How this Fintech Lender is Changing the Game...

How this Fintech Lender is Changing the Game... Speaker 1: What I really appreciated about settle which a lot of your competitors don't you guys offer this amortization schedule as opposed to like the standard bullet where like a typical fintech lender it'll be let's say 1% a month so if you're taking a four month term loan out you might assume that I'm paying 4% on this so my APR is The reality is, let's take a million dollars, right? So you're paying 40k on that initial drop. You have to pay back 25% every 30 days for that four months. So that initial capital of a million dollars, you actually have 750 after the first 30 days, then you have 500,000, then you have 250,000. 50. So if you take that average capital that you actually have for the four months, it's 625,000. 40k on 625,000, which is I think maybe like 7, 6, 7%, multiply that by three to get your APY, you're getting close to 20%. What we have with Settle now, we're paying 1% a month, but we're paying 1% on the outstanding balance. So after 30 days, we're paying 1% on the 750, and then the 500, and then the 250. So my APY, 12.775%. People often try to avoid the Fintech lenders, but you're getting access to way more capital. Speaker 2: Welcome back to a new episode of Chew on This. Today's a special episode brought to you by Settle. And we have the incredible ladies here, Simran and Natali. Natali from Transcendence Coffee and Simran, who is the customer success lead at Settle, here to talk about the journey of what it takes to grow a brand in today's climate. What are some of the tools and resources you can use to really figure out how growth doesn't have to be as challenging as it is for some of your peers? So we're going to get into a lot of that, but before we do, I'd love for each of you to give a little bit of background for the few people who may not know you. And Natalia, I'm super excited for you to be here because I think we got to be part of your journey early on. And so it feels really cool to be able to be a part of that and see you here. And so I'm really excited to get into it. But Simran, we can start with you. Give us a little bit about your background. Speaker 3: Yeah, totally. So, thank you all for having us. My name is Simran. I work as a customer success lead at Settle. Settle is a platform that helps you manage your whole procurement process. So, starting from inventory forecasting, placing the PO for the inventory, paying it through your bank account or working capital financing, and then once you get the receipt, kind of making sure What you paid for is actually what you got. So my role is helping brands like Transcendence make sure they're getting the most use out of the platform, getting the best terms from our credit team, basically your internal advocate at Settle. So excited to be here chatting with you and Vitaliy too. Speaker 2: Awesome. Vitaliy? Speaker 4: Yeah, Ron, thanks for the intro. I'm really excited to be here too. So I'm one of the co-founders of Transcendence. We do all-natural, globally inspired flavored syrups made with real whole spices. And yeah, like Simran said, I've been working with Settle a really long time and, you know, you came in really early in my journey, helping us out, giving a lot of advising and support. So I'm excited to share all the things that have happened in the last few years. Speaker 2: Really excited for that. Amazing. Well, I'd love to maybe start, Natalia, at kind of your journey point, right? I think from my vantage point, I always was so inspired to see a really cool product, a really cool story, purpose, and I think you've always led with that and I think you still lead with that. But tell us what that journey from the start point of, obviously, you found a white space, you've created something really special, but then what is like day one to now? What has that journey been like through the phases of growth? Speaker 4: Yeah, totally. So, flavored syrups I know sounds random, so I'll give a lot more context. So my co-founder Lisa and I met back in college. We were studying engineering and we were baristas at an on-campus coffee shop. And so you can imagine working late nights in class. We wanted free coffee and fell in love with coffee. So we're drinking like three, four coffees a day. And yeah, very, very caffeinated. But it was really fun because, you know, every season we get to make fun drinks. It's always rotating. So there's pumpkin spice in the fall, but then You know, maybe there's rose in the spring. And so we really love the idea of like coming up with fun flavors. But kind of the pain point was there's two or three big syrup brands that have been around. You go to any coffee shop, you'll see one of them. And they have this like very artificial kind of chemical aftertaste to them. And so let's say you're doing like a Christmas cookie latte, right? You mix, I'm sure you'll see it when you go to a coffee shop, like a pump of hazelnut, two pumps sugar, three pumps vanilla. And by the time you get your latte, it has this kind of like muddy chemical taste to it, you know? So we were like, the only alternative to that was before shift, which is like 630 in the morning, you start making handmade small batches of syrup. And so we're like, between a really high quality flavor, you know, you go to a coffee shop and you get, you know, house-made vanilla syrup, you get a house-made vanilla latte, tastes miles better, maybe you pay like $8 for it, they can only make so many of them. So taking all of these things together, it wasn't something that clicked immediately, but over time we were like, how can we make more interesting flavors but scalable for coffee shops so that they actually taste good and it's easy for a barista to use? So that idea kind of like brewed over the next like two, three years and then me and Lisa kind of came together and I was like, hey, I have this idea. And then Transcendence was born and that was in 2022. Speaker 3: Coffee beans, like having us test the Gulab Jamun coffee to see how far they've come in such a short amount of time. It's been incredible. Speaker 2: It's amazing. You kind of started right at the beginning of their journey. And I feel like one thing that we kind of missed out on earlier when we started was we didn't have partners, especially, you know, call it in the space of ops and finance early on. We kind of had them when we felt like we desperately needed it. Just touch on that point a little bit more of like, why was like the point of where you joined Transcendence to be a partner? Why was it such a pivotal time even for them? Speaker 3: