The Sudden Pivot Towards Success | Annie Slabotsky and Morgan Lerner | GoNanas — Honest Ecommerce

You are always evaluating or should be always evaluating your strategy with literally everything. We're like, is this still working? Great. Is it not? Okay, what else should we try?

Welcome to Honest Ecommerce, a podcast dedicated to cutting through the BS and finding actionable advice for online store owners. I'm your host, Chase Clymer, and I believe running a direct-to-consumer brand does not have to be complicated or a guessing game. On this podcast, we interview founders and experts who are putting in the work and creating real results. I also share my own insights from running our top Shopify consultancy, Electric Eye. We cut the fluff in favor of facts to help you grow your e-commerce business. Let's get on with the show. Hey everybody, welcome back to another episode of Honest Ecommerce. Today I'm joined not by one but two amazing co-founders of GoNanas, Anne Schlabatsky and Morgan Lerner. Welcome to the show.

Thanks for having us, Chase.

I'm excited to chat. So for those that are unaware about Gonanas, can you kind of let me know and let them know the types of products you guys are currently selling?

Yes. So we are a banana bread mix company. We sell all different kinds of flavors. And the best part is they're all allergen-free, meaning vegan, gluten-free, and nut-free, and everyone can have them. So you can't tell that they're any of those things, but the goal is that everyone can have them. So banana bread is our shtick.

That's amazing. So where did the idea to make a banana bread like this, a banana bread mix like this, come from?

It's a long-winded story. I'll try and keep it brief. So Morgan and I were actually neighbors in our freshman dorms at the University of Michigan, and we really did bond over banana bread. Her mimi had a famous recipe, my mom did. And we felt like there were no good options for healthy and tasty desserts on campus. So we decided that we were going to change that. We first came out with baked banana bread loaves that we'd sell to sororities and fraternities and eventually food service. And then COVID was really what pushed us to sell the mixes because everybody was stuck at home and food service really took a dive. So that change was definitely for the best.

Yeah, that's definitely an amazing pivot. I'm just going to assume that the mix is a lot more shelf-stable as well.

Oh yeah. 2 years versus 5 days. So when we made the mixes, we realized we had an actually scalable business on our hands. And then it was also convenient timing because banana bread was blowing up during COVID Everyone was at home. Stuck at home baking. So those really, really took off.

Absolutely. All right, let's dive in a bit more there, right? So you start a business and it's typical, we're selling the banana bread product, the actual loaves, and you pivot and you as kind of in response to the pandemic and what's going on there, did you just dive all into the mixes or did you do any sort of validation within that kind of phase of the business?

That's a great question. So we had both lines going, but then the shipping was real challenge with COVID So we realized that the ready-made product, the loaves, were not scalable. And then the response to the mixes, that's where we got the market validation, the sales going viral on social media, the news channel coming after us and us getting approached by a national retailer. So there were some signs that said, okay, this is really where the opportunity is.

How long did it take to kind of kill the first product line and how did that feel?

We definitely like struggled to let it go. We tried every which way to make it work just to give a little more clarity during COVID Well, let's back up a second. Before COVID you could ship things overnight or 2 days via FedEx or UPS, but during COVID you could pay for overnight or 2-day shipping and it could arrive a week later. So we kept trying to send this perishable product via UPS or FedEx, and then it would arrive a week later, spoiled, molding, you name it, we experienced it. So we really did a lot of R&D to see like, is there a way that we can get this product to people successfully? And at the end of the day, there wasn't. And we sort of thought, okay, God willing, one day this pandemic is going to end. Maybe at that point we will pick back up. This product line. But those few years later, we were like, there's no way we're doing this. The mixes had become so successful that it just didn't make sense. I think maybe one day we'll try and make a shelf-stable version of those ready-made loaves. But definitely a 5-day shelf-life food service product is just not in the cards for us.

Yeah, I can, I can only imagine. And obviously these days hindsight's 20/20 there and it's like we, Maybe we should have done that a little bit earlier.

Yeah.

Oh yeah, we knew nothing.

So you've got this product, the ready-made mixes, and you're getting a great reaction from the market. You're getting some viral kind of stuff out there with social. You're getting approached by news channels, you're getting approached by wholesalers. How do you capitalize on this traction? Where did you guys spend your energy? Did you invest any money into growing the business at this point?

