Sriracha2Go: Building a Successful Start Up Business that Earned Mark Cuban’s Investment

By |2018-05-23T17:06:00+00:00November 17th, 2015|eCommerce Best Practices, Skubana Updates, Webinar|

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. And they realize which ones are going to be beneficial and which ones aren’t. They reached out to us cordially asking if we were open to it and we were…when it all finalized, I remember after that conversation, after they sent us the signed agreement, it was like…it was a sense of, like Kyle said, that solidified us. And that was probably more exciting than the BuzzFeed article for us. Just the sense of “This is something real and it’s not something that’s just potentially one article.”

Jeremy: Right. How did that conversation go? For someone who may be in licensing conversations now or thinking about it, how did that course go?

Kyle: Yeah. A lot of it was…there’s the legal part, and then there’s the business part. On the legal side of things, we had a lot of help from friends, one of which being Farbod’s girlfriend happens to be a lawyer. And so, we got a lot of advice. And just we’re running ideas by people and getting feedback.

Then on the business end, we just…the first call that we had with them, we wanted them to make sure that our intentions were good, and everything that I had just said about us loving their sauce and their product and their entire brand, we wanted to make sure that they knew that and that we wanted to build a positive working relationship. And that was really important to them. Because in a sense, like you were saying, we are very much aligned with their brand. That’s key for them.

And the entire process took about maybe six or eight weeks.

Jeremy: Very quick.

Kyle: Yeah. It wasn’t too long. It wasn’t too much legal back and forth. I mean, everything…for the most part, everything that they had in their template agreement was fair. Kind of your standard licensing agreement. There were just a few tweaks that we ended up making and that was about it. It was pretty straightforward, yeah.

Farbod: They have some recommendations as well. So when they’re licensing their name out, they want to give recommendations because it is in line with their brand and we were completely open to all of that. Because again, this product and the need for this product, it came from our love for their sauce. If they had a recommendation, we were open to it and we made a couple changes. Whether it was messaging on the website, messaging on the bottles, things like that; we wanted to be a good partner because we knew this was something that was going to be integral to our success, and since then, it’s been an amazing partnership.

I don’t know…I don’t think if we can speak to whether or not this is how all licensing partnerships are. But this one’s been amazing and we’re happy about it.

Jeremy: In the back of your mind, when you started this company and you see this huge influx of orders, what’s in the back of your mind about copycats or people copying you before the licensing? Obviously now, you have a licensing deal, and there’s a huge differentiator there. But before that, were there any thoughts to that, or were you just not even worried about that because you’re selling the product?

Farbod: We have a patent pending on the bottle. There are still things that were concerning. But we thought if we could hit the market hard and hit it extremely hard and get out there first to market, we can make a big enough dent where Sriracha2Go would be the name you think of when you think of a sriracha key chain bottle. That happened and we were very fortunate. That’s why you’ve got…when you do release a product, that you even have those type of thoughts. You have to get it out there and hit it as far as you can right off the bat. Because if someone does copy it, people will think of that as a copycat product, and they want the original.

Like you said, Jeremy, once we got the licensing agreements solidified, that’s a big differentiator.

Jeremy: Huge.

Farbod: Having Huy Fong as a partner. And people love that logo. People love that rooster. I, personally, if I went and saw the rooster and I saw a non-rooster key-chain bottle at a lower price, I’d want the rooster. I want the real thing. So I think we’re–

Jeremy: People are brand loyal to that product.

Farbod: Brand loyal, especially to Huy Fong. We saw…when we released the initial product, some comments on that BuzzFeed article, the majority was how amazing it was. But some were like, “It’s not the rooster. It’s not the real rooster.”

Jeremy: There was one article I read, it was by Eater, and it said “An adorable…” and they put “unlicensed sriracha experience.” I don’t know why they thought to put that word–

Farbod: Yeah, they should have left it out.

Jeremy: I thought it was a weird word to use…

Farbod: It was a positive article, but they definitely put that in the title.

Jeremy: Right.

Farbod: Stuff like that, we now can avoid.

