Building a startup company is a dream that can either blow up or fizzle in an instant. For Sriracha2Go, a company that sells keychain bottles for the famous Sriracha sauce, it was social media exposure and a unique idea that not only blew up their sales, but also earned them an investor named Mark Cuban.
In the Ninth episode of Skubana’s E-Commerce Mastery Series where we invite experts of their respected fields to share their best practices for success, our host, Dr. Jeremy Weisz of InspiredInsider.com interviews Farbod Deylamian and Kyle Lewis of Sriracha2Go.
Some essential lessons include:
Although the business may be growing, the next few steps are absolutely crucial to ensuring that your business grows and not folds.
Lessons you learn by working at start up companies.
How networking and finding the right connections can ensure you develop profitable relationships
How Sriracha2Go used social media marketing to become an Internet sensation.
Raw Transcript: Farbod Deylamian and Kyle Lewis of Sriracha2Go
Jeremy: Dr. Jeremy Weisz here. I’m founder of inspiredinsider.com where I talk with inspirational entrepreneurs and leaders like the founders of P90X, Baby Einstein, Atari, many more, how they overcome big challenges in life and business. This is part of the Skubana eCommerce Mastery series where top sellers and experts teach you what really works to boost your eCommerce business. Skubana is a software platform to manage your entire eCommerce operation.The sensation, Sriracha2Go. Today, we have Farbod Deylamian and Kyle Lewis, co-founders of Sriacha2Go. It’s a company catering to the needs of sriracha fans worldwide. They make, get this, amazing, key-chain to-go bottles so you can carry your sriracha sauce with you everywhere. You have to be fanatical about your sauce. They sold their initial order of 20,000 units in two weeks. We’ll talk about that and how they did it. And they sold over 10,000 three-packs on Groupon in a week and that’s just the beginning. And they received an investment from Mark Cuban’s investment company. Kyle, Farbod, thanks for joining me.Kyle: Thanks for having us.Farbod: [inaudible 00:01:22], Jeremy.Jeremy: One of you in New York, one of you in California. And we’re going to talk a lot of cool stuff; licensing agreements, getting Mark Cuban as an investor, the huge buzz around your product, how you launched. I would like to start with a fun fact, which most people don’t know about you. And fun fact, Farbod, about you is, which is unexpected, you’re big into freestyle rapping and you dominated the San Diego party scene.Farbod: Self-proclaimed “dominated.”Jeremy: Self-proclaimed dominated, yeah.Farbod: Yeah, it was kind of a stage I went through in late high school, early college, which as I was mentioning earlier, I don’t think Kyle even knew. I don’t even think my girlfriend knows. But I went through a five to ten-year stage where parties, bars, whenever I’d go out, it was me freestyling against people. If there was a bar or any sort of contest, I would get involved and usually do pretty well. I can’t imagine I still have it nowadays. I don’t think it’s like riding a bike. But I went through a solid [inaudible 0:02:33]. I actually thought there might be a future involved in that.
Jeremy: Did you want to be a professional rapper at the time?
Farbod: Nothing that I thought that I was ever that, that provisioning. But I loved doing it. I always thought it’d be great fun to go up there with some of the rappers that I love and the hip-hop artists. And I’d have these visions of freestyling with them on stage.
Jeremy: When you’re huge, Sriracha2Go is huge, you’d be able to freestyle with whoever you want. And hopefully I’m hoping you can find a clip of this and everyone who watches to the end of this may or may not, we’ll see, can see Farbod actually rapping freestyle. I’m not going to promise it.
Farbod: I can’t commit to that, but I’ll definitely search through my Dropbox.
Jeremy: Kyle, for you, as a kid, you liked to slick your hair back?
Kyle: Yeah, so…
Jeremy: Tell me the story about that.
Kyle: Yeah, this is especially funny. Ever since Sriracha2Go launched, my family loves bringing this up. When I was a kid and most of the time, it happened when I was in the pool. I would go underwater and I’d come up out of the water and I’d slick my hair back. And I would like to say, “I’m a businessman.” When I was younger, I used to have a pretty bad lisp, so that didn’t come out very well. My family, still to this day, loves teasing me about that.
Jeremy: How did you get rid of your lisp?
Kyle: I don’t know.
Jeremy: Just went away naturally?
Kyle: I think people teased…not “teased,” but playful teasing and it eventually went away.
Jeremy: It’s interesting. Because childhood and growing up is hard enough, let alone having something else going on. Was there ever kind of a confidence? Because you seem pretty confident in general.
Kyle: I may be over-exaggerating the lisp. I don’t think that it was ever that bad.
Jeremy: It wasn’t that bad? Okay.
Kyle: No, it wasn’t like a speech impediment that I went to classes for or anything like that. It was just something that close friends would give me a hard time about.
Jeremy: Let’s start from the beginning of the journey. I want to find out what works with boosting sales. You guys have hit it out of the park early on and some mistakes to avoid, but how did you guys meet?
Farbod: We met in San Francisco in 2000…and I always get the year wrong, Kyle. 2000…
Kyle: ’11.
Farbod: ’11 at a company by the name of Extole. It’s a startup based in San Francisco, and Kyle started a few months after I did. We were both on the sales team and hit it off pretty quickly. We became pretty good friends, and soon after that, I actually moved out to New York to kind of be part of the heading up of the New York sales team and the New York team for Extole here in the city.
I made that transition and I moved on from Extole about a year after that, and then Kyle actually then moved to New York to take that position, and we ended up living together. It worked out really well, and I didn’t really know anyone when I moved out there, I don’t think he knew anyone. So when he moved out here, it was really a good situation.
Jeremy: What did you guys learn working at Extole, a startup?
Kyle: A lot.
Farbod: A lot.
Kyle: It’s something that I highly recommend to a lot of people, because just from working at a startup, you get insight and visibility into a lot more than you would at a company like Oracle, which I’ve also had firsthand experience with. You get to see a little bit more of a sliver of how things are actually done in a business. And you have more input. You can help build things like sales strategy, marketing strategy, things of that nature.
And you also learn what doesn’t work, how not to do things.
Jeremy: What did you see that wasn’t working? That you thought “We’re not going to do this in my future company”?