Yeah. So kind of around the time that this was all happening, we— this was a side hustle. We had full-time jobs. So when this started happening and this was after 4 or 5 years of going after it as a passion and still, you know, a small business. So we finally took that leap to quit our jobs and go full-time. And I think that was the big shift. And we bootstrapped up until the end of 2022. So we exceeded $1 million all bootstrapped and that was just Annie and I were working our little tushes off because we finally had an opportunity to grow it.

Absolutely. Now, was the model more wholesale with partners? Obviously, you guys are in Whole Foods and Target these days, or was it more direct-to-consumer through kind of your own business? You know, where, where did you guys find the most traction?

So we definitely, with the mix business, it was all direct-to-consumer to start. We had a few direct customers. So shortly after we came out with the mixes, Nordstrom Rack actually approached us and was like, banana bread is blowing up right now. And we saw your packaging online and loved it. Like, can we carry your product? That was honestly the precipice for us taking the leap to do this full-time. But in terms of a sales split, it was like 90% direct-to-consumer. And Morgan and I would— we literally had a whiteboard and we'd call like independent retailers and we'd, you know, try and have competitions who could call more in a day to dip our toe into retail because it's such an expensive channel and see that proof of concept before we started pitching to the Whole Foods and Targets of the world.

Yeah, that's the best idea I've heard on this podcast as far as retail goes. One is making it a challenge between your co-founders, but just getting the reps in, learning how to talk the language, talk about the product, find out what these buyers are into. That's just Sales 101. And it's one of those things where you just have to do the reps. And that's awesome. Everyone listening, if you have a, you know, a CPG brand and you're trying to get into retail, I would strongly suggest doing something like that. Any tips you guys picked up from that kind of honestly non-scalable part of trying to get into retail?

Yeah, I think you learn the nuances of your pitch. So that was the biggest thing. We like really refined our pitch and also figured out where in the stores we would do best. So right now at scale, our strategy is to be in produce next to the bananas because you need real bananas to make our mixes. And that's something we tested out at a small scale with these retailers to kind of work through the nuances. But that's also kind of the approach we took with everything in our business at that time because we had so little money and we were just trying to figure things out. So that was kind of the, uh, you know, the scrappy approach we took to everything. That also applied to other areas of our business.

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You know, it's been such an evolution because D2C is still such a big part of our business and it changes like every few months. So things that have always been at the core of what drives our direct-to-consumer revenue Morgan Lerner has done an incredible job building out our brand ambassador program. So we have, I think at this point, over 2,500— call them micro-influencers. They're people with a few thousand, maybe up to 10,000 followers that are just super fans of GoNanas. They buy the product on their own, right? Post about it. And then we give them a code and they get kickback for the sales that they generate and they get lots of perks like early access. To our new flavors and things like that. But that has been the core of building that community online. And then we do a ton of work with influencers, whether that's working with them on posts or creating products collaboratively. So we have flavors of our mixes that are in collaboration with some big influencers. And then we've gone in and out of the paid ads. So there's been periods where we've done them, periods where we haven't. Right now we're seeing a lot of success with them, but there were periods with, you know, changes. I don't want to get too technical, but Apple rolled out a new privacy release and we were like, we can't do paid ads right now because you're never going to see a return. So we sort of try and adjust our levers with what's going on in the market. But those are the things that we sort of do.

Well, that's, that's an amazing answer there. With the growth of the business, and obviously it scaled pretty quickly over the last 2 years. Does anything come to mind when you think about maybe mistakes that were made along the way?

There's such a classic answer to this, which none are mistakes. You learn from all of them because it's inevitable in what we do. We make mistakes all the time, but you learn to view them as learnings because you have no choice. So I mean, if anything, I would have come out with the mixes early and thought about the scalability piece. But I think that also allowed us to really refine our product without any rush or pressure. So we really had a sound product that when we turned it into a mix, it was just taking the base, and that really has not changed. So what's in Whole Foods today for our original, say, is the same base we've had since you know, 4 years ago and in that, the University of Michigan where we started this. So yeah, there's always two sides to the coin. I'll have Annie.

