Nicole Vereczkey - Founder of Etelka

Almost. Yeah, we're live. Welcome to another Founder Wisdom podcast. We have Nicole Varekzi with us. Hoping I'm pronouncing that right. She's the founder at Telka. She's an ex-Bain and MIT Sloan in New York City. Telka is an interesting company. It's a cottage cream, 18 grams of protein and no curds, no tang. Looks pretty delicious. I wish I could Try it. I guess I will when I'll be in the U.S. So welcome to the pod, Nikki. Tell us a bit more about yourself.

Hi, thank you for having us. Yeah, well, you covered a little bit of my background today, coming to you from New York, which is where I grew up, but grew up kind of really close to my family over in Hungary and spent a lot of time there as well, which is kind of the cultural backbone of Atelka. It is kind of the beloved Crème Turo that we see over on shelves there, whether it's in Germany, Austria, or Hungary, kind of a beloved European product. But before I started Atelka, did some corporate jobs here in New York, as you mentioned, and spent 2 years in Boston getting my MBA. And that's really where I had the idea for Atelka. And one night I kind of woke up and just couldn't put it down. Like, I was obsessed with the idea and bringing it to market and felt like there was Like finally this product market fit here in the US for, again, something that I grew up with and was kind of an established category over in Europe.

How does one go from banking to cottage cheese or cream, shall I say?

There's definitely many pathways. I think that's the beauty of kind of an MBA environment is you see so many people going to pivot. They're going to kind of break the mold and get a little uncomfortable and do those things. And that was a really great environment to find myself in. Candidly, I went to business school not knowing what I was going to pivot into, but I had my mindset on maybe something more corporate, kind of moving to a more strategy or consulting role from banking. But there's so many resources that are available to founders within these MBA programs. So it was really the encouraging words of friends. My good friend Carolina was like, you need to take advantage of all these resources available to you at Sloan, and very quickly made closer friendships with folks that had gone to Sloan to start companies. And so initially was just kind of like curious and approaching just entrepreneurship almost like a class project was like, what would it look like to start a company? What are the questions I should be asking? How should I take advantage of this, again, amazing environment that I'm in, but as a time-boxed environment, only 2 years. And I was kind of out in the streets of New York and saw cottage cheese ice cream. And that was like the aha moment. So I ran back to campus after my trip to New York and started working on Atelka. So it was really a little bit more spontaneous than perhaps some of the other folks that I was working alongside of in the Entrepreneurship Center in MIT Sloan who went to school with an idea and wanted to use the resources to build something that they had already come up with. Mine was a little bit more of a, again, a spontaneous journey.

What's Turo? And is there like a demand for that? Like, if I don't know what that is, like, there's education to be done about the product, right? Like, tell us a bit more.

For sure. Education is a huge part of what we think about on like the strategy and marketing side today at Atelka. I think there was definitely this moment when I was building the company of like, what do we call it? Do we call it Túró and be like pretty genuine and authentic to the Hungarian heritage? Do we call it quark, which is the German word for it? And we see sometimes in the US brands call it quark and there's not many big brands. They're very like artisanal kind of cheesemakers that will make a quark that we see here today. It's a bigger country, more people speak German than Hungarian. And in either case, I kind of didn't like either. And I didn't want to call it cottage cheese either because that also wasn't correct. And so it was this moment of like, okay, what do we call it? Had this again kind of spontaneous kind of conversation where like cottage cream seems to describe what this is, right? Without— it's assigning English words to something that doesn't otherwise have an English word to it. And on the side of the pack, we we call out the European words for it. So quark, topfin, turo, whether it's the Austrian, German, Hungarian, Polish. And that was kind of the nice compromise, right? Because we did want to not scare away your American consumer, but we really wanted to honor the heritage and the background of the product. And cottage cream with kind of the the call out on the side to its authentic names felt like that right compromise. And then the need for it. Was ultimately the driver for the actual founding of the company for me, right? I was seeing so many people take cottage cheese online and try and blend it to make recipes. They're taking immersion blenders into like their cup of good culture, like straight into it in videos. And that was that kind of aha moment for me that cottage cheese was, had a problem that customers didn't really have a solution for besides, again, getting their blender in there. And the Turo that I grew up with was always smooth. And so I was like, oh my God, either there's finally a product market fit and this ability to kind of be this cultural ambassador for this product, but again, meet Americans where they're ready for it. And Americans are ready for it in kind of this smooth forward, high protein forward marketing version of it. And I can do that. Like we can figure that out. So that was kind of the balance of marketing terms and figuring out where we wanted to position it on shelf.