Farbod: Over-hiring. Over-hiring, I think was like, for me, personally, and I think…I won’t speak for Kyle, but I think a big part of that for him as well where you have some success and you obviously have…there’s pressure from the board to hit some numbers. But I’ve been at a few startups and I’ve noticed…not all of them, but there are definitely a lot out there that over-hire and then they have to scale back, and then that’s going to lead to layoffs, and then that leads to morale issues. Leads to people leaving. And then it’s really hard to come back from that.
I get wanting to grow fast and just hit it out of the park. But once the layoffs start, people are looking over their shoulder and always worried about their job. That…there’s a sense of people being scared and sometimes, that works in the benefit, but it also leads to a lot of people looking for work.
Jeremy: Right. Instead of working at what they’re doing, they’re looking at CareerBuilder or something.
Farbod: We saw that firsthand. I don’t know. I think that’s a big one that I saw in terms of things that I learned that we definitely didn’t want to adopt.
Jeremy: Yeah. Because startups are the figuring it out, too. What else did you see that you learned from that “We’re going to do things differently”?
Kyle: Yeah. It kind of goes hand in hand with what Farbod had mentioned. But spending in general is something…especially when you think about venture-backed startups here in the Silicon Valley. Immediately when a company gets around to funding, they need to hit certain growth metrics to be able to get that next round. It’s like you’re…
Jeremy: It’s a cycle.
Kyle: Exactly. You’re addicted to this funding. And if you don’t get that next round, the company’s gone. As a result, the leaders of that company decide to invest all this money in sales teams and I think that’s what Farbod was mentioning; people end up over-hiring and they kind of go overboard.
I think that we took the general principle of not overspending and just making sure that we’re growing at a sustainable rate. We’re not spending a lot of money that we don’t have. We’re not doing things that are unrealistic. We always want to make sure that we’re making profit on every transaction and the way that we’re building the business and the foundation of the business is still…leads to sustainable growth and allows us to grow over time.
Jeremy: Yeah. Did that deter you from…at the time, did you think “We don’t want to have to take funding someday,” because of that? Or were you somewhere in the middle?
Kyle: It’s definitely a consideration. I think anytime you take funding–
Jeremy: Obviously, you have an investment from someone else. What was the consideration whether you were going to take it or just keep going without it?
Kyle: Yeah, Farbod and I talked a lot about that. It was…the due diligence process with the Mark Cuban’s Company’s team was a span of a few months. And throughout that entire period, Farbod and I, we talked through a lot of scenarios and we looked at it from every angle that we could.
We ended up doing it because we weren’t going to use the money to go hire people that…you need to continue paying to keep on payroll. We’re going to use the money to invest in new products.
Jeremy: Fulfill need, yeah.
Kyle: Right, exactly. And those new products are going to generate a profit. Then that will allow us to come out with other products. The money helps fuel growth. It doesn’t help us create a growth that’s not sustainable. Create expenses that may not be sustainable.
Jeremy: Yeah. So Farbod, what did you see in Extole that you liked? Like, “I want to do things like this in my company when I found it.”
Farbod: A lot of things, a lot of things. I think both at Extole, Conversocial, and NewsCred, the three startups that I’ve been a part of, there were a lot of positive things. And Extole was my first exposure to the startup world. That was very new to me just in terms of the culture and the cohesiveness and the way people work together; the product team and the sales team, legal, marketing. It was really one team.
And there’s disconnect no matter where you are. But the level of disconnect was a lot less and people were actually very good at communicating with each other. You knew what was on the product road map. If you had a contract that you got from a client that had some red lines, you were a part of talking to the lawyer and getting that expedited.
I just really liked that. Everyone from the CEO down to the sales team and everyone in-between sat together. There were no cubes, there were no offices. It’s not like our CEO had his own office. He was there grinding with us and working 12–
Jeremy: It’s like a flat structure so everyone…yeah.
Farbod: NewsCred, the last company I was at, did an incredible job of that as well. The culture element, keeping people excited, and everyone had the same vision and mindset was big. That goes a long way. When everyone’s bought in, obviously things change and you find another job or whatnot. That’s nothing against the company you were at prior. Everyone who was bought in at Extole had the same vision. And when we end up expanding our team, we definitely want those type of people. People who are in it to win it and really get our story and get where we’re going and want to be part of it. That’s the thing with startups. Everyone is hungry and gets that.
Jeremy: Right. And that vision, when you say that, what pops into my head, Farbod, is the YouTube commercial for some reason. Tell me about how you came up with that. And for people that don’t know, they can check out his YouTube commercial, I don’t want to spoil it. But there’s a nice-looking lady that comes by with a guy eating his…I think it’s a sandwich of some sort and he’s got a puppy-dog there. How did you come up with the idea for that? As the vision for that commercial?
Farbod: We went through so many different scenarios for a video. I remember there was a night when Kyle and I literally were at the apartment with a whiteboard and we were just jotting down different ideas, and we were doing that for six hours. It progressed into that. Our initial idea was completely different. And then we thought–
Jeremy: What did it start off as, and then tell people how it ended up.
Farbod: Yeah. It started off as…it was a restaurant scene. I hope we don’t end up shooting this video one day where I’m giving it away. But it was a restaurant scene in which…it was something in effect of there was a guy out with a girl to dinner and the girl asks for sriracha. They’re at a fancy Michelin Star restaurant. And we’ve all actually…us, we love our sriracha, had moments where we’re at a Michelin Star restaurant. It’s kind of “We shouldn’t be thinking this, but it’d be nice to have sriracha even with this foie gras.”
Jeremy: Right. The chef comes out and kicks you out of the place.
Farbod: It was kind of that. So the girl asks for the sriracha. The waiter…it was like a French restaurant, kind of rolls his eyes and says “No, we don’t have sriracha here.” It was to the effect of either she…there were a couple scenarios, but I think the initial one was she pretty much just flipped out at her boyfriend because she was like, “Did you bring the sriracha?” And he’s like, “I’m tired of lugging around a big bottle of sriracha for you.” And she just flips out, flips the table over, pushes the waiter. And it’s kind of like slow motion…it’s what we envisioned it.
And then she sees this guy sitting alone with his Sriracha2Go using it on his steak or whatnot. And she goes and starts eating with him and starts feeding him, and the boyfriend is stuck alone.
Jeremy: That’s great.
Farbod: We thought that would have been an incredible video as well. But I think that would have taken a much larger budget to do something that extreme with renting a restaurant and throwing plates, and breaking plates, and all of that. We would have probably had to have a lot more actors as well.
Jeremy: Yeah, and so then what you ended up going with…?