Yeah, totally. I think it's never too early to start getting a handle on your operations. Like you mentioned, you know, if you have a situation where you're growing super quickly, it's going to be hard to try to manage All right, how do I maintain these sales, make sure I'm stocked up on inventory and pay my bills in an efficient way and be able to forecast all of that out? So we actually started out, I know we're kind of known for our working capital, but we actually started out as a bill pay first platform. So our CEO kind of noticed this gap and a lot of people were kind of just paying straight from their bank accounts or maybe using like a legacy platform that has been around for a while and is a what-size-fits-all solution which doesn't you know it's not it doesn't work so yeah I mean I think if as long as you're paying bills that's a point where you can start using settle and then as you continue to grow we'll have obviously more data on your inventory so we can forecast it more effectively for you you can have a better relationship with your vendors too because They'll have transparency into when you place a purchase order and they can see when you've scheduled the payment too. And then of course we have the working capital aspect of it too. Once you get big enough to need that, we've already built that relationship, so it's a little bit easier to kind of get access to that as well. So short answer is never too early. It was pivotal for Metalli, I think, when you had your first purchase order that you needed to finance. We were kind of able to help out with that and then I think they've been using like the bill pay side of things too. Yeah, definitely. Speaker 2: Rovi, I think it'd be good just on that same note, we brought in Settle a little bit later and now it's like our premier product. Speaker 4: It's your bread and butter. Speaker 2: Literally, we use it to settle everything. So, curious on from your vantage point, right, like for the brands who are maybe larger or are deeper into their build-out, what's that point of saying, hey, like it's a good time to explore it, right? Speaker 1: Yeah, you know, it's really interesting because like when you get to a certain scale, people kind of push you to go the traditional route, you know, traditional lenders, bank lenders, get the cheaper cost of capital. I mean, we heard it from like our board and pretty much every advisee that we had. And what we ended up seeing is like, and the thing is like these Fintech lenders tend to get like maybe a little bit of a bad name because the APYs might be, or the APYs might be a little bit too high or whatever, like deceiving. What I really appreciated about Settle which I think is pretty unique that you guys do that a lot of your competitors don't and I've vetted all of your competitors so I can say this. Speaker 3: He wasn't paid to say this. Speaker 1: You guys offer this amortization schedule as opposed to like the standard bullet where like for those of you guys who don't know like a typical fintech lender it'll be Let's say 1% a month is like the structure you get. So if you're taking a four-month term loan out, you might assume that it's like, okay, I'm paying 4% on this, so my APR is 12%, right? People will think that, but the reality is when you're saying, let's take a million dollars, right? So you're paying 40k on that initial draw, but you have to pay back 25% every 30 days for that four months. So that initial capital of a million dollars, you actually have 750 after those first 30 days, then you have 500,000, then you have 250. So if you take that average capital that you actually have for the four months, I did the math, it's $625,000, right? It's roughly around that. So you're paying $40k on $625,000, which is I think maybe like 7, 6, 7% or something like that, and multiply that by 3 to get your APY. You're getting close to 20%, which is what you avoid now when you go through an amortization schedule. So what we have with Settle now is Let's say we borrow that million dollars. We're paying 1% a month, but we're paying 1% on the outstanding balance. So after 30 days, we're paying 1% on the 750, and then the 500, and then the 250. So my APY, again, calculated it, 12.775%. It's nothing crazy, which is actually pretty competitive to some of these traditional lenders and banks, especially what like prime rate is at. I think that's kind of like a lot of people when you do get to a certain size and scale, like to your point, people often try to avoid the Fintech lenders, but you're getting access to way more capital, especially in our situation. We're not as heavily into wholesale right now in our point, like we're about like maybe 80-20. And so you probably have a lot more AR and probably have a lot more inventory than we do. And so you might be able to get a bigger line. But for us, it was very tough to get the kind of line size that we need to support our operations. But Settle was able to do it because you guys underwrite a little bit differently, right? Speaker 3: Totally. Speaker 1: So, yeah. Speaker 3: Yeah, it's good to hear you speak about APR too, because I know that's the most fun thing to calculate. And a lot of these other lenders, I know they kind of take from sales. So it makes it kind of harder to calculate the APRs there. And it's good to hear you say that you're enjoying the Amortized structure too. That's actually a new product that our credit team built based on the need that we saw as well. So it's like, you know, you want to, one, kind of start chipping away at your debt instead of having one lump sum payment at the end, which can be overwhelming if you're not waiting on AR and you want to kind of like start paying back on some of your DTC sales. So it's just a testament to how good our product and credit teams are. And again, we're not a one-size-fits-all. We understand every business has different needs. So that's like why we built that. I'm happy to hear that you're liking it. Speaker 1: That's the biggest thing. You guys offer optionality, which a lot of other guys didn't. Speaker 4: Yeah, I was gonna say a lot of times like you'll even when you call different lenders, they'll be like, oh, it's this fee every two months. I'm like, tell me the APR. Speaker 1: Crazy how many people can't. I'm like, can you break this down for me? And they just keep claiming 1% a month. That's your finance for you. Speaker 3: I talk to people all the time, they're like, oh, this person's offering me like this much. And it's like, okay, like, you know, let's calculate how much this actually is based on what your costs are, what your sales are, what you're projecting. It