And isn't your slogan like better than Greek yogurt? Like, isn't that your one-liner?

My one-liner is the European cousin of cottage cheese or the smoother cousin of cottage cheese. We do often get questions about like how we compare to Greek yogurt or cottage cheese or like a labneh sometimes if people are a little bit more educated on different products in dairy. And obviously I can dive into those here today as well. But yeah, I'm always kind of helping people understand how Etelka compares to what they're already familiar with. Because, right, it's a new product. They're going to anchor on things that they're already familiar with. And I think one of my favorite stories is apparently when Fage was introducing Americans to Greek yogurt. I think we forget that, A, that was 20 years ago. Like, this is such a new category in the grand scheme of things. But when they were introducing it to people, the texture was such a differentiator compared to like a Danone or like a very thin Swiss-style yogurt, as we would call it, that when people ate it, they were like, oh my God, this is like sour cream. And that was like the initial reaction. And I think people don't really know that because we obviously have grown up— there's like a whole new generation that has always had Greek yogurt on shelves here in the US. But there's always these kind of questions. And as a brand, you have to kind of balance anchoring against a product and treating people how it's, and teaching people how it's different, but then also not having your marketing lead with what it's not. Like, I don't want to come out and see like, we're not yogurt, we're not tangy, we're not like, I want to highlight what we are and that's high protein and smooth and all the benefits of it instead of this negative anchoring.

Interesting. And how's it going so far? Do you sell on retail? I don't see commerce on the website. What's the next big thing, the next priority?

Yeah, so perishable, highly expiring like food products is definitely an interesting one. We obviously get a lot of questions about DTC and the closest we'll ever get to a DTC is like your grocery boxes. So partners like FreshDirect, Hungryroot, Farm to People here in New York, these kind of amazing direct-to-your-door grocery boxes, but that's still a retail partner. And from— My team's viewpoint, still a B2B sale, right? Like we're not ever gonna drop ship on TikTok Shop or Amazon, or at least not unless they start running refrigerated trucks, just because it's so hard to keep the product fresh and in good condition. So with that said, our go-to-market strategy and our rollouts are largely with these amazing retail partners, whether they're boxes or traditional kind of shelves in your local grocery store. We started in New York. We launched right at the end of June, and we're not even 3 months on shelf, and we're kind of on 100 shelves. A few of those are larger grocery stores that can contribute 10 to 20 doors for us. Some of them are like one-off accounts, little small, more gallery kind of like bespoke retailers. I think like your Happier Grocers, your Meadowlanes. And we're obviously expanding outside New York to hit those numbers. So in New York, we're in places like Citarella, Fairway, again, Happier, Meadowlane. We have trucks on their way to Seattle to open Town and Country and to Dallas to open Central Market. And these are really like your premium kind of product discovery, really championing new insurgent brands kind of local grocery stores. And those are the types of partners we want to kind of lean on to help us open new markets. So, I'll be flying down to Texas and doing those like in-store grocery demos. We're working with Some awesome brands even outside the grocery store, I think, like fitness studios, like local cafes and pop-ups. There's this awesome trail apparently that runs through Dallas that a lot of people go on runs at. So we're trying to think about how we can do pop-ups there to really drive people to store. But yeah, we're really dependent on our retail partners. And even before we get to our retail partners, we're really dependent on our distribution partners. Those are the people that run the warehouses and the refrigerated trucks and connect us to our retailers. It's a very different world compared to DTC and I'm often jealous of the clothing brands and the granola brands that can stick it in a UPS box and send it to you.

