The Startup CPG Podcast

Namik Soltan
Since beforehand I had other brands. So I was already familiar with New York City Market. I had some relations with some of the stores, and also I was working with other distributors. A salesperson, I actually was selling Calypso Lemonade. Probably heard about it, Lemonade. So I was one of the sales reps who was built in New York. So I already had some relationship with New York. But then we created like a whole strategy for New York City. We would send someone in Manhattan, someone in Queens, Bronx and Brooklyn. So we'd split the whole territory. The beauty of New York, it's, you go one block, you have four stores, right? So in one day you can visit 2030 stores. And then obviously some stores didn't want to take a product right away. So it was just like a strategy.

00:51
Namik Soltan
We'd constantly have to go back and remind them about the product. So that's how pretty much we did.

00:59
Daniel Scharff
Hello, CPG ers. This episode with Nameek Sultan from Ginger Labs is going to blow you away. It is a goldmine if you're thinking about launching your brand regionally, maybe even using your own sales and distribution team. Namik did just that. He launched in New York City and got into 400 stores using his own team to get the sales and traction he needed to move to a third party distributor and then expand into other regions. It's a cool approach if you want to try to conserve your capital and, you know, build up momentum, and especially if you want to penetrate in one specific market before going broader. There are a lot of learnings here, especially we go into how to actually build and manage a sales and merchandising team on your own. I want to thank our partners for this episode. Simply depot.

01:46
Daniel Scharff
They make the software that actually powers the field sales teams based off nMeek's experience and it helps you find customers, digitize orders and merchandising, and you can contact them@infoimplydepot.com check the show notes for more details and make sure to mention the startup CPG podcast. Enjoy. Hello everybody. We have a great guest today. We've got Namik Sultan, who is the founder and CEO of Ginger Lab. They specialize in wellness shots for health and wellness minded consumers. They've got cold pressed ginger shots for immunity, digestion, energy recovery, all those things that you need, and they are all natural and organic with no preservatives. Pretty interestingly, Gingerlapp scaled using their own sales and merchandising and even distribution team at the beginning, which is no easy task. That is a lot of stuff to manage when you're also trying to build your brand and find consumers.

02:46
Daniel Scharff
So I'm really excited to dig into that today. You know what it's really like. NMek is actually also a board member for Simply Depot, which is one of our partners. They provide the software that you need to manage all of that, which I think you're going to learn about why that's all really important. So, NMek, thank you so much for joining us. Welcome to the show. I wonder if you could just start out by telling us a little bit about your CPG background, your origin story. How did you get into this crazy world?

03:09
Namik Soltan
I. Daniel, thank you for having me. Started in CPG by pretty much myself. Started my first company back in 2012 when I was college student in college and had this idea. At the time, I didn't really know how difficult it was to build the consumer package. Good. So, so then I started a few other companies after that. Unfortunately, they didn't work. Have to shut them down. And then third one, luckily kind of took off. So idea for the ginger shot came from my mom recipe, which is a ginger lemon honey paste that I use as a natural remedy against cold and flu. And it was summer 2019 had this idea as an alternative to your kind of like traditional medication, especially when it comes to the cold and flu season. And it was just summer 2019 we bought to launch in 2020.

04:01
Namik Soltan
Covid happened, and it was just kind of like a perfect time to launch this type of product. So, yeah, that's very quick story about my entrepreneurial journey.

04:10
Daniel Scharff
That makes a lot of sense. And I mean, honestly, I don't know a ton about the wellness shots kind of industry. I know that a lot of people drink them. Like, when I go and demo at Erewhon, for example, like, I see people just coming in and cleaning the shelf off the shots, like grabbing as many as they can. That makes a lot of sense that during COVID that was going nuts. What was it like when you were launching, though? What was the category like at that point? Was it already kind of developed and you already had consumers looking for those kind of products a lot, or were you still building awareness about shots at that point? What was it like?

04:42
Namik Soltan
Yeah, I think the category was already established and weren't the first one on the market for sure, but I think there was still, there wasn't mainstream approach to, like, ginger shots or shots in general. I think that one of the reason why we started, because when we bought bunch of other ginger shots and we tried them, they were so kind of like weak. They weren't like, spicy enough, I would say. And to me personally, the person who constantly drink this type of product, when I would spend $4 and drink, like, 2oz of coconut water, I was like, this is not. I shouldn't spend $4 on this. So. And that's why we created product that, like, very spicy. And I think that was kind of, like, success behind our company. I think what really happened during COVID it just. That category just completely exploded.

05:28
Namik Soltan
And I think that was kind of acceleration of the category. And now it's just pretty much, like, mainstream. You go to Walmart, they also sell ginger shot. You wouldn't think about this type of chain would sell them. So I think that's, nowadays it's pretty established category, but I think there's still a lot of room to grow.

