Shopify Happy Hour

Bootstrapped to 100K Email Subscribers @ IQBAR: Will Nitze’s Genius Growth Playbook

• Dan Cassidy • Season 1 • Episode 9

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Will Nitze, founder and CEO of IQBAR, shares how he built a brain and body fuel brand from the ground up.

This episode is packed with game-changing insights for founders and health-conscious hustlers!

Will reveals:

  • The "secret" growth hack that helped him generate his first $90K in sales—something you won’t find in any marketing book
  • How he built an email list of 100K subscribers without spending a dime on paid ads
  • The brain-boosting science behind IQBAR’s ingredients and why they work
  • How a bold Kickstarter launch helped turn IQBAR from an idea into a brand
  • Why he pivoted from just “brain food” to a full-body performance nutrition approach
  • The toughest manufacturing challenges he faced—and how he powered through them
  • Why pricing is actually a marketing strategy—and how to use it to your advantage
  • The founder’s role in product development—and why you can’t afford to outsource it too soon

Tune in now to get the inside scoop on how Will built a profitable, mission-driven CPG brand from the ground up.

Products and brands mentioned during this episode:

Chapters

00:00 Introduction to IQ Bar and Its Offerings
03:01 The Science Behind IQ Bar's Ingredients
06:09 Evolution of the Product: From Brain Food to Body Fuel
12:02 The Journey of Launching IQ Bar
17:49 Kickstarter Success: Strategies and Insights
27:16 Funding and Financial Challenges
30:23 Product Evolution and Manufacturing Journey
37:08 Navigating Manufacturing and Supply Chain
42:12 Marketing Strategies and Sales Channels
50:42 Achieving Profitability Through Volume
54:12 Lessons Learned and Future Strategies

Dan (00:01)
Welcome to the Shopify happy hour. On this show, you'll hear from Shopify founders, operators, and experts on growth marketing strategies, lessons learned from the trenches, and other nuggets of e-commerce wisdom shared over a different drink each episode. Today, I'd like to welcome Will Nitze, founder and CEO of IQBAR, which makes superior brain and body fuel, including plant protein bars, hydration sticks, and instant coffees. Will, welcome.

Will Nitze (IQBAR) (00:29)
Thanks for having me.

Dan (00:31)
Yeah, excited to have you on. So I've got my IQBAR hydration packets and plant protein bars ready to go. Before I crack both of these, what sort of IQ bump am I gonna get if I have both of these at the same time? Is my brain gonna explode? Like what's gonna happen?

Will Nitze (IQBAR) (00:48)
It might,

it might. No, you know, I won't, you know, can't, can't saying, I can't get too claimy. But just, you know, pay attention to your brain and body through the early to late afternoon. And I think it'll be pleased.

Dan (01:04)
Awesome, awesome, fantastic. Well, I'm going to, so I've got a few different flavors in front of me, peach mango, lemon lime, blueberry, pomegranate, and I'm gonna go with the blood orange. What are you having today?

Will Nitze (IQBAR) (01:15)
Blood Orange is a crowd pleaser. I'm doing a Raspberry Lemonade, which is actually was a seasonal and we're bringing it back full time. So it's not even on available for purchase, although it will be in a couple of weeks when we bring it back full time. But we can get into that too. We do, have a whole LTO limited time, time offer strategy, which has worked great, but yep.

Dan (01:40)
Fantastic, yeah definitely want to dig into that. So I've got my blood orange. So for anybody watching or listening, so it dissolves pretty quick. Just poured it right in a tall glass of water, mixed up pretty well and cheers good sir. Thank you for joining us.

Will Nitze (IQBAR) (01:52)
Cheers.

Cheers.

Dan (01:57)
That's very nice. It's very subtle, blood orange, very nice. You know, a lot of times with hydration packets, they can taste a little like medicinal almost, but this is nice. Tastes pretty clean. Just a hint of blood orange and yeah, pretty tasty. Nice job there. So question for you, how long before I feel any, let's say mood enhancing effects and what would those effects be?

Will Nitze (IQBAR) (02:05)
Yep.

Yeah. So what's cool about our hydration sticks and our coffee sticks is we use a compound called Magteen, which is the trademark for magnesium L3 and 8.

Not to nerd out too hard, magnesium, there's a bunch of different magnesium molecules. There's magnesium chloride, magnesium citrate. So one of them is magnesium L3 and 8. So it's a magnesium and then 3 and 8 is actually the bigger part of that molecule. And what's special about that is that the 3 and 8 ferries it across the blood brain barrier. So it gets magnesium into your brain.

That's the only molecule that does that for magnesium. So you take any other magnesium supplement, which are usually much cheaper, is never actually getting to your brain.

So that's why magnesium L3 and 8 is it's kind of having a moment right now, like Huberman talks about it and Peter Tia and all these like talking heads are very bullish on magnesium L3 in it. So we use 750 milligrams of it per serving and there are a bunch of clinical studies done at one and a half grams. So we recommend you drink two a day or drink one IQ mix and one IQ Joe hydration and coffee. However, you want to slice and dice it to get to one and a half grams. That's what most of the clinic.

And yeah, I mean, it's, fairly quickly onset, within 15 minutes. Um, you know, you're not, it's not like THC or something or whatever. And it's also non-STIM. So it's not like caffeine, but it's, it's a decent analog for it is L-theanine if you're familiar with that. So that's a compound and amino acid and T, um, which basically smooths out caffeine. So, um, it pairs really, really well with a STIM.

like caffeine or nicotine or whatever. But yeah, it's just sort of like a subtle, like you just feel better. Yeah, there's all these other things I get we technically could claim like response time goes up, short-term memory goes up, blah, blah, blah. But we're kind of light on the claims on that. And it's really just clarity and mood and of course, hydration in addition to the magnesium L3 and A.

