How Nutty Made It

What if your financing strategy was as clean and simple as your ingredient list? We sit down with Hector Gutierrez of JOI, the plant base brand built on “just one ingredient,” to unpack how a concentrated product, a flexible channel mix, and disciplined cash flow turned a pre-pandemic seed round into a profitable, resilient business. From the early days of almond paste sold B2B to cafés to a brand platform that spans DTC, Amazon, foodservice, and select retail, this is a masterclass in using the right capital at the right time.

Hector walks us through the investor dinner that galvanized their seed raise, the overnight shift when foodservice collapsed and e-commerce exploded, and the systems they put in place—3PL, Amazon, Shopify—to capture demand. We dig into the real numbers behind growth capital: merchant cash advances, Amazon and Shopify lending, AR financing, and how to decide between fixed or percentage remittances. The tactical takeaway is clear: map your cash cycles by channel, prioritize suppliers to protect inventory, and let your model decide the instrument.

We also get personal about the psychology of fundraising. Scarcity vs abundance, valuation vs dilution, and why “raise because you can” can backfire if the fit isn’t right. JOI’s approach favors profitability as leverage, retail as a credibility and awareness play, foodservice as a margin engine, and DTC as a data-rich community channel. With new products rolling out, partnerships with Whole Foods and Target, and foodservice formats designed for speed, JOI proves that resilience is a strategy you can scale.

If this helped you think differently about capital, channels, or unit economics, follow the show, share it with a founder who needs it, and leave a quick review so more builders can find these conversations.

Connect with Keith on LinkedIn - https://www.linkedin.com/in/keithkohler1/

Transcript

Show Intro And Mission

Keith Kohler 0:02

Hi everyone, it's Keith Kohler, your financing man, and welcome. Welcome to episode four of How I Financed It. And again, by way of background, what I do is I help founders and companies find the right financing at the right time. And I help them with the understanding and getting to the roots of how they manage their business finances. So essentially, I help with transactions, the right financing, and transformation about how people are going to use the money to most effectively manage their business finances. And I founded how I financed it with the goal of chronicling the journey of founders and their business, both professionally and personally, principally through the lens of how they finance their business. And from there, from that core discussion in financing, talking about strategy and anything related to their journey from where they started, their origin story, to where they are today. And so today's guest, Hector Gutierrez, I'm excited to talk with him because I think we're going to learn a little bit more about how a company pre-pandemic changed strategies, changed channels to get towards where they are today, being an omnichannel brand, and all the financing that accompanied that along the way. So I can't wait to get started. Here we are in episode four. And would you help me welcome to the stage Hector Gutierrez. Hey Keith, how are you? I'm doing well. Thank you for joining us today, episode number four. Hope four's a lucky number for you. Absolutely. Glad to be here. Yeah, so um, as I said about how I financed, what we look to do here is talk about you and your journey and the business journey of Add JOI or Nutty Made, and talking about it from its origin to where you are today. So, really diving right in and kicking off, why don't you share with us a bit about from your lens and what you want to share, a bit about the origin story of Nutty Made and Add JOI?

Hector Gutierrez 2:17

Sure. Um yeah, so origin story. Uh the company started in 2018. Um I have three other co-founders. It really was a combination of a desire to bring together uh different characteristics that we were seeing in the market in terms of problems. Um one of them was you know, is plant milk sustainable due to the packaging constraints and shipping water across the country? Is it nutritionally dense? Um, and is there a unique way to present uh this growing product segment to consumers? Uh so several years ago we got together and started problem solving around you know different ways to approach uh solutions for these problems, and we ended up uh uh delivering our first product MVP in late 2018. Um, it was a paste, uh simple almond paste that we refined and went B2B, selling it you know to food service outlets and have been growing you know our our little segment, our little niche ever since.

Keith Kohler 3:26

At the time that you launched your product, what was the landscape looking like competitively?

Hector Gutierrez 3:32

Yeah, so I think mass market plant milk options were inundated with um additives, fillers, gums, um, bad oils, seed oils. Um and I think they were really trying to deliver a beverage that had the marketing and presence of a vegetarian uh vegan option and alternative to dairy milk, but they weren't really focused on um the sustainability efforts behind that, nor the uh I think nutritional profile of these products other than you know, maybe protein. And that landscape has changed tremendously over the past, you know, uh seven years. And we think a lot of brands have come around to understanding, you know, what the consumer needs and what the consumer is looking for. Consumers have gotten a lot smarter since they're reading nutritional labels, they're reading the ingredient panels, um, and they're asking themselves, you know, fine, this might taste great, but what's in it? Um, and that's a problem that we've been really trying to solve and hopefully delivering products that speak to the consumers who are curious and looking for something better.

Keith Kohler 4:38

Yeah, and I think better is the keyword, right? What you've done and what you're doing is what we see a lot when new segments come out, right? So plant-based, broadly defined, way back when, well, it feels like way back when, right? Seven years ago, was kind of like just give me something, right? It wasn't you were pioneering the better for you next level beyond, hey, I just want something plant-based, right?

Hector Gutierrez 5:02

I mean, in in many ways, yes. And in many ways, this has been, you know, something that consumers have been doing or humans have been doing since the dawn of time, right? So, you know, from uh from a commercial standpoint, you had dairy milk uh, you know, in the mid-1900s really taking off with pasteurization, and then you know, you got into skiing, fat-free options, then soy, then uh then almond milk came about in the early 2000s, and then uh, you know, during COVID and right before COVID, you have the advent of oat milk taking off. Um, our proposition is kind of going back to basics, uh, taking giving you the 100% of the raw material, transformed in a way that makes it really easy to consume at home. You're just adding the water. That's why we call it Adjoy. You're you're taking J O I, which is just one ingredient, mixing it with water. I didn't know that. Yeah, yeah.

Keith Kohler 5:52

The secret has been revealed, Hector. Finally, just one ingredient.