05:45
Daniel Scharff
Okay. That makes a lot of sense. And that's kind of funny how you describe it. Like, if I'm paying that much and it's not spicy enough, like, almost like, this should hurt a little more so that I, you know, feel like it's working more. It's like des an x, like the shampoo. Like, it tingles. That's how you know it's working. Like it's spicy. That's how you know there's some good stuff in there that's gonna help you out. That's pretty interesting. And so do you think that consumers, like, you're appealing mainly to consumers who like shots, but then want it to be spicier? Or do you think you're the first wellness shot that a lot of people in the category try? Like, you're bringing consumers into the category. How do you think that works, the consumer journey?

06:22
Namik Soltan
So what I can say from New York City experience, because we mainly build our business within the tri state area. And when we first started, I think that shot category was more like exclusive and exclusive to, I would say, manhattan, whereas people have money to spend, right. It's $4, $5 per shot. It's pretty expensive product. And when we first started, we would take this product to as many new neighborhood as possible. And I still remember when we would go to the store, they're like, what is this? They didn't know what it is. So it was very something new and novel for them. And I think what we really did, we really expanded the category. We took this product to so many new neighborhoods that you wouldn't think this type of clientele, they would consume it.

07:06
Namik Soltan
And I think what we really did, we expanded the category. We brought new customers to this category here in New York and I think special with TikTok and there's a lot of videos or with people making their own gender shots. I think this product is just becoming almost like Kombucha. Even if you compare the size of the category, which is shot right now around 300 million and then Kombucha, I believe around 500 or 600 million. So they pretty much close, though. And I think shotgun continue to grow moving forward because also a lot of consumers drink this product as energy shot. So they would use this product more as your maybe alternative to your coffee or energy drinks or even like five hour energy.

07:46
Daniel Scharff
It makes a lot of sense why a store would want it or a buyer. I know, I mean, I was just talking to the sprout buyer and he was telling me for their dairy set, like, the top item or one of the top items is one of. Is a shot. And I mean, if you're talking about, like, how much money you can make per square inch on the shelf, like, how are you going to beat that? A tiny little bottle that retails for a high price point. So, I mean, once you kind of show it to them and they see it working, it seems like you would have a lot a big open road ahead of you and a lot of shelf space they want to give you. So.

08:14
Daniel Scharff
And then just, man, I'm not a shot drinker, although I spend so much time in CPG as a consumer. Like, I'm so basic. So that will be revealed in the way that I ask these questions. But, like, who is the consumer exactly for these kind of shots? And when do they drink it? Maybe. And was that different during COVID It was just like, yeah, they take the immunity stuff when they can get it versus now, like, are they hungover and that's when they want it? Or is it like something they have in the morning or at the end of the day or with lunch? Like, you know, what's going on with people in their shops.

08:44
Namik Soltan
So I think one thing about ginger is, like I mentioned before, our product, it's very potent, right? So it has close to ounce of actual ginger juice. And when you drink ginger juice, it wakes you up. So it just feels like it's working. It gets your blood going. So you do feel the energy, kind of like instant energy without, like caffeine. Right. And based on kind of like, feedback from customers, what we have learned a lot of consumers drink this product is your morning shot. When you go and I, you know, start your day, you go to your bagel shop, grab a coffee, get the ginger shot, you feel like it's protecting you. Also, we got some interesting feedback. Some people drink them as a handgun recovery. They think it just helps them to recover faster.

09:23
Namik Soltan
And I personally drink ginger shots just kind of like, looking at myself. My habit of taking ginger shot evolved over the years. Right now, I drink ginger shots right after, like, a heavy meal, for example, perhaps cheeseburger, for example, or something that frieden, I take the ginger shot. I really feel like helps you to reduce the pain in your stomach. You know, it just feels like if you have, like, blowing, right, you take the ginger shot, you feel right away, within the 510 minutes, you feel like, okay, it's working. And when it's, like, a winter time, for example, it's, like, super cold, right? You want to take ginger shots and be, like, warm. It just warms you up. So I think there's a lot of use cases. I wouldn't say people drink this product. Yeah.

10:01
Namik Soltan
Kind of, like, gives you baldness or so I think that's kind of the main use cases. Some people make them with. Mix them with water, and they drink it during the day. So I would say that's kind of the main use cases.

10:14
Daniel Scharff
Okay. Namik, in your future, I see you getting on counters at all McDonald's then across the nation with a sign that's like, you will feel less crappy after your meal if you have this, like, yeah, fight off the bloating from your big Mac.

10:30
Namik Soltan
Yeah, it's funny story. We have this, like, a small chain here of, like, a cheeseburger chain. And I actually was pitching them. I'm like, you have to have this. You know, you have to have this. But they didn't take it. So maybe eventually I will convince them.

10:44
Daniel Scharff
Yeah. All right. I'm just, like, imagining there's, like, really famous movie with John Candy where he goes, for the record with, like, I forget what he's eating, but I think it's like, a huge steak or something for, like, 20 people, and he finishes it. I mean, just imagining all of those chains, they should offer a complimentary ginger. Not after somebody goes for the gold on a. Or, like, sponsor the hot dog eating contest or something. All right, so. And then can you just give me an overview just of your total product line? Like, how many different skus do you have? What are the flavors? I think you also launched in a can format as well.