might be a little bit more expensive than you think. Speaker 1: Yeah, exactly. Speaker 2: You see it a lot. It's very sharky sometimes. No, I think it's a super, super great color on both lenses of starting early, starting later, and where the product fits in. But going to now, you know, the second part of your journey, right? You've created an incredible product. You realize there is a need. You probably start picking up the phone and emailing and calling people saying, hey, this is why you need it. Tell us that next part of the journey, especially building a business that's different from probably 80% of the viewers here who are Building things DTC, you're running a ton of meta ads and focusing on acquisition from that level, your acquisition's totally different, right? Talk a little bit about that and I would love to understand how you've kind of conquered that. Speaker 4: Sure, yeah. So to get a little more into that strategy, I'll talk about the product roadmap first and then I'll get into that. So we started with kind of, and we talked about this, we really started out there by saying we're going to do a lot of storytelling. We actually did launch DTC. And still to this day, zero digital ad spend, very, very organic. And so we started with two flavors. And they were tributes to mine and my co-founder Lisa's culture. So we did Indian gulab jamun, which is a cardamom rose and saffron syrup. And that's the one Simran tried early, early on. And then an Algerian baklava. Her family's from Algeria. So it's a orange blossom, honey and cinnamon. And so flavors that go really well in an iced latte, a matcha, chai, whatever. So we started those two flavors, really doing a lot of storytelling, like why these flavors, why there's this problem in the market, why no one seemed to bridge these two worlds and Having those kind of distinct flavors made it really easy to start cutting through the noise and saying, we're not just making another vanilla syrup. We're solving this problem, but there's something here for you to look at, something new for you to try. And so that's what started bringing eyes towards Transcendence as opposed to maybe a couple of the other syrup brands that are very food service oriented. And so what we're doing is we're trying to make sure that people are in that world and are kind of just saying, we're higher quality. So I feel like just saying we're premium wasn't enough of a distinction. So we're like, let's do a lot of unique flavors. We can do storytelling and be higher quality. So starting with that, we did about like six months of that and then we started slowly tacking on more and more flavors. Calling people and emailing people actually wasn't enough. So it's like really I'm talking old school business like door-to-door sales, taking backpacks of syrups to coffee shops, running through the subway lines, making a CRM and a Google Maps and like going to coffee shops. And then we're talking trade shows, we're talking like Again, you do have to email and follow up, but it's a lot of that traditional field sales methodology. We used DTC to continue brand building over the last few years, and then adding those flavors really helped with building out the flavor ecosystem, but then a lot of really pounding the pavement on the field sales side. I think we're going to be in like 500 cafes this year, so it's been a crazy journey, but I think to your point, like you said, a lot of brands kind of sit in, and consumers nowadays especially, it's like DTC, meta ad stack to really drive the growth, and then you go into retail, so you have a footprint for buyers. Of course, that's going to be one day, you know, people will know the brand enough and then there's a small sliver of our specific market that goes to retail to buy flavored syrups, but actually a lot of it, like 80% of flavored syrups, it's in food service. We're really competing. When I say legacy brands, I'm talking about like Italian-American immigrants from like the 1920s for the last hundred years have been bringing syrups to coffee shops all around the country. And so like if you want to like penetrate that, not only does your product have to be super unique, have to be significantly better, but you have to have like test the patience of time, which is like how do I penetrate this market, which is that old school feel sales methodology. Speaker 2: So yeah, yeah. Speaker 1: Did you like see a barrier at all just with the glob jamun and baklava being I guess like mostly like you know Asian flavors like did you see a barrier being in the US? Speaker 4: Yeah, actually great question. So I think a lot of times those flavors we noticed coffee shops adopted them because they really liked it but they were like this is gonna be our spring seasonal drink or our fall seasonal drink and so that's why last year I think last We launched our Back to Basics collection, which was like our, like a transcendence take of some of the classic flavors you get at coffee shops. So we did a Madagascar vanilla bean, which like has real hand-scraped vanilla beans. A Persian pistachio, which are like toasted, very nutty. And then a miso salted caramel. So it was our take on the vanilla caramel and hazelnut, which is like the trio at a coffee shop. And that actually, I think when you stack that on top, that helped coffee shops who are using us seasonally. We're like, I really like your stuff. Do you have anything else? We're like, great, get rid of your vanilla, use Transcendence. And then that's how we started getting a lot of product adoption year round. So people are like excited to say great I trust them as a brand partner and as like a quality partner so now I want to start using more of their flavors. Speaker 2: It's really cool. Speaker 3: Yeah. Speaker 2: I'd love to understand a little bit of like the supply chain of this, right? Because one, you're riding the subway going from coffee shop to coffee shop to sell the product that you either have in your warehouse or, you know, in stock somewhere. But you also have to go and create that right product. I'm sure there's ingredient purchases. I'm sure there's an element there. So I'd love to understand like Do you have to kind of pay up that all front? Are you managing the cash flow where you're creating the product and then hoping to sell it pretty quickly so that turnover is there? How do you kind of manage both those cycles, especially as you scale past even the first hundred coffee shops, right? Because that's probably a considerable amount of growth. Speaker 4: Yeah, so I think that's definitely where Settle came in. And then also it's like working with Settle and working