Dan (04:39)
Fantastic, I love it. So thanks for helping us both be hydrated at the beginning of this podcast. So next up, we've got these plant protein bars. I've got a few different options here. Chocolate sea salt, peanut butter chip, and almond butter chip. think I'm feeling chocolate sea salt. So tell me about what's in these.

Will Nitze (IQBAR) (04:59)
Yes, it's a man. It's been an evolution. So we're, know.

coming up on, we're about seven and a half years in. And when it originally started, the original idea was brain food, like simple as that brain food. So everything is body, body, body. So digestion help, or I'm going to build more muscle or, you know, I'm going to lose weight or whatever. Like every packaged food that was functional was, was body centric and no one had done something that was brain centric. So that was, that was the original idea. There was no data that people wanted that. just figured they would cause they want

brain functionality from other things like pills and powders.

So that was what our starting point, what, we learned pretty quickly is people want brain and body value propositions. So, and what really that means just is protein and fiber in addition to, to the brain food element. And what do I mean by brain food? Right. that's kind of like a high level thing. It really just means we center all of the inputs into the bar on things that are rich in compounds that have been shown to be good for your brain. So magnesium, vitamin E.

flavonoids, medium chain triglycerides, and then lion's mane we add as well, which is a mushroom extract shown to confer a bunch of brain benefits. So, but it's a delicate balance, right? Because we don't want to be a supplement, we don't want to be a medicine, and so it's just a brain healthier option.

But it centers on all of those things in addition to having 12 grams plant protein. And then actually what's like really the crowd pleaser is one gram sugar. So and that's not like added sugar. That's just sugar from almonds predominantly. So high protein low sugar is kind of the quickest way to give the value props.

Dan (06:57)
Nice, good stuff. Well, I gotta say, I typically for these podcasts try to reserve consuming the products before the show so I can kinda taste it live. But I was at the office a couple weeks ago and I had some IQ bars there and I'm doing the 75 hard fitness program. So, know, I'm working out a bunch, eating clean and I was just hangry. And I saw some of the bars, I'm like, I gotta dig into this stuff. And...

Will Nitze (IQBAR) (07:19)
Mm-hmm.

Dan (07:24)
You know, I'll talk through the kind of flavor proof on a minute and what the texture is and all that stuff. But in terms of just what's in the bar.

Here's why I like it and I like what you're doing is, you know, for decades, the sort of snack bars have gone through a bit of an evolution, right? And these let's say protein packed or healthy snack bars. And years ago, if I'm thinking about back in the nineties when I was, you know, working out hard, doing a bunch of strength training, there were a lot of protein bars out, but they were all.

They tasted like dust or dirt, or they were just really like they, they chalky, sandy. They were, they were not good. And then I remember there started to be a few protein bars that came out that were actually really tasty. So one is the detour bar back in the day. It was delicious. It was like a Snickers bar, but the only problem was it was basically a candy bar with some protein added. So it was like, it was definitely not good for you. There's all these ingredients you can pronounce and it tasted great, but that stuff where I was like, I just don't want this in my body long-term.

Will Nitze (IQBAR) (07:59)
Yeah. Chalky.

Mmm, yep, I remember it.

Dan (08:26)
because it's probably not the best stuff. And then I think over time, know, over the next couple decades.

there's been a lot more focus on healthy living. And so there's been more snack bars that have come out that were, let's say clean, where it's just, you know, a few different ingredients, fruit, vegetables, nuts, things like that. But lots of those were geared towards almost endurance athletes because it was just lots of sugar, lots of carbs, low protein. And if you're trying to watch your macronutrient profile and go with a higher protein bar, there weren't a lot of options out there.

Will Nitze (IQBAR) (08:39)
Mm-hmm.

Dan (08:59)
So what's nice about this is you've got a good amount of protein in here. The calories are pretty low. I think they're like 160 or 170 calories per and about 12 grams of protein, low sugar. And they taste good. You know, it's very different than the old protein bars of back in the day that were chalky or sandy. You know, the texture here, these are pretty chewy. Each of these flavors are pretty nice. So I think that chocolate sea salt for me is a favorite, but they're all good. And what's nice is, you know, there's no like junk

Will Nitze (IQBAR) (09:19)
Yeah.

Nice.

Dan (09:29)
in them. They're pretty clean. They taste good. And the functional element for the for the brain health is a nice little bonus. So yeah, great job with the So in terms of in terms of onset for any sort of let's say effect from the bars, would that be different than the hydration packet?

Will Nitze (IQBAR) (09:40)
Right on. Love it.

Yeah, definitely. mean, so there's no like, you know, we haven't done clinicals on the bars and, and, and all this stuff. So this is kind of a, maybe a counterintuitive thing, right? So for the brain, really what we're first and foremost trying to do is eliminate bad things versus propose good things. That that's like.

So the standard American diet really is putting in, you know, carbs that break down very easily in your gut and turn into blood glucose cause your mental energy to go up and then crash. Right. So first and foremost, you're protecting against that. Right. So the absence of a negative is actually a bigger deal than the preponderance of a positive. So you just have to like frame your, your, thinking around that first. And so it's mostly your.

feeling an absence of a negative, right? So you're consuming a snack, you're feeling satiety, and then you're not crashing.

It's a less, I would say, addictive feedback loop than, let's say, like nicotine or caffeine or, you know, cocaine or whatever. Any like addictive substance that quite literally is euphoric and releases serotonin and dopamine and all that. Obviously, that's going to be more, you're going to crave a cup of coffee more, but the absence of a negative is still incredibly powerful. so that hence the...

It's like, are we low sugar and low net carb? Because it's good for your brain. Like you don't want to spike blood glucose sitting at your desk typing away. So it's really like, how do we protect against brain crash? More so than like, I feel like Superman right now.

