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Episode: Noosa Yoghurt: Koel Thomae

Author: Guy Raz | Wondery
Duration: 01:07:26

Episode Shownotes

In a small beach town on Australia’s sunshine coast, Koel Thomae tasted a yogurt that would change her life: creamy, infused with honey and piquant with passion fruit, it became an obsession–something she was determined to recreate in her adopted home of Boulder, Colorado. With no knowledge of dairy, Koel

forged an 8,000 mile partnership between the Australian yogurt-makers and a Colorado dairyman. Noosa Yoghurt faced a near-death experience as the founders scrambled to meet the pace of demand; but by 2018, the brand was available in 25,000 stores, with over $200M in sales. Today, the company is owned by the food conglomerate Campbell’s.This episode was produced by Devan Schwartz with music composed by Ramtin Arablouei.It was edited by Neva Grant with research from Olivia Rockeman.Our audio engineers were Robert Rodriguez and Gilly Moon.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Summary

In this episode of 'How I Built This with Guy Raz,' Koel Thomae recounts her journey from discovering a unique yogurt on the Sunshine Coast of Australia to establishing Noosa Yoghurt in Boulder, Colorado. Lacking dairy experience, she strategically partnered with Australian yogurt-makers and a local dairyman, navigating regulatory challenges to build her brand. Despite facing numerous hurdles and a near-death experience due to demand, Noosa Yoghurt flourished, landing in 25,000 stores and achieving over $200 million in sales by 2018, before being acquired by Campbell's.

Go to PodExtra AI's episode page (Noosa Yoghurt: Koel Thomae) to play and view complete AI-processed content: summary, mindmap, topics, takeaways, transcript, keywords and highlights.

Full Transcript

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00:02:52 Speaker_05
ShopRite is probably one of the hardest operationally retailers to work with. Everything that could go wrong was going wrong. We were literally hemorrhaging cash for this customer from spoils to the slotting fees.

00:03:10 Speaker_05
And finally, I was like, this is not working. Like this retailer could sink the entire operation from a cash flow perspective.

00:03:19 Speaker_02
So what did you do?

00:03:21 Speaker_05
We pulled out.

00:03:22 Speaker_02
You pulled out.

00:03:23 Speaker_05
We pulled out, and I mean, they pretty much said, you'll never sell at our store again.

00:03:35 Speaker_02
Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

00:03:47 Speaker_02
I'm Guy Raz, and on the show today, how Koel Thome discovered a delicious passion fruit yogurt in an Australian beach town, became obsessed with bringing it to the U.S., and built Noosa into a major yogurt brand.

00:04:07 Speaker_02
Coelle Thome, like a lot of the founders on this show, was an accidental entrepreneur. She left her native Australia in the late 90s and moved around the rocky mountain states doing different, mainly temporary jobs.

00:04:21 Speaker_02
She waited tables, worked at ski resorts, and in shops. But eventually, she landed a junior role working supply chain for a startup in Boulder, Colorado. That startup was a sparkling beverage brand called Izzy.

00:04:36 Speaker_02
And while working there, she caught the bug. She started to think that maybe she could come up with an idea as well. And the idea actually came to her on a visit back home to Australia in 2005.

00:04:50 Speaker_02
Coelle was visiting her mom and tasted what she thought was the most delicious yogurt of her life. It happened to be a local brand made in a small beach town in Queensland. But for years, she didn't do anything about it.

00:05:05 Speaker_02
She just dreamed about finding a way to bring that kind of yogurt to America. How she did it? With no experience working in dairy or running her own business? Well, that is today's story.

00:05:19 Speaker_02
how Coelle Tomei and her partners managed to turn Noosa into a multi-million dollar yogurt brand that was eventually acquired by Campbell's, as in the soup company. Coelle grew up in Australia in the 70s and 80s. She came to the U.S.

00:05:35 Speaker_02
after college and bounced around Oregon, Montana, and Utah before landing in Colorado.

00:05:42 Speaker_05
And so in 2000, I landed in Boulder and ultimately got a job working for this IT company, thinking, again, that it would be this sort of Kickstarter to a real career. And realized pretty quickly that I was not very passionate about the IT world.