Jeremy: Right. Why would they even think to put “unlicensed sriracha experience?” That doesn’t make sense to me. It’s about food…I don’t know. I obviously specifically remember that because I thought it was a weird choice of words.

Kyle: Yeah, that was motivation for us to finalize that licensing agreement with Huy Fong and then go back to them and say “Look at us now.”

Jeremy: Maybe someone from Huy Fong called them and was like, “This is not a Huy Fong product. You better put ‘unlicensed’ in the title,” or something.

Farbod: Maybe they reached out to Huy Fong about it and something like that happened.

Jeremy: Yeah. Why do you think that…they reach out to you, right? Why do you think…”Well,” they’re a huge company. “These guys just started. We could just crush them and just make our own bottle.” Why do you think they didn’t do that?

Farbod: They focus on making the sauce. That’s the answer. They have built–

Jeremy: Was there anything at the back of your mind at this point? Like, “Maybe they just want to know what we’re doing or create it themselves?”

Farbod: Yeah, but they didn’t seem like those type of people. The conversations we had, they seemed genuine. And we’ve done enough research on them where we know that they’ve perfected the sauce.

Jeremy: They don’t care. You think they don’t even care about that. They’re like…they just want to sell more sauce.

Farbod: David wants to sell the sauce and get the sauce. His focus is on getting the sauce in everyone’s hands. There’s still a market. When we were in Dallas a couple weeks ago, some people…we were buying a bunch of sriracha, I think we were at Walmart. And a couple of people were like, “What is that sauce? It looks hot. That looks crazy.” People don’t still…as popular as it is and it’s probably the most popular sauce and the most cult…have the largest contingency of a cult following of any sauce right now on the market, there’s still a lot of room for growth and I think Huy Fong realizes that, and they want to focus on getting sriracha into every person’s hands. And leave the goal of getting Sriracha2Go in every person’s hands to us.

And they’ve still got…which is a great sign. Because they’re as large as they are and as widely known as they are, they still have room to grow, which is amazing, and they want to take advantage of that.

Jeremy: Yeah. You get the licensing deal, huge milestone. What’s next? What do you do next to grow?

Kyle: Shortly afterward, we reached out to Mark Cuban directly. Farbod and I had talked about it quite a bit. And in Mark Cuban’s book, “How to Win at Business,” he actually says “My email address is publicly available. You could basically just Google it and you’ll find it, it’s pretty simple. And if you ever have anything that you want to share with me or tell me that you think I’ll find interesting, then just email me and I’ll read it. I open and read all my emails. I probably won’t respond, but if I find it interesting, I’ll keep reading and maybe I will respond.”

We had always thought…when we get to a point where we really have something that we think Mark Cuban would be interested in, we should send him an email. It was a very carefully crafted email that we sent to Mark. And he replied in two hours.

Jeremy: What did you send in the email?

Kyle: We had revenue numbers. We had…it was basically our goals. We were saying “Hey, here’s what we’re doing and here’s what we want next.” And a lot of it was around retail and retail distribution. He replied in two hours and he said “Tell me more. What do I get and what do you need from me?” And–

Jeremy: Was the goal to get him as an investor from this email?

Kyle: At first, we certainly structured the email in that way. It was almost like a “Shark Tank” pitch in the form of an email. But the question in the email was “Are you interested in discussing a further type of thing,” and his response was “Yes.”

When we reached out, we thought…and Farbod and I’s minds were like, “How great would that be to have Mark Cuban as an investor?” It’s certainly something that we were open to. We weren’t sure if he would be open to it. We reached out, he replied within two hours, and Farbod and I ended up staying all night, that night responding to him. And [inaudible 01:18:37].

Jeremy: What’s that?

Farbod: Literally until 4:00 a.m. writing an email just to make sure…

Jeremy: Everything is perfect.

Farbod:…had it. We both come from sales backgrounds, so we’ve written a lot of prospecting and sales emails. But this was a different level.

Jeremy: It could be the most important one of your life, yeah.

Farbod: Yeah, absolutely. Yeah.