11:19
Namik Soltan
Yeah. So currently we have six skus of shots. Essentially. Two, it's an immunity shot. One, it's a digestive weight, cancer probiotics in them. Also, we have two skews. One, it's vitamin C booster, and second one vitamin D booster, which vitamin C arrives from acerola, cherry. And vitamin D also arrives from seaweed, which is 100% vegan and organic. And last, energy we just launched about two weeks ago. Essentially, it's an energy shot. It's your ginger shot with caffeine from green tea and also lime. Just helps you to focus. Also vitamin C, D, and zinc. So we have those six skews. Most of them contain ginger and turmeric. And we have one skew, which is just ginger lemon when it comes to RTD. Well, last year we launched line of prebiotic beverages.

12:09
Namik Soltan
Essentially that idea came from consumers because they would mix our ginger shot with sparkling water. So we thought this kind of like a great idea to have different use cases. So. And we have three skews of our rtds as well.

12:23
Daniel Scharff
All right, that's pretty interesting. Probably this is maybe an out there question, but, like, do people ever mix it with alcohol, even just because you mentioned the sparkling water? Like, are people using this instead of Red Bull with her vodka or anything like that?

12:36
Namik Soltan
Yeah, we have seen a lot of tags on Instagram when people make actually spicy margarita without ginger shots. So essentially you use, you know, you can use like a quarter of the shot. Kind of a great mixer, too. Some people make mocktails. I think there's so many ways you can utilize ginger shots because it's so patent. So you can just put a little bit. You can have that spice in them, too.

12:57
Daniel Scharff
Yeah. Okay, great. Thank you for indulging me. I don't know why my mind always goes to alcohol, but. Okay, so the topic that I'm really interested to understand with you is around building your own sales field, merchandising, and then even distribution in the early days. I think before you switched over to using a third party distributor, you know, I was, I'm a former beverage CEO as well. And I think, you know, when were trying to target our, a specific market to really penetrate, you know, we did that math like, oh, you know, should we work with third party distributors? Man, they're kind of hard also to get into and get them interested versus, oh, what would it look like to kind of build our team in the early days?

13:34
Daniel Scharff
And, like, aside from just the cost benefit analysis of that, like, that's going to take up all my time if I do that. And also, I've never done that before, so it'll be a lot to learn. Right. So I'm really interested just to dig into your journey on doing that kind of from the start. So can you maybe just like talk me through the kind of sales and distribution journey that you guys went on in the early days? How did you get started doing that and what took you to make certain decisions? And for year one, year two, year three?

14:02
Namik Soltan
Sure. As I mentioned before, we launched right at time of COVID it was like March, April. Obviously, as you remember that the whole country was like under lockdown. And at that time, most of the distributor, they wouldn't even take any product into consideration because just no one was at the office. Right. So that was kind of like the major move for us. Kind of like influenced us to actually go out there and start doing self distribution because we had the product, we got to get this product on the shelf. Also, when it comes to new brands, it just most of the kind of like a large distributor, they don't want to deal with the new brands when you don't have any presence on the market.

14:36
Namik Soltan
So it's also really hard to get into distribution because you need to have some sort of like a sales or attraction. You have hundred stores, 200 stores. So when we first started was like April of 2020, we had three full time salespeople. Essentially, they were our investors, our friends, who also invested in the company. And we had my truck, so they would take orders, I would deliver them. And it's ended up being pretty great strategy for us. I think it's also at time of COVID there wasn't like a lot of brands launching into the market. So were probably one of just few brands. So it was kind of like easy to get the product on the show. And we did that for almost eight months. I think within the six months we had about 3400 buying stores or buy like every couple of weeks.

15:22
Namik Soltan
And I think once we had that footprint and the sales, obviously were able to introduce short sales to the distributors. And oftentimes, you know, it's the same stores that everyone worked. Like, there's ten distributors, they were all visiting same stores. So also salespeople from other distributors, they were seeing our product everywhere. And I think, like, after six months, we already had so many distributors, they were reaching out to us. And then we actually have to make a decision with who we're going to work.

15:51
Daniel Scharff
And so in those early days, then was it you doing the sales, distribution? Did you hire people? How did that work?

15:58
Namik Soltan
So all salespeople, they were our friends and who also invested in the company. So it was like our friends and also it was Covid, right? So everyone was out of work. So everyone had a lot of time. I had experience in sales, so I was able to build the whole strategy, like intro deals and pricing and all that. And essentially, I trained my friends who were just going out there and pushing the product. And we also had our van, you know, had our, we bought this Fridge stuck in everything, our office, so. And they were like, would pack everything in my truck with coolers, and then we would deliver to the stores. And that's pretty much how we started. I mean, luckily to us, products are moving, like, right away. So we would get reorders, pretty much every two weeks.

16:41
Namik Soltan
And I think first twelve months on the market, we made around $400,000, which is pretty big for, like, a brand new brand. And I think the fact that our product was moving, I was able to pay everyone because product not moving, you're not getting reorders, and obviously you cannot pay anyone. And so that was kind of like the strategy how we started.

17:00
Daniel Scharff
And how did you know even what stores to go to? You had like a list, or you just had everyone in specific areas just kind of driving around and figuring out which stores to go and try to sell to, or how did you have your target list?

