He sold dog food from his condo. Now he does $100M+ a year. | Russell Breuer, Founder of Spot & Tango

Russell went from working in private equity to hand-delivering dog food on the NYC subway at 5 a.m. He didn't start with a VC check; he started with a studio apartment kitchen and a belief that dog food was broken.

In this episode, Russell breaks down how he turned a side hustle into Spot & Tango, a direct-to-consumer giant doing over $100M in revenue. 

He reveals the gritty reality of early-stage CPG, why he vertically integrated his own factory when everyone else outsourced, and how a simple "fresh dry" product innovation called UnKibble unlocked massive scale.

Why You Should Listen

• How to scale from a studio apartment kitchen to $100M+ revenue.
• How a simple packaging choice created a premium brand identity.
• Why your second product might become your biggest winner.
• Why the best performing ad creative is often the cheapest.

Keywords

startup podcast, startup podcast for founders, product market fit, finding pmf, DTC startup, CPG brand, direct to consumer, scaling a startup, founder stories, Spot and Tango

00:00:00 Intro
00:02:30 From Private Equity to Dog Food
00:07:36 Hand-Delivering to the First Customer
00:11:57 The Dark Ages: Cooking in a Shared Kitchen
00:19:17 Pricing Strategy Without Sales Data
00:22:50 The Pink Butcher Paper Brand Identity
00:26:26 Launching UnKibble: The 9-Figure Product
00:31:52 Why Vertical Integration is a Moat
00:40:54 The Best Ad Creative is a Sticky Note
00:47:09 Selling Out Inventory in 4 Days

Chapters

• 0:00 Intro
• 2:30 From Private Equity to Dog Food
• 7:36 Hand-Delivering to the First Customer
• 11:57 The Dark Ages: Cooking in a Shared Kitchen
• 19:17 Pricing Strategy Without Sales Data
• 22:50 The Pink Butcher Paper Brand Identity
• 26:26 Launching UnKibble: The 9-Figure Product
• 31:52 Why Vertical Integration is a Moat
• 40:54 The Best Ad Creative is a Sticky Note
• 47:09 Selling Out Inventory in 4 Days

Transcript

Russell Breuer (00:00:00) :
The company now is kind of growing fifty percent year over year at nine figures, just given product market fit. There was no margin, sweat equity is priceless, but the amount of time and resources invested in delivering those boxes, was that economical? No, and honestly, in those days, you're not building a P&L, you're building a product. You're trying to demonstrate demand. Whether you're making $1 or $2, honestly, does not matter. Iterate, innovate, you can pivot, you can launch new product, et cetera. Change the color, change the texture, change the channel. You still need early adopters and that signal gave us confidence that addressable market was there. It was only a matter of time. You're never going to get price right the first time, never and you always hear it's always better to start high than low. You start high, you can test high and if people are tolerant, great. You've got higher margin. That's a win, if you don't see good conversion rate or customer acquisition cost is too high. You can test lower prices and so you can test into the right price.

Previous Guests (00:00:55) :
That's Product Market Fit. Product Market Fit. Product Market Fit. I called it the Product Market Fit question. Product Market Fit. Product Market Fit. Product Market Fit. Product Market Fit. I mean, the name of the show is Product Market Fit.

Pablo Srugo (00:01:07) :
Do you think the Product Market Fit Show, has product market fit? Because if you do, then there's something you just have to do. You have to take out your phone. You have to leave the show five stars. It lets us reach more founders and it lets us get better guests, thank you. Russell, welcome to the show, man.

Russell Breuer (00:01:24) :
Hey, Pablo, great to see you. Thanks for having me on.

Pablo Srugo (00:01:26) :
Dude, so I mean, this is going to be a different one. We talk almost exclusively about tech on the show. You have a company called Spot & Tango. You sell dog food, right? So, I'm sure there's a lot of things that go behind it but certainly at first blush, dog food, seriously? But you've grown it to over $100 million top line. You build a sizable business here and what I thought would be particularly interesting, we'll dive into it. We'll do the origin story, all that stuff. But I mean, the areas that I find are compelling here are, you think about branding, you think about differentiation in a category like dog food that is well established, that has tons and tons of brands, and you compare that to the worry that we have in startup land about, oh, you're going after a crowded market. Because there's two companies that have raised money, right? And it's kind of this, night and day difference. And so I'm sure there's a lot of muscles that you've had to develop over time that would be super helpful to dive into, because they really will translate over to kind of the tech startup land. So anyways, we'll get into all that, but maybe as a first question. Tell me, how does one start a dog food company? What was happening right before? Where does this come from?

Russell Breuer (00:02:30) :
Yes, the origin story. Thank you for asking. So my background is very much traditional professional roles, whether it's in consulting or finance. I worked in private equity. I'm a Cleveland kid originally and spent a number of years overseas working in London and then moved back to New York. And, my wife and I were cooking fresh human grade meals for our Mini Goldendoodle, Jack. In fact, she was, and her mother was, for Jack and the family dog, George. And when I mention human grade ingredients, I'm referring to, you know, ground beef, ground turkey, brown rice, fresh vegetables, really for the dog. Primarily for the dog, only for the dog and, these are ingredients you'd feed your family and friends, right?

Pablo Srugo (00:03:08) :
And the reason was what? Just health or they're just into this stuff? What was kind of the primary motivation here?

Russell Breuer (00:03:13) :
We're mission driven people. You know, a belief that a dog is a member of the family. You know, to say the dog used to sleep outside, now the dog sleeps in the bed and so people treat their animals like family.

Pablo Srugo (00:03:23) :
Our dog sleeps right between my wife and I, so I completely understand.