Kyle: That included just more detail in all areas. Retail, what we’re currently doing now on the website, the successes that we’ve had. How we imagine the product road map to develop over time and the ideas we have for the business. And I guess he liked it, and his response…I think the next day, he replied and he said “Sounds good.” He copied five or six people from his team, got them involved, and started helping us from that day forward, actually. And then on the finance and legal side, we kicked off the due diligence process, which took two or three months running through all the numbers and getting the paperwork drawn up and red lines and whatnot.

But they’ve been a huge asset to us. Like I’ve said multiple times today, this is Farbod and I’s first time with this. There’s a lot that we don’t know and there’s a lot that we still don’t know to this day. And having them there, somebody who’s been through it so many times and has firsthand experience in a lot of the situations that Farbod and I are finding ourselves in has been super helpful.

Jeremy: I read…I think it was in Inc. there was an article on this, actually. And it says…it talks about this. Mark Cuban invested in you for an undisclosed amount, so I’m sure you’re not disclosing that. But do you offer him a percentage for a certain amount or does he offer to you “I am willing to make this investment at a certain percentage”?

Farbod: We proposed it, initially.

Jeremy: You did? Okay.

Farbod: That wasn’t the number that had stuck, but there was a little bit of back and forth and that was fairly painless because we came up with a fair offer. His rebuttal was fair and it all worked out in this case. We can’t speak for every scenario with him, but in our case, it worked out very well.

We later found out that actually, this is a pretty rare occasion for him to actually have a portfolio–

Jeremy: Get a cold email and invest in something?

Farbod: Yeah. And then just like…the majority of his companies right now, if you go to markcubancompanies.com, are actually “Shark Tank” companies. It was extremely humbling and exciting for us to be able to actually be one of the few. And we’ve gone and visited the team and he’s got a great team under him at Mark Cuban Companies. We’ve gone there twice. We actually want to try to get out there every couple months and just kind of have them be an extension of our team and really leverage their expertise as much as possible.

It’s all worked out extremely well and we couldn’t be more excited. We’ve loved Mark…been a fan of his. We’re both basketball fans and we just kind of…as his time with the Mavericks and how animated he is–

Jeremy: You should have worn a Mavericks sweatshirt instead of Golden State.

Farbod: My ties are always to the Bay Area when it comes to that. He’s always so…he’s got so much pride in his team. And most owners in sports, they’re not as involved as he is when it comes to going to every game. He goes to every game, he argues with refs. He’s like a fan. He’s screaming. He built a team that ended up winning a title who was awful before he acquired the team.

There was that inspiration of “Hey, not only is he amazing on ‘Shark Tank,’ but as a basketball owner prior to that, we loved him.” There’s no one else in terms of who we dreamed of working with that I could say was ahead of Mark. It was a dream come true in that sense.

Jeremy: What good advice have you gotten from him, whether an email, text, or phone?

Farbod: “Keep selling.” That’s the one. He’s a big sales guy, and he’s always big on “Keep your focus on sales.” He’s adamant on “A company is nothing without its sales guys.” We realized that. We come from the sales world. But we also realize product is super important as well. Mixed with that, we’re innovating and trying to come out with new products. It’s having that balance of selling and being on the front lines, but also coming up with new products and expanding our product line.

His team has just been around just strategic…paying too much for something, whether it’s accounting or fulfillment. And these are just examples I’m throwing out. Or potential new products that we actually have coming down the road that you’ll hopefully be seeing in the next few months that we’re very excited about. They’ve been able to help us a great deal with all of that stuff as well.

Jeremy: Yeah. What’s some good advice or direction that his team has given you? Specifically that sticks out the most that maybe you would have gone in another direction if it weren’t for them telling you something or sharing something?

Kyle: A lot of it, like Farbod said, is sales. They’ve introduced us to a program at Amazon called Amazon Exclusives, which we were a part of for a while, which was great. Things like that that happen so quickly that just weren’t really in the realm of possibilities, I guess, or at least that accessible to us, had we not had that introduction.