Dan (11:43)
I love it. think we've got a good tagline here. IQ bar, better for your brain than cocaine. I think you're good with that,

Will Nitze (IQBAR) (11:49)
Yeah, mean,

hell yeah, put that on a bumper sticker.

Dan (11:53)
Perfect. So tell me the story. How did you start and launch IQ bar? Where the idea come from and tell me about the early days of getting it started.

Will Nitze (IQBAR) (12:02)
Yeah, so kind of a circuitous path, which by the way is the case for most people in consumer goods because there's no like school for consumer goods, right? It's all just people who had an idea and made something in their kitchen or lab or whatever.

And usually it's by the way, not like a technical person. So I studied psych and neuroscience in addition to poli sci in college. But really what I loved was the psych and neuroscience piece. And I wanted to work in something brain related, but I couldn't really figure out. I couldn't map that to a job and all my friends were doing. So I went to Harvard undergrad. So.

Like the kind of feeder move is you get fed into a management consulting job or banking job or whatever. And I knew I didn't want to do that either of those things. Um, but I was really interested in the brain and, um, sorry, it was interested in, uh, you know, organizational behavior, for example, cause that's the intersection of business and psychology and can I work there somehow?

Long story short, I couldn't figure it out. So I took a job in software by default, just to take a job. And, was super arcane and esoteric stuff. was doing, was selling supply chain and ops software to oil and gas companies with no background in software or, or oil and gas. But totally got up the curve on both. and SAS as a, as a model was just taking off then like Salesforce was the poster boy for that.

But like SAS wasn't always the predominant model. It used to be a by Microsoft Office once and yeah, and it's not a recurring model. But, so we were one of the earlier SAS companies and that was cool because it was kind of startup. It was 150 people and, then the company went on to sell and I was like, Whoa, okay. You can, you can sell a company for a lot of money. And I didn't benefit whatsoever. I had no equity in it, but it was just a good.

Even though it was like these random fields, it was good to cut my teeth in just the startup world, period. But NetNet was not passionate about software, was not passionate about oil and gas, and was kind of looking for the exit door, call it a year or two in. And I always did want to be my own boss. And I always wanted to create something physical.

You know, partially because I'm also not a software engineer. I'm not a coder and, and I want to make the thing myself. I don't want to outsource the creation of the product. And so that kind of left physical goods. And I read a couple of books that got me really interested in, in particular in food and Bev consumer goods. And what one of them was called mission in a bottle by the guys who started honest tea.

And that got me fired up to start a drink company. That was my first idea, drink company. And then I read a book called Grain Brain by Dr. David Perlmutter, which covers the intersection of nutrition and cognition. so basically saying, hey, if you eat a pizza at lunch, you're going to feel like crap cognitively at 3 p.m. But if you eat a pizza every day for three decades, you're going to get Alzheimer's or Parkinson's or just garden variety cognitive decline. Right. It's not going to be a good outcome for your brain. So

Those two things combine in my mind to be like, I'm gonna start a brain food company.

and had no background in it whatsoever. just sort of my first move, which by the way, this is a principle I apply to everything is just call people who have done it or and or are two, three years ahead. So I was like, okay, what are the bar? I lived in Boston at the time. I was like, what are the bar companies in Boston? And there was like two of them and I called both of them and I bought them coffee and I asked them 300 questions. And I was like, what should your gross margin be? Where did you manufacture? Do you self manufacture?

do you outsource manufacturing? Do you try and get cute on flavor profiles or do you just go down the center of the fairway with chocolate, peanut butter, et cetera, like blah, blah, blah. And mapped out a, triangulated a set of first steps.

and then just went and did them. our first sales were, the other problem by the way was I had no money and consumer good is a like pay to play industry. Like you have, you have to make a bunch of physical goods and you have to pay for those.

So you have that chicken or egg problem where it's like, I need money. And one way to solve that chicken or egg problem is crowdfunding. So I did a Kickstarter and that was our first sales. And we did super well. between Kickstarter and Indiegogo sold $90,000 a product. Just on this idea, right? We didn't even actually, we had prototypes, but we didn't actually, we had never manufactured at any scale. So that's, and by the way, like,

That's not a lot of people don't do that. They start in a commissary kitchen and they make a thousand units and then they make two thousand units and then they make five thousand units. I was like, how do I go from zero to making thirty thousand units? What would I have to do for that to be possible? And basically it's something like a Kickstarter. So happy to take it wherever from from there I could get into the Kickstarter. But that was that was what kicked it off.

Dan (17:27)
That's awesome. So what year was the Kickstarter?

Will Nitze (IQBAR) (17:29)
Jan 2018.

Dan (17:31)
2018 so lots of brands attempt to launch and grow on Kickstarter and they'll they'll list and then Kickstarter goes live or any go-go goes live and nothing good happens. They might sell to some family and friends, but that's kind of it. Why do you think you had a successful raise through those platforms?

Will Nitze (IQBAR) (17:50)
man, so this is one of my favorite stories to tell because it's kind of wild and it encapsulates like the magic of desperation. So I had no money and what a lot of people don't, a couple of misconceptions about Kickstarter. Number one, the point of Kickstarter is not to make profit to then like funnel back into running the business because your unit economics are so bad.

That that's just not possible. The real point of kickstarter is prove out the idea that it actually works and people want it generate a bunch of sales and then be able to go raise Some seed money based on that like add a decent valuation right because you have real sales That is from my perspective for consumer goods the point of a kickstarter

So that's like number one. Number two, you can't apply the marketing tactics that you would apply to, let's say a Shopify site to a Kickstarter campaign because like meta ads won't work. No one's going to convert for you saying you're going to send them something in six months. Like it's just not going to happen. And by the way, it's like a very weird clunky checkout process and I'm backing you. I'm not actually buying and

Half of the people never fulfill on their kickstart. Like there's so much friction that traditional mechanisms are like just so inefficient that you might as well not do them. And by the way, you need money to do those too, right? You need money to dump into meta ads. So

That's the other misconception. You do need a little bit of money to run Kickstarter. So you're like, oh Kickstarter is how I get money. No, no, no. You need money to even run the Kickstarter. Not a ton, but like call it 30 grand. If you really want to run like a good 50,000 plus Kickstarter. So I scratched together that from

angels, like friend of a friend, but you know, it's 30k, it's nothing crazy.

