Michael Blumenkrantz - Primal Krisp

Welcome to another Founder Wisdom pod. We have Michael Blumenkratz with us today. Michael is a 4x founder, is a business operator, is a real estate investor in private capital and alternative finance. Sunrise Funding Group, Vivian Capital. He also runs this consumer brand called Primal Crisp, which we're going to talk about, in New Jersey. So, Mike, welcome to the pod. Tell us a bit more about yourself and what you've been up to.

Sure. So, uh, you know, grew up here in Jersey, you know, always been trying to, you know, eat clean, eat healthy. And, uh, being in the kosher market, it's been, uh, you know, the food is not really so focused towards that— the food items, the snack items. And I've been seeing all these, uh, you know, these meat chips out there on the market. I said to myself, I got to make this, I got to make this a kosher product. So, but at that time, you know, I just had my first kid and, you know, quite busy with the other things I was dealing with. And a buddy of mine came to my house to bring over dinner. It's like 2 weeks after my kid, and he was complaining about, you know, his job and this and that. And I said to him, you know, this is something I've always wanted to do. I just don't have the capacity to do it. I don't have any cooking skills. I got business skills, but not, uh, not really any cooking skills or the ability to make, uh, to make any flavors or recipes or anything like that. He went home, bought himself a $20 slicer and a $50 dehydrator on Amazon, bought a piece of— bought a piece of meat sliced it up. And, uh, you know, he called me up like 2 days later. He said, Mike, you're not gonna believe what we did. This thing is so delicious, you know, you gotta try it. He brings me over a little, little baggie, like, uh, just a pound or 2 of it. I ate a couple bites. I'm like, wow, I can't believe this doesn't exist. This is like, you know, it's got no preservatives, it's got no sugar, it's got nothing in it, just meat and salt. And we ran with it, you know, came up with the name, you know, started cooking it, started making this product. And, you know, the people loved it. They really did. We tried getting into retail and we just couldn't— we couldn't keep up with the amount of orders and the volume that we were selling. So we, you know, just continued figuring out ways to make the product better and, you know, add more flavors to it, add more twists, add more cuts of meat to be able to, you know, scale, to be able to get to the masses.

I love it. Yeah, when you say kosher, I guess you mean like organic and also like delicious, right?

Um, so kosher is a, it's a certification. It's very similar to halal. We actually, we are actually halal as well. Um, it's just, it's a certification of the way we, we get the meat. So we buy the meat, it's already been, it's already kosher. Um, without getting into too many details of that, um, it comes it comes— when it gets to our facility, it's, you know, kosher meat, and then we process it just like everybody else does and sell it. And yeah.

And how does a guy go from finance to B2C? Were there some adaptations in your mindset required to be successful?

Definitely, definitely. Um, you know, being in finance, the, you know, every, every all the work that I did was rewarded instantly in regards to like commissions and things like that. So, you know, you close a deal and you get paid and it's, you know, your overhead is minimal, your marketing is minimal. It's, you know, it's really pay to play in the finance space. You know, you hustle and you find the right clients, the right, you know, people that are interested and you win at that day. But when it comes to, you know, consumer packaged goods, you know, zero experience with it. I've actually tried a few different, like, businesses on, on, uh, on Amazon business, a t-shirt brand, but never really put much effort into it. But, uh, pivoting over to this, you know, this, this, this, you know, this snack item, you know, the first day we sold like $2,000 worth of it, you know, just by putting it on my stat, on my WhatsApp status. And it just kicked off. And I said, you know, there's no, there's no turning back here. Um, you know, we got to really adjust. I got to figure it out. You know, there's no, there's no, you know, when it comes to a consumer package good, there's no real income. You know, everything's got to be dumped back in. Every dollar that you take off the table, you know, is, is money you could have spent to bring in more, to bring in more, um, more customers.

It seems though you've launched like all these financial agencies. It seems like these are way better to make more cash and make cash faster. But you also wanted to touch a physical product and see what it's like in, in B2C, right? And you financed yourself some B2C companies and you wanted to see what it's like to actually run these companies. Was that your thesis when starting these?

Was it what?

I'm sorry, your thesis.

Um, what do you mean by thesis?

Oh, your full plan, your scheme of things, your mindset.

This, this just, uh, this just, you know, came into my head. I'm very, you know, entrepreneurial driven. I like— I love business, I love new things. So, you know, I see an opportunity, you know, I'm fearless in that regard. So You know, being in the finance space and dealing with a lot of deals going bad and things going wrong, you know, I kind of am immune to it a little bit. So my risk appetite is kind of, you know, a little bit higher in regards to, you know, you're just taking on the risk. And, you know, it obviously took some capital injection to be able to get everything running. But right now, you know, it's bootstrapped and we're just selling. You know, we've done, you know, we're growing at this point. You know, we just partnered up with a co-manufacturer. We're growing 50% month over month. So right now it doesn't need any new cash, but obviously it's a completely different world and a different mindset from coming from finance.