Product, Market Gaps, And Brand Positioning

Hector Gutierrez 5:56

That's right. That's the nexus of uh where it all where it all came about. We really well, actually, first uh tidbit, we don't market it much, but we were not a milk company when we first kind of got kicking around with brands. Um, and the idea was, you know, it's not our traditional milk, it's in a different form factor, we do concentrates, uh, but we didn't love the negative connotation with the brand. Um, and we felt milk was really pigeoning our long tail and our long-term ambitions. So we decided to go with something a little bit more ambiguous but positive, and then with an acronym of just one ingredient. So we felt joy, you know, you know, it means it means something positive, it's simple, um, and it gives us less in terms of contract. So that was that's that's what it came about.

Keith Kohler 6:45

So there you were creating something that you knew could be a platform, right? By using that term.

Hector Gutierrez 6:50

Yeah.

Keith Kohler 6:51

When you think about here, you had three co-founders, right? So when you look back at that early stage and all four of you, did you find that you were all somewhat very aligned on the product side, what you wanted to achieve, that that was easy for all of you to feel like, hey, this is what we're doing, and we know how this is going to look like over time?

Hector Gutierrez 7:10

Yeah, it's a great question. And I think really what a key to a success or a version of success that I think we we can all we can all agree on uh from the co-founder standpoint is that we all brought something different to the table. Um excuse me. We all brought something different to the table. I'm gonna have to excuse me one second. Turns out the lights are sensitive here. If you don't move motion sensitive, if you don't move, they go off. So we all brought something different to the table. Um, you know, Tony was brought this perspective that he had been uh, you know, realizing plant milk was a better alternative. He was making plant milk at home, but it was really labor-intensive. Um, he had goals to really make this a commercial product and bring this to a wider demographic. Dave was realizing for the first time ever that he was lactose intolerant. He's a Midwestern guy. He grew up, you know, drinking glasses of cold milk uh for breakfast, lunch, and dinner. That's just something that was a staple for him. Uh, but the realization in his you know early 30s that he was lactose intolerant really struck him. So he wanted to do something um, you know, to pursue this this new health concern that he was he was dealing with. And then Izzy, um uh she's has a background from growing up in Hong Kong. Um, her experience is is such that a lot of folks over there actually do make soy milk as an example from a concentrate. Um, so it wasn't unusual to her, and it and and a lot of countries outside of the United States have refrigeration limitations, either of raw material. Yeah, exactly. So shelf stable, you think instant coffee, you think all of these different pantry staples that are ubiquitous outside of the United States. Um, so there was, you know, all an already a kind of a cultural understanding that this was uh a usable application or a usable format to pursue. And then my background um as a restaurateur, I went from you know trying to really bring together uh people uh around food, given my background as a Cuban, trying to do a Cuban concept in my early 20s, then getting into fast food, realizing I wasn't in love with fast food and didn't love the idea of putting these products in front of um of a growing population. Um, and then I moved into the raw vegan food world, which opened my eyes in in terms of alternatives that people could be consuming that are much better. Um, so all of our different backgrounds kind of came together to put together this narrative, this brand, um, these products, and build a business around it.

Keith Kohler 9:58

Really interesting. When you think of co-founders, right? I would say, based on my observations and when I think of the market of companies that were founded with several co-founders, you do have a greater amount of variety, I think, coming from different lifestyle backgrounds, different professional backgrounds, different regional backgrounds, right? That's really kind of cool. And here you come and you found alignment and strategy on both product, right? When you first started out, what was the what was the financing you first took or contributed to get the business off and running?

Bootstrapping To Seed: Building The Investor Narrative

Hector Gutierrez 10:35

You know, whatever was in their our bank accounts, you know. Okay. And the credit of my co-founders, you know, uh pooling whatever they had access to in terms of immediate access to be able to get the ball rolling, um, you know, not paying ourselves for substantial duration of time and really focusing on these efforts uh to bring this to bring this together. And I think, you know, going to the point of co-founders, like it's so important to understand people's personalities, understand the different assets and characteristics to bring it to the table because you're really in the trenches with these people. They're they become your family, they become more than family in many ways. You know, you speak to them more than than you know you do family members in many instances. So uh, and you're you're riding a crazy roller coaster with tons of ups and downs. So you need to be prepared to have skin in the game and uh have hard conversations.

Keith Kohler 11:31

Yeah, I really appreciate you bringing that in, Hector, because I think a lot of people can easily talk about hey, here's what Hector, Tony, Izzy, and Dave bring objectively to the table. A like Dave might be an expert in marketing, Tony might be an expert in operations. I'm just, of course, making those up, but I think people are very good at understanding the tangible contributions that people can make. And yet you're taking it to that other level, which I think is as important or perhaps even more important, is the personalities, right? Can what do people bring to the table? Are they are they good at startup but not great at scaling? Is there something will they have fears? And I think also it's not just those for the other co-founders, right? It's you plus your family situations and your life situations and how those can change over time. And I'm sure they have for probably all of you over these past seven years. And I really want to witness you went in. As you said, all four contributed some level of personal savings to originally fund the company. And just curious to finish off that part, when you think about your own situation, Hector, and then where everybody was at 2018, all four of those contributions was anyone else influencing their ability or their thinking about what they might contribute, such as spouses or partners or parents or children or things like that.

Hector Gutierrez 12:55

I mean, I think all of it is is is part of that calculus, you know. Um everything, everything's on the table. Um, the amount of time that you have away from your family, you know, it's it might not be your terms of your in terms of your equity into the business. It could be from a cash standpoint, it could be from a sweat equity standpoint, just time commitments, what you're not doing in order to pursue this business and make it come alive. Um, so I think all of us, you know, from different levels uh at different times have have really put everything on the line, um, and figuratively and and you know, uh literally. So that's that's been you know, and it's been a seven-year journey, obviously. So there's there's so many instances where a little bit of this is happening at different stages of different people's lives. Like both my co-founders had kids during this process. I had two kids during this process.