00:06:05 Speaker_05
Dying in a cube. But I loved living in Boulder, and I really wanted to stay.

00:06:13 Speaker_02
Boulder was and is an IT hub, but it also was and is a food hub, I think in part, in large part, because of Hain Celestial, which I think is based there and kind of started there, I think.

00:06:26 Speaker_05
Hain Celestial, White Wave.

00:06:28 Speaker_02
White Wave, yeah. Some of these really big brands that started there. And so Boulder became kind of like the Silicon Valley of food. And were you aware of that when you were living there in 2000?

00:06:40 Speaker_05
I wasn't initially, um, food has always been the sort of common thread in my life, you know, from growing up and going to farmer's markets.

00:06:48 Speaker_05
I think being raised by a single mom who just sort of had bigger expectations of, you know, me being independent and sort of helping. So I started cooking at a younger age. Um, I'm a weird nerd. I like going grocery shopping.

00:07:04 Speaker_05
Like I like just cruising grocery aisles.

00:07:07 Speaker_02
There's nothing nerdy about that. That's what I do in every city I go to.

00:07:10 Speaker_05
It's so fun. Like just the discovery of things.

00:07:13 Speaker_02
It's the best.

00:07:15 Speaker_05
Um, and so, yeah, so food was this sort of passion point for me, I realized, and here I am in the Mecca of natural food. And I just decided I was like, I'm going to work in the food industry.

00:07:28 Speaker_02
You, you stayed in that, this sort of job that you hated for at least three and a half, four years, right? For this IT company, you were there for quite a while.

00:07:36 Speaker_05
I was. And, you know, once I sort of had this epiphany that food was where I should be, I didn't really have any defined career role within food. I was like, I'll do anything just to get my foot in the door.

00:07:50 Speaker_05
And because I had been nomadic, my resume looked very spotty. And so it was probably over a year and a half of applying for every job that I thought I was reasonably qualified for before I landed my first food job at Izzy Beverage.

00:08:07 Speaker_02
And Izzy, of course, the sparkling juice brand. Yeah. And that had started in Boulder. And and so presumably that this is more interesting for you than than the I.T. job that you had before.

00:08:17 Speaker_05
Yeah. Well, I learned so much, you know, sales, marketing. I was loving it. Absolutely loving it.

00:08:25 Speaker_02
I guess you're in Boulder and around 2005, from what I understand, you go to Australia with your new boyfriend at the time, a guy named Tate.

00:08:38 Speaker_05
My now husband.

00:08:40 Speaker_02
So you go to, you take him to Australia to meet your family. So clearly you're serious about this guy.

00:08:46 Speaker_05
Yeah.

00:08:48 Speaker_02
And you go stay with your mom. She has a small beach house on the Sunshine Coast in Queensland. And tell me about that trip.

00:08:57 Speaker_05
We were on the Sunshine Coast. So we had gone to the beach. We'd gone surfing. And we're walking back. We had stopped in at this little local corner shop. And back to my love of just perusing stores, I ended up in the back. And there was a cooler.

00:09:16 Speaker_05
And there was this container which was clear. It wasn't really very apparent what it was, but I could tell that it had passion fruit in it. And in Australia, passion fruit's a pretty, actually, traditional flavor.

00:09:29 Speaker_05
And for anyone that doesn't know, passion fruit, when you cut it open, is this vibrant orange, has black seeds. So it's very distinctive if you know what you're looking at.

00:09:39 Speaker_05
And so I picked it up, turned it over, there's a label on the top of the lid, discover it's yogurt. So I buy it and we walk back to my mom's apartment and I immediately try it. And it was one of those just stop you in your tracks taste moments.

00:09:58 Speaker_05
Like think about eating the best peach in the dead of summer or, you know, things like that where you're just like, You don't want to think about anything else." And it was like that for me. So I'm like, Tate, you've got to taste this.

00:10:14 Speaker_05
This is like literally the best thing I've ever tasted. He tastes it. He's like, it's good, but it's just yogurt. And I'm like, hey, look, you don't understand. This is amazing. This is revolutionary.

00:10:26 Speaker_05
And so I ended up calling my mom later that day, and I'm telling her about this yogurt that I've just discovered. In Australia, it's called Queensland yogurt.