A lot of the things that they do are in the form of introductions. Farbod mentioned a product that we have coming out, one of which…they introduced us to one of the facilities that is going to be integral to that manufacturing supply chain. Things like that and being able to leverage that personal relationship. Anytime you throw out Mark Cuban’s name in a conversation it–

Jeremy: It’s taken seriously.

Kyle: Yeah, exactly. It buys you some credibility, and that’s helped, too. Especially driving costs down and trying to figure out “Okay, how are we going to make this work?” That’s one example. Simple introductions like that that are very easy for them make a huge impact to our business.

Jeremy: Yeah. And you mentioned retail. I want to talk about some of the online channels you sell in and how that works. But tell me about your retail strategy. Because it sounds like that was one of the reasons why Mark Cuban, you thought, would be a great fit.

Kyle: Yeah. Retail has been going super well for us, and still to this day, we think it’s going to be a huge part of the Sriracha2Go business and if we continue retail distribution, we think it will become much larger than eCommerce.

Jeremy: Where can people buy it?

Kyle: People today, we’re in Cost Plus World Markets. They have about 400 locations, I think mostly on the West Coast. We will soon be in Urban Outfitters…

Jeremy: Awesome.

Kyle:…which will take that count to about 1,000 locations across the U.S. And then we’re in a few smaller regional chains like Pepper Palace. I think they have 15 or 20 locations across the U.S.

Farbod: [inaudible 01:26:40] up to 30 or 40. Then there’s a number of other ones, pretty large ones that were…we’re getting there.

Jeremy: In discussions with.

Farbod: In discussions. We couldn’t really go full steam ahead with retail until we had our–

Jeremy: Manufacturing in mind?

Farbod: Retail packaging. Let me see if I…so our blister packs…I’ll show you what it looks like here so you can get a…this is our retail option.

Jeremy: Gotcha.

Farbod: You put it on the clip strip. We really couldn’t go full steam ahead until we were able to show what we had ready for retail, which is pretty recent for us. Urban Outfitters will be carrying this. And some retailers want to just have the bottles, the loose bottles outside of the packaging. But we think this will take it to another level, which is kind of why it’s taken this long.

Jeremy: Yeah. That’s a whole huge project in itself. How do you manage and find someone to get that design right on the packaging and to get the packaging, in general?

Kyle: You’re right. It’s a whole new project. It’s almost like creating a new product because you have to have the plastic shell that Farbod just showed you on the front that’s holding in the bottles. That’s a custom mold specifically built for our product, all of our product, and all of the artwork. And just–

Jeremy: Do you do one? Do you do three? Do you do two? Do you have a lady on the cover or not? I mean, all these decisions.

Kyle: Yeah, exactly. It took time. We found a retail packaging designer who’s done these packages before and we worked with him…just freelance on the project to do the artwork on the front and the back. It was back and forth. There were a few rounds of revisions because we wanted to make sure to get it right.

But you’re right. It’s something that a lot of people underestimate because the reality is, most people are going to buy it and they’re going to throw that away within minutes of opening it. A lot of times, it’s not what people think about, but it’s definitely a big–

Jeremy: Yeah, they can’t just put an empty bottle on the shelf at a grocery store. [Inaudible 01:28:57] something, and then you now have to create that as well.

Kyle: Right.

Farbod: And you can’t underestimate the amount of time it takes to create something properly. If you want to do it right, whether it’s a product or whether it’s packaging, that’s something that we’ve learned and we learned early on, and we continue to learn. The packaging, we thought we could get that up and running in a few weeks or a month or whatnot. But if you want to do things right, it’s going to take the longer; the artwork, the quality, the quality controls, the testing, and so forth.

Kyle: Yeah. One piece that we kind of skipped over was deciding what we actually want the package to be. That was a Catch-22 because we were working with retailers and retailers were telling us that they were excited. We didn’t know…did we want it to be a blister pack, which is what we ended up landing on. Did we want it to be some other form of packaging like a box or…there’s a variety of them out there.

We kind of ran through a variety of different options, and there’s a few different factors you have to consider. First and foremost, what do the retailers want? And that’s–

Jeremy: How they can display it, that type of thing?