Russell Breuer (00:03:27) :
Exactly, right? So it's a belief that we should be treating our animals and companions as members of the family. And so that it's inclusive of their diets. And historically, you know, legacy pet food companies, quality of ingredient input was kind of second or third priority. Oftentimes source of ingredients unknown or use of meat meals or use of synthetics, artificial additives, food colorants, colors, et cetera, et cetera. All of those issues kind of led to what people refer to as the pet health epidemic. Obesity, for example, is a huge issue affecting one in three dogs. There's ninety million dogs in the U.S. It's a lot of dogs. Diabetes, itchy coat, candida. I mean, again, there's a long list of afflictions related to diet and our view was there's a better way up the mountain here. And we want to do that for Jack. And ultimately, this idea very much started blossoming. It was a homegrown story and then realized that millions of Americans feel the same way about their dogs, and the importance of a human grade diet. So again, it was very cliche but side hustle, studio apartment, New York City, this harkens back to, you know, 2015, 2016. It was a nights and weekend thing. This was not some grand plan. We're going to build a hundred million dollar business. TDC Digital Oil was like, okay, we love our dog. Let's build recipes that suit his dietary needs. We worked with the vets and animal nutritionists to develop recipes, that are complete and balanced for dogs of all life stages. Delivered in a direct to consumer business model and what was very much a homegrown story. And kind of on the side, eventually I quit my job. My wife is actually still very much pursuing the finance path, but I quit my job, built a founding team, found a co-founder. We've been scaling since 2018.

Pablo Srugo (00:05:06) :
Let's go deeper on that. The first part I get, I mean, there's a lot of people out there that do different types of food for their dog, you know, because for whatever reason. So you're doing that, the next step is the side hustle. What even takes you, walk me through how that even happens. Do you have just a bunch of friends that are like, oh my God, can you do this for me? Is that what pulls you in the direction of just, oh, maybe we should turn this into some kind of a business?

Russell Breuer (00:05:27) :
This is a great question. The zero to one is probably, I refer to that as the dark ages, the dark times. It's a lot of grit. Every day you take it as it comes. I would say it was very much first principles problem solving. For example, we knew we had a product. We had a product that dogs were going to consume with high palatability, i.e., does a dog like the product? Yes or no? The answer was yes. What started as a studio apartment, again, you need pots and pans and ovens, a commissary kitchen to create our fresh recipes. And we can talk about our product portfolio, and UnKibble, and the story there. But in the early days, it was a studio apartment and then the next question was, well, the neighbors want it and the neighbors' neighbors, and our friends, and friends of friends want this.

Pablo Srugo (00:06:06) :
Very organic.

Russell Breuer (00:06:07) :
Word of mouth. Absolutely right, and very early testing.

Pablo Srugo (00:06:10) :
Did you set out like, we should turn this into side hustle or did you just organically start giving it to friends and family? And then realize, maybe there's an opportunity here?

Russell Breuer (00:06:19) :
The latter and again, we knew that there was a huge market. And you mentioned in the introduction, zero to one, people are, you know, it's like speed to market, first mover advantage, in pet. There's no category killer. There's no, it's not one stop shopping with one brand or the other. There's room for everybody given the scale of the industry. You know, depending on the report you read, six or seven of ten households in the U.S. have a dog, right? That's a lot.

Pablo Srugo (00:06:45) :
How much dog food is bought a year in the U.S.? Is it five billion, ten billion?

Russell Breuer (00:06:49) :
Forty. Okay, so we're talking huge industry and so finding product market fit early was very important. And the feedback was, my dog loves this. What are the ingredients? Wow, they're human grade. Is there anything artificial in it? No, there's not. By the way, my vet told me that I should explore these types of recipes because they're better for coat or itchy skin or allergies or picky eaters. That's interesting and so it was this dialogue, and again, referral-based marketing. Where we started actually receiving orders, and we kind of built together a very, you know, our original website was on Squarespace. It was a template. We uploaded photos. You could buy small, medium, large plans and it was, okay, wow, we got an order. Oh, we got two, Oh, that's interesting. Oh my gosh, we got six.

Pablo Srugo (00:07:32) :
Do you remember your first order outside of Friends and Family? Your first online e-commerce order?

Russell Breuer (00:07:36) :
Yes, it was a nurse from Brooklyn who had five dogs. Yorkies, and we would hand deliver them to her apartment, and incredible customer. Mary was her name, last name will remain confidential, but none the less, early adopter. There's two customers. There's early adopter, like big believers early without, you don't need to convince. There's everybody else, which requires the education. But we were, you know, it was like, wow, we have this customer and the thinking was never. And we lived on the Upper East Side at the time, was never, oh, how do I get this product to Brooklyn before I have to go to my day job? It was, we're going to Brooklyn. Okay. Either I was driving, or we found a bike messenger, or we were on the subway. I mean, there's, I've got stories until the end of time of, okay, well today there's five boxes going to Brooklyn to Mary's house. I'll just wake up at five o'clock in the morning. I'll take the subway. I'll drop them off on her doorstep. Say, thank you, have a very nice day and then go to my day job.

Pablo Srugo (00:08:32) :
Very uneconomical. I assume you're, you're making good money, by the way. In the margin you're making off that extra trip probably doesn't make much sense, like economically speaking at that time. That's my guess, you tell me.

Russell Breuer (00:08:43) :
There was no margin. Well, this sweat equity is priceless, but the amount of time and resources invested in delivering those boxes, like, was that economical? No and honestly, in those days, granted, the financial wherewithal of, you're not building a P&L, you're running a product. You're trying to demonstrate demand. So whether you're making $1 or $2, like, honestly does not matter and again, I'm talking at the very, very early stages of. 

Pablo Srugo (00:09:06) :
Yes.

Russell Breuer (00:09:07) :
Certainly, as companies scale over time. I can tell that story, like, unit economics above anything else and, a healthy P&L is like live or die. And a lot of companies now scale, they figure out revenue acceleration, they hemorrhage cash, unit economics are less than desirable, and they end up going bust. So you got to figure it out eventually. In the zero days, do people want this product? And for us, crucially, it's a subscription model. So there's a recurring revenue, right?

Pablo Srugo (00:09:33) :
It was always like that? It was always subscription?

Russell Breuer (00:09:35) :
Always and I would say pets are very unique with subscription models because dogs need consistency of diet, right? So if a dog, on average, is changing proteins from a Monday, Tuesday, Wednesday, you know, beef one day, turkey the next, lamb the next. That's bad for digestion and terrible for your Persian rug. Nobody wants that. So consistency of diet is good and repeatability.

Pablo Srugo (00:09:55) :
Was that also then a big test? Because that's not like I buy dog food. I guess we have, auto-ship from whatever, PetSmart or whatever it is but it's not really a subscription. Was that a big test for you, or did you know that subscription diet was already just a thing and people would do it?