Farbod: Yeah. We thought that was a fun, simple…you got the puppy, which was one of the cutest puppies we’ve ever seen in real life, and I think in the video, you could see that as well. We had a beautiful girl who saw the sriracha and saw the puppy, and you don’t know what grabs her eye first. And then there’s the guy who’s just eating the burrito and loving it. And poor Jason probably went through what, Kyle, six burritos that day?
Jeremy: Are you serious?
Farbod: It’s because we had to keep shooting it and keep shooting it. Poor guy. But, yeah, it was just a little bit of everything; great food, a puppy, sriracha, a beautiful woman, a good-looking guy who she gave no attention to. We thought that was a perfect 30-second clip. It was simple and got the point across.
Jeremy: I ask that because you got…your mind thinks a little bit differently and we’ll talk about what led up to the idea of this product, which I would never have thought of, and probably most people would agree. But how your marketing works and somewhere like Dollar Shave Club, they had this really cool video. Same thing with you coming up with these innovative ideas to kind of spread the word. Did that require a big budget?
Farbod: Again, back to Kyle, what Kyle had said and I mentioned earlier. You learn this in the startup world; expenses, cost. We were very conscious of that stuff. We leverage our network, and Kyle has a friend who’s based in Los Angeles who is in that world, and we leverage them, and we’re able to do it at probably a third or a quarter of the price whereas if we were to go through a digital studio or whatnot, an agency, and have it done that way.
Kyle: Yeah.
Jeremy: What led to the idea? Tell me leading up to the idea of actually coming up with this particular product?
Kyle: Yeah. Like Farbod had mentioned earlier, we were roommates in New York, and we are also big foodies. So Farbod and I, probably our biggest hobby, especially in New York, was to go out and eat. While we were out at those meals, we kept finding ourselves in a situation where we wanted sriracha. And it wasn’t available…and still isn’t today, isn’t available at restaurants. Most of the time, if they have anything, they have Tabasco, they have ketchup, mustard, salt and pepper, kind of the standards. But they rarely have sriracha.
So it became a running joke between Farbod and I that it would be really great to have sriracha at this meal, and we just kept mentioning it. Didn’t do anything about it because we didn’t want to lug…what we were going to do, lug an entire bottle to the restaurant? It just became a running joke.
One day, we ended up getting food to go. We were out in New York, we had had a couple drinks. Late night, wanted to get some pizza. And instead of eating it at the pizza restaurant, we decided to get it to go so that we could bring it home and eat it with sriracha.
On our way home, a rainstorm came out of nowhere and the pizza box was soaked by the time we got home. We were both soaked. When we got home, Farbod actually pulled up his computer in such anger of the situation and looked for a miniature sriracha bottle. He’s like, “There’s got to be something out there where we could just bring it with us,” and there wasn’t.
Then we kind of got addicted to the idea and we were doing research day and night. There are mini bottles, like travel-sized airplane bottles out there that you can fill with whatever you want. But a lot of them aren’t food-grade. They’re for things like hand sanitizer and whatnot.
It kind of snowballed from there and we kept thinking about the idea. And Farbod and I, we have very business-focused minds. We love debating on what’s a good business, what’s a bad business. How can we poke holes in this? We were doing that for maybe a month and we couldn’t poke a hole in the idea. We were like, “We should give this a shot. There’s no compelling reason why not to do this.” We just kept moving forward.
Jeremy: What did you do next? You decide “Okay.” Was that the first iteration of the idea? Or was there something before what we see now?
Kyle: There have been updates. For instance, what we’re going to talk about later, the Huy Fong partnership, we’re now using their artwork, things like that. It’s an official Huy Fong licensed product. But for the most part, it is very similar. And the next steps after that research phase was to put together essentially a business plan, a simplified business plan, and think about “How much is it going to cost to get the product? How can we customize it? How can we make the mold? How can we shape it the right way? How can we get it the right…food-safe plastic, BPA-free,” all that stuff. “And how much is that going to cost? Realistically, what can we sell this thing for?” And we just continued down that road, and we started talking to manufacturers both in the United States and in China and figuring out how much it’s going to cost to get it off the ground, cost of goods sold, and all that good stuff. Which, for Farbod and I, was a completely new world. Before that, we had careers in software sales.
Selling a physical product and actually building a product, a tangible, physical product, was totally new to us. It was a steep learning curve. The entire manufacturing world was new to us. But we did a lot of research. We had a lot of conversations with friends that were in the industry and–
Jeremy: Yeah. What advice were you getting…Kyle and Farbod, tell me some advice also that you were getting? You were probably getting…talking to different people and kind of gaining some mentors.
Farbod: Yeah, at that point…for example, there was a buddy of mine who I worked with at the time. It was, I think, September of 2013. Around when we…a little bit after when we actually thought of the idea and we’re in conversations with manufacturers. So about a year before we actually launched, a buddy of mine, he has a product that he sells on Amazon called Cat Amazing and he had been selling that for about a year or two. It was a side gig and he was doing well with it. He was one of the initial people we went to for basic advice; manufacturing advice, things like that. He was a huge help to us.
But I remember specifically, September…it might have even been August. But Kyle and I were like, “All right, how are we going to get this launched and out before Christmas?” And I’ll never forget when I told Kyle this. We were both so discouraged, but Andre said…he’s like, “Man, I’ll be surprised if you get this launched by next Christmas.”
And that was interesting. Because in our minds at the time, this is just an empty plastic bottle, [inaudible 00:24:07] get the design. We’ve done so much more to it that really…to this day, we’re learning how much more there is to one product than just creating it and launching it.
We were so naive to that and talking to guys like Andre. And just other people in the industry. We have friends who are advisors at software companies, but have done in the eCommerce space who we’re talking to. There are a couple other solutions…Kyle, I always forget the name of it in which we would call and we could request 30 minutes’ time or 10 minutes’ time with specific advisors. And that helped us a lot as we were launching as well.
But early on–
Kyle: Actually, it’s called Clarity, which is actually another Mark Cuban company. But yeah, to kind of piggyback on what Farbod had mentioned, I think that’s one of the best skills you can have as an entrepreneur, is being willing to network and ask people for favors, and ask them for advice. And I think what you’ll find most often is that people are really willing to give advice. People who have been through it before, they get it, they understand.
And so, I think that was great for us. Like Farbod was rattling off, there have been a variety of people in a variety of different industries. Whether it be legal, accounting, manufacturing, who have helped us a lot.