17:12
Namik Soltan
Sure. So since beforehand, I had other brands, so I was already familiar with New York City Market. I had some relationship with some of the stores, and also I was working with other distributors, a salesperson. Oh, actually, what's selling? CALYPSO LEMONADE. Probably heard about it. Lemonade. So I was one of the sales reps who was built in New York. So I already had some relationship with New York. But then we create, like, a whole strategy for New York City. We would send someone in Manhattan, someone in Queens, Bronx, and Brooklyn. So we'd split the whole territory. The beauty of NEW York, it's, you go one block, you have four stores, right? So in one day, you can visit 2030 stores. And then obviously some stores didn't want to take a product right away. So it was just like a strategy.

17:55
Namik Soltan
We'd constantly have to go back and remind them about the product. So that's how pretty much we did.

18:00
Daniel Scharff
It for you guys. You were building the sales and distribution arm with your friends, and how did you even figure out where to send them and how to manage their routes and all of that? Like, you had some experience, you kind of knew where to send them, or how did you optimize what they were going to do?

18:19
Namik Soltan
Yeah, so essentially, when we first started, we're using Excel spreadsheet, just putting all the stores. First month we only had 2030 stores. Right. And then we was very easy to manage. And then we also used the routing map. So this way I can send those people to, like, a different locations. But then once we started having hundreds of stores, it just became super complicated, especially when you have to track someone paid cod or someone didn't pay. Oftentimes you can deliver a product, they won't pay you. So that was like, you leave a lot of money out there. I think when we first started, first probably month, we bought this invoice book from Staples. You know, it write the orders right out of the booklet.

18:58
Namik Soltan
And then we became a little bit more sophisticated when we got quickbooks and started using actually invoicing and putting everyone into the system. And I think there was like ten different apps we're using for this, for that and communication. And I think that's how idea for simply depot came out, that there should be something that you can utilize in one place and you can manage your sales team, you can manage your distribution, you can manage your merchandising team. So that's pretty much it's how it's all started.

19:25
Daniel Scharff
So, yeah. What's that process then, like? So, okay, I understand now, how do you manage, like, the territory and the stores that they're going to go to? What are they actually doing when they go into this store? Like, they walk in, they've got invoice, whether it's book from Staples or now you have software that can do it. So they're talking to the owner of the store. Hopefully the owner is there when they go, which I know can be a problem. And then they're just like trying to take either selling the product or just, you know, take orders and then kind of face up the product, like make it look good on shelf. And also, like, where were you getting the placement in the store in the early days?

20:00
Namik Soltan
Yeah, so usually the we process looks like salespeople, they would go inside the store without no product. Right. And they'll try to find the owner and introduce them product if it's like a new store. Right. So they'll try to pitch them an idea if they hesitant to take the product, maybe offer them some sort of deal, buy one, get one free, something like that. So, and then once they place an order, they would send us an order and then next day, or we will deliver this order to the store, create the purchase order, create the invoice, and then deliver the product and collect the money. Hopefully we can collect the money right away because oftentimes they're like, oh, the owner not here, and then, you know, come back tomorrow, pick up the money.

20:38
Namik Soltan
I think those are the great thing because we are delivering ourselves. We can put this product right on the shelf because for the stores, it's also kind of like it's a good thing because it's less work for them. And were able to put the product next to Kombucha and maybe some other shots and merchandise them right away, which was great because oftentimes when you work with a distributor, they would just deliver the product, leave it there, and they will just go. So I think at first it's really important to get your product right on the shelf. So it starts selling, it starts sitting at the warehouse for like a couple of days. Obviously, once product, it's already on the shelf. Salespeople, they just go back, try to take a reorder. Obviously they want to merchandise, put some sales materials on it.

21:19
Namik Soltan
And that's pretty much how the process looked like at the beginning.

21:23
Daniel Scharff
That's pretty interesting to hear. You know, I've gone in and to convenience stores with a new product and tried to talk to them about it, and pretty much what all of them said is great. If you want to leave some free product, I'll see if it sells. Like, they're very happy to take $40 worth of free product from you and sell it. And either it sells through and they make some free money off of it, obviously they're going to mark it up or it doesn't, and then who knows what they're going to do with it. And so, you know, were you even having to give free cases for that? Or. I know you mentioned kind of buy one, get one. Were they pretty open to that?

21:57
Daniel Scharff
Maybe because you guys were really confident that it was going to sell well and it was Covid and people were looking for those kind of products. How did you navigate that?

22:04
Namik Soltan
Yeah, so I think weekly learned that giving away free product, not a good idea. I mean, of course, we gave away a lot of free product to some of the stores, but we can learn that it's better to do one one, buy one, get one free, for example, because now they invest it in your product. When you just give them product, they're like, oh, you know, my cousin had the whole case. I'm like, I gave you to sell it. Right? So, but when they pay, even if they pay like $10, for example, they're like, okay, I spent some money, I need to sell it. So. And weekly learned that even the way free product, it's not a good idea, because like I said, they won't sell your product. They might just live for me and just drink it. So.