Russell Breuer (00:10:08) :
We knew if you pull any kind of research reports or look at Chewy.com, you know, their Subscribe and Save is probably seventy percent of the revenue. If you have a dog, the dog has to eat and, there's. Again, you're not going to cook in January and then order a kibble in February, and continually change the diet. So obviously, in the kibble space, these bags, you know, thirty, forty, fifty pounds, you're lugging them from Petco or PetSmart to get shipped to you. Isn't that a nice value proposition, right? So skip the trip to the pet store. So subscription was always the original. We put together the website and so early days, it was okay. We're delivering to Mary, then Mary's friend ordered it, then another friend ordered it and all of a sudden, we had twenty five customers between Manhattan and Brooklyn. It's like, okay, well, that's interesting. We started looking into, can you ship the product? But if you ship it, and this. Again, at this stage of the business, that product is fresh frozen. So you require insulation and dry ice. How do I get it to this person in a frozen state, right? Because dry ice sublimates. Five pounds of dry ice, it's called sublimation. It like evaporates, it disappears every twenty four hours. So if you ship it to that person from the Upper East Side, does it take a day to get there? If so, put five pounds of dry ice. If you put less, guess what? The dry ice literally goes up in smoke. Now you have no coolant in the box and if it's lingering in a FedEx warehouse. That's not temperature controlled, product shows up, not frozen, likely spoiled, bad customer experience. They cancel. That's called churn. That's bad for business. So there is this whole logistic side of the company of trying to figure out, okay, not only is your product market fit, how do you get your product to that customer? And for us, in the early days, it was a car, a subway.

Pablo Srugo (00:11:54) :
And you're flash freezing in your house? How are you doing that part of it?

Russell Breuer (00:11:57) :
When we started getting more and more orders, we were in an incubator kitchen. I found a space in Long Island City in Queens, it's called the Entrepreneur's Space. It was a five thousand square foot commercial kitchen where multiple brands could cook at the same time and they had, you know, industrial ovens, industrial freezers. We had vacuum sealing machines at the time and again, these machines were a thousand bucks. So I'd go to a vacuum sealing OEM or vendor and pay a thousand bucks, get the machine, plug it in. I had to find a workforce. The Entrepreneur's Space had access to folks that could jump in and do shifts for eight hours at a time. In fact, these are the early days. I had to get my food handler's license. Okay, so I was working in finance, don't forget. So I'd show up, with the food handler's licenses. Most people that work in the food trade, restaurants, if you're cooking and you don't need to be the head chef, if you're a line chef or otherwise, or in the kitchen. You need to understand about temperature danger zones, food handling, proper cooking temperatures, all advised by the FDA. So, for example, you don't put raw meat over cooked product, right? Obviously, there's potentially contamination issues. I had to actually study for this exam, which is not easy. Take the exam, get a license, and now I'm going to the incubator kitchen. I used to leave my office in Midtown Manhattan in a suit, and I would go to the incubator kitchen. On the way, I would stop at a butcher in Brooklyn and buy, sorry, Dittmar's Boulevards in Queens. And buy five hundred pounds of raw product, beef, lamb, and turkey in my car. And then drive that to the kitchen with, fruit and veg, and all these wonderful things that we were buying from the grocery store. We started kind of getting a little bit of scale. Take off the suit, put on, like, t-shirts, jeans, kicks, you know, whatever and then I would grind for eight hours, and cook with a team of five. And then package, freeze, and then they would have bike messengers show up the next day, you know, three or four, put all the product in boxes and it was all packaged nicely, et cetera, in pink butcher paper in those days. Put it in their backpack, and then they would deliver. Hand-delivered on the bike, to our customers all throughout the five boroughs. So it paid cash. There's no payroll. There's no W2. It's like, so and so, here's your bike, right? Here's twenty bucks. Great, thanks very much and again. Back to your earlier question, was what the economics sound at that stage of the business? No, absolutely not.

Pablo Srugo (00:14:25) :
This story makes a lot of sense when you're twenty years old. It's like, why not? But when you're in the stage of life that you were at and already working at the level that you were working. At that time, when you're doing all this extra stuff and you're literally handling food, and just doing messy stuff that is not normal to you, what is driving you? Do you feel like, you know what, there's just something big here and I got to just invest time to see what's on the other side? Or is it something else? What's kind of pulling you in that direction and making you still want to do that work?

Russell Breuer (00:14:52) :
Yes, that's a great question. I've always dreamed of being an entrepreneur and an operator. And so that drive has been built in from a very early age. And like many people, I'm sure you have friends, I'm sure you're an entrepreneur, you're running a podcast. It's like, there's always the ideation phase, I'm sure amongst your friends, it's like, oh, post a note, like, hey, wouldn't it be cool to do X? Or there should be an app for that. Okay, like, everyone has those ideas. It's a wonderful social tool. It's very engaging and entertaining amongst friends and family. Great. I'm the guy that would have that conversation and then the next day I'd write three or four slides in PowerPoint of how to actually execute the idea. And then I would want people to engage in those ideas with me, and oftentimes naturally the conversation would taper, and get very quiet, and then it would go nowhere. That urgency or that want to build something has always been there for me and so this business idea, I knew pet was large. I knew health and wellness was trending. So the humanization of pets was happening importantly and then I knew that a digital delivery model, direct to consumer, was very new for the pet parent. And so this brand was living at the epicenter of a lot of different macroeconomic trends, health and wellness for humans, then for pets, value proposition of DTC. And it was like, wait, there's something here for sure. And once I had put my own money to work, like dollars, real dollars to bootstrap the business. I mean, not millions of dollars, but material money for me at the time, there was no going back, right?

Pablo Srugo (00:16:25) :
Was it tens of thousands, hundreds of thousands, that kind of order of magnitude?

Russell Breuer (00:16:28) :
Tens, tens of thousands of dollars. But again, you know, the thinking wasn't like, oh, you know, let's put tens of thousands of dollars into this thing and then, like, on a Saturday, I don't really feel like going to work. No, that was not the mentality. The mentality was like, it's go time. I'm invested and again, I still needed affirmation that what we were doing was working. And so, for example, if we had launched this product. This is just true, I would say, generally speaking, if you're launching any widget, a new tennis shoe, a t-shirt, a food product, a snack, SaaS app, whatever it is. You need signal, early that there are early adopters for that business and again, iterate, innovate, you can pivot, you can launch new product, et cetera. Change the color, change the texture, change the channel. You still need early adopters and that signal gave us confidence that there were more people that we could address, addressable market was there. It was only a matter of time figuring out website, delivery model, the economics, marketing awareness, et cetera, and so because we had the affirmation, that was the impetus to say, we should keep going and doing this.