I was going to jump in. I was like, I totally disagree because we launched our mixes during the pandemic, like at a moment when banana bread was blowing up. And so there was that element of like luck with timing because we were able to see this incredible growth on direct-to-consumer, which I don't necessarily think we would have seen beforehand, and that catapulted us to be able to join the Mondelēz Accelerator, have a really big sales number that first year that allowed us to raise money with investors despite not being in any grocery doors. If anything, I would say our only— not like mistake, but like a learning that I've really come to understand this year as we've been hiring and building out the team is like You can never really be hands-off, or even agencies we've used, like sometimes we've just trusted, like, oh, you're an expert in X, Y, and Z, here's this project, take it. And then you notice mistakes, or maybe things weren't being done the way that you'd want them to be, or you just need to be more involved to catch things because you know your business better than anybody else. That to me has been the biggest learning.

Hindsight 20/20.

That—

I agree with everything, and I Annie and I were so used to working together for years and years and years that that also translates to that because we have that trust with each other that we just assumed with everyone we hired it would be like that. And it's not, which is great. That's what it— of course not. Like, that's, that's management and that's growing a team. But yeah, I agree.

Yeah. Managing others and hiring is definitely a skill set in and of itself and a lot of founders when they get to that scale start to realize it's like, oh, there's a lot more to this. Um, can we talk about the success that you've had with wholesale and how those large orders maybe throw kind of a wrench in your plans?

Um, from an operational perspective, I would say we are so fortunate at the ease of our product I have up until this point run all of our operations, but I would say very successfully. And like, what background do I have in operations? None. And that's because it's really hard for a manufacturer— I'm like knocking on wood— to mess this up. You're blending a bunch of dry ingredients and putting it in a bag versus so many other products. There's like a gajillion things that could go wrong. We have had our operational challenges in that during COVID There have been oat flour shortages. We had a load of butterscotch chips get stuck on the Suez Canal. Our main ingredient of our chocolate chip is affected by the war in Ukraine and Russia. So there are those elements, but nothing that is like, oh, we launched in Whole Foods and now there's this huge problem to scale. It's really just those general, like, world things that affect our supply chain. Um, although we did have a machine part break right before we launched in Whole Foods. I didn't sleep for like a month, but we got it sorted and we delivered the day it was due. That was very stressful.

Well, congratulations on that. Is there anything that I didn't ask you about that you think would resonate with our audience?

That's a great question. Um, I think the innovation piece, like how you innovate, meet your customers where they are, um, and bring things to market. I think we've had to do that a lot. Um, we've launched over 35 flavors to date, and that's really what has driven a lot of our online, um, business, but also what we bring to retail and the innovations we bring there. Retailers are looking for a lot more seasonal products, exclusives, something that's really different. So I think that's been a big strong suit of ours is that, that product innovation.

I would also add, and we sort of touched on this with direct-to-consumer, but I think the most important thing we're learning is like you are always evaluating or should be always evaluating your strategy with literally everything. We're like, is this still working? Great. Is it not? Okay, what else should we try? With retail, it's like we're trying all these different levers, leaning into, okay, maybe this time of the year we do this. Okay, demos are great, but X, Y, and Z. So it's like we're never stagnant in how we're approaching something. We're always pushing ourselves to do things better.

And I think as you grow too, you're creating systems for that. So you're— how are you analyzing your marketing? How are you analyzing your sales so that you can continuously change and evolve? And then when a new part of the business comes, how are we analyzing using that so you have some metric and some, some system to continuously improve. That's such a foundational part of a startup.

Yeah, kind of distilling down those business units to KPIs that make it a lot easier to understand if you're on track. Now, if I've listened to this podcast episode and I'm got a hankering for banana bread, where do I go to get this best mix?

You go to econanas.com or any Whole Foods near you. We just launched in 300 Targets. In all major cities. Um, Meijer, H-E-B if you're in the Midwest or the South. Um, and you can use the code BANANAFOM for 20% off and find us on social at go_nanas.

Morgan, Annie, thank you so much for coming on the show today.

Thanks for having us.

This was so fun.

Thank you.

We can't thank our guests enough for coming on the show and sharing their knowledge and journey with us. We've got a lot to think about potentially add into our own businesses. You can find all the links in the show notes. You can subscribe to the newsletter at honestecommerce.co to get each episode delivered right into your inbox. If you're enjoying this content, consider leaving a review on iTunes. That really helps us out. Lastly, if you're a store owner looking for an amazing partner to help you get your Shopify store to the next level, reach out to Electric Eye at electriceye.io/connect. Until next time.