Yeah. Or maybe you're successful right now, right? Which is like not the case with like pretty much 90-95% of B2C companies, especially in the first years. So maybe that's a bias, right? Because I started B2C from the get-go. I'm a marketing sales guy, incredibly well-versed at that. And it's a struggle. And I vowed never to return to B2C ever again. Right? Like some days I was in the green, some— most days I was in the red. Right. And we had to shut it down after some time. What's been your secret so far to be successful with that one? Any hacks on the go-to-market side of things, on the ads? Side of things? Do you also sell retail, right? Like, tell me your secrets.

So I think— I don't really think it's a secret. I think the first, the, the first thing you have to ask yourself before you start a brand is, is someone gonna like this, right? Is someone gonna be excited to see your product? And it's really, it's really simple. It's— I, I started it because I enjoyed the product, right? So I am, I am my own biggest customer. In a sense, right? So any decision that I make in regards to marketing, any decision in regards to the way we sell it, in regards to subscriptions and discounts and promotions, everything is the— is, is my vision, is how I put myself in the customer's shoes. And, um, in the customer's shoes, and, and then go and, um, and kind of feel like, okay, I'm gonna go through this selling process. I mean, sorry, the, the buying process of the website. Okay, what do I want to see? Do I want to see more, you know, about the brand? Do I want to see a million items? Am I coming to your website for just to browse, or am I coming to your website with specific intentions, right? So these are all like little changes that, that little adjustments that you continuously have to make, that you could just have to make when growing a brand. But to answer the question, the number one thing is that you the product has to be a good product, right? It has to be something that you can resonate with because otherwise you can never make adjustments. If it's something that you don't like, you know, you're not going to really adjust, you're not going to pivot. I could say one of our biggest, um, one of our biggest hacks that we had— we were, you know, this is, you know, really early on, um, you know, people saw our momentum. We were getting approached probably by 3, 4 different companies that have a lot of experience in this, and they wanted to invest, they wanted to take, you know, 20% of the company. And we were, we were talking to them, we were going back and forth. And one of the biggest tips that I learned really is like understanding the, the, the nature of a customer, right? And we realized that this is like one of our biggest tips of, you know, you have to be able to have a, you have your, your CAC obviously, right? And then you have to be able to cover it. And if your first purchase, you're getting a customer in and they're not coming back, you don't, you don't make money on the first purchase. Right? So if, and if, if they don't end up coming back, right, then that, that whole customer's, that whole customer's a waste, right? So what we've realized is that the customers that come on our website and try one item, right, we have right now 6, 6 different SKUs, um, and they come in and they try one item, right, the chances of them coming back was very, very low. And the reason for that is, you know, when a meat chip is something new right? It's not your jerky that you see everywhere. It does— nobody sells meat chips in retail nowhere. I haven't seen it. Um, and when you try it for the first time, it's weird. It's not weird, it's different, right? And you don't really fall in love with it. It's like, okay, interesting. And it's also not a cheap product, and you have to pay for shipping. So when you spend, you know, $15 on a bag plus $7 to ship it to you, you're like, okay, this was $22, I didn't love it. You know, maybe this is not for me. But if we have a minimum buy, and if you come on the website and you want to try it and you're committed, you buy 5 bags, the chances of coming back went up astronomical, up to like 40%. So that was one of our— I would say to anybody running a brand, that is the number one tip, is, you know, the customers have to have enough product to be able to fall in love with it. And if they're not going to commit to it, then it's not even worth the cost to bring them on board.

I did pretty much all of, all of this with my product and still failed.

What was your, what was your product?

It was the best, uh, nootropic, right? Like a supplement for the brain, right? Like, uh, like Qualia. Um, we did scientific studies, uh, about it. Uh, Health Canada approved. It's super good. Was for students back then. Then we created another one for a entrepreneurs. It was so good. It was the best supplement I ever took, right? Like to get energy and to increase my brain capacities. We sold multiple bottles, right? We upsold bottles, you know, like Russell Brunson style. So people went on a page, they bought the first bottle, then we upsold the second bottle at the lower cost. And even with that, right, like maybe the problem or one part of the problem was that I sold in Quebec. Quebec is like not the best market, I would say, to sell new products. Like, most people love their comfort zone, right? And that was a novel product back then, like buying a supplement to increase your brain capacity, right? But yeah, it felt— we— if I would have to do it again, I think I would take the retail route, right? Like, I'm incredibly good at cold email and I would just like email the shit out of a bunch of people, try to get my product in, uh, have probably 8 stores out of 10 reject me off their shelves right after some time, and stay out of 2, use these 2 as case studies, and try to scale from there.