Jeremy: From the manufacturing end of things, what was some good advice that you got that helped you avoid some big pitfalls or mistakes from that end?
Kyle: Well, a lot of the mistakes, we learned the hard way.
Jeremy: Like what?
Kyle: We found our first manufacturer through Alibaba, which we thought…we had heard good things about Alibaba; a big company doing very well. This would be a good place to start. It was. We were in conversations with a variety of manufacturers and we were getting samples made and things of that nature.
But what we learned and what we now know is that there’s not a very…some of the people that you find–
Jeremy: The reputation, it’s hard to sift out who the best reputation of trustworthy manufacturers are there?
Kyle: Exactly. It’s hard to trust those people. And we didn’t know that at first. And some are good. I don’t want to talk in blanket statements. Some, I’m sure, are good. But–
Jeremy: It’s hard to kind of figure out which ones…
Kyle: Exactly.
Farbod: [inaudible 00:26:57] other side of the world. We can’t easily go meet them and go check out their facility. It makes it extra tricky.
Jeremy: Yeah.
Kyle: And they’re the lifeblood of the company. They are building the product, and that’s an extremely important part of the business. On top of that, the language barrier and the time difference…it makes it very difficult to get business done.
Now what we would suggest to anybody who’s now in that situation to do everything that you can to find a connection. Now, the distributor that we’re working with is actually through a family connection of mine. And there is a level of trust. Farbod and I actually went to China earlier this year and met with them and sat down with them and had dinner with them. That helped quite a bit as well. We highly recommend that, too.
But yeah, it’s definitely a learning process and it’s hard to find a manufacturer that you can really trust.
Jeremy: Yeah. What was interesting…when you went to China and you probably toured the facilities, what was interesting about the manufacturing process that you wouldn’t have known without going on site?
Farbod: I think something that comes to mind, how manual a lot of this stuff is. There’s…you go and there’s a table of people working on your product, which is just crazy to see people manually putting the caps on or things like that.
Jeremy: You picture some machine coming down and just snapping them on type of thing?
Farbod: It was machine-based, but yeah, a lot of that stuff can’t be done via machine. That was interesting. We were delighted to see how clean and well put together our facility was. We actually saw a few other facilities as we were driving by. And just like peeking our heads in and so forth. This was top-notch and it was very good working conditions and so forth. I think we were both really, really happy with that just because you hear a horror story…
Jeremy: You never know.
Farbod:…whether it’s Bangladesh or China or wherever it may be, you hear stuff and we were scared about that because we want to be conscious of that as well. That was good to see. Just the way…outside of the facility, the way they treat you there is great. Going out with them and the experience we had. It was something that I think Kyle and I will never forget in terms of doing the dinners with them and the amount of wine they make you drink and things like that.
That night that we went to dinner with the whole facility and the management and owners was one of the most memorable nights of my life.
Jeremy: Really? Wow, that’s amazing. What was the hardest part, initially? Before you launched it to the public, what was the hardest part about getting to that point?
Kyle: I would say that the hardest part was time management and moving forward.
Jeremy: You’re both doing full-time jobs at this point, right?
Kyle: Exactly. We both have full-time jobs that were very time-intensive jobs. Farbod and I traveled a lot for work. And we were working on this on the side and there’s a lot of work that went into it before we ever made a dollar. Sometimes, it was difficult to stay motivated because we didn’t know if this thing would even do well, right? We thought it would because we would buy it.
Jeremy: But you have no idea until you get it out there, yeah.
Kyle: Right. It could have flopped. It could have not gone anywhere. Sometimes, it was hard to just stay motivated and to…when we get home after a long day, to do more research and reading, and emails back and forth with China, which are not always fun. I think just kind of keeping our eye on the goal, which was to launch this thing, got us through kind of that 18 months of product development.
Jeremy: Yeah. Those crazy days, what did the day look like? You get back…how late were you working in the evening?
Farbod: I think the craziest days were…leading up to the launch, it was crazy, but it wasn’t…let’s say we were working 8:00 to 7:00 or 8:00 to 6:00 or 8:00 to 8:00…whatever that regular workday at NewsCred and at Oracle for Kyle consisted of. When we got home, we put in a few hours. It wasn’t like we were up until 3:00, 4:00 a.m. leading up to the launch.
When we launched, it was a whole different level and it was the most insane month of, I think, our lives. Where we’d go to work, and then we’d be up packing boxes and dealing with stuff til 4:00. It was consistently til 3:00, 4:00, 5:00…I know there was a few 5:00 nights. And then get up and go to our other jobs, at the time, our real jobs at 8:00 and then do that again.
It was 20-hour days until the launch. Prior to that, it was manageable; it was 15, 18 hours. We weren’t getting much sleep–
Jeremy: It’s like startup manageable, yeah.
Farbod: Yeah, exactly. And then in the midst of all that when we launched…which we’ll probably talk through a little more later, there was always the conversations with China where Kyle and I would put our alarms, set our alarms, check the emails in the middle of the night and try to get conversations going with China so that we wouldn’t have missed them the next day, and then we’d have to wait another 12 hours to get back. There was a lot of that.
Jeremy: Tell me about the launch. Before…you’d get tens of thousands of units delivered to your apartment? Where do you have them delivered?
Farbod: They were in a New York City apartment, it was a mess.
Jeremy: What did that look like? You have one of your bedrooms half-full with…
Kyle: I have a funny story about this. Yeah, you’re right. When you get it imported, it arrived at the New Jersey docks and you have a truck go pick it up and deliver it. And as part of the…when you’re filling out some of that paperwork, they ask you “Do you have a loading dock?” And Farbod didn’t know how to really answer that question. We weren’t sure…”If we say no, are they not going to deliver this?” I think we just said “Yes, we do,” just so that we can get the truck there and we’ll ask for forgiveness later.
The truck arrived and we live in a residential area in the East Village in New York, and there’s only room for, really, one car, let alone truck on the streets. The truck came, I got a call, I go downstairs and there’s already cars backed up [inaudible 00:34:06] back to the intersection. And people are honking, and I was like, “What are we going to do?” And the truck driver is like, “We’re going to make them wait.”
It took probably ten minutes…people honking, people getting out of their cars. I’ll never forget that. We just stacked up the boxes on the sidewalk and it took about an hour to get them all in. But then, the truck driver took off and the truck driver’s only there for ten minutes, but [inaudible 00:34:34].