00:10:36 Speaker_05
And throughout my whole life, my mom has been somebody to dare me to do things out of my comfort zone. And so she said, you should call them. And I was like, and tell them what? That their yogurt's delicious? She's like, well, why not?

00:10:53 Speaker_05
Like, okay, you know, I turn it over, there's a phone number on the lid. And so I call and I end up connecting with this woman, Kay Mathewson, and it's this small family business. They've only been around for about 18 months.

00:11:09 Speaker_05
And, you know, I give her this sort of like mini pitch. Hey, I'm an Aussie expat. I live in Boulder, Colorado. It's this amazing food community. Have you guys ever thought about doing anything with the US? She's like, no, we're, we're way too busy.

00:11:24 Speaker_05
I was like, okay, well, you know, here's my, here's my email address if anything changes. would love to hear from you. So I go back to Colorado, having tasted this yogurt literally one time. And I'm back in Colorado. I'm back working at Izzy.

00:11:43 Speaker_05
And I start just looking for something that tastes remotely like this yogurt.

00:11:49 Speaker_02
And the yogurt was, it wasn't like Greek yogurt. It was like thick, but not as firm as Greek yogurt.

00:11:57 Speaker_05
Yeah, so it's a whole milk yogurt. I mean, the best way I can describe it is eating velvet. It was just so creamy. And then it's infused with honey.

00:12:07 Speaker_05
And then that paired with the passion fruit was just this like beautiful, sweet tart sort of flavor opposition. And yeah, I couldn't find anything like it in Colorado.

00:12:21 Speaker_02
And Greek yogurt, by this point, 2004, 2005, you start to see Chobani and Faye was around. There were some Greek yogurts that were available.

00:12:31 Speaker_05
Yeah, they were just coming onto the market. So I could see that there was a trend happening with Greek, but to me it didn't taste as good as Queensland yogurt.

00:12:41 Speaker_02
Yeah. And you keep thinking about this, but obviously you just go back to your job at Izzy because it is what it is. But I guess you were telling a lot of people about this yogurt, right?

00:12:53 Speaker_02
It becomes like a weird obsession for you when you go back to Boulder.

00:12:58 Speaker_05
Yeah, I mean, I sort of embarked on what I like to describe as my yogurt PhD. I literally would go to my local Whole Foods. There was a guy working in the dairy section. His name's Joseph. He still works at my local Whole Foods.

00:13:16 Speaker_05
And he and I would just ruminate about like all the different brands and what did you think tastes the best. And then we started talking about packaging. And, you know, we just had like very deep, meaningful conversations about yogurt.

00:13:29 Speaker_02
But why are you in Boulder? Like, you know, sometimes you meet people who are born in another country. Like I've noticed somebody from Bulgaria and they'll say, oh, in Bulgaria, the tomatoes and cucumbers are so much better than they are in the U.S.

00:13:42 Speaker_02
And you're like, are they really? I think there's pretty good cucumbers and tomatoes in California. But, you know, whatever. I get it. You know, I get it. And so you would have been saying to me, oh, the Australian yogurt is the best in the world.

00:13:55 Speaker_02
And I would have been like, OK, great. I would have kind of, you know, sort of subtly rolled my eyes. But I would have, you know, I would listen to you. You were that person.

00:14:03 Speaker_05
I was that person. I mean, driving my husband crazy, driving everyone at Izzy crazy. I think when you're an expat, you become very nostalgic about things that you can't eat in your new home. And so I think that was part of it for me.

00:14:18 Speaker_05
But I just couldn't find anything that tasted that good, in my opinion.

00:14:23 Speaker_02
Yeah. All right. You go back to Australia in 2007 for another family visit, but this time you go back with the idea of making an appointment, of meeting the owners of this Queensland yogurt company.

00:14:38 Speaker_02
So you're really thinking, all right, I'm going to take another shot at this and see if there's something there, there. Like you really

00:14:44 Speaker_05
I was obsessed. And it was actually my boss at Izzy who was really the one that encouraged me to reach out to them again. That's cool.

00:14:52 Speaker_02
I love that he told you that.