22:41
Namik Soltan
But if there was, like, a really good store, we would give them three keys. For example, obviously, once were building product, but when we first started that were doing deals and we only had one skew, so we didn't have, like a, we only had one shot, one flavor. We started as a two in one. And then if they were hesitant, we're like, okay, let's just do one and buy one, get one free. Buy one, get one free. And I think most of the people, they're like, you know, it's like $30 for two cases. Dollar dollar unit. I'll sell it for four. I make some money. So you also kind of have to tell them how much they would make and then they would be open to buy it. And then obviously, we need the follow up deals.

23:19
Namik Soltan
You know, you buy five, get extra key. So that's how we build it free. It sounds good, but unfortunately, it doesn't really work for the brand as well.

23:28
Daniel Scharff
Okay. And then, so once you were visiting, you were doing, like, every two weeks kind of going back and checking into the store. And also, were you seeing the competitors try to bury your product and take your shelf space?

23:40
Namik Soltan
Yeah, I think, like two weeks. It's really good. Like, the timing wise. And obviously, yeah, it just happens all the time. You know, your product sells out, and then other people comes in, they would just push your product back and to kind of, like, it happens so many times. They would put their product into our boxes to make it look like, it's, like some of the products looks like ours. And I think that's what comes down to merchandising. You don't merchandise your product. And whether it comes to shots or any kind of juices, it's a refrigerated item as 90 days shelf life. So it's pretty short shelf life. And then if you box sitting there, people don't see your product, obviously, they're not going to buy it. Right?

24:20
Namik Soltan
Even if it's a good product, and then it expires, and then old nerds, like, all the product expired, they just sell. So it's very important to go back into the store, make sure you're merchandise, especially for the first three months, or I would say three months, probably. But then once your product become the people constantly buying your product, they will go there, they will search for your product. They will ask the ordinary, you know, so that's. But you have to build it to that level, so.

24:46
Daniel Scharff
Okay, so. And, man, I've heard crazy stories about like, sales guys in the field getting in fist bites and just like all sorts of crazy stuff that happens. You probably have some stories, huh?

24:57
Namik Soltan
Haven't had any fight with anyone, but, you know, definitely see some things in stores and kind of like anything special, especially when New York, it's like a lot of independent stores, right? Anyone can walk into the store and just do whatever they want on the shelf. So I think that's kind of like, you really need to stay on top of it.

25:15
Daniel Scharff
Yeah. Okay, good. I'm glad it's been safe for you guys out there. So you obviously had some really motivated people because they were investors in the business and they were your friends, so they were working hard. But inevitably you're going to have some people who are better than others, and some people, you need to try to improve their performance. So what are you looking at in terms of metrics and stuff to see like, hey, who is doing a good job? Who do I need to try to help here to either increase their efficiency or maybe try to teach them how to sell better, or maybe they need to merchandise better. What are you looking at as kind of the manager of that team that helps you make it work better?

25:49
Namik Soltan
Yeah, I think probably one of the most important thing is just if person is motivated, if person likes what they do, I think if person doesn't like what they do, it doesn't matter what you do, they're just not gonna perform well. So I think that initial motivation, it's very important. And if person also wants to learn and maybe build himself within the category and just start a salesperson, become a vp. When we first started, we had three people, and then once we moved to the bigger distributor, we end up having only one person. And because just to manage our distribution, obviously we're a startup, so we can really pay a lot. So were paying this person salary, wasn't big seller, but then we also offered some equity.

26:30
Namik Soltan
You know the funny story, I remember when we first started, we actually were trying to hire a couple of people, and we also offered them some equity within the company. So they end up, they worked for us for like a day, and then they left and kind of like, you never know, right? It's, you start with a brand and maybe it's a new brand. You don't really know about if it's going to take or not take off or not. But our salesperson, Daniel, he's been with us for four years. He earned some equity and continuously growing within the company, so, which is kind of great, but it's the same time person, they also take a chance on your brand because you never know if brand's gonna take off or not. So. Yeah, and that's how I really see that's pretty interesting.

27:09
Daniel Scharff
I've heard the same thing even about like liquid death, for example, that I think in their hiring process, like, I don't, maybe they don't even care so much about whether this is an experienced salesperson, but they, what they really do care about is the person's passion. Like how much do they care about this brand? And are they ambitious, driven? And that's how you know if they're just gonna crush it for you because, yeah, it's hard, hard work being out in the field. You know, it's so, I mean, you're really going to need that. And even, man, I bet in New York probably also you're dealing with like a lot of parking issues and getting a lot of parking tickets and having to make friends with the parking attendants. Is that right?

27:44
Namik Soltan
I mean, that's one of those things. It's unfortunately can leave your car for like 2 seconds and that's it. You got a ticket. So that's a part of the business.

27:52
Daniel Scharff
Yeah, I know, with fresh direct anyways, they were just like, yeah, that's just an expense. We're going to get tickets. There's no way to have a truck here and not get tickets. But I expect also, like, I mean, you do have some kind of inherent advantage if you have the branding on the truck and you're just driving kind of slowly around the city, you just have a moving billboard all over the place. So people get really familiar with the brand. And I think also maybe kind of interesting because your branding, you know, it uses the like kind of Red Cross like swiss thing, which I think probably immediately makes it feel more familiar to people even if they don't know the brand yet. So that's pretty interesting to me. Another thing that I've heard of from people is just around like hiring field salespeople.