Keith Kohler 13:51

So in these seven years, you you brought you I got married and I had two and started your family, right?

Hector Gutierrez 13:57

Yeah while you know running the startup. Uh, and it's no different for my my co-founders who also got married, who also had children, who also moved across the country, dealt with COVID. Uh, you know, so there's it's it's it's a tremendous journey. Um, I don't wish it for everyone, let's be clear. I but it's it's definitely energizing, and uh, I wouldn't have it any other way for myself.

Keith Kohler 14:21

Perfect. So you've put that initial money in, right? And when you think about how far did that get you in your initial business um outreach or rollout?

Hector Gutierrez 14:30

You know, I think it got us um conversations with suppliers, it got us early uh, you know, minimum viable products into hands of investors. Um, it got us a small production run, which was which was really important, some branding. Um but it's we we deal with a capital-intensive business, you know, you're in terms of inventory, you're you're putting out a lot of capital to to generate revenue. Um, so you know, it was definitely several hundreds of thousands of dollars before we were able to position ourselves in front of investors with something tangible um and be able to close our our initial seed funding.

Keith Kohler 15:09

Great. So your contributions got you to the ability to be ready, right, with the product and the go-to-market strategy. Yeah. And then here you are talking to investors for a seed round. Tell me a bit about how that unfolded.

Pre-Pandemic Seed Raise And Investor Dinner

Hector Gutierrez 15:22

Yeah, um, you know, tons of conversations early on. Um our process of building an investment narrative deck financials has been, you know, get feelers from a lot of people, coffee conversations, dinners, phone calls, um, with whoever was willing us to give us advice. A lot of the time it was just that asking for advice, and um, by way of that, being able to close a deal and and solidify investment. But we went through multiple rounds of um deck tweaks, we're constantly doing that. Uh sure. You know, we have an omnichannel business, so different investors want to see different things.

Keith Kohler 16:05

Uh, some gravitate towards direct-to-consumer brands, some to retail brands, some to omni-channel, right?

Hector Gutierrez 16:12

Correct, exactly. And then some investors you think of as potential strategic partners, some are much more passive, some are just really fans of you as an individual, some are really vested into the industry um and want to see more products like this into the market. So, you know, I think there's a little bit of customization, there's a little bit of understanding who you're speaking to, there's a lot of conversation to refine the narrative, understanding, you know, where what's the sentiment of the market currently? Are people bullish about this segment? What do they understand about it? Um, you know, and and I think from an early standpoint, um you know, Tony and I have had uh um much experience in a startup world prior to this. Um, so we came into this with strong operational knowledge and ability to talk to investors, so that was useful. Um, but with it was definitely you know an unconventional product and business plan that we were proposing. Um, so there was there was a lot of learning from both parties to really solidify something. So it was, you know, we have over 40 investors in our cap table, um, small checks uh to medium-sized checks, all angels, nothing institutional, um, by way of just uh us wanting it that way. And ultimately, um, I think one of the best things we did in addition to those individual conversations was we got everyone together at a restaurant um, you know, after hours, um, and really made the case for the products um in the way that we were propositioning it as a B2B for food service product. Um, you know, got everyone into the room, made a presentation, provided samples, um, and created a little bit of buzz and energy around what we were trying to accomplish with which helped us kind of take the next step, close some deals and get the ball rolling.

Keith Kohler 18:00

That's a big idea. Now, this was 2019, right?

Hector Gutierrez 18:04

Yeah.

Keith Kohler 18:04

Okay, so we know pre-pandemic and it was a different landscape and world versus what we know today for equity investment and even for seed investment. And those were kind of go-go times, right? Times when we saw traditionally tech investors more as excited to look and dip their toes into the consumer space, right? And given your backgrounds, you probably had some folks that were um mainly or perhaps uh had technology investments in addition to looking at the consumer sector, right?

Hector Gutierrez 18:34

Yeah, some of that, you know, I think we benefit from Miami, where there's a there's you know, a good um a good community of active investors that come from a lot of different backgrounds. Um, you know, Tony, my business partner, has a strong background in technology in the venture capital markets and was able to facilitate conversations uh with people in that. But at the same time, you know, people with technology mindset, um, and at least actively pursuing opportunities and deals within the technology sector, have it's a fast moving market. There's a lot of um growth opportunity, it's a different business model in terms of you know, overhead costs, um, so on and so forth. So, you know, you have to, you really have to explain to people, even if they might be a strong investor from a technology standpoint, you know, this is a different business case, this is a different ROI, this is a different path to success. So a lot of a lot of understanding of that, but that's that's part of the process, and you know.

Keith Kohler 19:36

And I think it was really clever, Hector. I don't I've never heard of everybody bringing all the investors in into one dinner to really get to know each other and present that strategic plan. Maybe they did it virtually again, that's what I'm more used to. But that wound up being, I think, probably in hindsight, a really proper and clever move by your part, right?

Hector Gutierrez 19:55

Yeah, it felt like a really big milestone um in the way of us getting over um some of the challenges of you know, just the initial initial momentum that's required when fundraising. I think momentum is extremely important and to be able to create that energy um ourselves and take that next step was was hugely important.

Capital Efficiency And Omnichannel Shift

Keith Kohler 20:19

Brilliant. So you got did you fill out the round the way you wanted it to be?

Hector Gutierrez 20:24

The in fact we raised we raised what we needed to, absolutely. Uh markets have changed a lot since then.

Keith Kohler 20:32

I'll bet you were perhaps even oversubscribed at that point, right?

Hector Gutierrez 20:35

Yeah, exactly. There was a lot of interest, a lot of strong interest. Um, and and it continued for for a good amount of time. We were saying no to some some deals uh at a certain point in time. We didn't want to get too in over our heads with with new money. Um, but yeah, that's all changed and our our ambitions have changed and our focus has changed since.

