there. They're forming our foundation as we, as we grow into that larger company, that you're *inaudible*.

Michael Maher  27:45

Dude, you're speaking my language right now.

David Downing  27:45

So stronger, so much stronger. Yeah.

Michael Maher  27:47

Absolutely. I truly believe, it is not, in spite of the difficulties in your life, that you become successful, but it is because of those things. And the reason it's because is that you're now forced to change your perspective, and what you're viewing and like you said, analyze every single aspect, what's working, what isn't working? Or can we be better at doing this one thing, and I think it's a forced, almost a forced pursuit of excellence in a way, but you're being adaptable, and you're saying we can, what can we do to be better? And I think you're absolutely right, a smaller company may just not have the momentum to keep going but a billion-dollar company, they've got shareholders, likely their public, they there, they might have to make a layoff that is, you know, detrimental to a lot of people or make a tough decision like that. Because of you know, what a board wants or whatever the case might be, but you've got you know, your I think it's, I love your perspective, you're like we're in the best possible position we could be right now. And these problems are making us better and I couldn't agree more. And I think we should just end it there. I think you crush this and I would like to know, people want to find you. Where can they find you? They're going to be looking you know, behind a food processor. Are they going to be looking in the in the trunk of a car? Hopefully not a trunk? Maybe your friends? Where can people find you and Chipmonk if they're wanting to Chipmonk Baking if they're wanting to get a hold of you?

David Downing  29:19

Yeah, the best places, our website so www.chipmonkbaking.com and that spelled m o n k, like a Buddhist monk. We're also on Amazon if you just give a quick search for like chipmonk cookies or chipmonk bites will show up walmart.com And then if you do go to our website, we have a store locator page on there too. So you can see all the like physical retail locations if you're in Texas, central markets, kind of the biggest chain to find us. And yeah, if you if anyone wants to reach out we do have a contact form on my website that goes straight to me. We'd love to hear feedback, comments, thoughts on any of this.

Michael Maher  29:56

Straight to the boss. I bought your products and I give them giving you feedback on them. And you've been receptive to that, which I think is cool. I will also say this, sign up for their email list, sign up for text alerts, a lot of cool things come out through that. And email marketing and SMS is something that's working really well for brands in general. So if you want to be supportive of a brand, sign up to get those notifications and engage with them when they come out.

David Downing  30:21

Absolutely. Yeah.

Michael Maher  30:22

David, thanks so much for being on the show. Guys. This is and girls, this is all about retail and the changing and shifting landscape. So if you're brand right now, you have to be nimble, whether you're big or small brand if you're a big brand and you've ignored Amazon for a long time. $10 million in your top-line revenue might not seem like a bunch but when it's now a branding play, that's a big deal smaller brands if you're if you're hesitant to get into brick and mortar stores right now, maybe it's something you need to pursue, go for it and just give it a world. This is The Longer Game and now this is the end of the show. Goodbye.