Jeremy: It seemed like an eternity with people getting out of their cars, swearing at you, probably.
Farbod: Kyle was on his own. I was traveling for NewsCred at the time. He was just so low. He called–
Jeremy: He needed a street cred rapper to be there fending the people off.
Farbod: But he handled it.
Jeremy: How many boxes are we talking? How many boxes did they unload?
Farbod: Ten big boxes. So you can imagine, ten big boxes in a Manhattan apartment is no joke. It’s not like we have a garage or a storage area. It’s in our living room; it was in the corner of our living room. More than just a corner, but it was kind of a mess, and it was something that we were hoping would only be there for a few months til…maybe four or five, six months. Then the next order would be our big order where we would potentially have a fulfillment center and have them shipped out of there.
Jeremy: This is a big risk at this point, right? What was your strategy? And we’ll talk about what ended up happening. But what was your strategy? When we get these things, how were you planning on selling them?
Kyle: Yeah. We had a whole marketing plan built out, and Farbod and I were funding this from our savings accounts at the time. It’s not like we had a big budget to go buy a bunch of ads and billboards and whatnot. It was very much like a grassroots marketing, organic approach.
We had kind of a two-phase launch plan. The first phase of which was friends and family, basically. We would open up the website, we would turn on Facebook, turn on Twitter, make all those accounts public. And basically announce this thing, put a bunch of good pictures out on the Internet and these social properties. And kind of hope that people pick it up, and friends and family share it on their Facebook pages. See how far we could take that.
Then the second phase of that launch was going to be a publisher outreach. We had already reached out to a few publishers and there were a few people excited about the idea. But nobody was really willing to give a lot of time until they had pictures and more details that they could build a story out of.
That was going to be the second phase where we were going to have…basically, these packages be delivered to a lot of publishers in the New York area with Sriracha2Go and with eight bottles of sriracha and details about the company, basically, a press packet.
But what ended up happening was after that initial launch, the initial phase of that launch, the product really picked up and we were getting more and more sales every day. And that’s…when Farbod was saying we were having some 5:00 a.m. nights packing up these boxes. We were like, “All right, that’s enough. This is not sustainable. We need to find a third party fulfillment center. People who can pack up these boxes and ship them out at scale before we do this publisher outreach.” Because if we do the publisher outreach and they pick it up, there’s no way we’re going to be able to fill all these orders.
It turns out that the morning after, ironically enough, that we decided to not do the publisher outreach, BuzzFeed wrote about us.
Jeremy: How did they hear about it?
Kyle: I think just through Instagram or Facebook–
Jeremy: You have a lot of great social media pictures with food and things like that, yeah.
Kyle: That was a core part of the strategy and I think…the two big ones, I think, were Reddit and Instagram. And we were thinking ‘What’s the best way to get in front of people who like sriracha for free?” We had this Sriacha2Go Instagram account and we would stay up just liking pictures that were #sriracha. Because we figured…and we would comment and whatnot. We figured, “Hey, if somebody sees an Instagram account named Sriracha2Go like their picture, they’re probably going to click it and see who that is. Once they click it, they’re going to see these pictures of Sriracha2Go, and hopefully, they re-share the image or they come to the website and make a purchase.”
There was a lot of that; probably thousands and thousands of likes on Instagram. Looking back, I think that was a really important part of the strategy and I think it could have led to that BuzzFeed article directly.
Jeremy: Farbod, yeah, you were going to say something.
Farbod: On that note, the Instagram note, a week before Halloween of last year…we hadn’t launched yet.
Jeremy: It’s like almost a year ago.
Farbod: Almost a year ago, yeah. October 28th is our birthday. A week prior, Kyle and I and a couple friends, for the first time, took the bottle out and we’re going to show it. We were testing it and testing the cap and so forth.
Jeremy: That, I can see. I was thinking about that. I’m like, “That would be a nightmare.” If something was wrong with the cap…you have it in your pocket. That would be…yeah.
Farbod: Yeah, it was a very, very small percentage of people. It’s very minimal. And the initial batch of products that we got, the cap was not nearly as strong as it is now since we’ve changed our manufacturer. But we don’t see that issue. Even when we tested it for a month or whatnot of using it and taking it everywhere with us, we didn’t really have issues with the cap. But the first time we took it out was that weekend before Halloween. And we’re just like, “Let’s see if people notice it. We love this and our friends love it. Let’s see if the general public…if they see it, if a bartender sees it, or a waitress…”
Jeremy: What people’s reactions are?
Farbod: It was absurd. That day, I’ll never forget. We went to Brooklyn, went to lunch. It was Kyle, myself, we had a couple friends in town and we’re taking photos because we wanted photos for the website. Kyle…I’m sure you remember this as clearly as I do. But we were at that…it was like a rooftop place in Brooklyn and a girl spotted it. She came over and she got all her friends, and suddenly, there’s a circle of people. She’s taking pictures of it asking us if she could have it. And it hadn’t launched yet, so we were kind of like, “I don’t know. Do we give this to her?” This is the first time we’ve had any sort of real excitement outside of our friends and family around the product.
And we said “Sure, you can have it,” and she actually posted a photo. Later that night, I just was searching Sriracha2Go…#Sriracha2Go on Instagram. Even though we hadn’t launched the product, I just was doing that on a daily basis. And her picture popped up. I remember the excitement that Kyle and I had. It was one photo, but we were so excited that somebody loved our product enough to post it.
I’m sure that photo is still there if you search #Sriracha2Go and go to the first photo. It got double the likes of any of her other photos and people were commenting on it. Like, “Where did you get this? How did you find it?” I think that triggered something online that this Instagram thing could potentially be bigger than we ever imagined it to be. That’s why we did the whole liking everyone’s photos who #Sriracha because if you love sriracha, you’re going to love our product.
Jeremy: Right, right.
Farbod: Reddit, we went on there and gave a coupon code and did a shameless plug for our product. Reddit usually doesn’t like that, but they embraced it, the community embraced it, and we saw purchases come in with that Reddit coupon code. Again, just the excitement of seeing that happen.
The first few orders were from friends and family. Once we saw those Reddit coupon codes come in, we’re like “Oh, wow. This is something that people outside of our immediate network might actually love.”