Keith Kohler 20:56

Absolutely. So you have this money. What was the go-to-market strategy and how did that how far did that seed money take you?

Hector Gutierrez 21:04

It's taken us to today. Um, from an equity standpoint, it's taken us to today. So uh we've been very capital efficient. Um, you know, we factored in debt on top of what we've done on the equity side and focused on profitability. Um, so our main effort is to create a strong return for you know these initial investors who have who have taken a leap of faith in us, um, and make sure that we're providing uh great valuations on the business by growing the business um in a really uh conscious way, conscientious way, in terms of not taking new capital and overextending ourselves in certain markets. And CPG, you know, again, we were started B2B pre-pandemic. You can only imagine what that did to the you know our food service sales during the pandemic. It collapsed, but fortunately, we grew uh multiples in our direct-to-consumer line, which we had just spun up pre-pandemic. And now as a result, we have you know a fledgling business that's growing in in a variety of different sectors, which has its own challenges. But at the same time, I think we've kind of made a bulletproof business that we're uh that we're really excited to uh deliver strong returns on on the initial folks that had given us investment.

Keith Kohler 22:20

Yeah, it's really interesting, Hector, because you think about it, folks who raised and had a seed round pre-pandemic, and then to do the rest through debt and income from operations and capital efficiency. Was was that on your mind in 2019?

Hector Gutierrez 22:37

I think it always mainly due to the fact that I was uh from the restaurant background. Um, it was on my mind. Um, you know, I I think we definitely walked into this maybe as a um raising in in in a structure with expectations that it was similar to perhaps a technology business. Um given your background, right?

Keith Kohler 23:00

As well.

Hector Gutierrez 23:01

Yeah, and that was that was some of the team's background, and that's I think that's where a lot of the investment energy was at the time, too, um, and the positioning of the market and the way we structured the deals. But um, you know, at the same time, we were, and this is a little bit paradoxical too. You know, you wanna you want to run as fast as you can, spend as much money as you can and and grow as fast as you can that top line. But I think that's always if you're trying to raise the next new round of capital. So we're trying to be extremely efficient while growing extremely quickly, uh, which presents its own challenges, but it got us to where we are today. Um, and again, my restaurant background, you're reliant on it's a cash flow-heavy, intensive business. You know, every single month you're you're either positive or not, or you're watching that closely, um, and not a lot of strong lines of of of capital to access, especially you're you know, one through three with uh with a restaurant. So um, you know, we had all of those factors kind of playing into what ultimately became our strategy.

Keith Kohler 24:02

So here you are, you've raised the money and you go to market and food service, and then the pandemic comes. What did that require you to do as far as rethinking how you're gonna sell your product and who your customers would be?

Hector Gutierrez 24:16

Yeah, I mean, uh fortunately, we we got lucky. Um, we did get lucky. We had already begun making some changes to um deliver a strong brand. We had put our product on Amazon right before the pandemic, it just by chance. Um we also were engaged with a fulfillment center, whereas before we were doing our own hand deliveries. So by the time the pandemic came around, um, we had an infrastructure that could benefit from the market shift to consumers buying a lot of pantry staples at home for their homes. Um, so our e-com presence grew dramatically and offset the uh the loss of revenue from our food service side. Now, post-pandemic acquisition costs became expensive. Apple changed their their privacy uh policy, Facebook uh advertising got much more expensive for e-commerce businesses. Um, but at that same time, food service was coming back in a really strong way. So then the tables turned again. And now food service represents the majority of our revenue. Um, and we still have a really strong presence on the direct to consumer side. So it all kind of worked out. It was just a really pendulum swing.

Keith Kohler 25:38

We're on one side real classic full circle, isn't it?

Hector Gutierrez 25:41

Yeah, full circle, and and now it's full circle plus added pieces of that pie. Um, that's that's making this uh an interesting omni-channel business.

Keith Kohler 25:51

So there you were during the pandemic, food service largely or completely went away, right? For you, or and so now it's Amazon and directed consumer, right? Right. When you when the seed round money was um fully gone or invested, what was the next capital you took, or how did you seek to finance the business after that?

Hector Gutierrez 26:13

Yeah, um, merchant cash advances at that time, especially with the growing Shopify store and Amazon, we were plugged into um lines of capital that these platforms provide to us to the brands who are using them. Um, so you know, quickly tapping on that to pay for inventory.

Keith Kohler 26:32

Yeah, and that's common for everybody in the direct-to-consumer space. I'm sure this is memory lane for any of our viewers or listeners, right? Because Shopify, PayPal, they're gonna show up in your inbox all the time, right? Yeah, and Shopify is that deal. Yeah, they they they and they're there constantly. Shopify comes in first when you've only gotten a fair amount of traction on your website, right? And they're it's convenient, right? Wasn't it Hector? Because it shows up as an offer. When you said yes to that offer, it showed up in how much time? The money in your bank account? Within four days, within four days. So, and that's significant versus the long tail stuff out there. Um, that takes a lot longer, such as SBA lending or even conventional bank lending, if people qualify for it. So I think what's different though is you probably, given your background in finance, you really knew what you were getting into, right? You had a strong sense of if I take this money, here's how I'm gonna use it, I understand the payback.

Hector Gutierrez 27:31

Yeah, I mean, you have to you have to understand it to the best that you you can, and given your ability to project where the business is going. Um, absolutely. So I think there's uh there we go, move a second, get the light back going.

Keith Kohler 27:46

So the lights going off makes it kind of fun. It's a little bit of unpredictable, maybe very unexpected. That's your opportunity to make a very, very relevant point, right?

Using MCAs, Shopify And Amazon Lending

Hector Gutierrez 27:54

I guess they expect people to be in a conference room and not move whatsoever. Yeah, um, so when we uh when we were taking the capital, you know, we it is early on. Um the payback cycle is pretty quickly, so is pretty quick. So, you know, uh our mind has always been we gotta have inventory. So you can't be inventory.