00:14:54 Speaker_05
I do too. So I actually had my mom call the second time. She definitely has the gift of the gab. And my mom organized a meeting with the Queensland Yogurt Family.

00:15:04 Speaker_02
And you met, these are the owners, the Matthewsons.

00:15:07 Speaker_05
The Matthewsons. So it ends up being Kay, the two sons, and one of their wives. We meet in my mom's beach apartment and, you know, I go back to, I live in Boulder. It's this amazing food community.

00:15:22 Speaker_05
And I said, I really believe that the American palate is not that different from a Nazi palate. And there's just nothing like it. I said, you know, yogurt is growing as a category.

00:15:35 Speaker_05
I can attest to that from just having watched it over the past two years. And I think there's this amazing opportunity. And again, my vision wasn't to create this national brand. I just thought I could have this really cool Colorado based company.

00:15:51 Speaker_05
And then I selfishly get to eat it more than once a year.

00:15:55 Speaker_02
And the idea was, maybe could I license it from you? Like, did you even ask at that lunch?

00:16:01 Speaker_05
Yeah, it was, would you consider licensing the recipe to me? And when you do an Aussie lunch, you definitely have some beers. And they essentially said, look, yeah, we think there is an opportunity in the US. We'd happily license to you.

00:16:19 Speaker_05
We'd want to invest in the business and we'd be happy to bring like a yogurt maker over and just help with the initial startup of the business. This is from a three hour lunch and a handshake.

00:16:33 Speaker_02
But no numbers were discussed at that point? None. And just out of curiosity, I mean, as somebody who makes yogurt myself in my Instant Pot, it's not, you know, commercial quality yogurt, but is it that, like, did you need to license the recipe?

00:16:49 Speaker_02
Was it that complex? Was there a world where you could just have figured it out?

00:16:54 Speaker_05
Maybe, but that was not what I was thinking. I just felt like this was so unique. And why try and reinvent the wheel?

00:17:02 Speaker_02
Fair enough. And and you're this is now 2007. Yeah. You go back to Boulder. Let's just pause for a second to talk about where you were at this point in your life, because Izzy had sold to Pepsi. Yeah. And you got some equity when you joined.

00:17:18 Speaker_02
So you got a nice size check when when Pepsi bought out Izzy, I would assume.

00:17:23 Speaker_05
I did and more money than I ever envisioned having in my life.

00:17:27 Speaker_02
Do you mind telling us, telling us how much you got from that equity?

00:17:32 Speaker_05
I got about $75,000. Wow.

00:17:35 Speaker_02
That's pretty good. Cause you were, you were like in your early thirties at that point.

00:17:39 Speaker_05
Yeah. I mean, and just a junior position had just bought my first house. Yeah. It was sort of revolutionary to have this, this kind of money.

00:17:48 Speaker_02
All right, so you get back to Boulder, you've got probably after you bought the house and the down payment, maybe you got, I don't know, maybe between 25 and 50 grand that you'd be willing to put in. What was your next step?

00:17:59 Speaker_02
I mean, now you knew that they were willing to commit to this. But I'm assuming, I mean, what did you know about the yogurt business? What did you know about how to start it or anything. Did you know anything?

00:18:13 Speaker_05
I knew nothing about dairy. I just knew I loved to eat it. But yogurt, as I realized, very different industry from the U.S. to Australia, like way more regulated in the U.S.

00:18:28 Speaker_05
You know, the Matthewsons were pretty adamant that we would only be able to make this yogurt if we built our own manufacturing facility. And so I'm like,

00:18:39 Speaker_05
okay, I can figure this out, you know, thinking more small scale, commissary kitchen, then ultimately realize, I have to go talk to the state health inspector.

00:18:51 Speaker_02
Right, because that's right, because you want to kill people, you want to kill people with bacteria or something, right. So, so you go to the state health department to get more information. What did you find out?

00:19:03 Speaker_05
I found out that I was even more ill-equipped than I imagined. And, you know, this state health inspector kind of like figures me out pretty quickly that I am completely green when it comes to dairy. And he asked me, do you even know what the PMO is?

00:19:22 Speaker_05
And I say, I have no idea what you're talking about. So the PMO is the Pasteurized Milk Ordinance. And it is this volumous document that governs dairy, essentially.