I would say my biggest— my opinion on in general in supplements is that, you know, there's supplements, there's, there's a million different companies, and in order to educate the customer of what your product is costs so much money just to educate them. And then when you do educate them, right, you're buying— they're gonna— they'll try it. And I mean, I've taken supplements, you know, I still take supplements. Do I, do I take it and I'm like, wow, I feel so much better? I don't have like an instant gratification when I take a supplement, right? So it's something like, I, in the back of my mind, I believe that it's good for me. But in order for me to buy your product versus somebody else's, right, what would I really need to be educated on why it's better? And even if you're going to educate me you know, what do I really know about like the science behind it, right? It's a very— it's a complex way to educate a customer, and also to— it's a very expensive way to, to, to, to, to, for some, to convince somebody to come to you versus come to somebody else. So, you know, in a packaged good, you know, they got to know what it is in 2 seconds, right? The hero image has got to be simple, like on your website. It's got to be simple, it's got to be, you know, straight to the point, and you got to look at it people have no attention span, right? So they got to look at it, know what it is, and be interested all within a second. Otherwise, you know, they're just browsing, especially on social media. Like, they're just scrolling through reels. If you don't have them hooked in right away, you're on to the next, and you paid for that view, right? You paid for those eyeballs.

Yeah, no, it was a genius strategy back then. So we didn't have like direct competitors, right? Because All supplements were scattered back, back then. You had to buy one supplement that is ginkgo biloba, another that is caffeine, another that is bacopa. We took like all these ingredients and placed it into one capsule, right? And then the feeling part is great that you mentioned because normal supplements, you don't feel a thing, right? Like if you take magnesium, for example, right, you don't feel anything. You might sleep better. If you take creatine, you'll feel something, right? If you take caffeine, you'll feel something. So we had a very strong dose of caffeine inside our product. Sorry, I have something in my throat. I think we approached it with a very smart strategy back then. It was like targeting students, right? So it was a Facebook strategy. Campus per campus, right? And the outcome was like pretty smart. It was like increase your grades, right? We couldn't mention some specific claims, right? Because we're regulated by Health Canada, but it's, so we couldn't say like, oh, you'll be smarter, but we could say like, you'll have better focus on your test, right? And the name of the product had GPA in it, right? Like the goal is to get a better GPA., when you're in college or when you're in uni level. So we did it all right. Um, and maybe the problem, like you said, is we were too early. Uh, we had to educate people on these things, right? Because people before tests, it was like, just study, study, study, maybe get some good sleep, get some, get some good nutrition, right? It was a novel thing to actually take, um take product before your test. People were taking Adderall back then, right?

Uh, yeah, it's, uh, it's fun at that time in the office, but when I— what the day was over, it was, uh, the comedowns were brutal.

Oh yeah, dude. Uh, and sleep, right? Like, I would affect your sleep in your mind, and it's like amphetamines, right? So it's pretty heavy for young brains. So we were playing the alternative to that. So we did all the Genius Play, dude. And it's sad because I really like that product. Do you know the company Onnit by Aubrey Marcus? Yeah, I still have their supplements. AlphaBrain.

I've heard of it.

Yeah, yeah. Aubrey was like probably one of the only guys that were super successful in that space. He had a billion-dollar exit. I think he did something smart. He partnered up with Joe Rogan, right? That was fucking genius. Do you have like—

that, that is, that is definitely a good strategy of, you know, doing, you know, finding a, you know, if you, if you're finding the person that has the eyeballs and you, you create the products for them, that is something that is on my, uh, it's on my radar actually.

Are you planning— yeah, are you planning to do something like that, like to partner up with the Liver King or something?

So, um, right now we're, we're, you know, our biggest hurdle is production. You know, I can't keep up. Um, we're— we doubled production over the past couple months, um, and we're going to be tripling in September. We're expecting a couple new machines. So right now we're just doing everything, you know, my marketing guy goes around the street, gives out, gives out, um, gives out, um gives out the product to people to try it and, uh, and, you know, just gets live reviews. And I think a product like that, like I said earlier, with instant gratification, you see people love it, you know, it's something that people love to eat healthy, it's something interesting, you know, they'll give it a shot.

Dude, you should partner up with the Liver King and make liver chips.

Liver chips, we thought about it. The organs are tough, it's tough to source, it's tough to source. And I can only imagine, like, liver already as it is doesn't doesn't have the best taste unless it's like really spiced well and really covered up. I can only imagine what it would taste like, you know, dehydrated with nothing in it. I wouldn't even know. Maybe, maybe.