28:31
Daniel Scharff
Like, sometimes they can be very clever. I actually was just talking to a friend of mine who was like, you won't believe this. I just hired a field salesperson full time w two. And then two weeks later found out they had three other full time jobs because they saw like, and they just were clearly just, you know, taking a bunch of people for a ride. Have you ever had those kind of situations or you know, other things where you have to like really be careful or, you know, do certain kinds of background checks and you're hiring people just to make sure that they're in it with you.

29:02
Namik Soltan
Yeah. So luckily for us, when we first started, we had the same person for pretty much all four years. So we didn't really run other people within the company. But right now we've been kind of interviewing a lot of people. So obviously going through a lot of interviews and learning about the people and seems like they're doing some people, seems like they have pretty steady experience with the brand. So, like, for me personally, when I see someone work for the brand, for example, a couple of years, which, the way I see it's like it's a reliable person, but if someone jumps from one brand to another brand every three to six months, which is, to me, that's kind of like a red flag, for sure. Yeah.

29:38
Namik Soltan
You know, some, oftentimes, some people, they want to work for the multiple brands, obviously, because they visiting, like, a same store.

29:44
Daniel Scharff
So, I mean, my feeling on it is when you have salespeople, like, you want them to know how to get stuff done right. And, like, it's even in, like, if you're talking about retail chains, like, I don't know, sometimes the salesperson knows how to become friends with the buyer in a way. You know, like, oh, hey. Like, the campus buyer is, they're really looking for a company to support them on something that they want to do. And they really need, like, a bike or something that they can give away to students to do some kind of thing. You know, it's like, great if a sales rep can be like, oh, yeah, I got you on that, and work with your marketing team.

30:16
Daniel Scharff
And then there also can be, like, an underside of it where, like, there are funny things happening, especially if it's cash business and, like, things that you have to watch out for. So I hope you haven't experienced any, like, too clever kind of stuff, but I think good for people to know that, you know, you have to keep a pretty close eye on it, right?

30:33
Namik Soltan
Yeah, definitely. I mean, I think that comes to anything. Like, you run the business, right? You work with agency or you work with subcontractors. It's, you also have to manage them. You also have to give them directions. Unfortunately, most people, they do what they do, but I think you really have to stay on top of things. It could be a salesperson or your accountant or your ops. So I think just staying on top of it and just also giving them direction, it's important. And then one thing about the salespeople. I think one of the best salespeople, it's with relationships, because, as you probably know, in this business, it's all about relationships. It's all about who knows the buyer. And then if you know the buyer, it's easier to get your product on the shelves.

31:13
Namik Soltan
So I think that's benefits when it comes to someone who has experience, which is great, right. Because they already have those relationships. But oftentimes you can just find someone brand new, you know, who wants to get into industry and just get into those stores and start building those relationships.

31:30
Daniel Scharff
Yeah, got it. Okay, great. So then as you grew in distribution of the team, then you shifted a bit the model, right, where, you know, in the early days, you were doing your own distribution in addition to the sales and merchandising. And then I think later on, you decided to then work with a third party distributor. Can you tell me, like, when did you decide to do that? How did you come to that decision? And then, of course, how did that work for the business as you grew?

31:54
Namik Soltan
Yeah, so as I mentioned before, when we first started first year in the business, so we already had about three to 400 stores that were personal product, and a lot of brands and salespeople, they already knew our brand. So we had a lot of distributors start reaching out to us, and we ultimately decided to work with Dora Naturals. It's a regional distributor. It just came to the point that we just realized that with one truck, you cannot manage it. So many stores because they all so far apart, and you really need like, ten trucks. And when you grow. Right, there's so many moving parts and working with distributor, it's great, because now we have about 1200 stores. Obviously, we would never be able to service those stores. And our distributor, they have 20 or 30 trucks. Right.

32:38
Namik Soltan
And especially when you start scaling and your product moves really fast and you need that infrastructure, you need those salespeople. And essentially, we did first pretty much like a year, almost a year, we did sell distribution, and then we moved to working with the TST. And since then we've been working with them.

32:58
Daniel Scharff
Okay. And so basically, were you covering then all of those three to 400 stores, mainly with one truck?

33:03
Namik Soltan
Yeah, pretty much.

33:04
Daniel Scharff
Okay. So across, like, all the boroughs, even of New York. So you were just cutting up the routes. One person able to service it, hitting all of those probably on like an every two or four weeks kind of cadence.

33:15
Namik Soltan
Yep. Yep.

33:16
Daniel Scharff
Okay. That was a busy driver. Awesome. But that's really good to know that you can actually get to that level. Even doing about 400k with one truck, obviously you got a lot working in your favor, right, where it's like a smaller product with a higher price per ounce. So, like, they can fit more in the truck and it's easy, easier to carry. They're not like having to lift quite as much when they do it, but that's really helpful to hear. And then, so when you moved then to the DSD for you guys from, like, let's say an economics standpoint and from a sales standpoint, like, what were the differences that you saw? Like they, I've heard about Dora's natural before. I'm sure they do a great job for you guys, but you also are going to lose a little bit of passion and control.