Keith Kohler 28:19

Yeah.

Hector Gutierrez 28:20

And we've made some of these mistakes in the past where you're you know, you're reliant on the receivables to fund the inventory and then to delay the suppliers. But the reality is you need to have the inventory, and supplier management is extremely important. So ensuring that our suppliers are getting paid um is guided our philosophy uh to the extent that you know, if you're gonna be growing, you need to have the inventory, and the only way you can have inventory is if you're taking care of your suppliers. So, you know, that has been a priority for us for many years now, and kind of all the math falls underneath that in terms of how much and uh and what that looks like in terms of implications of the business.

Keith Kohler 28:59

Do you remember more or less what the pricing was on Shopify at that time? More or less what interest rate. I mean, it's hard to impute because you're you're paying it back based on sales, but do you have a sense of what the APR was at that time?

Hector Gutierrez 29:12

Um yeah, I mean, it ranges from like 10 to 20 percent, I would say.

Keith Kohler 29:18

And it is a wide range, right? Because everybody can get a slightly different offer based on movement and what they're seeing.

Hector Gutierrez 29:24

Yeah, and they provide you a variety of options too. I think a big factor is the remittances. You know, um, we're constantly weighing out our fixed remittances better than percentage of sales remittances. Um, you know, we have a pretty stable business, so it kind of um is one and the same, you know, outside of just an unexpected, you know, major influencer celebrity posts about us and then you know, shell scales, uh sales skyrocket. But we have a good sense of what's coming. So you have to factor that in. It's interest rates, what's the remitted timeline? Um, and then how are you remitting? Those those payables? Is it a chunk on a monthly basis? Is it a weekly basis? Is it a daily? Is it fixed? Is it a percentage?

Keith Kohler 30:07

Yeah, and I think that's a great lesson to our founders and other listeners and viewers out there. Hopefully, in addition to taking the financing, that they are really looking at what are the different scenarios of what the payback could be, how it will impact cash flow, etc., and understanding what could come after. Because here you have Shopify, you got Amazon lending, was it the 12-month loan at that time?

Hector Gutierrez 30:29

Yeah, they have 12 and 18 month options.

Keith Kohler 30:32

Okay. And then they had that for a while. They don't do it anymore, right?

Hector Gutierrez 30:37

But they had it through Amazon for a while, and then they've they've um they've given it to third parties.

Keith Kohler 30:43

That's right. So they moved out of Amazon, they gave it, I think, to Lindustry and to um paraffin, is right? Yeah, those are those are the options that are but it was a very interesting time because that Amazon lending I thought was extremely well priced relative to other options in the market, if you could qualify for it. And a lot of people took advantage of it. And I thought, again, it was a good supplement to certainly for the direct to uh consumer channel, it was the right financing at the right time, and it could be stacked, right? They just had to have a first position lean on business assets, and Shopify really kind of didn't care, right?

Cash Flow Modeling And Supplier Priority

Hector Gutierrez 31:20

So, yeah, I mean, all of those, it's it's as you know, Keith, it's a convoluted world in terms of uh the options available to you. Fortunately, there are options. I mean, thank God there are options, and you know, you really have to look at what makes sense for your business. And my biggest recommendation is just to look at all the options available, talk to investors, you know, what understand what their needs are, you know, present an opportunity to say, you know, is that this is a deal that I have that's coming from a financial institution, but maybe you want to match that or beat it, and we'd much rather work with an individual lender um on a friendly basis than work with a financial institution, you know, at least at least someone that we know gets the upside as opposed to you know a random bank. But there's all these different philosophies and ways to approach it. Um, you just have to, I think the biggest thing is just cash flow model, plug in the numbers, and then do the uh do the calculation in terms of implications on the business on the back end.

Keith Kohler 32:22

Yeah, and oftentimes, and I'm sensitive to this because it's not my money, but a lot of founders will tell me, hey Keith, I don't have the money to afford someone to help me do a cash flow model. And yet I hope that people can realize that it is an investment that's very relevant and it doesn't have to be a massive investment. You can get it for a decent price. And I think the most important thing is providing some level of peace of mind, some level of guidance, particularly because a lot of founders sometimes struggle with understanding their cash requirements, right? You're different because of your background and and how you came into this, right? You had a strong, strong sense of these are my cash requirements, this is how that financing is going to work for me to accomplish that goal.

Hector Gutierrez 33:07

Yeah, that said, we we we do rely on um, you know, our CFO, and many times, you know, you, Keith, and um anyone who's willing to give us perspective from different angles, you know, and it's interesting institutional people, you know, brokers, uh, because there's always different ways to approach the problem. There's always a solution to the problem. And I don't, I I tend to have a bias, you know. I I sometimes I'm overly optimistic or you know, I'm overly cautious. And you know, looking at the numbers might give me a lot of anxiety or my a lot of hope, depending on what day of the week it is. So, you know, having a third party, um, you know, less tied to it, at least from my standpoint, the CEO, that I can, you know, have these productive conversations with from an objective standpoint is extremely beneficial just in the day-to-day decision-making process.

Keith Kohler 34:00

Yeah, thank you. And I've been it, I've been very, very lucky to work with you over the years and talking about and thinking about, and then in some cases helping get that different financing, right? Because that's my highest purpose is to help you, Hector, and others think broadly about what things can be, right? Cast the net wide as a starting point, not just focusing on one that you may be familiar with or you may think in particular might work for you, but really casting the net wide, then narrowing it down. But it does tie back to then saying, okay, how does this fit for you strategically? And how does it get you to what's next level? So here you are in the pandemic, you're in direct to consumer, you're in Amazon, you're continually in that loop, right? And then you kept working with that specific type of financing to keep moving you forward, right? But did you keep the an eye open for investment? Were you still thinking about bringing in equity? Were those conversations happening and not going somewhere? Or was it no, no, no, we know that we're going to be looking at just this type of work in capital financing?