Yeah, just kidding. Uh, we had a question from the audience. Uh, is your plan to stay D2C or make a shift in Whole Foods, Aldi, Costco?

So we definitely want to get into, uh, into retail. Um, but you know, these, these companies, they really need a lot of value. And they really, they expect a lot of margin as well. So the, the problem with Whole Foods is, I mean, it's great for, for the eyes, but if you have a limited amount of, uh, of product, you know, and if you're, you're not making any money on it by giving it to Whole Foods, um, you know, you might— we're, you know, we're going to kind of save that to when we have excess, excess, um, product. So it's definitely coming. We're in the local stores here. Um, but I could— I would say that's a little bit far out to be able to have enough product to be able to go there.

I would see it for you though, because your moat is like your financial skills, right? And it takes deep financing to get on their shelves, and I think your background would be the best for that.

Yeah, no, I think we— I mean, if there's products, we'll get there, right? Where, you know, every brand you have to be able to have, you know, have conversations every day about pricing to really— it's really, it's not about what the dollar says on the website or what it sells in the store. It's about the margin that you're getting it for, right, in order to be able to be a profitable business, right? So, you know, I always looked at before I got into this business, one of the first, one of the, one of the things I, you know, I was before I got this was like, okay, they sell a product for $15.99 and there's not much to it. This was their number, right? But then you start like learning about, you know, in order to be a lot of brands lose money, and they can't get out of the— get out of their— they can't get out of their own way because their pricing structure is wrong, right? If you're, if you're not making a specific margin, right, on the product, which I think should be about 45%, um, minimum, you're, you're, you're right off the bat starting at a wrong— on the wrong leg, right? You're always going to be catching up. You're going to be pushing more product you'll be making more product than you— than you're never gonna have profits to invest into the actual structure of the business. Um, you know, we're looking to bring production back in-house so we have more control over it. We're looking for, you know, potentially we're looking for different, um, ways to be able to grow that margin so that we could scale properly. We do— like, the last thing we need is, is to be able to have tons of product but not making any money. Like, we don't want any debt, we don't want any, any, you know, you know, any things like that.

And tell me a bit more why production is a bottleneck right now. What's, uh, what's this about?

So production is a, is a, it's, it's a, it's a high— in order to create the item, it takes about 10 hours, um, and they're just limited amount of— and, and when it's, it's, it's cooking, it takes up space, right? So you put there's a limited amount of oven space and you have to leave it there for 10 hours, right? So you need more oven space, you need a bigger, you know, more electric, right? And it's— you're using these monster machines to be able to create the product. They're just, you know, to any, any growth that you're going to do, you requires a big investment to be able to make more product. So we sell and then we're doing like in increments, like our sales go, we try to bring it up to, you know, from, from $2,500 a day to $5,000 a day, $10,000 a day, to be able to, to, to scale appropriately.

So what are your top goals for this year, like your top 3?

The goal by the end of this year is to be able to hit, um, to be able to produce about $400,000 worth of product a month. Festival worth of sale?

400K. I'm sorry, 400K worth of product a month and sell what percentage of that? All of it.

Well, we think— I mean, we, you know, thank God we don't have any, we don't have any, any issues selling. I mean, people want this product. We're also one of the only meat chip companies that are USDA as well. Um, we're, we're USDA product as well as, you know, I guess mentioned kosher and halal. So we have, we have zero competition in this, in this space, uh, due to the complexity of it to make it. You know, it takes my, you know, my, my partner that deals with the recipe, he's every day is tweaking it a little bit because every cow is different, right? Every, every piece of meat that you buy is a little different. So we're constantly adjusting as well as, you know, there's a lot of factors such as like the weather, the, the when it's hot out, the product doesn't— when it, when it's humid outside, the product doesn't it doesn't have the same crunch, right? So, you know, you're constantly adjusting, changing the bags, changing the way that we are, you know, in order to give our customers the best product.

And what's the plan after? So $400K, right, that would be a $5-6M business a year. What's the plan after that? Keep scaling or eventually sell?

Um, uh, no plan. No plan as of now. It's just let's see what we can do. Um, I'm always open to listening to ideas or things like that. I wouldn't— I wouldn't— I don't have a plan. It's let me sell.

It's— it's—

the plan is let me sell out every day and sell more and get more media, get more attention, get more, more people to love the product, you know, make sure the product is good every day, you know.

I love it, dude.

Consistency really is— I would say consistency is really the biggest plan.

Where can people find out more about you, Mike?

Um, I mean, I have my little, my little website that I have. I haven't done a lot of these, these kind of interviews before, so, uh, um, you know, just trying to build a, build a brand for myself a little bit.

Yeah, it's primalkrisp.com. So that was, uh, Michael and Charles