Then the question is, okay, how do you run, you know, how do you get over 50,000, which was our goal of 50,000 in sales. And I had this crazy idea. went, like I said, I went to Harvard undergrad and at the Harvard library, I was still in Boston at the time, so I could just go back at the library. There are these things called red books.

And in a red book, it's like an alumni book and it has one for every year. And so you can flip it up and it'll say, well, Nitsa, whatever, 30 years old. I live in Boston. I like tennis. I'm married. I have a dog. And here's my email address. And it has a contact element for each person.

So I literally flipped through page by page into picture, picture, picture, picture, picture, picture, picture across multiple decades of alumni books. And I found this software that could convert, could like pull email addresses out of images. And so I got, you know,

Something like 15,000 email addresses from that and then separately my old boss had went to harvard business school And harvard and so he gave me his login And they don't give out email addresses But they you can go to like the you can find the person just their first and last name If you go to advanced search and you do every permutation of like was in the tennis club was in the tennis club and was in the international relations club Was only in the international relations club, right? You do all the permutations and

because it would only give you 100 results, I think. So just keep changing the permutation and you get tons of duplicates, but just pull all that out and dedupe the whole thing. I got something like...

Like 85 % plus of like all people who had ever gone to HBS, which is just, just wild. Now I had their first and last name, but they all use the same template. So you just do a basic concatenate in Excel first dot last at HBS insert year, yada yada. And that was like 85,000 email addresses. So now I had, I had over a hundred thousand email addresses. Granted, these are strangers. They don't know who I am, but I.

created a MailChimp account and I created this like basic email which was like a picture of me and the product and I was like, hey, my name's Will. I graduated class of 14. You know, I did the whole woe is me like little guy, you know, I'm chasing my dreams. I have this project. It would mean the world if you just checked out this campaign, right? A little bit of the heartstrings move and just blasted.

these people, right? Which of course is against, you know, the rules. Like no one ever opted in. And I use my Harvard undergrad email address as the reply to you, right? Because like you would kill your domains for otherwise. But that's not my domain. So and of course, a zillion people marketed to spam and blah, blah, blah. But I mean, we we made multiple dec, thousands of dollars.

that way. mean, I don't know the exact number, but like we made like $30,000 just from that. And tons of people are like, never email me again. How did you get my email? This is crazy. But a ton of people are like, this is awesome. Like love the hustle. I just bought two boxes or whatever. And these are all people, by the way, who have like disposable cash. So it was a good demographic.

And then the beauty of Kickstarter is it's a momentum game. It's kind of like Amazon, right? Where you do better in the listings and then you sell more and then that helps you do better in the listings and it sells more. So it's similar with Kickstarter. You want to stay on the front page of your category. So our category was food and Bev. And the longer you're on that category, the more organic sales you get because people just go to the food and Bev front page. See you, click you, back you.

And so ultimately half of all of our revenue was totally organic. Zero dollars customer acquisition costs purchasers.

because we were able to like keep that momentum, keep, and by the way, once you're flagging, you have to like send another email and then it bumps you back up and you stay on the homepage and you get more organic. There's like 10 other things, right? I befriended the Kickstarter category manager and they will put you in their like newsletters, which go out to every backer. And so these are all just things that like, what's the commonality of these? They all cost $0.

And are highly effective. But you won't find like both of those things. You won't find those on any blog post about how to run a good Kickstarter. Which is kind of why they're kind of why they're fun.

Dan (24:50)
That's an amazing story and here's why I love that and I'm sure lots of people love that story is lots of people want to start a business, they want to start a brand, CBG or otherwise, and they do exactly what you're talking about where they start researching the internet. How do I start a beverage business? And they'll look at the top five or 10 tips and at some point they stall because they think, oh, I've got to raise $500,000 in order to get this thing off the ground or.

you know, they just start seeing obstacles and you were just like, screw that, I'm gonna build a list using whatever I have and connections to Harvard is fantastic. Using that community and building relationships with people like Kickstarter is a very smart move. So yeah, for anybody out there listening, like everybody has some type of community. Everybody went to a school or they've got family or they're in some type of social group.

or in your community, exactly. So the question is like, how can you use and leverage what you have in order to achieve your goals? And just because there are brands out there that are dropping boatloads of cash on meta ads or Google ads or whatever to get to, you know, to grow doesn't mean you need to do that. You can go out there and hustle, you know, use your sweat equity, find community and grow that way. So that said,

Will Nitze (IQBAR) (25:45)
You're a member of a church. Yeah.

Dan (26:12)
You know, you did mention that you did have, you were able to do a small raise where you got 30K or so initially to help fund the Kickstarter along with the work you put in through, you know, scraping emails and all that stuff. What did you use that money for to grow the Kickstarter?

Will Nitze (IQBAR) (26:32)
man, I mean we had to produce a video and we were so cheap about it all. I emailed the former CEO of my, well, not that he, at the time he was the current CEO of my software startup that I was working at. was like, Hey, can I come in on Saturday and film in the office? Cause I didn't want to pay like a venue fee and my friends acted in the video and so like,

But you know, it was like five grand for the videographer and the guy with the boomstick and blah, blah. know, creating that, creating all the creative assets for the Kickstarter page. We did dabble. There are these agencies that,

have like these lists, how they got these lists, I don't know, but have these lists of people who have backed to Kickstarter in the past that they can just, you can target via meta ads. and like the number one determinant as someone will back your project is have they backed a project at all ever. Cause it's just a certain type of human being who likes doing Kickstarter. so we did, we did invest a bit in paid ads.