Equity vs Debt: Valuation, Dilution, Fit

Hector Gutierrez 35:11

Yeah, I mean, all of the above. Um, we, you know, we're always open to a strong equity deal. We're just we really want to be mindful of is the relationship a good fit? And is the value something that we agree upon? Um, and we know the strength of our business and we know the trajectory of it, and we know the the narrative that we've experienced over the past couple of years. And fortunate now we're running a profitable business, which is, you know, sometimes not everyone's cup of tea. Some people just want, you know, burn, burn, burn, grow, grow, grow, and then we'll worry about profitability later. Um, but we we have the benefit of being uh a product and with a positioning that allows us to have um you know a path towards profitability sooner than I think a lot of other brands. So that's always been a factor in our in our calculations. Like we didn't don't take the money if you don't need it, um, but you can also keep an eye out and an open ear towards opportunities that you know may be suggestive of money that you don't need, but could be a really meaningful relationship in the immediate and the long term.

Keith Kohler 36:27

That's a little bit contrarian when you think about it, Hector, because a lot of folks will say in the broader space, no, take all the money you can get, right? Now that might be a little bit more of a pre-pandemic philosophy, particularly in the equity world. But you saying that, it is a little different than what some founders might be feeling.

Hector Gutierrez 36:45

Yeah, I mean, you know, I'm saying this from a position of uh of having been on the now on the other side and and feeling a little bit of uh a little bit of room to to exercise the strength of the business and the financial you know strength of the business. Um I think taking taking the money, the right money. I think all money is good money if you can put it to work and you think you're being valued correctly. Um now, you know, we also have three three co-founders and you know, dilution becomes a conversation. And then um, you know, what does it look like to basically give away the business isn't uh something that we're you know, after having put so much time and effort into this to give away. But if you have you know a lot of growth potential in a hockey stick format, um and you're you want to raise the capital and the capital is accessible, and you know, take it maybe. I think it's just every business has its own needs, and you just got to factor that into it all.

Keith Kohler 37:52

I want to go back to one thing you said, which I think is an important element. Um, and we've talked about this, Hector, a lot, is that mindset, right? You you shared with us just a few minutes ago about hey, there are some times when I look at financials and I might feel anxious or cautious, right? And we'll add the word scarce, right? And there are other times I'm looking at financials and you thinking abundance or this is great, I'm confident. And everyone between so I'm curious if you can share with us a bit about your own thinking about that a little further about when you felt scarce or when you felt abundant, what does that feel like for you? And what does it how does it what react what action does it result in? And I'm curious, do your co-founders have a similar level of mindset or feeling about financials?

Omnichannel Cash Cycles And Retail Tradeoffs

Hector Gutierrez 38:44

Yeah, I mean, feel feeling like you're in the world of abundance is amazing, and feeling that you uh are you know in lack uh and that there's scarcity is terrible. Uh, it's it's it's definitely an emotional roller coaster from that standpoint. Um, you know, definitely have felt all of the above. And I think the scarcity really comes from lack of knowing the options more than the reality of the scarcity. So it is much more of a mindset than a fixed reality. There's always options, you know, inclusive of selling the business or taking a huge um uh dilution uh in order to take on new cash. So all of those are are always options. It's just what you're capable of stomaching, what your threshold of for tolerance is, and and really putting yourself up there. I think the most beneficial thing that we've done is just constant get advice, speak to people, speak to speak to people like Keith, um, you know, ask friends, uh, vent, and uh, and you start realizing there's there's always something, a solution for you on the table. It's just making sure that you're aware of it. And, you know, um, even with the experience that I had walking into it, this there wasn't uh I didn't have all of the knowledge that I do today. So there's I think it's it's been growing in abundance um as a result of going through these exercises of feeling scarce and then uh problem solving for that that sent to it. But you know, you need to you need to feel ambitious about your future, you need to put be proactive about the opportunities that are in front of you, and you need a you need to figure out the financing so that you can walk away um and deliver on these solutions that you know you've concocted, whether that be selling more product, because that makes that's the path to more more more uh stability of of your financial situation, which is always true. Um, but you know, there's also alternatives within that, selling off inventory or raising debt or raising equity. So um lots of options, and I think just changing your mindset and getting perspective is a huge component of that that you know working through it all.

Keith Kohler 41:02

Yeah, I really appreciate that because Hector, I think in my conversations with founders, I will often hear the phrase it feels lonely, or I don't know how to feel supported, or I don't know how to get support. And yet we know that we do know for a fact that in our industry, this broader industry of CPG and natural products, there are a lot of resources for people, right? I find that I, as a service provider doing what I do in my way, plus others who may have a similar background or a similar um or at least an empathy towards finance, that we're available, right? I really encourage founders, all our viewers, all our listeners to remind themselves you don't have to do this by yourself. There are ways to get support to talk about finance. Of course, I'm raising my hand, uh, plus the myriad others out there, even the people providing the financing can sometimes help you think about things in a different way. So going back a little bit, Hector, you you've managed you managed through the pandemic in the direct-to-consumer space, and then you went back into wholesale, right? And food service. And that's that's what took you along the path to break-even and profitability, right?

Hector Gutierrez 42:13

Well, yeah, it it it also changed our financing needs and the options to us, so it widened the the availability of options. Um, you know, we talked about MCAs, then there's um working towards ABLs, there's AR in uh financing, there's um AP financing, factoring financing. So there's all kinds of different options, and the interplay of them all is is something that you work towards as you understand the implications of all of them. But um, yeah, you know, that's that's been part of our um ability to be successful is that we we have different uh revenue channels that we can leverage uh to help us continue weathering storms and and and progressing forward, all the while, you know, being hyper-vigilant about costs in our overhead. I mean, you can't you can't do one without the other. Um so selling as much product as possible, understanding the landscape of debts and having the conversations with equity, but just being extremely um, extremely cutthroat and uh rigorous with your operational uh expenses and costs, you know, how much is whether it's cost of goods or or just you know the operational expenses that you have on a day-to-day business of maintaining the business.