Yeah, yeah, for sure. And I read that your favorite GTM initiative was what, trade shows? Isn't that because your number one strategy is to have people taste the product and like other than, yeah, market it with words, you can just simply have them taste and try and sell them on the taste at first because it's such a new product.

Exactly. You're getting all the decision makers in one convention room floor, right? These trade shows are designed for grocery store buyers or distributors to come and taste new products. They're constantly trying to think about their assortment to maximize the revenue of their shelves if you're thinking about it through a financial landscape, but also creating that really cool discovery environment for their customers. They're competing against other grocery stores, bigger chains, like they're incentivized to come and really meet the newer brands like Atelka. And so trade shows are a great environment. And yes, you pay pretty high numbers to get a table and to be a part of these trade shows. But considering how many decision makers and how many doors you can open in those environments, they're totally worth it to us. And that's been my strategy since day one, and it's worked out well. I mean, that that contributed to our growth and being on 100+ shelves in 3 months' time and in multiple kind of regions across the US in such a short amount of time. But yeah, it's exactly that. You want people to sample it. The amount of times I'm like running to UPS with like these little insulated boxes with ice packs, hoping that the samples arrive in good condition so someone can taste it and like start this buying process for us. Like it's a little messy, whatever. I much so prefer a trade show where I can give out the sample myself, answer any questions myself, Food is intimate, right? Like it's so many of our memories, whether it's like around your grandmother's breakfast table or that amazing restaurant you celebrate your anniversary at. It's a very kind of memory-rich, immersive sensory experience. And so being the founder and being able to serve you your first taste of Etelka versus it coming out of some weird box that UPS may or may not have shaken up a bunch of times before it got to you is also really important to me as a founder. And so yeah, trade shows for so many reasons are truly excellent.

Interesting. Yeah, I'd probably do like also like a podcast strategy just to get like a bunch of your ICPs on a call first, right? Get to know you. Probably like some quick video just to use the right words and right audiovisuals to describe like what it feels like and what it tastes. And then after that, like, yeah, send sample at scale in a predictable way, right? Like if UPS is not predictable, maybe there's another option, who knows? But I mean, it's a hard game. It's passion product as well. It's like what you grew up on, right? It has a special meaning to you and you want to share it with the world. So it's pretty cool. And it takes guts to do that, right? You could have launched like, I don't know, a B2B AI software company like all of us, right? And you go conservative. Me, I started my first business was DTC as well, right? And it was so hard. I vowed to never start one again, but who knows? If I would have to do it again, I'd go retail first for sure. We'd have some e-commerce. I'm not sure if you've heard about like that coconut yogurt company. Apparently they do it very well. It's like you buy in bulk, right? What are they called again?

Yeah. I believe you're talking about Coconut Cult. They're awesome. They're a great product as well.

Yes. How do they do it? Like, how is it? Is it just that they raise massive funding and they really cracked the part of shipping the yogurt like cold and perfect? Like how did they do it?

Well, if someone from Coconut Cult ends up watching this, I hope they write me an email and tell me how they do it. But if I had to guess, not knowing more, I guess they started the DTC model that they have kind of with UPS once they had really sticky customers, customers that were going to the store every week and picking up the same product because it— because of the benefits. It was a part of their morning routine, or maybe they have it as like a dessert sub, like a healthy dessert sub instead. My guess is that the brand had conviction that that demand had gotten to that point because their marketing efforts, because of their product, because the brand was now a household name. And only then did they start to do DTC. I think starting DTC when you're as small as Atalpa is today is hard because you don't have that repeat subscription buyer yet. Hopefully that comes soon. We more so have people in that discovery phase getting obsessed with Ateljé for the first time, searching for it on shelves and stuff like that. Hopefully with time we can actually build the confidence to do that DTC model. But I think it takes, and it's a compliment to Coconut Cult, I think it takes a really sticky customer for you to say, you know what, despite the cold chain, despite the perishability, Despite the headache of working with like a UPS FedEx box when you're in our refrigerated category, we're still going to do it because we know that customers are going to want that box showing up at their door and they're going to want the volume.