Kyle: Exactly, right. Do you want it to hang on a hook, or do you want it to stand on its bottom, on a shelf? It’s hard because it’s a Catch-22 because the retailer isn’t going to tell you “Okay, I’ll buy a thousand cases if you do it this way.” They can’t really commit to that that far in advance.

We got a lot of feedback, we were just having a lot of conversations. Finally at one point, Farbod and I were like, “All right, let’s move forward on the blister pack. If we want to change it down the road, we can. But we need to have at least something that people can buy and sell.”

We decided to move forward with that and it’s done really well. Another entirely new challenge for us has been retail distribution.

Jeremy: I was going to ask, yeah, the biggest challenges with retail. Because there’s another set of…a learning curve, I guess you could say.

Kyle: Totally. Even buying direct, which I think is…you could sell directly to the retailer or you could sell through a distributor. Both have their complications selling direct. The size of the box, the weight of the box, the thickness of the box. Dropping it on its corner, how far does it bend in, where do you put the stickers? You almost need to be like a mathematician to figure out everything single step in the process and how to package the product in a way that’s right for that retailer. That’s something that we have never really been exposed to.

Jeremy: You didn’t have to think about it up until then, yeah.

Kyle: Right. But every retailer has their own process, their own distribution centers that it needs to comply with their operating procedure.

Jeremy: Yeah. It sounds like…yeah, go ahead, Farbod.

Farbod: When you work with a distributor, the benefit is they have all this stuff perfected. They know what to do. You sell them the product, they handle the rest. But then, you don’t get direct contact with the retailer.

Jeremy: There’s a middle person.

Farbod: Yeah. You’re ultimately waiting on that distributor to get you the answers, and then you ask them something and it might take…it gets a little frustrating at times but…

Jeremy: Because you’re used to acting quickly.

Farbod: Acting quickly and handling stuff…having our destiny in our hands. Whereas now, it’s kind of in someone else’s hands, which is the distributor in many ways. But they really do alleviate a lot of the pain when it comes to the stuff Kyle was referring to.

Jeremy: Right. Then talk about the online strategy? Because obviously, that part…there’s a lot that goes into the retail part of it. But I’m sure you guys have a wide online strategy, too.

Kyle: Yeah. A lot of it is still, to this day, is word of mouth and is organic. Every time Farbod and I go out to a restaurant, we have our key-chain with our Sriracha2Go sitting on the restaurant table. And more often than not, somebody makes a comment about it. Like, “Oh, my gosh, how cute is that?” type of thing. There’s still a lot of that going on, which we think is probably the primary driver of growth for us, and the more we can encourage that, the better. Which is why we’re very active on social. We really want people posting their pictures of our product because it’s a great way to get out there. It’s a great way to get new eyes on that product.

That, I think, will always be what kind of our strategy is built around. And then as the business has matured and grown, we’re trying to take a more scientific approach on the eCommerce side.

Jeremy: Tell me about that.

Kyle: What do we want our marketing mix to be? Between organic social growth, digital advertising, press coverage, things like that. We’re kind of working all channels right now, and we’ve been at it almost a year.

Jeremy: A lot has happened in a year, guys. Jeez.

Kyle: Yeah. We’re still testing a lot of new things. We have a very open mind as far as what’s going to work and what’s not. We’re willing…when it comes to Twitter advertising. “Sure, let’s give it a shot. Let’s see what works. If it doesn’t work, we won’t keep doing it. If it does, we will.” That’s kind of the mentality we have a lot of times.

But yeah, we’re very much…eCommerce is a huge part of the business, so we’re very much continuing to try to develop and refine it.

Jeremy: Go ahead, Farbod.

Farbod: I’m sorry. When we launched…again, we’re new to this. We were thinking…it’s funny to look back on, but we were thinking like Amazon…they take a percent. “I don’t know. We don’t know if we want to go…” they take a nice little chunk. [inaudible 01:35:10].

Jeremy: A lot of fees, yeah.