What else? And then we, you know, we were also making, using some of that to make prototypes and improve the product and get the product manufacturing ready and investing in, you know, gluten, gluten free certificate. And just like so many ticky tacky costs. and by the way, you're making two, three, $4,000 mistakes here and there, and that just adds up and.

So yeah, all of that money went away pretty quickly. And then you make mistakes by the way on fulfillment. You're probably paying too high in postage because you don't really know how to optimize postage. So there's just so many ticky tacky mistakes that add up in the early days. But yeah, so we did that and we fulfilled everything. And very quickly I turned around and I was like, okay, we need to raise 500,000 to a million dollars.

And we, you know, we picked a number not out of the sky, but we were worth $4 million. Right. And that was just based on talk to 10 people. Hey, with a little bit of traction, a hundred K in sales, good team, good idea. Like that is like the market rate for whatever reason. Every time since then it's all based on been based on sales and, now EBITDA, but for your like first round, like that was just in that environment. That was a going right. um,

Raised actually it ended up being 625 K I think. and that, know, why raise that? Well, I wanted to hire a head of ops and, and finance and supply chain. And I would be like the sales and marketing person and fundraising guy and product guy. And that person was going to be finance and ops. And then I also hired a head of creative and social media and, and website.

And then just like funding inventory, right? So it's just, you need cash to fund inventory and your cogs are going to suck like invariably out the gate. so you're just not, it's just not that efficient of a cash conversion story for several years. we lost over a million dollars for the first five years.

But and by the way, that that's a good for consumer goods. And then we flipped profitable last year, like meaningfully profitable. And now we're kind of control around destiny. you definitely needed five million bucks to get to scale to then get to profitability.

Dan (30:23)
Gotcha. So talk to me about the product evolution. So you first launch on Kickstarter. You've got an idea for the product set, but it sounds like, you weren't manufacturing yet. You were just looking to prove that the concept was one that people would pay for. Right. You get this, let's say, 90 K or so through these through this crowdfunding. And then I imagine that so then then you're thinking about getting investment. But you also at some point have to start fulfilling orders and get the product.

ready. So can you talk to me about how you went to manufacturing product? What that looked like in terms of, yeah, what sort of flavor profiles do you go with? How do know what ingredients to put in? How do you get product feedback to know whether people like it or not? Can you talk about that journey?

Will Nitze (IQBAR) (31:13)
Yeah, was very clunky. It was all trial and error based, which by the way, most of CPG entrepreneurship is trial and error based, which is a feature, not a bug because you'll get advice and what you learn is trial and error almost always outperforms advice because times change, markets shift, yada yada. So try everything.

I mean, there just weren't that many people who would might manufacture call it 30,000 bars period. There's just that like low end of volume of the marketplace. There's like two, three players and we met with all of them and we liked one of them a lot and they're in Spokane, Washington. And I didn't know how to, like, how do you get from this prototype you made in the kitchen to being able to produce it on a line and make tens of thousands of them. And what I quickly learned is, you know,

They kind of force you into, or they did force us into using certain things because they knew it would machine well on their, on their lines and it would be more efficient. And so they made a lot of recommendations. And so the first version of the product was like at least half formulated by the manufacturer.

And I would, I would push back on things and I would say, Hey, can we get the sugar lower? And they'd say, no, because we need this amount of adhesiveness. And, and so actually the first product had eight grams of sugar and I think six grams of protein. like totally different.

And I just didn't frankly know enough about food science and product development to be able to like push back in certain areas. And, and the products were good. it just wasn't like, would say nutritionally exceptional that, that first batch.

And we did try to get cute on the flavor title. So it was cacao, almond, sea salt. was blueberry, sunflower, walnut. was matcha chai, hazelnut. Those were our first three flavors. Like super flowery, whole foods-y. Cause I thought that's, that would be a differentiating vector is, is, that sounds so natural. And, that was a huge learning of don't try to get cute on flavor.

Because you could have called, you could have just called that chocolate sea salt, right? We chose to call it cacao almond sea salt. Cause it's cacao, not chocolate. Turns out no one, no one cares. No one cares about cacao. In fact, they don't know what it is and it confuses them. So you asked how we get feedback. mean, we, this is the beauty of starting an online business is people will just tell you what they think. They will email you, they'll leave reviews. ideally you're doing, you have some sort of survey mechanism.

you know, purchase survey mechanism. And so you learn pretty damn quick, like when you're selling thousands of units, you get a good sample size and oh, you know, 60 % of people thought this was too sweet. Okay. It's, it's too sweet. We weren't like, Oh, what's the P value of that? And is that statistically significant? It's like, no, just like six out of 10 said that.

And like take a bite. Yeah, I see what they're saying. Okay, let's make the adjustment. and then, so it was like sort of organoleptic changes like that, like smell, taste, texture, et cetera. And then over time, I got more sophisticated food science wise and, and, and formulation wise to where I was like, okay, we, do we like keep jamming the sugar countdown down, down, down, down.

And how, and then eventually how do we layer in protein? Which like, thank God we did that. I mean, as you like proteins, like in everything now and everyone's like obsessed with it. Like we would have limited our total addressable market, like by 10 X had we not made that move. So thank God we did.

but yeah, just got like more sophisticated. personally got more sophisticated and so I knew and better at formulating. So I knew how to just achieve more exceptional results nutritionally. And then like the thing, a lot of people don't talk about, but they really should because this will, this is why most companies like us fail is cogs.