Pablo Srugo (00:17:39) :
Was this the first business out of all those ideas that you actually went forward with? Or had you tried others and you kind of saw that the pull was different this time between, you know, maybe other things you started before?

Russell Breuer (00:17:49) :
This has been the one. This has been the only one. I would say that, you know, I launched the company when I was, I'm forty five now. I feel so old, I've got three kids, a dog, I live in the suburbs. Used to be a cool kid living in New York City, like, that's all changed. I was thirty seven, thirty eight when I officially launched the company. So I was, in my mind, and I don't know how the market's very different, tech. You get a lot of younger founders and in fact, pure tech SaaS is a younger man's game for sure. For early stage startup, and you need, the energy and bandwidth, and time. I'd already felt at thirty seven or thirty eight that I was late to the startup game, right? And most of the folks on my, at my team are not, you know, they're certainly not in their mid forties. Folks that I hired, and they're like, you know, late twenties, early thirties, that's the age. Cause at that life stage, you're willing to take more risks. You know that that risk could result in zero and as, you age and stage. And you add, you know, children or a mortgage to your balance sheet, you know, your risk tolerance goes down, right? So.

Pablo Srugo (00:18:49) :
Tell me a little bit about. I've got two streams, but the first one I'm going is just on pricing, right? You talked about, the margins were effectively non existent then, but I'm sure you thought about what price level. I mean, it's a premium product, right? So how did you figure out where to go to market with it? Because that's, you talk about affirmation, like one of the things that you're testing here is not just, is there demand? Because obviously there's demand for dog food, and if you make it the same price and better. There's gonna be demand, but is there demand at the price that's viable? So how much did you play with pricing in the early days?

Russell Breuer (00:19:17) :
Yeah, that's a good question. So we used competitive data to inform price, and we would look at other premium priced pet food products. And you can pull that information from visits to Petco, PetSmart, looking on Chewy and figuring out price per pound or price per ounce for any size dog. We effectively built a matrix to say, okay, here is the market landscape, right? It's, you know, I'm making this up. It's, fifty cents a pound. On average, it's fifty to seventy five cents per ounce or per pound of this type of food and I use that in relation to what the cost base was on a per ounce or per pound basis. And so knowing that, the market was tolerant of this wide range of prices. Of course, these products are priced premium, just given the integrity and quality of the human grade inputs. And so we were at the high end of that scale. And again, testing, right? So this is true, and it's been a reality throughout the kind of history of this company. We test everything. So what price, for example. You're never going to get price right the first time, never and you always hear it's always better to start high than low. You start high, you can test high and if people are tolerant, great. You've got higher margin, that's a win. If you don't see good conversion rate or customer acquisition cost is too high, you can test lower prices and so you can test into the right price. And that was part of the early story. It was like, okay, market data will inform price. Is that tolerant of our cost base? The answer, you know, objectively at first blush, yes and the reality has happened of like, oh, delivery was more expensive getting to Brooklyn. Oh gosh, that cost more than expected or the reality of a business will set in. But that's really the starting point and then from there, it's really starting to test into, okay, like, can you increase prices or can you add additional products? In our case, we've added treats, supplements, and dental care. And so, there are ways to build and boost what's called the average order value, right? Without increasing the price of the food, you can add other ancillary products to our box. Which boosts AOV and the overall margin of the box without taking price within a specific category. So again, there's just more sophistication as these companies scale. But again, first principles, it's like, anything, okay, well, I got to figure out a price, let's go to the grocery store and figure out a price. There it is and what's wonderful about digital, kind of last comment. Digital is wonderful because you can change things in real time. If you go on a shelf and your channel is brick and mortar, much more difficult. Because you're leading with price with wholesale. That's on the shelf. You want to change price. It could take you six months to unwind all of the inventory and reprice and get back on shelf. So different channel dynamics there in particular.

Pablo Srugo (00:21:59) :
Well, this is one of the examples of, there's kind of two types of products, right? You can go and create a new market or you can go after an existing market. And in a new market, a lot of these questions, price being one of them. Are much harder to answer, because the comps are harder to come up with, right? You think about AI agents for developers, right? Which you have to take cursor, et cetera. What is the true cost of that? I mean, you can compare it to what the developer costs, but you're not going after an existing market, you're creating a new one. When you talk about dog food, even premium dog food. There are a lot of things that get easier, pricing being one of them. Because you have all these comparables and you could say, oh, all these brands are premium, they charge this much, they'll charge a little less, a little more around there, and then obviously you keep playing with it but your starting point is a lot firmer. The downside of going after an existing market obviously tends to be competition, and it tends to be differentiation. Tell me a little bit about branding, right? When you think about identity, you think about design, name, logo, etc. How much time and thought did you put into that at the outset?

Russell Breuer (00:23:00) :
Great question. I would say a lot, actually. The visual identity was very important because we were. We developed a product that was very different, not kibble, not really, consumers had never seen fresh human grade food and so actually the company name in the early days was Brewer Premium Pet Foods, which is my last name. Now it's Spot & Tango. So we've rebranded, and there's been the journey of rebranding from a kind of design perspective, et cetera. But we wanted to dial in a specific blue, a specific font. The fresh product was vacuum sealed in plastic, and then we would wrap each unit in pink butcher paper. Okay, if you ever go to the deli, buy a boar's meat, you know, sandwich, what have you, there's the, are you raw? They say it's pink butcher paper. It's kind of a brown-pink hue. Everyone in the world associates something with pink butcher paper and I will tell you that they associate human, premium, right? And local, there are these elements. It's very experiential. So it was very important to us that every unit was wrapped in this pink butcher paper, which played beautifully and people love it. Execution was a complete headache. How do you hand wrap? How long does it take? How many units per minute, per hour, to wrap? Forget the commercial realities of that. Building that identity, I think, was very important in standing out from the pack. To your point, there's a lot of competition, and ultimately, if you're an e-commerce brand, you are competing for clicks and competing for time, and consumers are distracted. And maybe they're doom scrolling on TikTok, they're holiday shopping concurrently, looking at tennis shoes, the phone's ringing, the SMS is going, they're getting IG notifications, and it's like, how do you stand out? And you have a very short period of time to draw somebody's attention, to stand out from a brand perspective. And so we made a lot of decisions early days to focus on that. And again, this wasn't tens of millions of dollars spent on a branding agency. It was very much homegrown. It was our own kind of ideas and then remaining consistent to convey that kind of brand identity.