I think it's mostly funding, right? Like raising gigantic quantities of capital because they're probably losing money on that, right? But they'll do anything to just get the product in customers' hand and have them try it at once. On the hopes that I don't know one out of ten will come back again and again and create super fans.

Idaho, yeah, I'd be curious. We definitely—I mean, I can tell you this: my little sample box that fits four single serves. So I put in two vanilla and two plain little single serve 5.3 ounce cups. It weighs less than five pounds. It'll have two ice packs on both sides and is an insulated cardboard box for me to send that and. hope that it arrives cold and in good condition, it means I'm sending it overnight UPS. If it's going anywhere on the West Coast from New York, it is $64. So for me to just like send it to a buyer that will hopefully place an order for many stores, it's like $64 in shipping alone. Obviously I'm happy to do that, to open accounts to facilitate this, but the idea of doing that for like a single household with like Call it mom, dad, and 2 kids. They're not ordering enough to offset their $64 UPS charge, right? So it's a hard game to play. It's definitely a hard game to play.

Right. And you raised capital, right? Like with your investment banking background, did that help? Like, is that the only way like you can start and scale a DTC nowadays or you can still bootstrap it?

You can definitely bootstrap. There's many founders in New York as well that are bootstrapping. I think I raised capital not from my banking days. It was actually someone that I got connected to through my MIT Sloan times and is a family office that has a lot of experience in consumer. So it was a very friendly raise in terms of these people are in my network and really believed in the product as well as the founding team. And so, was able to kind of bring them in early pre-revenue, and they really just believed in the product and were great partners, right? So, I got lucky in that I didn't have to go out and shop around the product when there was already a need. I almost had my investors almost be my cheerleader box when I was very, very early days and kind of see the effort that I put into to get to a point where fundraising was on the agenda because we were looking at investing in inventory, whether that was packaging or warehousing relationships, or just like fronting big sample runs and inventory runs before we had orders from retailers, right? So really to take the edge off of those capital needs. But I think anyone can do it at any stage. I know people that bootstrapped longer than I did. I know people that invested right off the bat when it was purely a concept, no samples had ever been made, there wasn't work on the R&D, right? So we see a massive kind of range of when founders look to sell what is ultimately the most valuable thing to them, their equity, in exchange for capital. And we call it working capital for a reason, right? Because that's what you can actually like use to get the product off the ground. And I think it's a very personal choice for the founder to decide when they want to pull that trigger. And then I think there's also A, more access to capital these days, and then B, we see alternatives starting to enter the space. So particularly relevant to CPG brands is like the emergence of PO financing, which wasn't really there prior. So you can have this massive order from, let's say, Target, and you have to front all your inventory. And this is where like CPG gets interesting 'cause it's like these cash conversion cycle businesses. And that's the hardest part of keeping your company kind of financially Soluble, because you have to front all this inventory, you get paid for it way later. And so how do you kind of manage that gap? And so you see the PO financing world kind of starting to explode where you can kind of submit to them like, here's the order from Target, please help me have access to capital so I can make it and get paid. And they obviously take a percent of that financing period. So that is also a way that people are pushing fundraising way down the line and they're able to kind of access financing in lieu of selling equity. So that's something that I see a lot more founders kind of tap into because they're bullish on their product. They think that they can make it work and they're willing to take the debt and a little bit of risk in order to keep their equity. So there's, there's so many paths in this world. There's no right answer. I mean, there's wrong answers, but there's no right answer.