with all of our spice partners and suppliers. So yeah, I'm gonna say we started as grassroots as you could possibly imagine. We didn't really touch on this, but I'm an engineer by background, so I'm very meticulous about product and know everything end-to-end. And so when we started, we handmade all of the syrups in a commercial kitchen in Queens, bottled it, labeled it. We used my apartment as our warehouse. I packed them. And wagon them to the UPS down the block. Speaker 2: Every big brand starts at an apartment. Speaker 4: Every big brand, right? Speaker 3: Yeah. Speaker 4: So I think we really, really nailed that. And then we're like, okay, how can we kind of grow each supplier and partner accordingly? And then kind of really build out the relationship with them. So you can be like, hey, can I get net 30 terms on this? Can I, you know, can I get net 60 on this? If I buy X volume, will that change, you know, accordingly? Speaker 2: And you selfishly want them to buy more volume, so you're kind of like, yeah, I'll give you the terms. Exactly. Speaker 4: And then the same goes with, like, you know, with Settle, the really nice thing is because we now started doing so much B2B, we're like, hey, we now, we have these invoices already and these coffee shops are going to pay us, you know. X amount of money in 20 days. So we just need to finance the inventory for that. And so that's where Settle has been like super, super helpful. And it's definitely still like we're in the building block phase of like that B2B side, but I think this year we're going to see out like That strategy has really worked and then we can start hiring. I won't be the one going to all the coffee shops in the subway. We can hire a field sales team. Yeah, so we're interning to really help grow out the sales strategy. So then it's really just about managing, okay, here's all the POs coming in and how can we continue to finance that with Settle. Yeah. Speaker 2: That's really cool. Speaker 3: Yeah. Speaker 2: Touch a little bit about like from the the point of view of as you're getting some of these B2B sales, there's obviously a reorder element and then you're also heavily focused on forecasting for that, right? You're not hoping a coffee shop orders once and then that's it, right? What's your process there? Because I think that's one piece that I don't think it makes or breaks brands, but it definitely hurts brands, right? It's like you're hoping to get a little bit more sales than you have, but you don't want to overshoot because now you're sitting on too much inventory. You don't want to undershoot because now you're losing out on opportunity to make money. What's your process to handle that? Because yours is coming in waves of bulk. Versus for us, we know if we spend another $100,000 on meta ads, we're going to make $222k, right? It's almost a little bit methodical there. Give us a little bit of color how you're handling that process. Speaker 4: Yeah, again, this is gonna sound old-school business, like I said, but a lot of the coffee shop owners, whether it's a chain that's 15 locations or it's, you know, Two or three. Either way, a lot of them, I'll give them my phone number and they have my email, but they can order through our distributor and I can get into that element of the whole supply chain piece. They can order from our distributor, but sometimes they'll actually just come talk to me first. There's this one coffee shop owner we'll get into. He'll literally call me out of the blue. I'll be in a meeting and I'll be like, hold on, I gotta take this. Hey, Matai, what's shakin'? Every time. Hey, Matai, what's shakin'? I'm like, hey, how are you? And he's like, listen, I'm trying to plan my menu for the fall. What flavors do you think are cool? Like, he wants to know, not just in terms of, like, what we have and what we can offer, but it's like... We're almost like a flavor house. We're helping him set what makes sense. That's where also our DTC side comes in. We're doing all these recipes and we're able to say, in the spring, people are going to start loving banana bread lattes. How can we feed into that? In the summer, people love floral things. How can we feed into that, etc. We're almost supporting them and then Doing procurement and inventory accordingly. So we're like going back to all of our coffee shops saying, by the way, for every season, they're doing like three to six months in advance, right? So you call them ahead of time or they call you ahead of time. We're like, hey, by the way, these flavors are gonna crush in your next season. We have it ready for you. You can do 30 cases a month and We'll get that to you and get it set up with the distributor. They'll be like confirmed, good to go, and then you kind of go accordingly. So I think it's almost like I get ahead of it, but then also like give them a couple options and say these are the ones that do the best in that season, and then you can kind of plan accordingly. Speaker 2: It's crazy though, you have to get ahead of it, which means you have to be ahead of that. It's almost like if they're three to six months ahead, you got to be another Three months ahead of that, so you're like planning for December now. Unknown Speaker: Yeah, I am. Speaker 2: You're tasting gingerbread cookies. Unknown Speaker: Yeah, literally. Speaker 2: That's super interesting. Speaker 3: Yeah. Speaker 2: When it comes to like your order managing system, and again, I think we're a little bit spoiled because we order our products turnkey. So it's like make me a fat burner. Like obviously we know what goes into it, but like it's turnkey. It's done. Whereas for you, there is elements of I'm sure bottling and then ingredients and everything else that goes into it. Give us a little bit about that process and are there any kind of special ways that you're handling it and managing it? Speaker 4: Yeah, so like you said, there's so many different spices that go into each of the different flavors, so it really is like Yeah, thanks to ChatGPT, we were able to build out a really nice template and then Settle has a really nice feature for handling your PO management. You want to templatize everything as much as possible and so I think using both of those in parallel helps me manage a lot of the supply chain. But yeah, I'm still doing that. So every time we do a production run, it's like, how can I make that as easy as possible to know exactly what to order? And then I try to do it as close to just-in-time inventory, but it's still like, you know. Speaker 2: I was just gonna ask, so you're probably in just-in-time, right? Speaker 4: Yeah, yeah, yeah, exactly. But it's