It's, not enough to make a great product, not even close to enough. You have to make a great product that has a path to get to 60 % gross margin. And like, no, very, very few people can do that. And it's, really is like an art just as much as a science because

There's you can actually get quite creative with your supply chain. Like you might think, almonds are almonds. No, you know, there's five different almond suppliers. have different prices. You can have blanched almonds. You could have light roasted almonds. You could have full roasted almonds. You can dice them at this mesh size or that mesh size or that mesh size, blah, blah, blah. So.

Like it's really, really actually complicated and nuanced. Once you set up a supply chain that has more than call it 30 inputs. And that is where you live and die. Honestly, it's not really on the sales. mean, sales marketing is important, but like, let's assume that you're somewhat competent at that. You're still going to die if you don't get really excellent at the supply chain and ops side and manufacturing side.

And so that's why you see all these companies where you're like, they go under and you're like, I don't get it. It was a good product, you know, like, well, almost certainly under the hood from a finance and ops standpoint, they were not good.

Dan (37:08)
So how do you do that? Because manufacturers, whether it's food, beverage, consumable, or a hard good, manufacturers are going to kind of, like you said, brands into their process because it's just easier for them, right? So they'll say, we already have these ingredients that we often purchase for other clients, so we just want to kind of have you run with that. Or our machines, our team is used to these ingredients, so we're just going to stick with that. So how do you approach them?

Will Nitze (IQBAR) (37:24)
Yeah. Yep.

Dan (37:38)
with the idea that, you know what, we're not gonna use these almonds, we're gonna try these other ones, because they taste just as good as the primary one, but they're 30 % cheaper, we're trying to drive our costs down. How do you approach that?

Will Nitze (IQBAR) (37:49)
Part of it is like, you just force them to, you're like, look, this is the formula and they'll say, okay, but we're going to need to do a trial run and that costs this and that. And then you say, okay, and you do a trial run and you prove it to them that it can machine. It can work and it can produce units at scale. That's the other thing that makes it even harder. It has to produce a certain amount of units per minute to be economical.

So it's like you can make a really good thing, but if you have to like bake it for this amount of time and then you need this drizzle over here and then, well, guess what? You can only make 50 units a minute instead of 200 a minute. That's a problem. have to be. So. It's just, yeah, it's it's you're threading so many different needles at once, but.

I mean, you just have to say, look, this is the deal and you have to do all the work for them, right? They'll give advice. Hey, maybe if we mixed for half the time, you get the same result and we get bars on the slab line quicker. Okay, let's try that. Trial and like again, I come back to trial and error. There is definitely heavy trial and error, which is expensive by the way, right? Cause you have, you screw up a batch and then you have to throw the batch out there. goes $8,000. So, you know,

And that's painful in the early days. And so you make damn sure that you're putting yourself in the highest odds of success scenario as possible on the manufacturing line and you do all your homework you can beforehand. But I would say another like another just like macro thing that allowed us to do that is I got obsessed with the product and like all the technical elements of it.

There are many founders who will outsource that they'll get like an R &D specialist and that person will make all the products and the founders like not even like intimately knowledgeable about all the ins and outs and why why this input was chosen instead of that input.

And so they just like, can't evolve the product because they don't intimately understand it. They can't really problem solve around the product because they don't intimately understand it. It creates a lot of downstream problems for them. They can't reduce cogs because they wouldn't even know where to start.

And so I think that's like a terrible, terrible idea. You as the founder have to know the product, the ins and outs, and ideally be able to create the product in your own kitchen, if it's a food and bed item, or lab if it's otherwise.

That's like one of the number one piece of advice I give to people is like, if you're not a food scientist, become a food scientist, like become an amateur food scientist, like get at least dangerous enough to be able to do 80 % of the work.

Dan (40:43)
That's where passion comes in when running an e-commerce brand, DTC brand, CPG, whatever, founders who are passionate about what they're doing just have a leg up because they're willing to put in the time and effort to go into those details that you're talking about, right?

It's analyzing every ingredient, digging through and trying to figure out how you can minimize cost, increase output, make the product more efficient while still delivering a product that people are interested in and learning those insights over time where it's, know, people didn't want those exotic flavor names. They wanted something that they were more used to and something that was a bit more.

say comforting for them because they're used to chocolate, peanut butter, almond versus something a little bit more exotic. yeah, founders need to need to do all of that stuff. They're going to be more successful if they're intimately aware of all of those details. So okay, awesome. So you do the you go through the Kickstarter, you raise funds that way through that process, you're dialing in the product, you're going through manufacturing, you choose a manufacturer, you're working on improving the product, making it more efficient. You do the second raise where you get an additional

let's

say 650k or so that you can then invest in product and growing the brand, right? So through that time, what are you doing to market the brand and how are you doing that between, let's say direct to consumer along with retail as well?

Will Nitze (IQBAR) (42:12)
Yeah, I mean, we're doing zero top of the funnel stuff. So it was all like direct response, like bottom of the funnel stuff. And so, and this is not like what makes us all that innovative. We were doing all the blocking and tackling that I think most people would suggest that you do. were doing meta ads, know, email marketing. and then we, we, so we rolled out a DTC site and then we pretty quickly thereafter rolled out an Amazon storefront.

And Amazon actually started outpacing DTC quite quickly. I think it was partially a function of the era because keto got really big and our, we got a little bit lucky because our bars were keto compliant and keto just became this like massive mega trend that by the way lasted for like seven years. Most people thought it would last two, three years, it lasted seven years. So, um,

There's just so many more people searching for keto products on Amazon. And there were, we were one of like two, three bars. And so we just, so much demand just fell out of the sky. And of course we were bidding on, you know, keywords aggressively on Amazon.

We weren't even doing display advertisements on Amazon for several years. So yeah, it was just bidding on keywords and then meta ads and...

