Persistence and patience. Know that you are in this for the long haul. If you’re not willing to spend years on this project (and probably lots of financial and emotional pain), you may want to reconsider. Entrepreneurship isn’t for everyone and that’s okay.
Asa part of our series called “5 Things You Need To Create a Successful Food Line or Specialty Food”, I had the pleasure of interviewing Jose Hernandez.
Jose is co-founder & president of ChipMonk (www.chipmonkbaking.com), a specialty baking business based in Houston that creates low carb, better-for-you desserts. ChipMonk’s mission is to help people indulge mindfully, making better nutritional choices by cutting sugar out of their diets without sacrificing sweets. Prior to starting his business in 2019 with co-founder David Downing, Jose spent many years working in health and wellness as a personal trainer and specialized in holistic approaches to wellness through conscious food choices and lifestyle tweaks. Most notably, he was the Director of Fitness and Nutrition for a Houston based health startup.
Jose holds two science undergraduate degrees from the University of Texas at Austin. He is incredibly passionate about health and spends his free time outside cycling, hiking, and climbing.
Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a bit about your “childhood backstory”?
Igrew up in Houston, Texas and attended Catholic schools for the majority of my education. The Jesuits in particular left a strong impression on me, and I credit them for how I see the world. They would challenge us to “be men for others” and would discipline our minds as much as our morals. To this day, I hold the door open for everyone.
Growing up, I was the curious child that always sought to learn more about anything and everything. My curiosity often got me into trouble, but it also made me question why things were a certain way. I’d ask questions like, “Is this the only way? Can I simplify the process? What’s the point of this anyway?” This mindset made me a better critical thinker and ultimately made me realize that I didn’t have to always follow the status quo. That’s why I decided to pursue holistic health and wellness and become an entrepreneur in the first place.
Can you share with us the story of the “ah ha” moment that led to the creation of the food brand you are leading?
Four years ago, I was unexpectedly diagnosed with type 2 diabetes. When that happened, I turned down the prescription my doctor recommended. I knew I could manage the disease through food, and I successfully lowered my blood sugar back to normal levels via a strict low carb, high fat diet. Unfortunately, my love for sweets occasionally got the better of me. Knowing full well how much sugar affects my energy and body, I tried out a lot of the low carb, low sugar, and “healthy” desserts already in the market only to be sorely disappointed by their lack of taste and clean ingredients. One particularly gloomy weekend in January 2019, I decided to bake a pick-me-up dessert. I decided to use alternative ingredients like almond flour and monk fruit instead of the processed all-purpose flour and sugar that I knew was bad for me. The results were shockingly delicious. I managed to make a chocolate chip cookie that was as good as the real thing. I gave my roommate David some to taste and then it just clicked for both of us. One in three people in the United States are dealing with diabetes or pre-diabetes, yet, to get an acceptable dessert, I had to resort to making my own. It seemed like a big opportunity to fill a market gap. We took some cookies to our work place, setup a little table, and sold some on the spot. Once we saw that people were willing to buy our low carb cookies, we jumped in to build the business.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
Looking back, lots of decisions we made were questionable, but some mistakes were funnier than others. One of the most memorable mistakes came in the form of packaging. We ordered a thousand custom printed boxes of a certain size to precisely fit a set number of cookie packs, but we subsequently changed the size of our packs (we went from two cookies per pack to one big cookie per pack). Doing so left us with 1,000 boxes that were much larger than necessary. We adapted and had to use bubble wrap in all our shipments to pad the cookies so they wouldn’t move around and break during shipping. I think the lesson learned here is to anticipate change as a startup and really think through how future changes might impact the various aspects of your business before you commit to locking yourself into anything. Flexibility is key!
What are the most common mistakes you have seen people make when they start a food line? What can be done to avoid those errors?
- Waiting too long before launch. People often think they need to have everything figured out and perfected before they decide to get out there and sell their product. Start with the minimum viable product and build from there. As Nike says, “Just Do It.”
- Investing in a brick and mortar too early. While having a physical location of your own can help you, it is likely too big of an overhead cost in the beginning and can hurt your growth, especially if you don’t have lots of capital. Instead, find a shared commercial kitchen space you can rent and work out of until you’re ready for the next jump.
- Not knowing your margins and cost of goods. You need to know exactly how much it costs you to produce a unit including the packaging, labor, ingredients, transaction fees, and shipping costs. If you don’t know your unit costs, you won’t be able to price your product correctly. You could end up selling yourself straight into bankruptcy.
Let’s imagine that someone reading this interview has an idea for a product that they would like to produce. What are the first few steps that you would recommend that they take?
First things first, do your market research. Google the concept to see if your idea already exists. If it does, see if you can learn anything from them and be sure to check for patents too. Then I recommend you make a prototype. You need all the input and feedback you can get to improve the product, so get it in front of as many people as you possibly can. Lastly, ask yourself if this is something that you care enough about to devote at least 5 years of your life to.
Many people have good ideas all the time. But some people seem to struggle in taking a good idea and translating it into an actual business. How would you encourage someone to overcome this hurdle?
If you believe in it strongly enough, just go for it. There’s never going to be a point in time when you feel like you’re 100% prepared, so you may as well jump right in. The key is in being open to change so that you can revise and improve your business as you move forward.
There are many invention development consultants. Would you recommend that a person with a new idea hire such a consultant, or should they try to strike out on their own?
Unless your new food product is something super proprietary and crazy unique, I really wouldn’t suggest working with an invention development consultant. You don’t need them early on. Your goal should be to find that first customer and build from there without spending 20,000+ dollars on what is really just an idea at that stage.