still like, you know, you gotta start reaching out to suppliers like two weeks in advance, you gotta get everything, you know, et cetera. So, yeah. Speaker 1: So do you warehouse your inventory or is it like most of the time they'll just kind of place the order and you'll order it then? Speaker 4: For B2B, I try not to warehouse too much inventory, but I will actually say some of our B2B is D2C in the sense that like people will have our wholesale page on our website and And there'll be some coffee shops or people who do, I think a really big thing right now is like pop-up events and home coffee shops and things that are just more community-driven. We'll have a lot of people just ordering like a three-pack of our barista bottles just to be like, this weekend I'm doing a little pop-up somewhere. So we do have some in our like traditional warehouse but a lot of it we'll try to do like It's right out the manufacturer and it's going straight to our distributor or to the coffee shop or commissary. Speaker 2: I think it'd be good to touch on from your end like our process of ordering because I think for us it's like a lot different where we have to do heavy forecasts but then heavy output of cash and then a lot of prayers and hopes to meta. Speaker 1: Yeah, like on the B2B side is a complete different beast. Like at least the DTC, it's like a little bit more manageable because I can talk to Ash, like our CMO, and he can tell me like, okay, I think, you know, just based off in the last few days and what I'm feeling and this intuition, I think we'll spend this much a day for this long. And I can just easily kind of like, what's our ROAS, what's the velocity per SKU and this and that. So I can come up with a daily velocity compared to our inventory on hand and so now I can come up with the days on hand. It's very simple, right? What happens though is sometimes Ash will crack something and overnight our revenue triples and our ad spend triples and our velocity triples and then we're just out of stock in, you know, 15 days as opposed to 45 days and I'm making a call to our manufacturer being like, you need to get this out in three weeks. Can't do that. So that's like one, like obviously those challenges when you are relying on meta, there's kind of like the good and the bad. For the most part, it's usually steady, but then an algorithm change, a regulation change, you know, elections are happening, whatever happens on the macro side, we get affected and it changes the velocities completely in the forecasting. Then when it comes to B2B, because we're in like these retailers, right? Like we're in the Walmarts of the world, Rite-Aids, vitamin shops and like let's take Walmart, right? Like that's a beast. Yeah, it's like, you know, we're in close to 5,000 stores there and they're forecasting like they're good about giving us six months of forecasting by week and because they order weekly, right? That forecasting, I shit you not, for three or four weeks straight, we saw that double. Quite literally double. We got like, you know, what it was like 800 units a week to 16 to 2,000, like at 3,000 and it just kept going. And so that's tough because you never, and we learned this, you know, our first year at Walmart, we got super ambitious. We over-ordered like, you know, seven-figure, seven-figure bill. And we honestly like just, we shot ourselves in the foot. We were sitting on so much inventory because we were going off based off Walmart's projections and it just tanked. And we were on like that side of it and then now here because we were like, okay, let's be conservative We're not gonna get like, you know too much in stock and then you see this happen We had to say no to a good amount of Walmart orders and even like today We're still getting that grasp on it because the projections change like like they should swing the volatility is insane So like I'm trying to like take the learnings that you're giving me like how do I get ahead of my Walmart buyer to be like? He's like, he's already given me six months in advance, but that's not reliable. It's so tough to deal with these, I guess, elements that are outside of our control. I hear you. Speaker 4: I am curious, for you guys, how far in advance, if you're trying to book with your co-man or something, do you have to let them know to get everything squared away? Do they do everything end-to-end? How does that work for you guys? Speaker 1: I'll say they say eight weeks, but when I get Ron on the phone as bad cop, it could be a lot quicker. Speaker 2: The right thing to do is like, is probably not have to make these calls and also have to like, force them be like, we need this right away. So you kind of like go back and be like, can we get better at this, but then it's also It can be one ad that goes viral that you don't want to control it because we're all greedy, right? It's part of why we're in business. The greed gets in and you're like, all right, run it, keep going. We're kind of going through this right now, actually. It's a live example. We had an example where Ash started a new funnel and it's selling this thing called the Burn Box. It's three products in one kit, so it's a really cool AOV. It's like three different fat burners to take throughout the day. Anyway, that product went from doing probably like $8,000 to $10,000 a day going up to like $30,000 a day, right? And 3X, you don't have 3X worth of product across three SKUs and you're like, all right, well not only did you completely screw up our supply chain, you screwed it up on three different products. So we've actually been sold out for the last 20 days almost and we've still been selling. And we've just been telling people we'll ship later and this and that. But what happens here is You get into this cycle of like, oh, I don't want this to happen again, so you order more, right? And then what will happen sometimes is Ash will be like, hey, this funnel's not working as great anymore, and it'll be right when the product landed, right? So now you're like, all right, well, let's call up Settle. Speaker 3: You know, we see this happen all the time too, and it's like, okay, finally, I made it, I'm in the Walmart, I'm in the Target, and then you're like, wow, this is like a whole nother beast, and you're just like, so not ready, like you said, The retailers need you to stay in stock, but then one ad goes viral, you over-order, and now it's like, what do you do with all this? And it's hard, because you can't even always look at historical sales, because you never know when that one ad is going to go viral, so definitely feel the pains of the challenges of trying to forecast the