Farbod: Yeah. I don’t know if something clicked with us, or someone told us that we’re just crazy. The largest reach in the world is at your fingertips with Amazon and we’re neglecting it. Groupon Goods, for example…some people, Groupon doesn’t work for, some brands. But for us, Groupon has a huge reach. We’ve been on Groupon Goods a few times and it’s done very well for us.

I think getting our product out without tarnishing the integrity of the brand and so forth where…without naming certain examples, there are some channels that we don’t want to be involved in, but that’s very rare. Groupon Goods, for example, is great and it’s worked well. Amazon is obviously the best and it’s worked incredibly well. When we first launched, we were neglecting these distribution channels. Where now, when we talk to people who are launching new product, we advise “Get on there as quickly as you can.”

Jeremy: Yeah. What do you advise people, whether it’s musts or mistakes with navigating Amazon?

Kyle: I highly recommend Amazon FBA–Fulfillment by Amazon. And if you can find a way to build your supply chain so that it eliminates a lot of the work that you personally have to do, I think that’s the optimal way. But it takes time. Basically, what that means is trying to get the product to Amazon as quickly and easily as possible. And leveraging…like Farbod was saying, leveraging their reach and their network is great. And Amazon Prime FBA gets you more visibility within their ranking system.

Something else that’s also worked really well for us is Amazon Promotions which is basically like an ad-buying platform with an Amazon system. So that you can target users based on what they’re searching for on Amazon. A very simple example is a lot of people go on Amazon and they search for sriracha. Well, we want to be there when somebody is searching for sriracha. Because if they’re buying from Amazon, they’re likely buying sriracha in bulk, and those are definitely the people that we want seeing our product.

Jeremy: Right. That makes sense. Guys, this has been fantastic. I really appreciate your time. I’m looking up, I’m like, “I can talk for another three hours about this stuff,” but I won’t keep you on for that long. What’s next? What are you working on? What’s keeping you up at night now that is top of mind that you’re working on?

Kyle: We have…a lot of the things that we’ve discussed today, that takes up a lot of our time. Like sales. We always need to spend time focusing on sales and getting more retail distribution and all those things we discussed. But at the same time, we want to make sure to focus on new products. A couple in particular we’re extremely excited about, we think they’re going to make a bigger splash–

Jeremy: Those are confidential right now, I’m assuming?

Kyle: They are confidential.

Jeremy: That’s what I like about video. I can sense they’re not going to answer that question if I ask them.

Kyle: Yeah. But we think that they will make a bigger splash than Sriracha2Go did, actually. That’s something we’re really excited about.

Jeremy: What products do you have now just to give people a sense? Different sizes…I know you have different sizes.

Farbod: We have our flagship Sriracha2Go, which is 1.69 ounces. We have the mini Sriracha2Go which is one ounce, which is actually the size that I carry around–

Jeremy: Do you have it with you?

Farbod: Yeah, always. That’s the one ounce. And that is actually…a minor change in size makes a big difference for guys who want to put it in their pocket. The 1.69 ounce, I think, is perfect for if you have baggier pants or you’ve got a purse or a bag.

Jeremy: Right. How do you decide on that, on those measurements?

Farbod: We tested a bunch of bottles and just came with what–

Jeremy: Just put them in your pocket.

Farbod: I tried on skinny jeans, threw them in. Tried on baggy jeans, threw them in.

Jeremy: “I put Spandex on, see what that did…”

Farbod: I’ve had girlfriends test them. We had a bunch of different sizes that we had molds of that we tried. And then we’ve got the bundles. You can see on our website that we have four different bundles that you can purchase. Starting from Sriracha for You which is a 9 ounce sriracha…Huy Fong sriracha filled with sauce with a mini Sriracha2Go and a regular Sriracha2Go. All the way up to a bundle that has a handful of different bottles of sriracha with, I believe, 50 of each product. [inaudible 01:40:26]. If you’re having a wedding or something like that, or throwing some sort of an event, you can get those at a very good price.

And then we’ve just recently started re-selling Country Archer beef jerky.

Jeremy: I saw that, yeah.