Pablo Srugo (00:25:06) :
By the way, how does it work? You order for a week, keep it in the freezer, and you take it out each day as you use it? Or how does the food actually work?

Russell Breuer (00:25:11) :
We have two products. One is the fresh frozen product. So it's delivered in a frozen state. It's cooked, so it's ready to serve after you defrost. It goes in the freezer, you defrost in the fridge, and it's ready to serve.

Pablo Srugo (00:25:21) :
That was the original product?

Russell Breuer (00:25:23) :
That was the original recipe, original product, yes and then we launched a brand called Unkibble in April of 2020. Unkibble, we refer to as fresh dry. So kibble is a word in the industry. Unkibble is the antithesis of kibble. So it's all the same fresh ingredient inputs, but we extract the water and the reason we did that is because the fresh frozen recipes are expensive. Because to ship it to you I need insulation and dry ice. And it's inconvenient, it has to go in the freezer. You want to ask anybody in the five boroughs of New York how much room there is in the freezer? The answer is none. You're choosing between your own meal and your dog's meals.

Pablo Srugo (00:26:00) :
It's too much sacrifice, man. Yeah, it's tough.

Russell Breuer (00:26:02) :
Exactly. So Unkibble was the answer. We are offering affordable health and wellness. And by taking water out of the product, we made our fresh recipes shelf-stable, right? No dry ice, no cold chain. They're thirty to forty percent less expensive than the competitors. That product we launched in April 2020, and that business alone is doing nine figures five years later.

Pablo Srugo (00:26:23) :
The original product you launched when? By the way, 2015?

Russell Breuer (00:26:26) :
The original, original, like formally 2018, is when I went full time and started scaling the business. We had kind of bootstrapped in advance of that and then, I would say kind of a year and a half after going full time, we launched Unkibble. And Unkibble really has been the driving force of our company. In fact, that's where we staged and raised, venture and private equity capital. And then we built our own factory in Allentown, Pennsylvania. We have a hundred people on staff, and that facility is scaling very rapidly to enable the scale of Unkibble. Because the company now is kind of growing fifty percent year over year at nine figures, just given product market fit.

Pablo Srugo (00:27:00) :
I'm going to ask you for a small favor, a tiny little favor. In fact, it's not even, now that I think about it, it's not even really a favor for me. I'm actually trying to help you do a favor for yourself. Just hit the follow button. You won't miss out on the next episode. You'll see everything that we release. If you don't want to listen to an episode, you just skip it. But at least you don't miss out. What percent of your sales are Unkibble versus.

Russell Breuer (00:27:22) :
Unkibble is the majority.

Pablo Srugo (00:27:24) :
Is the larger? Okay.

Russell Breuer (00:27:25) :
We like to say it's our business and our food is the benefits of a fresh frozen diet and the convenience of kibble. Because it's this wonderful reality of, it goes into the pantry. So for busy on the go pet parents, it's scoop and serve, right? So it's in the bowl, off you go to the office. And I would say the most important piece of why there is wonderful product market fit, we personalize the recipes. So we learn about your dog's lifestyle, age, weight, activity level, and we use that to inform the number of calories your dog needs per day and per meal. And the scoop is customized to your dog. So your dog, your twenty pound dog, is feeding a different volume of product per meal than the sixty pound bulldog. Because caloric needs are very different. So it's that level of personalization that people kind of gravitated towards. But in the early days, back to the kind of zero to one conversation, there was no algorithm on the website. There was no funnel. It was like, do you want small, medium, and large, yes or no? Very simple and that's one of the pain points of the industry. On the back of a dog food label, people will recommend two to four scoops of kibble per day. It's a very wide caloric band, and I may feed the dog two scoops in the morning, and my wife may feed the dog three scoops or four scoops at night. Because the dog's been well behaved. Well, that's a disservice to the dog's waistline and so, we are precision calories and precision recommended meal plans, and that's been a big win for us.

Pablo Srugo (00:28:53) :
You know, I asked about the percentage just because it is interesting to me how, you know, what came later. Oftentimes you'll think you have a core product and then you'll add ancillary products, you know, bundle this and that. And typically the idea would be like, you have your core product deals at maybe ten percent, thirty percent here, these sorts of things. But when the second product actually becomes the majority of your revenue, you know, what that says to me is there's a lot of paralysis by analysis, right? If you thought at the outset, raw food would be hard to or fresh food I should say. It's going to be hard to scale, there's going to be all these issues, how are we going to get it to $1 hundred million, $5 hundred million. Do you know what I mean? Sometimes you just have to go out with something, follow the market poll, and then the other ideas tend to come. You really have to be in the market to win the market, I think, long term, and I just wanted to flag that up because it was a good example of that.

Russell Breuer (00:29:42) :
Yeah, it's you test and we test a lot of things that don't work. You know, we test the UX, UI, and the website or checkout experience or the funnel. We've tested colors. We test, you know, if you're building anything, testing even the color of the checkout button, is our customer service number and checkout these signals to the customer will inform things like conversion rate, customer acquisition costs, et cetera. But you won't know unless you try, and you need to be willing to accept failure. Which is we thought of this really cool idea and we branded it, and it didn't work. And it's like, OK, did it not work because there is an issue with delivery or the online experience, or is that inherently a product challenge? You know, the expression like fail fast, fail often. That's like, I think a key success criteria for many entrepreneurs. You got to figure out if there's an inherent product challenge, like turn off product and figure out something else. I think far too often people are overinvested in one thing and they continue to try to make it work and continue investing good money behind bad money. When the reality is, you're not getting that positive affirmation. To my earlier point, find a different way up the mountain. I wouldn't suggest change category, but I'm suggesting there's many other different ways, whether it's in service or product, to get up to your destination. So rapid testing helps inform what that path looks like.