needs for those types of partnerships. Speaker 4: Yeah. I was going to say, we actually, I was talking about this right before we got at this table, but we actually are Pretty like sizable in the DTC to B2B split still. So we started like 100% DTC and we know like eventually we'll be 80-20. Right now actually, surprisingly, running into a very similar problem as you. I was saying we're like accidentally like a syrup streetwear brand. We did this big restock and it was supposed to be a 28-day forecast and we put it on our website and it sold out in six hours. And so now we're like, you can't shop us right now. We're fully out of stock. Unknown Speaker: All 12 SKUs are out of stock. Speaker 2: Wow. Speaker 4: And it's like coming back. That's incredible. Speaker 3: Hold on to your transcendence if you have it. Speaker 1: Start flipping them. Speaker 4: I brought you guys some. Speaker 1: Some are even for a hundred bucks a pop. It's ridiculous. Speaker 4: So I think it's like the same growing pains. We're like, now we're shooting up a little bit higher, but it's like, all right, this has to last us at least three weeks. Speaker 1: Like the supreme of coffee. Speaker 2: That's really, really cool. I'm curious when it comes to like new innovation and new products, right? I think it's another place we're like often challenged with because, for example, Black Friday, we launched three new SKUs. We launched a greens, like an athletic greens, a hydration product, and then we launched a colostrum, right? And our goal was that more products will mean consumers will consume and want more. And then obviously you have like the effect of just where too much product is also just people don't want to spend that much and you get diminishing returns. So I think I'm very curious like on your end when you're launching a new flavor how have you kind of gone about figuring out well like yeah I don't want to order too much but I don't want to order too little because then it's also opportunity missed is also opportunity. You know, in revenue. So I'm curious, how do you kind of go about that process now? Speaker 4: Yeah, I think when we, when we launch, we, I think because we've been like steadily growing, we kind of look at each previous production run and we produce once a month. So we're always like looking. Speaker 2: Oh, so you produce once a month. Speaker 4: I do. Yeah. And we're like, very interesting. And I think that helps us like Kind of incrementally look like how did last month go and then of course we have a very good understanding. I think DTC helps us understand you know kind of what flavors do well each season, what do people want a certain time and then we like produce that accordingly. So and then whenever there's like a new launch I think we do like I mean or like I've been saying like the organic social really helps so like for our back to basics we actually did like a really fun like early 2000s infomercial like Are you tired of your ugly syrup that tastes like chemicals? And I think so it was like really fun and playful and like that drove like a ton of like authentic traffic towards this which is like oh my gosh yeah I've been looking for something better for my morning coffee and so like we knew that like investing in that specifically kind of like you guys with the specific meta ad is like okay we invested in making this video at like a certain production level with like the right like Old-school editing and then that 5k is going to be like turning into 100k. So it's like thinking of it like that. And so like each piece of media that we're producing almost as if we're like flavor house meets like content house, which is like putting those together what converts into people wanting to buy that. Speaker 3: And kind of going off the point of new product launches too, a lot of times what we see is it's obviously very challenging to raise equity in this environment. So once you've kind of crossed that bridge, you think, okay, well now I don't really need inventory financing because I have all this extra cash. Wrong. You want to save that for R&D for those new product launches, like investing in that type of marketing so that you can see those types of growth. So, you know, it's good to use Save that for those types of investments and then kind of like tap into inventory financing to help you get there. Speaker 1: I was just curious, do you do R&D on the flavors? Do you ask your community, what flavors do you guys want to see? And you pick the top one. How do you pick which one you're going to do next? Speaker 4: Yeah, so even our content strategy is kind of like that. So it's very almost like crowdfunding what people are looking for. And I'll say Lisa is the one that leads everything brand content, has the pulse on what people are looking for. And so kind of taking their feedback, like people in our comment section and then we have like a survey on our website too that people are always filling out like, I need Ube or else I'll die. Like really, really passionate consumers that are like, I've been looking for this flavor my whole life. Everyone who makes it, it sucks. Like, can you make an authentic, like higher quality version of it? I'd buy it in an instant. And like, people aren't lying. When you do it, they'll buy like 12 bottles. That's crazy. Is that for you? Unknown Speaker: Is it for your sister? Speaker 4: Your grandma? I'm not sure. Speaker 2: It's probably for their coffee shop, too. Speaker 4: Yeah, and so I think the community very much tells you and informs you what they're looking for. I feel like you guys have a really similar experience doing DTC, right? Speaker 2: 100% I think community piece helps a lot because I think it just it gives you that like inclination of knowing like, hey, this is my confidence ratio now. This is probably going to do well. But then you also have the piece of like statistical significance, right? As you get pretty large, sometimes you still think like, The validation you're getting is enough, but then the expectations are also bigger now. So it's like, oh, well, wait, we really thought this flavor for greens is going to work. And it did work, relatively speaking, but not enough tonight, maybe now where you're supposed to be at. So I think that's that's one piece of growth that we've seen over the last like because now it's we're at the six-year mark. I think in the first few years we saw like anytime we did it we like could do no wrong. Speaker 3: Right. Speaker 2: But then like year four or five you start to figure out like hey you can't go on that same exact trend. Speaker 3: Right. Speaker 4: I was gonna say that that also kind