Jeremy: That’s huge. And very validating, too. Obviously, you’ve spent a lot of time, energy, and money on this so far. You want some people to get excited about it. And I want you to talk about that initial…what happened with BuzzFeed. But first, talk about some of the infrastructure. You guys are smart, you put certain things. What did you use for software, shopping cart, platform, shipping out…what do you use for that to start?
Kyle: Yeah. The big decision in all of that was “What do we use for our shopping cart? And what do we want the website to look like?” That was a long process and kind of going back to Farbod and I being very new at this, we didn’t have any firsthand experience with any shopping cart. So it was a lot of research and looking at features versus features, and reviews of certain shopping carts and there’s a lot of comparisons out there.
We ended up choosing Shopify, which we’re very happy about.
Jeremy: What were you considering? Shopify and what were the other top contenders?
Kyle: Shopify, Big…
Jeremy: Big Commerce?
Kyle:…Big Commerce, Volusion. Those are kind of the other entry-level shopping carts out there that get a lot of attention. We did think about a WooCommerce and…
Jeremy: Like a straight plugin WooCommerce or something?
Kyle: Right. But we decided against it. We wanted kind of an all-inclusive package that would do the reporting and the customers and the orders and all that sort of stuff. Shopify has been doing very well. They add features extremely frequently. We’re really happy with that decision.
But yeah, it was very new to us, and then kind of the next step after that was “Okay, let’s pick a theme,” and Shopify has a great selection of themes that you can choose from and plugins and an entire app store. A lot of what we wanted was already there out of the box from Shopify.
Jeremy: Yeah, I’m looking at it.
Kyle: There was definitely some customization and we found a friend that has done Web development in the past and helped us out kind of getting the thing up and running.
Jeremy: Yeah. What pushed you over the edge to go with Shopify? Obviously, this is a huge decision. All of your orders are going through this.
Kyle: Yeah. I think a lot of it was those reviews. I had read that Shopify customers were very happy. I think the scale…I think Shopify has more transactions than the other two that we were looking at, which I think is a good testament to how successful they as a company are and how successful their customers are.
Just reading about the company and the launch of the company and what they’ve done and the founder, it was just a great story and I just felt like they were on a good path. Now, they’re a public company and they’ve been doing really well.
Jeremy: Yeah. What else do you…Farbod, do you think about with infrastructure? You use Shopify and I know you were talking about someone that handles the shipments?
Farbod: Yeah. So in terms of the shipments, themselves, we were using Shippo…or Go Shippo? Shippo. Which worked extremely well for us when we were fulfilling these from the home. We were extremely happy with Shippo, they were extremely accommodating to us. You can plug in the information needed, it’ll print out a label, and you stick it on and take it to the post office and you’re good to go.
That was obviously a huge part of our business for the first few weeks that we probably used that more than anything else. Because that…we’re getting X amount of shipments coming in a day and we’re going to be printing labels for every single one of those manually. They had a really good solution set into place for that, and I think Kyle and I both highly recommend Shippo for anyone who’s in that situation. But obviously…fortunately for us, we didn’t even use that for that long. But for anyone who’s doing the fulfilling themselves, we recommend it.
Jeremy: Yeah. What kind of use tool software do you use today that helps you run your business?
Kyle: Yeah, so Shopify, of course, and for email, we use MailChimp. For communication, we use two tools kind of. We use Slack and then we also use Asana, which is like a project management communication tool, which is great. We also use a variety of analytics tools; Google Analytics. There’s a few others out there that we look at from time to time, and then Farbod and I do quite a bit through Amazon as well. We use their reporting tools.
At the moment, it’s pretty fragmented as far as what data lives where. But we are–
Jeremy: It depends on the platform.
Kyle: Yeah. We’re working on that.
Jeremy: Yeah. So BuzzFeed, what happened?
Farbod: Yeah. That was November 7th. Eight days…a little over a week after we launched. That morning, Kyle and I actually got coffee and walked to work together after just a couple hours of sleep. Slightly delusional, but super excited about the whole thing. Nothing had been written about us yet.
Jeremy: It’s only eight days.
Farbod: Yeah. I think there were a couple of blogs, potentially, but nothing where…not a lot of visibility. And we were talking about what would be the point where we would actually…we were just kind of in this state of euphoria, excitement. “This is actually something, people love our product.” But what point do we actually quit our jobs and fully focus on this and take it to the next level? Is it if we can sell through all this inventory in three months? If we have this inventory for a year, then we can manage it and we can try to grow it. But we won’t get any more than a few hours a day, maybe three, four hours a day outside of other jobs.
We were thinking “What is that threshold?” And it’s funny. We kind of went off…I went my way, Kyle went into his office. And two hours later, I think, Kyle…I was in meetings all morning, I think Kyle was, too. And my phone would buzz every time a Shopify order came in and I noticed that my phone was just a constant buzz. I turned it off, I thought something was going on with it.
And then when I turned my phone back on, Kyle had texted me with “Have you seen our orders today?” I looked and we were pretty much out of…we had sold out of all our inventory.
Jeremy: My God.
Farbod: We had to go on back–
Jeremy: That’s 20,000 bottles. That’s crazy.
Farbod: Crazy. We could see where all the traffic was coming from. Kyle pinpointed that it was from BuzzFeed. We went on and we saw that BuzzFeed had written this article that I think within those first few hours had almost half a million views. It ended up at, I think, right at about million views within a couple days.
Jeremy: That’s crazy.
Farbod: I’ll never forget. I was sitting there and my boss was sitting right across from me. I had a couple coworkers and I looked over my boss, Russ, and I was like, “Russ, I may need to leave early today.” He’s like, “What’s going on? I’ve never seen you look stressed or whatnot.” I was like, “All right, I’m going to explain something to you.”
I told him the whole story, and thankfully, he was incredible about it. But yeah, it was one of those things where we really didn’t know what the best thing to do was at that point because we just realized this had just completely changed our lives. That article had literally changed our lives and we didn’t know how we were going to fulfill the orders.
The first thing we did is Kyle went on and changed the website to reflect a 30-day back-order. Then we actually changed it to 45-day back-orders. Anyone who placed an order today, you’re not going to get it for 45 days. Which was kind of troublesome because we were, I think, two months away…less than two months away from Christmas. People [inaudible 00:51:47] for Christmas so…our email suddenly went from getting three, four emails a day to we had 200, 300 emails that morning in our email box saying “Am I going to get this for Christmas? You guys…you weren’t on back-order ten minutes ago, now you are. You ruined Christmas,” and we were upset because we didn’t want to ruin anyone’s Christmas.