Keith Kohler 43:44

So now, Hector, right? When you being an omni-channel brand, right, and working through that, as you said, the direct-to-consumer was one channel with a specific sets of financing that could serve that. Now you introduce, right, or then you introduce when was it about 2021, 2022? You started going back into the wholesale world?

Hector Gutierrez 44:03

Correct.

Keith Kohler 44:04

Yeah, so there you are. So now, as you mentioned, now you can look at accounts receivable, you can look at inventory, et cetera, and financing can be provided against those specific assets, right? And then I think the the lesson and what became interesting for you, right, is now you're looking at, well, how does it all work together? Right? What can be stacked, what can be sequenced, why is it this now and then that later? Right. And that's really when it becomes the complexity ratchets up a lot because an omnichannel brand can look at all of that. And when you think about it, how did you make sense of it? Right? Like, how did you know when were the right options and and when you could do this and not that?

Logistics, Direct Foodservice, And Distribution

Hector Gutierrez 44:43

Yeah, cash flow. Ultimately, each of those channels have different um cash flow implications. So D2C, you're you're getting your money within seven days, you know, in many cases, next day. Um, so you sell something, you could take, you could withdraw the funds on that transaction within 24 hours a lot of the time. Um, wholesale is not the case. Uh you know, food service, sometimes it's seven days, 15 days, 30 days. Sometimes you're chasing people, it could go up to 60 days before you get uh payback for that. And then in retail, it's even more convoluted because you might issue a PO or an invoice for a PO. You might not get paid for 30 to 60 days, and then you know what they're remitting is less than what you invoiced because they included deductions, and that's different from what is happening on the food service side, which is usually a one-for-one. What are we invoiced is what the PO was, and what and that's what we get remitted, um, unless there's you know you know credits or interest involved. So you got to map it all out. Um, and we're playing in all three of those segments. Um, we just know that from an operational standpoint, it's more efficient for us to continue pursuing um you know food service sales while expending our um our profit margins to grow the brand in other channels like direct to consumer and retail, which of all three of those retail, from my perspective, is the most costly um in terms of doing business.

Keith Kohler 46:23

Yes, for sure.

Hector Gutierrez 46:24

Um, so that's the one that's the smallest for us, but you know, um constantly debating the long-term implications of that. But it is, in my mind, a good uh awareness channel um and marketing resource for us to be spending on versus you know just doing straight digital advertising, let's say.

Keith Kohler 46:44

Yeah, I think it and that's a conversation a lot of founders get to have with themselves, right? Is here they may get to a level of omni-channel and then they're weighing the benefits and all and costs and benefits and ROI of operating in a certain channel. And we know, yes, the wholesale retail channel is foremost, I believe, the most expensive channel to operate in. And I've seen this conversation happen a lot lately because that has become more difficult to succeed in, I think you would say, over this arc, right? Is food service similar operating today as it was pre-pandemic as far as cash requirements, how you work with your your customers, etc.

Hector Gutierrez 47:23

Yeah, absolutely. And I think um it's only more in our favor these days as um logistics become um you know an a more of a viable solution for us to get in front of. So logistic providers get to get in front of um food service operators in a quick and reliable way. Um, whereas before you were really beholden to distributors, which we work with as well. Um, but really owning the channel in terms of the individual account and being able to provide them a white glove service and fulfill um their needs in an expeditious way and handle problems when they arise has been, you know, I think technology is benefiting us, uh, fulfillment operations have been able to benefit us, you know, carriers in terms of FedEx and UPS have been have been improving their services. So I think uh, and then you know, as a result of all of that, food service operators are more um likely or willing to get in front of brands and buy directly from brands as opposed to relying on distributors.

Profitability, Resilience, And Mindset

Keith Kohler 48:36

There you're back. Hey, we've had lots of fun today. We've had the lights go off twice, a little bit of frozen. It's it's part of the show, correct? And yet we move forward. And I think that's an actually good allegory, right? You've had some moments of darkness, you've had some moments where perhaps you maybe felt frozen. I hope you don't mind me riffing on that. Well, and yet here you are, because you think of that original what you originally raised money for, and now here you still have those seed investors, right? They're still around. You've you've used debt financing. Maybe it wasn't perfect, but you've used it, and maybe times it was perfect and exactly what you needed and at the right pricing, but you've cobbled it all together of this mix of original equity plus debt strategically, and sometimes for cash flow issues, sometimes for growth issues. And here you have it from the rec to consumer side, here you have it from the wholesale side too, supporting that. So, and you've gotten to that consistent break-even to profitable result, right? Yep. It's really quite a remarkable journey. I think what distinguishes your journey, Hector, and that of your co-founders versus others I've seen during this time period is many more of them would have needed to go back to the equity well. Right at some point, would have needed to. Key word, right? Yours is a yours is a bit different. Um and I think that shows a I think again the key to your success has been that you're on it, right? You're you're really engaged, you're always thinking of cash, you're thinking of cash requirements, you're updating your models, you're doing all the management things so that you're really, really you're always aware of what you need and thinking a little bit further down down the pike versus just putting out fires and thinking what I need today.