of reminds me like we're starting to see I we always say this is a good problem to have Like we're starting to see like more like small syrup brands start coming up and they like have the same copy, really similar flavor profiles, but like obviously don't call it what we call it. It'll be like rose cardamom, you know, like very, very similar flavor profiles. So we're like, okay, like, but in a way that means we're doing something right and people want to like start doing that. There's an obvious space in the market. We caught on to something, but then that just drives us to even further like, I mean, I think Easily my favorite part of building the company is the product development and what is missing and what are people looking for. And so I'm always thinking three steps ahead, okay, what flavor isn't quite yet in the market, but if people saw them come together, they'd be like, holy shit, I needed that. I had no idea. I'm sure exactly like you said, we did a flavor, it did well, but what do I do now to stretch the bounds of that a little bit more? Speaker 2: Not to me, that's a great call out. Somewhere from your end, I'd love to know, especially in maybe if you have anecdotes from this, especially in the last like 14 to 30 days. There's a lot been going on. There's tariffs, there is changes to businesses, there's a lot of uncertainty, right? What are you kind of seeing from your vantage point of like, I'm sure there's probably been a lot more maybe emergency calls these last few weeks, if that's the case. And like, I think it'd be really good to know like, How you guys kind of take the information you're seeing and either creating new products, but sometimes also just provide flexibility. Sometimes I think half the time a founder just wants to know that we're going to be okay from somebody else. So I'd love to get like that sense of it, especially with what's going on in the climate right now. It's crazy there's breaking news every six hours and like what's going on? Speaker 3: Yeah, well to start I'm just gonna say like the founders and the operations people and the finance people that I talk to every day, you all are some of the most resilient people that I know. I mean you will take any challenge that the macroeconomic environment gives head-on. I have so much respect for the people that I work with and what I've seen too is a lot of people are actually proactively coming to us saying, hey, just want to keep you in the loop, like here's a situation that's going on, which honestly makes us feel good too because, you know, we're not just your financing partner, we're not just your AP platform, your inventory management, like we are your partner, we are your Financial Inventory Management Therapist and we want to let you know like you will be okay and a lot of times people also just don't even understand like what do tariffs mean? How is this even going to impact my business? So I think what's important to us is one educating on okay, so what does this kind of mean for CPG? How can you prepare for this? What I've seen I think you both Pretty much touched on as well is the importance of forecasting. So the brands that we've seen be successful, you know, they're forecasting at the very least six months out in advance. Six months to a year, very on top of that. I think now more than ever really being cog-savvy is super important. You have to know your landed costs in order to become profitable, like you don't know how much you're paying on these tariffs yet. And then, you know, combination of short-term debt financing to align with your cash conversion cycle. I think those are key things right now. And again, a lot of respect because I know a lot coming out all of you these days. So we, I mean, open to feedback from y'all as well, but we're kind of doing our best to make sure that holding your hand. Speaker 4: She's our brand therapist. Speaker 2: No, you need that. Speaker 3: Yeah. It's really nice to see like our credit team too is very willing to get on these calls and understand and ask the questions of you know, how are you handling this? So that we know how others are handling it as well and like we know what types of products we should build out. Obviously customs costs are going to change a lot. So our credit team is working on like, is this something that we can finance? Like what does this look like? Is there going to be an invoice associated? Like what can we do to help support these people during this time? Speaker 2: Makes complete sense. Speaker 3: Yeah. Speaker 2: That was awesome. And I think, like I said, I think we just sometimes you just need like, hey, whatever you guys need, like we're going to be here. Speaker 3: Exactly. Speaker 2: And as you grow now, what's kind of on your mind in terms of some of the, maybe not so much challenges, but some of the things that are Potential obstacles that you're gonna have to navigate through, and I know you think in advance, I know you're always planning in advance, so I'd love to know like what's 2026 look like, what's the rest of 2025 look like, and are there certain things that you're kind of trying to get preemptive about? Speaker 4: Touching on Simran's point, there are so many macro changes and you can't say, oh, I started 2025 with this plan, so it has to be that. Just two days ago, Lisa and I sat down to be like, all right, now that we know this, what are we going to do to shift our strategy a bit? Really, this engine on DTC drives a lot for us and in a way is almost like a pseudo field salesperson, I like to say. So we get a lot of organic inbound from coffee shops being like, hey, I've been seeing your recipes on Instagram, seeing your syrups. Can I get samples for our shop or for our chain or whatever? So I think we're like, how do we invest in something to be more efficient with our time that also drives revenue? And then at the same time, it's like thinking about the lift, right? Like you're saying, there's all these changes, tariffs. Now coffee shops, not only is it, okay, we have to invest in syrup, but the cost of coffee is going up, right? So they're like, how much can we really charge a consumer right now while we're uncertain? I don't know if we want to make sudden changes to buy a premium syrup. So right now it's like continuing to double down on our existing partners, the ones that we have already like kind of locked in saying we're ready to spend that money because we trust you as a partner. And saying, how can I keep coming back to you season after season, get more of your flavors and support you that way? And then less of like, I'm going to go after these long leads of like, you know, 