We were not profitable in either channel. Again, this was mostly as a function of our ops and lack of scale and our cogs being too high and all that.

We did another kind of counterintuitive thing. Most people will come out and price more premium. So for a box of 12 bars, I might price at 32.99 or something like that, or 29.99. We came in and we priced at 24.99. We've never once raised our prices, even during COVID. We priced like sharply from the get-go. And the reason was, that was the right move it turned out because

It's a, play in really price conscious categories. And so there's just so much more volume at 24.99 than there is at 29.99. And the way I always saw it was we have to get to volume, like unit volume, not necessarily dollar volume, but unit volume in order to fix our.

Operate in our our gross margin basically And this is why it's such a tough business you have to get to like 20 to 30 million and net sales To be able to right-size your P &L That just is what it is. It's like there's no getting around it. You just need to be able to jam down your labor cost per unit and renegotiate down all your your material input costs and so

Like price is so overlooked as a marketing element. Like price is marketing. You know, people don't think of it like that, but it is. And we've, so we've seen this in brick and mortar, by the way, as well. So you asked about how did we layer on brick and mortar? We had some misadventures. Actually, our first retailer was CVS, which was kind of a disaster. People aren't really searching for health food in the drug channel.

But we got a lot of really good learnings from it. And then we started going into Kroger and Walmart. And by the way, a lot of these retailers came to us because we had built a good digital presence, which is like epic. That did not used to be the case. But in today's market, brick and mortar retail category managers look at like Amazon. And they're like, huh, what I'm a bar buyer. What are the top 10 bars on Amazon?

Cause maybe I'm missing some innovation. They always want something fresh and they always want to stay on trend. And so we got like Walmart because we had a good Amazon business. That like blew my mind when it happened. And then by the way, a Costco buyer in the, in the LA region reached out to us cause she saw us on Amazon and it was a consumer. So the order of operations matters a lot here. Had we not built a big econ business first, we don't get those cold emails.

But to dovetail back to my earlier point, like what is a massively, massively, massively underrated marketing element on a physical shelf price? It's not sexy and people don't really talk about it. You know, they're not posting about it it's not like a fun topic to talk about. But when we've noted like for a four count on a Walmart shelf, when we went from $6.97 to $5.99,

velocity like the number of four packs per week per store per skew or like double almost double. So anyway that's just like. It's one of those things that I feel like never gets covered in it for us we've noticed moves needle quite a bit.

Dan (47:24)
Well.

What's great about that is, you know, pricing as a marketing strategy is nice because you can increase volume, which on its own is important, right? You need to get to a certain scale. And, you know, in order to get a profitability, you need to have enough sales. So that all makes sense. But the other sort of hidden thing there is the more volume you do, the more word of mouth you're going to get, especially for a brand that people are consuming, not just at home, but potentially at the office or on the

go and when there are brands where people are using that product in some type of community where other people can see it that's just kind of free marketing right so if you get a buyer at the five dollar ninety nine price point that would not have purchased at six forty nine or a little bit high

Yeah, you get that sale, even if you're not making money on that person, when he or she is at the office cracking some of these bars open, or they're talking to somebody about, hey, I'm working out and I've been trying this new bar in order to, you know, manage my cravings and stay away from any added sugar. And they have a conversation about IQ bar. Well, now that that one customer you broke even on, they're a marketer for you. They're an outdoor sales rep that you don't have to pay. So getting to a certain sales velocity allows you to

Build your word-of-mouth channel, which is something that is so underrated and people don't talk about that much either But when you can have people using your product and talking about it that that can be massive So if you can capture more sales at a lower price point Yeah, maybe you use maybe you lose 50 cents in profit, right? Even if you know sales are the same You lose less profit on that customer But if that customer, know every 10 of those customers brings in one a free customer now of a sudden, know your your marketing engine can

be firing in all cylinders. So yeah, I love that pricing strategy as a piece of your marketing. So, you know, a lot of people talk about retail and D2C and how getting into retail can fuel your D2C sales, right? Because if people see your product on the shelves, it's a sign of trust and people might be more likely to purchase online, especially if they're traveling and they see your product at Walmart, but they just want to order online.

What's great is you're talking about the opposite, where it's growing your D to C channel has actually fueled retail because lots of people would love to get into Walmart. Lots of people would love to get into Kroger, but they have trouble doing that. So they have to work through distributors and try to get into those stores. But you're saying that your sales velocity online allowed those inbound leads to come through, opening up a whole other channel for you. And we see that with brands, regardless of product category, the more...

visibility there is online, the more likely there's gonna be some type of customer base from a wholesale standpoint or from like a custom order standpoint. So that's great you're doing that. Let's talk about, so you said last year, the profit became profitable or the brand became profitable. What did you do last year versus the previous, let's say six years or so that allowed you to turn the business to a profitable one?

Will Nitze (IQBAR) (50:42)
Volume volume. That's it. We didn't do much else differently. I mean, what you just described, by the way, it's bi-directional brick and mortar feeds online and vice versa. And once you get enough touch points with consumers, you start to be able to acquire them more cheaply. So we just have more touch points. Right. And someone sees us in Costco, then they see us in Walmart, then they see us in Amazon and then they convert. So

Like there's so many windfalls that happen with volume. The primary one is just you can negotiate lower what's called tolling rates, you know, which is labor cost per unit, and then you can negotiate lower material costs.

And you can be shipping more you can you can get lower freight cost per unit because now you're shipping more full truckloads So your your freight cost per unit is you know amortizing across more units for every time your your stuffs going on a truck like everything Guts better you're shipping more parcels so you can negotiate better terms with DHL or whatever carrier you're going all in on like volume fixes

everything. I would say too, we had a couple, you know, Walmart and Costco and Sam's club and we got to a certain volume just within a channel and that channel, those channels started feeding the bottom line of the business. mean, Costco is, is there's only one.