We were scrambling to do everything we could to make it happen, and we ultimately did. But that day was absolutely insane in terms of trying to find out what we were going to do, and I’ll let Kyle speak to what we ended up doing when we got home. But we left our jobs, went home, and I think we were home by noon or 1:00, and we’re working towards that process of figuring it out.
Jeremy: Yeah. Kyle, what happens next?
Kyle: Yeah. So that day was probably the closest I’ve ever been to a panic attack.
Jeremy: Really?
Kyle: It was…when we saw that, it was excitement like Farbod was saying. But at the same time–
Jeremy: A good problem, yeah.
Kyle: I was really nervous. We didn’t know what to do, we didn’t know how we were going to fulfill the orders. It was a lot of anxiety around what we’re going to do. And so, we said 30-day back-order and then 45-day back-order, but the reality is, we were kind of just picking numbers out of the air. We really didn’t know how long it was going to take, and we kind of figured that that was an accurate number. But it’s not like we already had a shipment on the way or anything like that.
The number one goal, and like Farbod was saying, we didn’t want to upset our customers. We wanted everyone to be happy, we wanted them to get their product. The number one goal from that point forward was “Fill these orders.” Do whatever we can to fill these orders, and that’s actually the day…I was on the phone with my stepdad that evening kind of explaining to him the situation of what’s going on. And he just happens to mention “Hey, by the way, my cousin works in manufacturing and he goes to China four times a year. Should I introduce you to him?” I was like, “Yeah, where have you been this whole time with this introduction?”
He ended up making that introduction and that’s now the family member that connects us to our manufacturer. They were a savior. We could not have done it without them. We immediately sent them samples of the product that we had and said “Can you replicate this?” They got the mold put together and everything.
From that point, we now had that underway. They were working to make the product that we would eventually send to the customers who had already placed their order.
Jeremy: How long did they say it was going to take?
Kyle: We told them our deadline. We were like…
Jeremy: You need 45 days, you were saying?
Kyle: Yeah.
Farbod: We needed that [inaudible 00:54:54]. We needed them.
Jeremy: To ship?
Farbod: Get them…in line with this, we were calling fulfillment centers, too.
Jeremy: You have to send out 20,000 bottles.
Farbod: I mean, more, yeah. We sold through our 20,000, but we had significantly more than that. We needed a fulfillment center not only because we didn’t have space, but we didn’t have the manpower. We not only needed new inventory, new goods, but we needed a fulfillment center as well. We were managing…trying to get both of those set up at the same time.
Jeremy: Did you…at the time, you go home, and you’ve sold out of your current inventory, which is like 20,000 units, right?
Farbod: Yeah.
Jeremy: How do you ship all those out? Do you send them to a fulfillment center to send them out, or what do you do?
Kyle: At the time, we were packing boxes ourselves.
Jeremy: You did all those?
Kyle: Yeah. Not us, ourselves. We were lucky enough to have friends, very generous friends who came over and we bought them food. We have pictures that day of our apartment. It’s just kind of a disaster with people everywhere.
Jeremy: It’s like slave labor. “You guys are not leaving until all these are [inaudible 00:56:06].”
Farbod: Our girlfriends were incredible. They were in it to win it with us. They were up super late with us every night. Maybe not as late, but they were an integral part of this…and continue to be. But yeah, it was the girlfriends and then the friends. We had some amazing friends who came over and just were offering to help. And seemed very genuine about wanting to help us.
It was amazing. We got pictures, like Kyle said, of eight people on the floor, on the couches just packing boxes, taping stuff up, doing labels. It was crazy. Incredible, but crazy.
Jeremy: You’re in touch with the manufacturing. What happens then? What do they end up…because you’re like, “We need this now,” type of thing.
Kyle: Yeah. They ended up delivering.
Jeremy: Really. Wow, that’s great.
Kyle: And there’s always risk. When you’re in such a time crunch, like, “What if anything goes wrong?” When you’re importing a product, there’s always a chance that it gets held up in customs for a month or six weeks. And sometimes, it’s not because you did anything wrong, it’s just because it got held up.
There were a lot of risks and we were really worried that we wouldn’t be able to fill the orders in the time that we had committed to our customers. But we’re now happy to say that the shipment did come in on time, everything went smoothly, the product quality itself was great. And it was exactly what we wanted and we were able to fill every single order by the time that we had guaranteed.
Farbod: Yeah, and the fulfillment center, Swan Fulfillment Center, was great about working with us. And they realized the urgency, we told them our story, and they made sure it happened. Kyle’s family connection…the fact that he speaks Chinese and is able to communicate the urgency…we would never have been able to communicate what was going on to someone in China on our own. Translating something through Google can only go so far.
Having that, I think, was huge. He was a big part of this as well. Again, it goes back to just tapping into your network. We found the fulfillment center through our network. We found, obviously, the family connection is an obvious one when you have family. But this wasn’t…most of this…the reasons we made this happen was not because we just went on Google and searched something and found it. It was friends…
Jeremy: Personal connections.
Farbod: Personal connections, friends and family helping us actually pack boxes. That’s kind of the stuff you ought to do in the beginning.
Jeremy: Yeah. What happened after BuzzFeed? And now, in the back of your mind, you’re thinking about your jobs. What happened about that?
Farbod: Yeah. I mean, the momentum continued. Now, we kind of knew the situation we were in. We had a timetable as to when we were going to get our shipment so we can tell people “This is going to be the day.” There came a cutoff where we had to tell people “You’re not going to get it for Christmas,” which was unfortunate. We would have loved to have had the inventory. And looking back, obviously, we would have purchased enough inventory.
But we thought we could dictate what was going to happen and to our surprise…and obviously, a great problem to have–
Jeremy: It just got picked up.
Farbod: It just got picked up, but we didn’t know that’s what was going to happen. Obviously, we move forward with future products and so forth. We’re going to make sure we’re a step ahead with that. But after BuzzFeed, sales…everyone else picked it up. L.A. Times to Esquire, to Eater. Anyone you could think of who potentially would write about sriracha wrote about the product. Ashton Kutcher tweeted about it. It was crazy. Those next couple weeks were just crazy because the momentum just continued to build.