Pablo Srugo (00:31:05) :
One of the classic VC questions that, to be clear, I think people over index on but it's still classic, is this whole competition piece. So in your case, it would be something like, well, OK, if this is so hot and it's so good and people love it. What stops ten, twenty, thirty, fifty, one hundred other companies from offering a product that is virtually identical and then ultimately it just becomes a race to zero, the margins get compressed, there's no way for you to keep growing at fifty percent year over year. Because there's just so many other people that are taking that market alongside you. How has that actually played out and worked out? I'm sure there are others doing something similar, but really what has happened over time is others, I'm sure, saw the success of what you're doing, and how much do you worry about that, how do you protect yourself against that, if at all?

Russell Breuer (00:31:52) :
Great topic to discuss. One is we have a very strong competitive moat with the Unkibble product line and what I mean by that is we vertically integrated the entire business, and we built our own factory, right? So you can't make Unkibble in a commissary kitchen. The fresh frozen recipes you can. There's actually been a lot of market entrants with the fresh frozen, that product format. With Unkibble, we have a very proprietary fresh dry process. You need a physics degree to operate the equipment. The equipment takes years to purchase, given long lead times. There aren't many OEMs actually creating the equipment that we use in our facility and verticalizing is a very contrarian action. Most brands in our cohort, they outsource. They outsource to co mans. They don't control quality. They don't control procurement. They don't know how to produce. They don't know what food safety or HACCP plans are. They are marketeers, and they outsource to other people.

Pablo Srugo (00:32:47) :
Is that true even of the incumbents of the large brands? Not just the e-commerce kind of upstarts?

Russell Breuer (00:32:51) :
The large brands have their own facilities for sure. But within, let's say, the kind of DTC venture backed world, within pet. Nobody insources, that's too hard. It's too hard and it's too expensive. So if someone else can do it for me, why not? And so I think there's an inherent weakness in that. And so for our business, we don't actively worry that someone's going to take share just given product market fit and our ability to execute. One, have there been copycats? For sure. On the branding, on the packaging, imitation is the greatest form of flattery. Did we hear that expression?

Pablo Srugo (00:33:27) :
I have, yes.

Russell Breuer (00:33:28) :
We've seen that and I would say the other most important thing to remember is innovate or die. So you've got to continue pushing the envelope and for us, not only do we have food, we've launched treats, as I mentioned, we've launched supplements, and these are all done the Spot & Tango way. We're a mission-driven brand, so everything is obviously human grade of the highest integrity. We launched a brand called Pup Gum recently. It's called pupgum.com. It's the first of its kind dental care product for dogs. It's a dental chew categorically, but it's like a gum. We thought it was either an absolute genius or a really dumb idea. It's like gum for dogs. Of course, the customer looks at that and says, well, my dog can't chew gum. The answer is like, actually, we ensure your dog can chew and ingest it. Because that's where product efficacy takes place and to kind of give you a bit of the science, there's a unique postbiotic in each dental chew. Which attacks bad breath, attacks the biofilm on the teeth. Which leads to bad plaque and bad breath and so there are hard clinical claims. There's a two year research and development project to, implement and launch that product. It's working unbelievably well. But innovation, we've got three or four large swings on innovation in the next twelve to eighteen months. To stay ahead of the competition, regardless of the moat we have on the supply chain side, from a product perspective, to your point, which is true. You got to keep moving. If you rest on your laurels and you tread water, someone will eat your lunch. It's a capitalist society, there's a lot of capital, there's venture, there's private equity. There's someone right now, I know, trying to build a better mousetrap in pet, for sure and my job is to be ahead of the curve on the innovation side.

Pablo Srugo (00:35:14) :
What about the big guys? What if one of the big brands decided to go down this road? Is that still, you think, the innovation that keeps that from killing your company, so to speak? Or do you not see that as a realistic thing that would happen?

Russell Breuer (00:35:23) :
If they wanted to enter our market, absolutely. Could they figure it out? Absolutely. I mean, they have obviously the balance sheets and legacy to do that. I would say where big brands fall short is their digital expertise. We are digital e-commerce marketers. It's lower funnel, it's paid performance marketing. We've insourced all of the buying on the marketing side, engineers, et cetera, and so the large guys are primarily brick and mortar players where sales velocity is very different than an e-commerce brand. The proof's in the pudding, building a nine figure business in a handful of years. Brick and mortar brands could never have done that. They grow kind of two, three percent year over year. We're obviously growing much faster than that and so where we have a distinct advantage, even if someone were to launch in our category. They're pushing their product out on the shelf and we're doing it online, which is a very different proposition to the customer.

Pablo Srugo (00:36:14) :
The product velocity, I think, is, by the way, the key. I mean, at the end of the day, if you think about the startups, I mean, if they're getting to you by copying. As long as you are consistently innovating, then that is really kind of your value add to the market and why customers will stick with you long term. Some obviously will switch and there may be some disruption as a result of more entrants. But as long as you're always a step ahead, so to speak, then that really is why customers will stick with you. Because they want to be with the company that's always delivering the best stuff over time versus the one that's always a few months behind. It depends on the industry, it depends on the situation, but I think in general that's more true than not, and I think that's something that's often missed by this competition question. Which I think looks at the world as almost status quo, almost static, I guess, would be the right word. It's like, OK, well, you built a product, now it's here. You add best bells and whistles, but then somebody will come in and copy. Yeah, but what about the next product? What about tech changes in three years and five years and ten years, whatever? And, you know, who's staying on top of that? So I think that's a great point. The last part I really want to go deep on is go to market, right? And I think go to market tactics is, I mean, every single founder who has a product wants to know how to get more customers tomorrow. And especially direct to consumer, I mean, it's cutthroat, very competitive. Obviously, you mentioned word of mouth referrals, that's a big piece. But when you think about top of funnel, what were some of the things that you tried in the early days that either worked really well or didn't work at all?