Costco. It's, it's an incredible retailer. and we actually sell for by far the cheapest of anywhere we sell for in America. And still you're just moving so much product. Like it's hard to even fathom how much product you're moving. Cause I mean, we're talking about tens of trucks of, and each truck has like, I don't even know 200,000 units on it. So it's just the volume gets eye wateringly big.

but yeah, no, we didn't, we, and, and our goal every year is to double in size, which mostly was just a fun, like why it's, it's not a bottoms up at the top down. It's like, Hey, we want to double. How do we do that? Why? Because we knew we had to get to call it 30 million in revenue to have the volume to flip profitable. And that was, that was definitely true. So

It's a scale game we're playing in consumer goods. And a lot of people, by the way, say you don't like the economies of scale are largely a myth and the price is a price. That's definitely not true in our experience. The economies of scale, we took our cost per bar from like a dollar 20 down to like well under half that, which just totally transforms your P &L.

Dan (53:44)
That's amazing. So I like that you were talking about Costco, because I was there on Saturday doing some shopping and I saw a stack of IQ bars, so I picked up a variety pack. So good job getting into some pretty big retailers. So completely get where you're saying about volume. That's awesome that that was the driver to get you to profitability last year. Let's kind of take a step back. Learning everything you've learned through this journey. Let's say if you were going to start over and you wanted to

Will Nitze (IQBAR) (53:54)
Love it.

Dan (54:12)
zero to let's just say your first seven figures in revenue knowing now what you know right how would you do things differently what would your playbook look like

Will Nitze (IQBAR) (54:26)
I don't actually think I would do things differently. maybe would. I know this is more of a DTC podcast, but I may, I may lean into Amazon quicker, like for it's very category dependent. So in bars, it's just, there's such a massive amount of people who buy bars on Amazon.

And there's just a lot of low hanging fruit and there's a lot of people who are like ready to like high, high purchase intent.

And so we just found for that category, the quickest way to scale up online and by the way, most efficient way is via Amazon. I would. If the thing I wanted to do was still that held true for it, then I would I would probably go harder at Amazon earlier. Now, certain categories are not that way, right? Beauty.

very, I might say go harder at D to C earlier, right? It's so context dependent. like net-net, I think what I wish I learned a little sooner was really two things. Number one, obsess over the product, which sounds obvious, but I think most people get to a good enough or pretty good and then they try and scale that. And really you should keep pushing it till it's like excellent.

Excellent product because that makes everything better. You acquire customers easier. You retain customers blah blah blah second piece is lean into the 80-20 principle, which is just Which is so true across everything in consumer goods 20 % of your channels or accounts Will give you 80 % of your revenue? Find big Ultra scalable channels and go really really hard after them might even be one channel

But I can't tell you how much time we've spent on like Tiki Taki, you know, three, three store chain or five store chain, which is nothing against them, right? Like these are great chains, but just, just from a dollars and cents standpoint, like it is the same amount of effort to snag that chain and sell into that chain than it is to snag a thousand, you know, store chain. So

Just focus on the whales earlier than you think you should.

Dan (56:53)
Awesome, great advice.

All right, so let's move on to the speed round. So each answer in like 30 to 60 seconds or less. So what is one of your most recommended books?

Will Nitze (IQBAR) (57:08)
They actually have the same name. really like Traction by Gina Wickman and then another book called Traction by Gabriel Weinberg and I believe it's Nick Mares. But yeah, both of those books are two of my favorites and they're both called Traction.

Dan (57:25)
Two for one, fantastic. What is an under the radar product or brand you have used and like, but most people do not know about?

Will Nitze (IQBAR) (57:37)
This isn't, I mean this is super random. My wife uses this thing called Clean Skin Club which is like a facial wipe. Because I guess there's all this stuff you do where you're like I didn't know how gross that was like you wipe your towel on your face but your towel has all this like bacteria on it or whatever so I actually don't even use it. My wife does but she uses it every day and I think it's kind of still under the radar so Clean Skin Club would be mine.

Dan (58:06)
rule. What is one thing in life that you do better than most people and how do you do it? And this is just something that naturally comes to you and you're better at it the most.

Will Nitze (IQBAR) (58:17)
I act sooner and I go to the source quicker. So like I just pick up the phone and call people, which is funny. Like it sounds obvious and I guess people used to do that, but they don't really anymore. I just go right to the source and I don't like try to work my way to someone's assistant and then get to that. just pick up the phone, call that person. And that's, think just generally more of like a bias towards action that I have. I don't know why I have that, but I do.

Dan (58:47)
Love it. Tell me about your favorite shopping experience online or offline.

Will Nitze (IQBAR) (58:54)
I love Costco. It's just like a Disney world. Like it's just fun. I mean, I love it for multiple reasons. I love it as a shopper, but also like I just appreciate efficiency. It's just so efficient. Same goes for Sam's Club and BJ's, but like I just love the club channel. I think it's so cool that that exists.

Dan (59:14)
Some friends were recommending Costco to me for years and I never did, I never joined. And then last year we joined up and I'm like addicted every Saturday I'm there, can't get enough. I'm with you on that. Awesome, Will, where can people connect with you to learn more?

Will Nitze (IQBAR) (59:29)
Yeah, IQBar.com is their site. I put out musings on LinkedIn, Wilnetza, N-I-T-Z-E. I try to do that daily. At IQBar is our social handle. And yeah, check out our store locator too if you want to try a bar or hydration mix or coffee. And we're probably sold somewhere near you.

Dan (59:52)
Awesome. Will, thank you so much for bringing IQ Bar to market as a way to provide better functional food and drinks to the masses, sharing your expertise and insights with our audience, and for joining us on the Shopify happy hour.

Will Nitze (IQBAR) (1:00:05)
Thank you.