Yeah. Well, it's hard, right? It's like no one can really predict the future and there's always new ways of doing things. So you gotta A/B test as quick as you can, my opinion, to make it. How long did it take you to launch? Like doing the packaging and the formula and making sure that the product was perfect?

The timelines I seem to give is like I had the idea in business school, but it was business school where I felt like I was in a bubble. It wasn't really like my full-time commitment. I'd say October of last year is really where I said I'm doing this. We're gonna figure this out. Um, that's when we really put money on the table with our manufacturer to do our prototypes and our sample runs. That's when we start to look into like, what does it take to get on shelf? Who do we have to talk to at the state of Pennsylvania to get our nutrition label and to be approved? What certifications do we wanna make on pack? Do we have to do like, do we wanna do gluten-free? Do we wanna do kosher? What do these look like? What are these timelines? Starting to work with a designer exactly on packaging and see said. And we didn't hit shelves until June. We used Fancy Food Show, which is a trade show that is here in New York and one of the bigger in the industry, to really launch and market. And I'd say some timelines, definitely, you could kind of like whip through them and you could make kind of big changes to your company in even just like a week's time. And some timelines, oh my God, they were cascading and dominoing and absolutely horrible. Like I remember packaging, they told me that it was like a 10-week lead time. So in my head I was like, okay, from working with Monica, my designer who's amazing, to being like product in hand and at the factory and we're filling cottage cream into the cup, it's 10 weeks. Not really, because you had to like submit— they— you submit a file and it has to get warped because again it has to wrap around a cylinder. Before that you get the PA, state of PA has to review it and like go, you go back and forth on edits about any claims you're making so that everything's above board. And like, obviously you don't want to, um, like make any claims that are going to be confusing to consumers or God forbid, like misleading or incorrect. And so there's all that work that kind of sits before the 10-week timeline. So as a founder, it was quite funny. Like it was definitely one of my bigger learning experiences of like appreciate a cascading timeline. And just because someone tells you it takes 10 weeks, Like, where do you need to be at the start of that 10 weeks? Because you might not actually be at the start line. You might be like around the block and you need to do a lot of work before you even get to the start line of the 10 weeks. So it took time and that's, this spring was definitely a lot of learning and work behind the scenes. And then once we've been on shelf, it's, things have moved a lot faster. You obviously get a lot more attention. People are trying it. Retailers get jealous. They wanna bring you in. Like once you're out there, things move a lot faster. I mean, we also have 65-day shelf life. We have to move fast. We have to constantly be manufacturing, constantly iterating, constantly moving product because every day counts.

And the process, is it like unique? Because it seems you outsource it to someone else, right? But it seems there's not a lot of Italki-ish products out there. So what's unique about the production? Did they have to modify? Some stuff in their processes so that you could make your product? Tell me a bit more about the production itself.