33:57
Daniel Scharff
Right. Your own salesperson in there has equity in the business. Like they're going to face up the product with just tons of passion. So like, yeah, from a, let's say, profitability standpoint and then also just overall, like, you know, sales and presence standpoint, what were the biggest differences you saw with the switch?

34:14
Namik Soltan
Yeah, I think when it comes to most of the distributor, they work with 30% to 35% margins. Right. Obviously, when you do self distribution, you kind of make good money, right? Pretty much you earn everything. And, but then on the flip side, you have to pay for salespeople, you have to pay for truck, you have to pay for gas and tolls. And those things, they also add up, right. Your own warehouse. And then once you start moving thousands of units, that's become very complicated because now you need warehousing. Right. So it's one of those things that's, you know, once you become a big brand, I wouldn't say we have big brand, but like, I think once you become medium brand, it just become very complicated to manage all that. You need operational team, you know, warehousing team.

34:57
Namik Soltan
And so for us, yes, they earn their own margins, but the way we build our unit economics and with our call backers, obviously we also profitable in that within the process. Obviously when we first started, our cost of goods were very expensive. So we're able to, with volumes, were able to reduce our cogs. And I think just kind of like building the sales structure, your incentives, your intra deals, right. Usually you are the one who's covering all that. So you kind of have to take everything into consideration and then look at your bottom line.

35:31
Daniel Scharff
So that's a really cool point around the incentives. Did you have any way that you did that when it was your own team around sales incentives? And then also what do you think are the best ways to motivate a third party distributor with incentives?

35:44
Namik Soltan
Yeah, I think when we first started, obviously were gaining, everyone was getting incentives per case. For example, I think just wanting to mention, I think when it comes to distributors, you really have to work with them to build your brand. And I think once you build a brand and your product is selling, everyone is happy. And salespeople are happy because they sell your product, they make commission. And so when we first started with our distributor, were moving a lot of products. So we still work with them every single day to get the product, to get the rewards. We'll take reorders, we'll send them this reorders. And obviously we run incentives yearly incentive for distributor salespeople.

36:21
Namik Soltan
So, for example, when you have new product, you want to get this product quickly on the shelves, so you incentivize them for, or, I don't know, a couple of bucks per case. They could do like different structures. And I think that's what really worked for us. But we also work with distributor to really build a brand. And then I think after a couple of years, it's already became more automatic process. And they will just go to a store, they'll take a reorders, and that's how we pretty much did it.

36:45
Daniel Scharff
Okay, and then how do you have your team structured to then work with them? Right, because I think you still will have some of your own salespeople, right, who know the brand so well and can work with distributor. Like, do you just have a team mainly to manage them? Do they actually still visit stores with the distributor? How do you set it up?

37:00
Namik Soltan
Yeah, so we have person full time pretty much on the street. They visit the stores, they go on ride alongs with the salespeople. It pretty much when you work with a salesperson within that person route and you visit stores on your own and then take orders, send this orders to your distributor, help them to kind of sell more, obviously. And I think also merchandise you can do blitz that's pretty much when it's, they will block off the whole week just for your team. And then you have a couple of salespeople. Pretty much, you go everywhere. And yeah, just, I think working alongside with your distributor is very important. Oftentimes I see when brands, they just launched, let's say, New York, they don't have sales people. Obviously they're not going to get any traction.

37:38
Namik Soltan
So you have to be out there on the ground with salespeople, with distributors. And obviously you also have to manage your distributors, though.

37:46
Daniel Scharff
Interesting okay, so to summarize back, like, let's say Namik is starting his business now. Let's say it's not during COVID where that was a pretty unique scenario, although we're not totally back out of that. I think we're in a new reality. So in this new reality of how distribution works and how brands grow, if you're starting this business again from scratch, knowing everything that you know now, what's the go to market model you're going to go with? Are you going to start with then the exact way you did it with your own distribution in the early days to get that space and show the traction and get interest from distributors? Are you going to start with distributors immediately?

38:24
Daniel Scharff
I think it's a really important question because there are a lot of brands that bootstrap the way that you did with, you know, their own money, and they want to know what is the most efficient way to grow my brand. You know, if I don't have millions of dollars with investment where I can just kind of like go big and spend a lot of marketing right away. So what do you think is your preferred model?

38:43
Namik Soltan
Well, I think for me, if I end up launching another brand, probably I'm going to go with a distributor because I already have some relationship with them and, you know, I kind of have attraction on the market. So it's kind of like easier for me. But I guess if I was starting out, like, if I was like someone else who trying to start, I think probably the good way to start, maybe start working with small distributor. There's a lot of small distributor that can take your product right away. And then instead of you personally delivering your product, you would just go sell your product to the stores and send those orders to your distributor and let them deliver. Because not everyone has a media van or personal truck. There's a different case scenario. It is, right?