Farbod: Which is actually…we released that a couple days ago, and that’s done incredibly well. And it’s actually very, very good beef jerky. We have those where you can buy one, or you can buy six at a discounted price. We’ve been working with them and we’re re-selling that. And I think we’re going to continue to–

Jeremy: You guys could probably sell more sauce in grocery stores, I would assume. Start selling more…

Farbod: Shipping sauce itself is expensive just because of the weight of the sauce. That’s why we bundle it and we can actually get the bundle down to a very good price for our customers, whereas if you’re just selling one…

Jeremy: It weighs too much.

Farbod: It weighs too much and the shipping itself…in that case, we don’t want to sell a product where you can go to Walmart and buy it for half the price, [inaudible 01:41:28]. That’s what we have now. And we have a couple products that’ll probably be launched in the next couple months. Then we also have some other stuff on the road map after that, and it’s all going to be sriracha-related and it’s all extremely exciting. One in particular that we’re extremely excited about [inaudible 01:41:49].

We’re hoping that Sriracha2Go can be the steppingstone into much bigger things for the company.

Jeremy: Yeah. I know you can’t talk about what the new products are, but what’s your process for sitting down, the two of you, to hash out where you focus your energy, and what the new product will be?

Kyle: That’s funny. We were actually talking about that yesterday and I think that that’s one of the biggest challenges that we face on a daily basis, is “What do we spend our time on?”

Jeremy: It’s too much.

Kyle: Yeah. There’s a variety of things that we could be doing. But what is the best use of our time? There are certain things that I’ll do and I’ll feel productive doing. But then I’ll look back on and think “Okay, that wasn’t the best use of my time.” A lot of times, product development and making new products, and making things that have never existed before, it’s a very difficult process. And it’s discouraging, it’s tough, and people are going to tell you it’s not possible left and right, and it’s not fun to do.

But things like that is probably the most important way to spend our time today. It’s a constant struggle making sure that we’re allocating our time in the right areas, and it’s something in our past careers we never really had to do. We knew what our jobs were, and we knew what the responsibilities were and what the steps to success were.

Farbod: Yeah, I think a lot of the product development actually comes…there’s the brainstorming component of “Let’s think this through. Let’s think this through every day,” and then that changes, right? Every day, we’re coming up with new stuff. I think the ones that stick are the ones that are more natural. Like “Man, Sriracha2Go, why doesn’t this product exist?” And I think a couple of the products that we have coming kind of fall into that line.

All this brainstorming that we do…Kyle and I work remote, but we’re always on Skype the entire time that we’re working, just so that we can bounce ideas off each other. And I think the ones that are most compelling and we get most excited about are the ones that are natural. “I want this product.” Not “I wonder if other people will want this.” It’s “I want it, so I’m sure other people are going to want it.”

Jeremy: I have one last question for you guys. This has been fantastic. Before I ask it, where should people go? Where should they check you out on? The website, social media?

Farbod: Yeah. Sriracha2Go.com. S-R-I-R-A-C-H-A, the number “2” Go.com. Social media, Instagram, Facebook, Twitter, everything; it’s Sriracha2Go, easy to find. Post your photos, check out the hashtag, check out our profile. We have an awesome person who runs our social media and marketing. We have some really cool photos that pop up, so it’s worth checking out.

Jeremy: Yeah. Since it’s the Skubana eCommerce Mastery series, I always ask the lowest moment in the business, what that was, and how you pushed through, and then the proudest moment. Start with the lowest.

Kyle: I don’t know if this is lowest, but it’s certainly the most extreme and we’ve kind of talked about it already, but it was the morning of November 7th. I don’t know if it was lowest, but I don’t know how exactly to describe it, either. We were super nervous about what was about to happen and it was kind of that make or break moment for us. If we couldn’t find a way to fill the orders, then the company may have been over, and we may have kind of just had to wrap it up and give everyone’s money back and that was it.

Jeremy: Yeah. November 7th, when you basically sold out all your product and had to go back orders?

Kyle: Right. When BuzzFeed wrote about us.