And we just kept it going. We had a few things we had to focus on. There was a backlog of hundreds of emails. So between Kyle, his girlfriend, myself, my girlfriend, a close friend of ours in northern California; we just had people who were helping us trying to communicate with our customers. And as Kyle said earlier, that was the most important thing. Being candid and getting back to people as soon as possible. We had the backlog of emails, and then from there, we were trying to respond to emails within 24 hours. Some people were upset, some were thrilled. We were trying to do everything we could to make everyone happy.
And when we got the product in, thankfully, Swan turned it and got it out to the customers within a couple days. And I’d say 99% of the people who were expecting to get their product before Christmas got it; 99.99%. Which was great.
Jeremy: You guys hustled for that one.
Farbod: Yeah, we hustled. Then we had the serious conversation of “What are we going to do about our jobs?” The quarter had just…December, end of the year, start of the new quarter. And I was like, “All right, what do we do? Sriracha2Go is something that took off. Do we want to turn this into a business and keep the momentum going and build on it? Because if so, we’re only going to be able to do so much if we’re doing it part-time.” We both knew it was ultimately a no-brainer just because…how often do you get an opportunity like this that goes viral and your name is out there and you could build on it?
I ended up leaving in early February. Kyle, you left a couple weeks before me?
Jeremy: It was like, three, four months, time period?
Farbod: Yeah. Initially, what we had hoped for was hopefully, we get to a point in 12 months, we can leave our jobs. Kyle left and…yeah, it was [inaudible 01:02:30].
Kyle: Yeah, three months.
Jeremy: It’s still probably tough though, right? Was it a tough decision? Because I can see “Well, we’re getting all this press. What happens when the press dies down?”
Farbod: Sure. It’s still a risk. It’s still a huge risk.
Jeremy: Or were you not even thinking that? You’re like, “We’re just going to keep this going?”
Farbod: The only reason it took…for me, I loved NewsCred. I loved the people I worked with. I was in a great opportunity there. So it was a tough decision in that sense. But it was a no-brainer in the sense of “This is once in a lifetime…”
Jeremy: “Let’s make a go of it.”
Farbod:”…let’s make something happen here.” And I think Kyle felt the exact same way. We were completely in line. There was just a couple things I had going on at NewsCred, so I had to wait. Kyle was able to do it a few weeks earlier. As of early February, we’re both 100% in.
Jeremy: What does Ashton Kutcher tweet out?
Farbod: “Yes.” He just said “Yes” with the picture of the bottle.
Jeremy: How does that…did you see…can you track…he has how many millions of Twitter followers? Do you see a direct impact from that?
Farbod: Yeah, there’s an impact. At that time, it was kind of hard to tell if it was coming from his tweet, or if it was coming from the press. Overall, we’ve noticed Twitter is…there wasn’t a link to the product. Ashton, if you’re watching, maybe you could [inaudible 01:03:56]. It was another [inaudible 1:03:58] wink, Sriracha2Go. No, it was awesome and we saw, definitely an increase. But it wasn’t what you would think because Twitter is just…people that go on Twitter see it–
Jeremy: They’re not looking to buy something.
Farbod: They’re not looking to buy as much as some other channels from what we’ve seen. And people on Twitter, you have…some people follow hundreds, thousands of people. It’s like…it’s very easy to miss a tweet.
Jeremy: You don’t know what they’re saying, right?
Farbod: You don’t know what they’re saying. Ashton Kutcher could have 17 million followers, but only a million of them might see the tweet, or 500,000 of them. I follow 500 people on Twitter. So at any given time, if Kyle tweets, it’s a high likelihood I’ll miss it.
But it was still impactful, it was still amazing. And it definitely drove some sales for us, but it wasn’t like anything to the extent of BuzzFeed.
Jeremy: Yeah. What was the next major milestone? You get on BuzzFeed, you get on all these other media outlets. Ashton Kutcher tweets you, you quit your jobs. What was next?
Kyle: Yeah. The next major milestone, we had Huy Fong Foods, who is the largest manufacturer of sriracha and probably the one that you’re familiar with.
Jeremy: The rooster.
Kyle: Yeah, exactly, the rooster, the green cap. They had reached out to us and invited us to enter into a licensing agreement with them, so that we could use their actual artwork, the rooster itself, on–
Jeremy: What was on your original bottle? It was a dragon, right?
Kyle: Yep. It was a dragon and we weren’t…we had done that intentionally. Since day one, we didn’t want to compete with Huy Fong. The reason we launched the business was because we love Huy Fong and we love their sauce. We love their product and we want to love more of it everywhere we go.
We didn’t want to be competitors of theirs in any way, shape or form. And we’re glad that they saw it that way as well. And they reached out to us and invited us into this licensing agreement to really make it official, and to have their artwork on the bottle.
Jeremy: It’s a huge deal.
Kyle: Yeah. For us, it was huge. Actually going back to the piece about quitting jobs, that was one of the things that really made us feel much more comfortable to leave our jobs is because at that point, it became official. This is a licensed product that will be around for a while.
That was extremely exciting and they’ve been great to work with. We’ve met with them a few times now, and they’ve just been a great team. And as part of that process, they wanted to make sure that the product that we’re delivering to customers is safe and BPA-free and all that stuff. There was a little bit of product testing and due diligence process there.
Jeremy: Right. Because their reputation is on the line with that.
Kyle: Exactly. We’re closely aligning ourselves with their brand.
Jeremy: Yeah. How did they hear about you and then how did they end up reaching out to you?
Kyle: I don’t know how they heard about us. I think they’re always kind of on the search for sriracha products.
Jeremy: Because they’re a huge company. What’s that?
Farbod: They’re on top of it. Their owner, David, he’s always looking for stuff related to sriracha on social. After BuzzFeed wrote about us…
Jeremy: He knew.
Farbod: People were hashtagging sriracha left and right. Even before that, people were hashtagging sriracha and hashtagging Sriracha2Go. If he did a search as due diligence, he would have seen it. And I think he probably saw it two days after we launched. Because there were people, including ourselves, who were hashtagging sriracha. I think they saw it, then the BuzzFeed article hit. And I think it was right after that…right before the BuzzFeed article that they initially reached out to us.
But they’re on top of it. There are companies out there that have tried to imitate their sauce and take the green cap and so forth. And it doesn’t even come close to the quality of their sauce. They need to be on top of that stuff and make sure–
Jeremy: No copycats.
Farbod: Yeah, copycats. And if they have an opportunity for a good partnership, they’re smart, they’re going to take it.