00:19:34 Speaker_05
And he handed me a copy and sent me packing and said, don't come and talk to me again until you understand this document.

00:19:41 Speaker_02
Fair enough.

00:19:42 Speaker_05
I walk out of the building and literally shed a tear.

00:19:46 Speaker_02
What was the problem with the document? Was it just impenetrable?

00:19:51 Speaker_05
I mean, I felt like it would take me an entire year to read it and really understand it.

00:19:55 Speaker_02
So you felt like you just did not have the skill set to do it. And so at that point, what do you do? I mean, I mean, this is the point where a lot of early stage founders just kind of say, you know, this isn't for me. I'm going to move on.

00:20:12 Speaker_05
I decided to pivot. I was like, okay, I can't do this by myself. I need a dairy expert. And so I sort of reached out to my network and I said, do you have dairy consultants? Do you have anybody that's in dairy?

00:20:28 Speaker_02
And who was your network, by the way?

00:20:30 Speaker_05
My Izzy people. Um, yeah, just small network.

00:20:35 Speaker_02
Yeah. Just asking if they knew people in Boulder who are connected. You just started asking people you knew, do you know anybody in dairy?

00:20:43 Speaker_05
Yeah, exactly. And it's, it's an old world process. And what I'm thinking is very entrepreneurial.

00:20:53 Speaker_02
When you say old world, it's like small families, generational families in this business, because a lot of dairies are small, but then they sell to larger brands.

00:21:04 Speaker_02
And a lot of these, as far as I know, in this area, they're families that have been in the business for two, three, four generations. And that's what you're running into? Exactly.

00:21:16 Speaker_05
But I don't see them as somebody that I can necessarily partner with until one day I'm at my local coffee shop and I see a flyer for this fourth generation dairy farm in northern Colorado called Morning Fresh.

00:21:32 Speaker_02
A flyer advertising what?

00:21:35 Speaker_05
It just sort of gives a little blurb about their family story, how they're treating their cows, how they're growing their own feed. I do a little bit of research and realize that they're selling their bottled milk already at Whole Foods.

00:21:51 Speaker_02
Oh, so it was a flyer advertising the dairy because they were, they were branding their milk morning fresh milk at Whole Foods in Colorado.

00:21:59 Speaker_05
Yeah. And so I ultimately cold call, getting really good at cold calling at this point. And I connect with Rob Graves, farmer Rob, as we like to call him.

00:22:12 Speaker_02
And he was, who was Rob? Was he the owner?

00:22:14 Speaker_05
Rob is the owner of Morning Fresh, fourth generation dairy farmer. You know, I sort of give him a little mini pitch on the phone.

00:22:22 Speaker_02
And your pitch was what?

00:22:23 Speaker_05
That I've discovered this amazing yogurt. I have a license to make it and I'm looking for almost like a co-man or a co-manufacturing facility that can help me produce it. And he's intrigued. He invites me up to the farm.

00:22:40 Speaker_02
How far, how far away from Boulder was it?

00:22:42 Speaker_05
It's about an hour north. Yeah. He was generous to even have the meeting. I think he thinks I'm pretty crazy at this point, because I don't have any product, right? Because tasting is believing.

00:22:56 Speaker_02
You're just saying, I have this amazing yogurt, and he's like, where is it?

00:23:01 Speaker_05
Yeah.

00:23:02 Speaker_02
You're like, it's in Australia.

00:23:05 Speaker_05
So then I call my mom. I asked her to ship me some samples. I don't even remember how we got them through customs because you can't technically ship dairy internationally.

00:23:15 Speaker_02
She just like ships them in like with dry ice or something?

00:23:18 Speaker_05
I think she froze like milk jugs. Oh. I mean, imagine this yogurt gets to me and it's probably not food safe at this point.

00:23:29 Speaker_02
Yeah.

00:23:29 Speaker_05
But I go back up to the dairy, to Morning Fresh, meet with Rob again, and I get him to taste the product. And at this point, he has the same taste moment that I did back in Australia.

00:23:43 Speaker_02
He finds it to be as amazing as you do? He does. Right, because he could have been like, you know, it's pretty good, but it's not amazing.