Russell Breuer (00:37:38) :
Yes, I'd say, again, this testing framework, right? For us, just context, we spend our dollars on channels like Meta, Google, TikTok, Affiliate, Direct Mail, mostly. We don't spend as much on traditional top of funnel brand marketing like billboards or wild paste things and so lower funnel direct response marketing is very measurable, and we measure everything by customer acquisition costs. So how much did it cost to acquire the customer, right? How much revenue does the customer generate on average every twelve, twenty four, thirty six months? What's the contribution margin on average per customer? So we look at all this data, right? I'd say two really important foundations. One is data is everything. So for brands, we built a data stack very early, segments, BI tools. We used Looker in those days, which then Google acquired recently after we started partnering with them. Finding out and when you're in the DTC world, if it's a subscription model. Maybe the best marketer in the world, you may acquire that customer once. What happens at the second order? Do they churn? And if so, why, right? And so there are a lot of channels and ways to actually acquire a customer, but you may acquire a very low-quality customer. For example, if you run a deep discount to drive trial and boost conversion rate, great. Your ROAS or your customer acquisition costs may be very low for the first order. But you've got to figure out what kind of quality customer that is. We've learned that the deeper the discount, we attract a value shopper that will typically churn out very quickly after the first order. The lower the discount, you're attracting a higher quality customer who has higher propensity to continue ordering the product month on month. And so for us, it was, let's figure out what data means at Spot & Tango. How do we understand customer behavior? And if people cancel, we understand why. Was it price? Was it palatability? Was it a shipping experience? Was it a shipping delay? Was it a tech experience? How much information can you glean from a BI tool versus survey versus conversation versus NPS scores? Get as much as you can and I'm not talking about year two, I'm talking about year one. When you start these companies, information is knowledge, and it helps inform the way up the mountain.

Pablo Srugo (00:39:58) :
You're looking at this data very early on early days 2018. You're looking at this stuff.

Russell Breuer (00:40:02) :
Yes. So you've got to figure out how to inform the way up the mountain. You've got to understand everything about the customer. So that's understanding what the metrics are. It's like, what are we? What is success? I think a lot of people throw spaghetti at the wall and the whole, well, I'll just figure it out later. We're like, no, you're going to burn a lot of capital doing so. If you do raise institutional money, it's okay. How do I understand the customer dynamics to inform my marketing and my channel? So that's one piece and then the second is, you got to push the boat out and spend money, right? So you pick your channels, whether it's the ones I've mentioned, kind of the core performance marketing channels. You set your budget, you set your target audience, you set the bid. Creative is everything. The other big foundational piece here is creative. You know, we like to say that we're in the entertainment industry, right? So I'm only as good as the most recent ad that I've launched.

Pablo Srugo (00:40:54) :
Do you remember one of like your best performing ads from the early days? That one that really stands out?

Russell Breuer (00:40:58) :
Yes, yes, I do. Oh gosh, we had influencer videos. We had videos that we had interesting GIFs. We had a lot of studio produced assets, right? And again, this is not the zero days. This is kind of, you know, when we had started in the early scaling days. We had all sorts of different creative optionality. The one ad that performed the best actually still performs very well today is a static photo of Unkibble on the shelf in our office. So our hero product on a shelf in the office with a sticky note attached to it that says twenty percent off. Literally, that's it. There's no big, beautiful studio produced ad with music. It's not some AI-generated Sora video or GIF. It's just very simple. It's, I would say, a nod to UGC, user-generated content. Which plays very well for us and it's authentic, right? It's like, okay, that looks like a shelf in someone's home with the product and I think customers identify with that, and they go, that's real. That looks good, that's authentic and it's real. I'm interested in learning more. This is not some hopped up, overly branded asset where you think, like, I distrust that, something about that does not look legitimate and so, that's been honestly a big realization and learning for us. But you got to push the boat out. You got to test. So once you've dialed in your data stack, you figure out your metrics, you start testing small budgets at first, and you feed creative. The pipeline of creative is very important. It's like, so on Meta, for example, in Business Manager, we load creative, and we tested creative, and we may test an ad with a dog owner, dog bowl in a kitchen. And we'll have the same asset that's human, dog bowl, backyard and, we run both ads. Let's say backyard's not performing so well, turn it off and the kitchen's performing better. Lean in, invest the dollars, watch your metrics, watch your metrics and when that ad starts to fatigue, you turn it off, and you have other ads behind it. So you're constantly feeding in these creative outputs across different formats in different paid performance marketing channels and that is how we were able to kind of rapidly scale because, again, you're competing for clicks. I mentioned earlier this very competitive e-commerce landscape. Everyone is distracted. I've got companies bidding on my terms. I have other CPG brands competing for attention and so if I have creative that breaks through. That's what works and you just have to continue iterating. You cannot sleep on the creative. That's been a big learning for us.

Pablo Srugo (00:43:29) :
You mentioned you decided to go in full time. You started 2015-ish, you went full time in 2018. What was the state in 2018, that led you to decide, you know what, it's time to go all in?

Russell Breuer (00:43:39) :
Velocity, it just got to a point where people were ordering this stuff hand over fist. It was like, oh my gosh, I can't do this part time anymore.

Pablo Srugo (00:43:46) :
What revenue level was it at that point?

Russell Breuer (00:43:49) :
Oh gosh, I mean, very small.

Pablo Srugo (00:43:51) :
A few million?

Russell Breuer (00:43:52) :
No, no, no, no, no, no, no, not even, not even near that. It was the, it was kind of the one order a day to like ten to twenty-five orders a day, right? Where that doesn't seem like a lot, but multiply by seven, four weeks a month. And it's like, I've got over a hundred orders. I got to go make all of this stuff back to the kitchen. Okay, everybody, we need another vacuum sealer. Oh, well, yeah, gosh, we need, how many more rolls of pink butcher paper do we have? We used to have one, now we need ten rolls. Who's carrying that stuff? Where do we put it? Oh, well, the incubator kitchen, there's not enough room. Oh, there's no storage closet? Well, yeah, there's one, you get your little shelf that you rent, and it's like, that's room for one roll and the cooking utensils, they, well, I need five shelves. Like, okay, this thing is happening. We're, it's, we're growing. So we grew out of the incubator kitchen very quickly. So we always like to say this, this whole story started in a studio apartment in a very small incubator kitchen. Now we have a seventy thousand square foot dedicated factory in Allentown. So again, and that's part of growth, but there were moments like that. I wouldn't say there was a singular like, aha, lightning strikes, like Mario Puzo's Godfather, the Thunderbolt. It wasn't like, oh my gosh, this is it. There were moments in the early days where you could see and feel the growth. And that was the, again, I use the word affirmation or encouragement to say, okay, let's go, let's go full time and scale.