Farbod: That’s the same, and I think Kyle and I will have the same answer for the highest and lowest. The lowest…it wasn’t a “low,” but there was that moment where we weren’t sure we were going to be able to fulfill these orders. And the thought of however many thousand people placing an order and how do we go back to them and tell them “Guys, we weren’t ready. This product, you’re not going to get it. We’re sorry,” and potentially close the doors.

There was a split second…maybe a couple of minutes–maybe ten minutes–where I thought “Man, this is it. We have all these orders, but we’re not going to be able to fulfill it. And that was a low. That was…Kyle said that was the first time…the closest he’s been to having a panic attack. That was the most stressful moment of my life. But it worked out and we’re so thrilled it did.

It went from a split second of being the lowest to being the high.

Jeremy: It’s the same for you?

Farbod: Yeah. Same, sorry…it’s boring, but yeah, I feel that the highest moments are going to be the same as well.

Jeremy: I guess the proudest moment came more when you actually realized what you needed to do to fulfill on those thousands of orders.

Farbod: Yeah. To answer the question on the proudest moment and the highest of highs that we were in, it’s a split tie between the Huy Fong and the Cuban agreement for both. Surreal to get those within six to twelve months of launching and where we were twelve months ago today, and what we were able to get solidified with Huy Fong, which is the whole reason we released this product to Mark Cuban, which is someone that we both admire and idolize from a business sense.

Kyle: Yeah. Another high…I’m just kind of thinking through it. It’s not like we’re curing cancer with these Sriracha2Go bottles, but it is very rewarding to make a product that people get a lot of enjoyment out of. And to see people on a daily basis post pictures and share it with their friends…things like that. It’s really rewarding to kind of see that on a daily basis.

Jeremy: For sure. You guys, thank you so much. This has been awesome. Everyone should check it out, use it, put it in your pocket. And I really appreciate it.

Farbod: Thanks, Jeremy.

Kyle: Thank you so much for having us.

Farbod: [inaudible 01:48:34] out for our products in the next couple months, and we thank you so much for the time.

Jeremy: Yeah. Thank you, guys.

Kyle: Thank you. Take care.

Interview Highlights

“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.”(00:06:08)

 

“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.” (00:06:54)

 

“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.” (00:08:45)

 

“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.” (00:25:00)

 

“I highly recommend Amazon FBA–Fulfillment by Amazon. And if you can find a way to build your supply chain so that it eliminates a lot of the work that you personally have to do, I think that’s the optimal way. But it takes time. Basically, what that means is trying to get the product to Amazon as quickly and easily as possible. And leveraging…like Farbod was saying, leveraging their reach and their network is great. And Amazon Prime FBA gets you more visibility within their ranking system.  Something else that’s also worked really well for us is Amazon Promotions which is basically like an ad-buying platform with an Amazon system. So that you can target users based on what they’re searching for on Amazon. A very simple example is a lot of people go on Amazon and they search for sriracha. Well, we want to be there when somebody is searching for sriracha. Because if they’re buying from Amazon, they’re likely buying sriracha in bulk, and those are definitely the people that we want seeing our product.” (01:36:20)

 

Conclusion 

We hope these real insights from a real seller can help your e-commerce business grow and succeed. Stay tuned – this will be an ongoing weekly series featuring a variety of e-commerce experts looking to provide you with hard-won knowledge free of charge.

Checkout out our previous E-Commerce Mastery Series episode featuring Jordan Gal of Carthook.com and how to minimize your cart abandonment rate and retain your customers.

Work Smart. Sell More.
www.Skubana.com

5 Comments

  1. Angela Sizemore November 18, 2015 at 1:25 am - Reply

    Such a great story. Genius idea.

  2. Angela Sizemore November 18, 2015 at 1:25 am - Reply

    Such a great story. Genius idea.

  3. […] Checkout out our previous E-Commerce Mastery Series episode featuring Farbod Deylamian and Kyle Lewis of Sriracha2Go as they discuss their start up and the business model that earned them Mark Cuban’s investment. […]

  4. […] Checkout out our previous E-Commerce Mastery Series episode featuring Farbod Deylamian and Kyle Lewis of Sriracha2Go as they discuss their start up and the business model that earned them Mark Cuban’s investment. […]

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