Yeah, so the recipe, it's distinct from other products that you see in the dairy case because it kind of has like this hybrid method, right? So we use cheese cultures and cheese fermentation. The like dairy science kind of nerdy part of this is like cheese cultures are mesophilic, which means that they had those like butterier, more savory kind of notes. They create a creamier, thicker product, whereas a yogurt culture thermophilic is almost like that gel-like consistency, those tart acidic flavors. So those are like the bacteria when they're eating the lactose in the milk, kind of the products that they create. And mesophilic is a much slower, lower temperature culturing period to really make sure that those bacteria in an environment where they're active and creating the product that you want in that period of activity that you want, and then you have to cut it off. Obviously, you don't want to overculture your product. And thermophilic is super high temperatures, um, for a really short period of time. That creates that really bright acidity in a yogurt compared to a cheese. Um, and so cottage cream is a cheese. We use cheese cultures that much longer time, um, at much lower temperatures. But unlike a cottage cheese, we don't cut the product into a bunch of small curds and apply a dressing and salt the product as part of that process. We kind of keep it as one massive 4,000-gallon curd, and then we strain it through basically like a really mechanical cheesecloth, basically like thousands of cheesecloths, and it passes through. And that creates the thickness of the product. We're taking out the water and trying to keep in as much of the protein as possible. So straining can also get pretty interesting because how are you straining will determine not just the thickness and the texture of the product, it'll also determine how much of the protein also gets passed through. So there's 2 proteins in milk, whey and casein. A lot of the straining methods actually remove a lot of the whey, so you only have casein. And so cottage cream's method keeps both of those proteins in. And that's why we see a little bit of a protein bump on an Atelco's product versus either a cottage cheese or a yogurt, because we're kind of taking some of the best practices of all these different products in the dairy case and coming together in this like super smooth but protein-dense format. And this is how Europeans have made it for centuries. Obviously, they were using cheesecloths and hand-pressing it in more artisanal methods. We're making it with the technology available to us today and here in the US. But all the machinery and all our cultures are brought in from European companies. And the dairy we source local because we want that to be as fresh as possible. And it's this awesome marrying of things. But yeah, that process is quite unique and finding a manufacturer that understood it was really important to me, a partner that understood the science, but also like the product and the authenticity and what it should taste like, kind of had tried it in Europe or had a European background themselves. Like, these are all really important to me in the process. And just given how scientific and technical this is, and if you're going to produce at scale, we knew right off the bat that we weren't going to be in a commercial kitchen or making this ourselves. There's so much attention on Temperature, pH. This is dairy. You have to pasteurize it. You want it to be safe for your customers. This was something that we really wanted to trust in a manufacturer on. And so all these little things informed our search. And at the end of the day, it really became clear that like who our partner was going to be because there was one clear winner when you factored in all these quantitative and qualitative kind of pieces to the puzzle.

Sounds complicated. Yeah, that's your moat, I guess, right? Like no one would want to start that. What are your main goals for this year? What do you want to accomplish?

I'd say I'd really love to see like these new markets that we're opening and where I'm not present do really well, right? Like, it's awesome being in New York and this being our first market because like when someone needs a restock, like If I can't get a truck there, like I can rent a little, I've done it before, a refrigerated van and drive product there. Like you get real scrappy real fast. And so it's a good forcing function. It's like basically teaching a parent to like empty nest, right? Like when the product's in a market away from me, like, can we really rely on our distribution? Can we really rely on content creators to drive the message? Because I can't be at every sampling event and I can't be at every brand pop-up? Can we really like see this work kind of outside of my team's immediate reach? Because we are a physical product, our immediate reach has been really crucial to getting to where we are today. Like sometimes you need to step in and move the product along its supply chain. And so we can't just hit send over an email and it's not a deliverable that is within like the software world. So I think for me, I'm— I really— it's not even new markets at this point. I've seen superseded kind of the growth that I thought I would in such a short amount of time. It's really more in the execution piece. The goal would be really seeing great numbers out of Texas and the Pacific Northwest, seeing reorders kind of tickle through, seeing our followers on Instagram come from those markets, seeing creators talk about us in those markets, really seeing kind of the product live outside of New York because, because of these great partners, because of Town& Country and Central Market bringing it to these new communities. Got it.

Well, thanks for being on, Nikki. Where can people find out more about you?

You can definitely follow us on Instagram. We try our best to share parts of the journey and where we're going to be in terms of events. You'll see a lot of Texas content come out next week. Our website is a little bit more of like about the product itself and the nutrition labels and stuff like that. We'll also update our store locator. Right now it's just a Google Maps that I update myself, but we'll be building that out so you can see what stores we're at in what regions. And yeah, I mean, I always invite people to send me an email, always happy to chat and share more about the journey. But yeah, I think our Instagram is a good place to start.

That's Nikki and Charles for another Founder Wisdom.