What are your thoughts about bootstrapping vs looking for venture capital? What is the best way to decide if you should do either one?
I highly recommend bootstrapping at the beginning. I believe that venture capital is a tool to accelerate growth, but you need traction and a strong foundation first. You’ll also likely be reinventing the product and brand as you figure it all out in the beginning.
Can you share thoughts from your experience about how to file a patent, how to source good raw ingredients, how to source a good manufacturer, and how to find a retailer or distributor?
We hired a patent lawyer to file our trademarks. Google will recommend plenty, and we happened to have already been connected to one through the co-working space we were officing in. You could do this yourself, but I recommend finding and using a trusted professional so you don’t have to hire someone down the road to fix your mistakes.
For sourcing ingredients, we’ve heavily utilized Google and found many of our suppliers directly. I recommend finding trade associations related to the specific ingredients you want to source (e.g., when looking for almond flour suppliers we found a list of them on the Central California Almond Growers Association website). Another great method is to find other entrepreneurs who use the same ingredients as you and ask them who they work with. If you go to specialty food trade shows, walk the floor and network with everyone and you’d be surprised at how many can point you in the right direction for good suppliers. In all honesty though, very early stage companies can simply go to their local Costco for the most affordable bulk ingredients. As you grow and are able to purchase pallets of materials, that’s when you should try to buy your ingredients from the source, cutting out the middleman and lowering your unit costs.
For manufacturers, we asked a lot of other people (entrepreneurs, consultants, suppliers) in the CPG space for recommendations on who to contact. Referrals are always a great practice to find the best partners for your business. Once you have a list of manufacturers, call them and ask them as many vetting questions as you can to determine if they are a good fit. An excellent book on this topic is Separating the Con Man From the Co Man: How to Source a Contract Manufacturer by William FX Madden III. All specialty food founders should read it.
Finding your first retailer can be tricky too. First, you need to make sure your product is retail ready. Is the recipe good enough? Is the packaging compelling enough to draw someone’s attention, and is the product packaged in a way that makes sense for retail display? From there, you have to identify whether or not you want to tackle sales yourself or if you want to hand it off to a distributor or broker. Early on, I’d recommend a founder go out and get the sales themselves. Start local too. Look up specialty grocery or health food stores in your city and start emailing and calling them. Always ask questions to see how your product could help them increase their business. Try to get them to try out some samples of your product, and, if they are fans after tasting, try to get them to make that first order. You’ll be ignored a lot, so make sure to respectfully but regularly follow up until you get a hard “Yes” or “No”. Offering promotions like free shipping or a free promotional case up front can help get that first order in the door. From there, it’s critical that you follow-up with that retail account and give them all the support you can (e.g., providing great marketing materials or offering to do sampling events) to drive trial of your product and to develop a repeat customer base that will move your product off their shelves quickly.
Here is the main question of our discussion. What are your “5 Things You Need To Create a Successful Food Line or Specialty Food” and why? (Please share a story or example for each.)
- You need the right team behind any product. Identify your personal drawbacks (e.g. I don’t have a business background) and either find a partner or build a team who balances out your weaknesses with their own strengths.
- Persistence and patience. Know that you are in this for the long haul. If you’re not willing to spend years on this project (and probably lots of financial and emotional pain), you may want to reconsider. Entrepreneurship isn’t for everyone and that’s okay.
- Prove to yourself and others that your product is viable and that people want or need it. You need proof of market demand for your product before you invest a ton of money developing it. We started selling immediately to see how people reacted to our product and to see if there was a need for it.
- Media and influencers can be a great tool for growth early on. Identify outlets or individuals who speak to your target audience. Offer to send them free products or samples. Tell them your personal story. Even one shout out or article about you or your product can be a game changer in the early days. We found YouTube and Instagram influencers in the space, sent them samples, and received plenty of reviews and extra attention.
- Branding and packaging design are no joke. Think about where your product will be purchased and design packaging that grabs someone’s attention and gets them to try the product. You can always start with something small and simple then refine it as you go along. The key is to listen to your customers. Find out what is important to them and make sure you communicate those attributes in your packaging and brand messaging.
Can you share your ideas about how to create a product that people really love and are ‘crazy about’?
Find a problem that a group of people share, then set out to solve their problem with your product. I needed sugar-free and diabetes friendly desserts because of my type two diabetes, so I set out to make the best tasting dessert for my own needs. It turns out that millions of people have the exact same problem, so it became a no brainer to run with the idea.
Ok. We are nearly done. Here are our final questions. How have you used your success to make the world a better place?
We are providing mindful desserts for people with metabolic conditions and dietary restrictions. Healthy food has a negative connotation associated to it, and we want to reverse that narrative.
You are an inspiration to a great many people. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger.
I would love to inspire a movement that revolves around sugar consumption and regulation. There are zero restrictions on how much sugar a company can put into their food. It’s either in plain sight or hidden in things like drinks, sauces, and breads. You can’t fix a problem you aren’t aware of, so the first step would be educating the world that the food they’re eating is being pumped full of sugar. Then we would challenge the big companies to find alternatives to their cheap and highly profitable processed ingredients.
We are very blessed that some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US, with whom you would love to have a private breakfast or lunch, and why? He or she might just see this if we tag them.
It’s not a person per say, but I would love to sit down and talk with the team leading the research behind sugar and health-related complications. The more we know about sugar’s negative consequences, the better off our society will be.
Thank you for these fantastic insights. We greatly appreciate the time you spent on this.