Hector Gutierrez 50:28

Would you agree with that kind of assessment when you're giving me a lot of credit and I appreciate it in the team? Um, at the end of the day, you know, we just are we are making decisions that we feel are important to the long-term success and stability of the business that are just smart financial decisions. What never has felt smart is raising because you need to raise, or you're in a desperate spot, right? Like you're in a desperate spot. We're always trying to think about how do we put ourselves in a more powerful position, and that might mean you know, not today or tomorrow, and you know, debt options getting leveraged, you know, can go from the extent of a lot of different things. People can, you know, leverage their homes and you know, put personal guarantees on stuff. So there's a wide array of options, it just depends on your willingness um to exercise that and then your your appetite for it and your your vision for success on the business side. But at the same time, like you know, the philosophy of what investors going to invest in something that you're not fully bought in on or committed on or aren't willing to to um to you know exhaust all of your own resources on uh why would they come in? Why would they write you a check if you're not putting in all of that work? So I think the work that we're doing uh only makes the equity side more uh more of a powerful opportunity for us if we needed to go down that path. But you know, doing everything to not have to do that has been uh been a core focus of ours. I'm gonna just start dancing.

Keith Kohler 52:13

You could you could have we could have like a little dance TikTok video interspersed in this. Keep the lights on, right?

Hector Gutierrez 52:21

From doing that.

Keith Kohler 52:22

Yes, and we're in the home stretch Hector. Very briefly, what's next? What's next in terms of financing and where the company's gonna go?

What’s Next: Pipeline, Whole Foods And Target

Hector Gutierrez 52:30

Yeah, doing more of the same, we're really excited about launching more products. We've been very um, we've been very lean on our product options and our portfolio, um, but we have a huge product pipeline that we could be deploying, and we're you know, we're rapidly launching new products to broaden our horizons and really create the platform ultimately that we've we've set out to to build. So we're launching uh new products this year, and then um and then continuing to push on omnichannel businesses, uh revenue sources in in more compelling ways. There's you know a growing market of e-commerce uh uh uh retailers that we're partnering with, um, you know, and then key retailers that we think are good partnerships for us. So we launched with Whole Foods, we're going into Target. Um we're looking at more regional opportunities as well to have uh a really strong kind of community response. Um, and then building out products that are really designed for food service applications that has been our bread and butter for so for a long time. So it's really making sense of the operations, putting new products in place and being vigilant about our operations.

Keith Kohler 53:40

You have good momentum, right? Because you manage to that break-even to profitable, the ability to execute on this plan becomes that much easier, doesn't it?

Hector Gutierrez 53:49

Yeah, and we want to put our profits to work um and make sure that we're we're doing everything that we've set out to do since day one in a better way every day. So that's that's been the name of the game for a long time now. But uh I think now we're we're not so under the gun. We can do it with a little bit more strength and a little bit more wind at our sales.

Keith Kohler 54:10

Yeah, wind at your sales for sure, uh, versus headwinds, right?

Hector Gutierrez 54:14

That's what it felt like, especially during the pandemic, post-pandemic, uh as being being a new company at that time, you know, uh still understanding the brand, still understanding the operations, and then dealing with you know global uncertainty and then talks of a recession and people's unwillingness to get into equity. You know, I think we've built resiliency. So now it's just leveraging that resiliency is is where our heads are at.

Keith Kohler 54:40

That's great, Hector. Now, as we go into the final closing moments, um, I have a tradition here at how I financed it. And I end our time together with two questions. And the first one, um, what are you most proud of over all this time from beginning to where you are now?

Hector Gutierrez 54:58

Um, it you know, surviving, uh building that resiliency, building that tolerance, um, having a little bit of grip, uh, you know, me and the team, uh, willing to stomach, you know, and pivot and change and adapt as needed. Um, so it hasn't always been easy, but you know, every day we get up and and try again. And I think that's that's probably what I'm most uh proud of, and I and I'm most proud of the team for for doing the same.

Keith Kohler 55:28

For that resiliency, for as you said, surviving at a core level, right? Protecting the downside, but also knowing that some days are going to be great and others are not going to be.

Hector Gutierrez 55:37

And yeah, now we get to where we are today, which is um feeling a lot more comfortable and a lot more ambitious, um, you know, barring any global catastrophe. Uh, but you know, we we have the the chips on our side of the table, and that's a good spot to be on.

Keith Kohler 55:57

And you made it happen, right? You brought those chips over to your side of the table by with a lot of help.

Hector Gutierrez 56:03

With a lot of help, yeah, a lot of belief, but yeah.

Keith Kohler 56:06

And finally, the last question is what would Hector today tell Hector when you were just starting out?

Hector Gutierrez 56:15

Um I think everything happens for a reason, and there's always there's always there's always a solution to every problem, so to not be so stressed, just uh not be so emotionally wound up. Uh you know, get to work, do the work, but um, you know, really take the time to think about the problem and speak to as many people as possible. So uh yeah, I I I think you could do all of the the hard work without feeling like you're underwater all the time. And um uh, you know, and then and me, I'm not just a high strung person, so I would, you know, tell myself to chill out a little bit and uh and take it step by step.

Reflections, Advice, And Where To Buy

Keith Kohler 56:59

Perfect, Hector. Thank you so much. I think that's a really good summary for our founders, right? It can feel sometimes a little bit overwhelming or a bit difficult, and yet hopefully they do have the releases or the support that they need to not always feel that way, right? That you don't always have to feel mired in that in that scarcity or other areas of stress or concern. Um, Hector, thank you so much for being here today. It was awesome to have you here. Um, just one ingredient, right? Now we know the secret finally of why it was joy. I thought, okay, the why must have been taken by someone else, so we had to put in an I instead.

Hector Gutierrez 57:36

All intentional.

Keith Kohler 57:38

Awesome. So, where can we find where can everybody find your product?

Hector Gutierrez 57:41

And um Amazon's easy place, adjoy.com, adjoy, uh in Whole Foods, I heard by the costs, uh, launching in Target, um, and then a growing amount of retailers and you know, coffee shops, juice shops near you.

Keith Kohler 57:57

That's it. Awesome, everybody. You got to go out and try his product. I have it right there, and I'm gonna be adding it to my coffee shortly. So thank you again for Hector for being here. Thank you to all your co founders and all the contributions they've made. And just thank you for being a part of how I financed it. So, this is us signing off of episode four. Thank you for all joining us. Thanks, Keith. Take care. Bye.