50 location chains, hoping that they'll change their mind in the midst of this crisis, for lack of a better word, to buy something a little bit more expensive per, you know, cup of coffee. So I think we're like, yes, I have a strategy for that, but it's like, okay, at this very moment, that's the thoughtful thing to do. And saying, all right, great, we're gonna hit these certain revenue goals and then the smart thing to do would be like, all right, we'll go out to raise then and then we'll be able to hire the field sales people so it's not Natalia on the subway. And I think that's like, it's like the minions walking the streets that are really like your brand ambassadors that are telling coffee shops like, you need this and you should make the change. And a lot of times they're like, yeah, I was looking for something, I just didn't know what it was. But I think trying to think more like efficiently with How we're trying to drive revenue this year now. Yeah. Speaker 1: Do you do like blind taste tests a lot or like either like content out of it or going to these coffee shops and making them do it? Speaker 4: I haven't done blind. I should try that. Speaker 3: We did. Speaker 4: Yeah. Yeah. Speaker 1: I feel like that'd be great content or even just like go into a coffee shop and be like, can I just set up a booth and just taste test 20 customers? You see what they like. Speaker 4: I don't think ours made the cut, but that's a great idea. I do have a video of Simran blind taste testing our lavender and someone else's. Speaker 3: I did take the Transcendence coffee one. I didn't know which one it was before I had it. Speaker 2: You do a lot of partnerships and you're spending a lot of time there and it kind of just probably makes sense from a roadmap sense too. I know for me, you're not going to love this answer, but like when I think coffee, I think Starbucks or Dunkin'. I live in a kind of a suburb area where I don't have beautiful coffee shops near me. I'd love to get into more of them, but like it's Bluestone Lane that's like the closest and then I have Starbucks and Dunkin', but like for you, you're kind of going after the market that does like to go to the coffee shops, does like to have, probably knows their local barista, like knows That, you know, has that kind of character development, but that also means you have to penetrate into those places. So give us a little bit of color how you're handling that. Speaker 4: Sure, yeah. So I think, to your point, like, you got to start with, like, specialty coffee. And, I mean, there's some chains that we're in that have, like, 50, 60 locations and then some that are, like, a neighborhood coffee shop, right? Like, and that's kind of a range that we started with. And then when we're, like, we've sufficiently saturated that, then you kind of go for a little bit higher where it's, like, all right, this is, like, a All of East Coast coffee chain, we can go for them. And then you go a little bit higher and you're like, all right, now I'm going to go for like my first like truly national chain. A lot of people say national, but they're really in like New York and LA. So like truly national chain and almost like thinking of like a tiered approach. And I think of each of those as like new market, which means like a new raise. So I mean, we didn't really touch on this too much, but I think even Simran made a really good point about it, which is We did the scrappiest raise possible. We've done a little over half a million over the past three years. We've pulled in a ton of checks. A lot of the investors are people that are now part of the business in some way. We work with a spice supplier, and they love what we're doing. Over time, they were like, great, we want to invest in you. The first 3PL took a bet on us when we were one bookshelf, and now we're 20 pallets in their warehouse. And they were like, okay, Metallica, I see you guys growing and I see the hustle. I see how much you care. I want to invest in you. So like literally bringing people along the way. And that's what's gotten us to this point. So like relationships are everything to me. And so like building it that way has really helped us get to this point. And then after that, I think, well, okay, we hit a certain threshold, we hit certain milestones that the venture might be looking for, and then that opens up the opportunities to say, like, who do we now want to raise from to, like, hire the right people and expand, like you said, to, like, those bigger coffee shops and chains. So, yeah. Speaker 2: How you make it feel like it's all possible. Speaker 4: Definitely. Speaker 2: That's amazing. Speaker 3: If you haven't tried the Cinnamon Social Latte, Olinstein, highly recommend. It's my morning coffee every morning. Speaker 2: I'll have to try that one. You know, as we wrap up, one thing we like to do is give everyone something to chew on. So I'll have all three of you kind of just share one thing and we'll start with you, Simran. Maybe just one thing that you want viewers to Go and think about, go and do something to chew on when they watch this episode. Speaker 3: Yeah, yeah. I mean, I think we covered this early on, but again, it's never too early to stay on top of your operations and on top of your inventory forecasting. So one thing to chew on is Maybe divorcing the spreadsheets and automating the processes so that, you know, given the tariff situation, again, you all are very resilient, very much respect everything that you do and hopefully this can help make your life a little bit easier so you can focus more on Managing macroeconomic changes, then your Excel formulas. Speaker 4: I think something we talked a lot about today was just how many unexpected things are going to happen in the macro scale. So I think for me, like you said, I'm a very purpose-driven founder. And so I always implore people when they're like, hey, I want to start something. It's like, what do you see in the world around you that's a real problem? Because it has to stand the test of time and all the headwinds that you're going to deal with. What do you really, really care about? So that's what I would chew on. Speaker 2: Love that. Speaker 1: I think for me, don't be so afraid of fintech lenders. A lot of them get these bad raps and deceiving fees, but I think if you take the time and do the math and understand the cost of capital that you're getting, you can really take advantage of it and it can really help grow your brand. Speaker 2: Chew on that. Speaker 1: If you want more from us, follow us on Twitter, follow us on Instagram, follow us on TikTok, and check out the website ChewOnThis.io.