Pablo Srugo (00:45:19) :
So you joined full time 2018. When did you hit a million? When did you hit 10? What was that early growth curve like?

Russell Breuer (00:45:24) :
It took us probably a year to get to a million dollars of revenue. Because we were, again, we built the website, built the algorithm, the funnel. We had to build out the supply chain. So we moved from this very small incubator kitchen to a co-manufacturer that could produce our recipes at scale. We had to hire a team. We raised a very small family and friends round. So it took us, you know, a year plus to really build out the foundation and, again, we always like to say we were building the plane while we flew it. You know, it's like, okay, we're getting great acceleration, but you have to build all the infrastructure around it and, people like to talk about growth, regardless of the industry or category, but operationally, if you're in the CPG space, operationalizing hypergrowth is very difficult. You've got to make products at scale, right? Profitably, and package, and get to a 3PL, and get to your customer, and then you have to do that every single month. Like, in a subscription model there is no second chance for being late because don't forget a dog has to eat. This is not like, you know, if you're ordering a new T-shirt and it's two days late, my guess is you're probably not thinking as much. Now, if it's two weeks late, maybe you're a bit grumpy or the new, you know, Air Force Ones or whatever. Food, you can't be late. Dogs got to eat, right? So you've got to build up enough volume, enough product to continue servicing that demand on a recurring basis and so operationalizing all this stuff becomes a big challenge.

Pablo Srugo (00:46:51) :
So it was maybe a year to one, another two years or so after that to 10-ish. Is that right?

Russell Breuer (00:46:56) :
Yeah, I'd say that's about right and then it kind of went very, very rapid. Yeah.

Pablo Srugo (00:47:01) :
Perfect. Well, listen, let me stop it there and I'll ask the last three questions we always end on.
The first one is, for you personally, when did you feel like you'd found true product market fit?

Russell Breuer (00:47:09) :
I'd say April 2020. At scale, is what I'm referring to. But I mean, there were probably two moments. The first was in the studio apartment, which was encouragement to actually go off and do this full time. So, that was a moment. I knew people were buying this stuff. But I would say when we launched on Unkibble, I had never seen that level of growth before. Experienced that myself. It was kind of, we always tell this story, but we had. At the time with my co-founder, we were debating whether to order a $70,000 or $80,000 purchase order of product, which is a lot of money. Even back then, it was a lot. Even now, those are material dollars and we thought it would last like three or four months, the inventory. We sold out in four days.

Pablo Srugo (00:47:52) :
How fast did Unkibble hit like a million?

Russell Breuer (00:47:54) :
Six weeks.

Pablo Srugo (00:47:55) :
Wow, crazy.

Russell Breuer (00:47:56) :
Yeah.

Pablo Srugo (00:47:57) :
But it's not software. Yeah, you got to fulfill that. Yeah.

Russell Breuer (00:47:59) :
That's a fantastic headline. Isn't that amazing? And it's a great, well, how do you? So we had two people on customer service, and customer service tickets went from like five a day to five hundred a day. It's like, oh, okay, that's interesting. I need to, how do I, I have to hire a customer service team. I have to make more of this product faster and get it to the East Coast, West Coast, North, South to distribution centers. How do you do all that stuff? So again, alongside the growth curve is your cost of goods sold. If you kind of travel down south in the P&L, it's like, oh, wow, I've got a big stuff. So anyway, I would say, back to your question, that's where we found a different level of product market fit, which was, again, a big driving force in the company's success.

Pablo Srugo (00:48:41) :
And was there ever a time where you worried that things might not work out? Maybe Spot & Tango might fail?

Russell Breuer (00:48:47) :
That's an interesting question. It's only been in hindsight when I've reflected on those moments. You know, zero to one, we refer to as the science experiment days, right? Where these companies can blow over with a high wind. I mean, there's, we've talked about a lot about product market fit. There's capital constraints. Are you raising capital? Are you self financing? There's website, people, team, all these things and then all the external factors. At every milestone, when the team grew from two to eight, that was so exciting. I mean, like really just amazing because again, we came from a very humble beginning, and humility is one of our values. You know, having done all the cooking myself, doing customer service calls and food handlers license and bootstrapping. Even the fact that we were hiring people to work for the company, was amazing. It's like, wow, we employ five people. Now we employ one hundred fifty, but back then it was like, this is amazing. Six, seven, eight. It would only be in, you know, I've looked back on those days, even now, or every year I look back and think to myself, wow, we were a small company. We were really small. We thought everything was going so well and it played, but our success was not linear. It's up and down. I would say we've always vectored up and to the right in a positive direction. But looking back, no doubt there were moments along the way where, I mean, COVID happened and we didn't know what was going to happen. We launched on Unkibble, we didn't know what we had. We just launched it and thought, this is amazing. Let's just see what happens and whammo, here we are. That could have played very differently, right? And so we'd be on a different trajectory. And so it's always these moments looking back, and even we were a different company last year. We grew fifty-five percent year over year this year and so, with that has brought so many new opportunities and new challenges. So I'd say in the earlier early days, yes, there were some moments when in hindsight we may not have made it, but again, we didn't think that way. It was like blinders on, let's go, let's remain persistent and that's, I would say, the most important characteristic of any entrepreneur in my opinion. It's grit, you just have to get up and keep going, like one day at a time. You look back in the rearview mirror fifteen, thirty, forty-five days later, six months later, a year later, if you are gritty, you build, that's how it works. If you're apathetic and you don't want to eat glass for breakfast for a few years, like don't do this.

Pablo Srugo (00:51:12) :
Perfect, well I was gonna ask your number one piece of advice, but I think you just gave it. So let's end it there. Russell, thanks so much for jumping on the show, man. It's been great having you.

Russell Breuer (00:51:20) :
Awesome, thanks Pablo, really enjoyed it.

Pablo Srugo (00:51:22) :
Wow, what an episode. You're probably in awe. You're in absolute shock. You're like, that helped me so much. So guess what? Now it's your turn to help someone else. Share the episode in the WhatsApp group you have with founders. Share it on that Slack channel. Send it to your founder friends and help them out. Trust me, they will love you for it.