39:24
Namik Soltan
So I think just if you are new brand and you just try to start, I think the good idea is just get your product on the shelf first and see if your product sell or not. Because I think there's a lot of product out there, you know, and unfortunately not all of them sells. And I personally experienced that at another two brands that didn't really work. And I think before you even go to a big distributor, unless you have a couple of million dollars, I think it's just good to get this product in 50 stores, hundred stores, and to really get the data if your products are moving, not, and then if it's not moving, maybe you need to change the packaging, maybe you need to change the formula, whatever you need to do.

39:59
Namik Soltan
I think you should incubate this brand for at least a year to see what's working, what's not working. And then hopefully, once you have the traction, you have hundreds of stores, you can show this data to the bigger distributor, you can show this data to investors, you can raise some money and then go with them. So that's how we do it.

40:15
Daniel Scharff
I love that approach. That sounds really interesting. Are there any small distributors that you can call out that you think are good options for someone like that who doesn't have the benefit of all of your connections and experience where people could be like, yeah, maybe in this market I could try with this kind of a distributor, any that you can specifically name?

40:33
Namik Soltan
Yeah, I think there's one distributor called Gold Coast. I think they do a pretty good job in terms of they pretty open to get the new brands and incubate them. So I think that could be a good option. But there's a lot of other smaller distributors. I just don't know all the names, but I'm sure there's a lot of distributors. And also, if you're in New York, for example, you can go to the store and you can ask them who they're working with and they will tell you all the good guys and all the bad guys forever. So I think that's also a way you can really find out who would they prefer to work with. And then you can go reach out to that distributor.

41:08
Daniel Scharff
Okay, great. And then last question. What's the pay range if you have your own people doing this kind of work that you should budget for, let's say just in New York.

41:18
Namik Soltan
Yeah, I think nowadays in New York it goes anywhere from 60 to 80,000 a year. That's if you're getting like seasoned salesperson. So that's about the range. Plus you also offer them some bonuses and incentives. You could also potentially find someone for maybe 50,000, for example. It was something just new. We're trying to break into the industry, and like I said, in our case, we offer them pay and also we gave them some equity. So that was kind of like how we structured it.

41:46
Daniel Scharff
Okay, got it. And then maybe on top of that, you should budget for whatever the vehicle is, plus the maintenance of that vehicle, plus, I don't know, maybe $100 a week of gas, something like that. It's new work where they're not going to move too fast. Depends on the region. Any other big costs that people should know to budget for?

42:02
Namik Soltan
Usually it's either all combined in just one salary that also covers mileage and then some other incentives. But I would say that would be probably range around 50 to 80,000. It might go more than that, but that would be the pretty much amazing.

42:18
Daniel Scharff
And probably a lot of people are immediately like, oh, what if I go in on this with one other brand and we'll get that one person and they'll just do both of our brands? Probably you've thought about that. Like, is that a good approach or. Obviously, like, it can get very complicated. Like, well, what if only one brand's at a store and, like, I don't want them spending time on that route. It's not helping me. Like, any business partnership.

42:37
Namik Soltan
Yeah, I mean, we actually tried to work something like that. But also it comes down to the person. Just like, they might kind of, like, push one brand, not another brand. It might just become complicated. But in the same time, you're a small brand. Maybe you should have that. Actually, instead of paying full salary, you can pay half, but at least you have someone there. But then there's also some salespeople, like merchandising company you can potentially work with. They like people, for example, and you just play like a one flat salary for that. So that could be also an option.

43:07
Daniel Scharff
Okay, super interesting. Thank you, Nimitz. And just to close out here, then, Nmek, what's a good way for people to follow along with you to check you out on LinkedIn or just to get in touch with you otherwise?

43:19
Namik Soltan
And, you know, LinkedIn would be probably the best. I'm trying to be pretty active on LinkedIn and yeah, that would be the best way to connect with me.

43:28
Daniel Scharff
All right, great name. Thank you so much. We're just really interested to hear about your experience doing this. Makes a lot of sense why you guys that had decided to launch simply depot as well, just to help out brands and companies who are trying to figure out that complicated web, how you manage all of that stuff. This makes a lot of sense, especially in a place like New York. So thank you for sharing all of this expertise. I think brands considering a journey like yours will find all of that insight and experience incredibly helpful. So thanks a lot for joining us on the podcast. I hope everybody listening got as much out of this as I. Thank you. Bye, everyone. All right, everybody, thank you so much for listening.

44:08
Daniel Scharff
If you enjoyed the podcast today, it would really help us out if you can leave a five star review on Apple Podcasts or Spotify. I am Daniel Scharff. I'm the host and founder of startup CPG. Please feel free to reach out or add me on LinkedIn. If you're a potential sponsor that would like to appear on the podcast, please email partnershipstartupcpg and reminder to all of you out there. We would love to have you join the community. You can sign up at our website, startupcpg.com to learn about our webinars, events and Slack channel. If you enjoyed today's music, you can check out my band it's the super fantastics on Spotify Music. On behalf of the entire startup CPG team, thank you so much for listening and your support. See you next time.