00:23:50 Speaker_05
No, so he's immediately intrigued, agrees that this is a huge opportunity. He's like, you know, good timing. I'm in the process of designing and developing a new bottling plant for my fluid milk.

00:24:07 Speaker_05
He's like, we can probably add a little extra space to make yogurt.

00:24:11 Speaker_02
So they were not making yogurt. They were just bottling milk and maybe cream. Yeah. Because that's a whole different process. Yeah. That's a that's a whole nother line that he's got to put in.

00:24:22 Speaker_05
Exactly. But he's like, yeah, we can do it. So then as we, you know, the conversation sort of continue, we realize it probably makes more sense for him to come on as a partner, as a partner.

00:24:35 Speaker_02
Fair enough.

00:24:36 Speaker_05
Yeah.

00:24:36 Speaker_02
All right. Let's, let's kind of break this down because this is really important and it's always one of the most complicated, awkward, um, frustrating and,

00:24:46 Speaker_02
just generally unpleasant parts of starting a business, which is talking about the details of what to do, how to divide it up, especially when it has no value. Like, this is worth zero dollars and zero cents.

00:24:59 Speaker_02
And you know that the partners in Australia are willing to put some money in, but in exchange for ownership. You want to own a significant amount because it's your idea. Rob is going to have the equipment. He's going to make it.

00:25:16 Speaker_02
You probably, first of all, in terms of overall startup costs, did you, were you able to figure out how much you would need by this point?

00:25:24 Speaker_05
We would lease the space from Rob, right? So that's, that's cash, but it's not like huge upfront costs. Um, the Australian family was willing to do a pretty, pretty minor lease on the product. Basically it was a dollar license agreement.

00:25:43 Speaker_02
Okay.

00:25:44 Speaker_05
because they wanted to be investors. And we were thinking about, okay, who are the retailers in Colorado? What's the opportunity set here? How much do we need to make to service this market? And sort of backed into this number of $400,000.

00:26:02 Speaker_02
That would cover the costs of getting off the ground.

00:26:06 Speaker_05
Exactly.

00:26:07 Speaker_02
How did you have, you didn't have that money.

00:26:10 Speaker_05
I had some of that money, had a chat with my mom and my stepdad. So they were on board. They had tasted the product. They were believers. And then the Matthewsons and Rob. So we were the three sort of blocks of investment.

00:26:27 Speaker_02
So you put all your money together to start this thing. And then in terms of figuring out ownership and equity, did you just make it simple and just divide it a third, a third, a third?

00:26:38 Speaker_05
It was a half, a quarter, a quarter. It's because the Matthewson family put in a larger share of money.

00:26:43 Speaker_02
Got it. Okay. So you, you, you and Rob each got a quarter, they got half and you would try and make a go of it with, with the 400,000. Yeah. And, and I mean, here you are, you are approaching maybe your mid thirties.

00:26:56 Speaker_02
Were you in any way nervous about putting all that money into this business, all your life's like all the money you saved up so far?

00:27:05 Speaker_05
No, I mean, I think- No, you were not nervous.

00:27:09 Speaker_02
There was nothing nerve wracking about that.

00:27:11 Speaker_05
Not really. I think I was so excited by this opportunity. And, you know, I grew up where I didn't have a lot of money as a kid, but my mom always prioritized experiences over things. I've always been a hard worker.

00:27:27 Speaker_05
So I just felt like if it all went up in flames, I could always get a job again.

00:27:33 Speaker_02
And I have to assume that – and you're still working at Izzy, right?

00:27:37 Speaker_05
At this point, I had actually left Izzy. I had gone to work with one of my Izzy alums who had started another company called Snickity.

00:27:46 Speaker_02
So you became a – this is interesting because how I built this always comes together in these – like I know that Izzy, a check from Izzy also helped to finance the start of SoulCycle.

00:27:55 Speaker_02
We did that episode years ago, and I know one of the founders of SoulCycle was an early investor in Izzy, and they got a $200,000 check, and that helped to finance SoulCycle.

00:28:02 Speaker_02
And then Snickety, I think that it was founded by the wife of Brett Shulman, who would go on to help create and scale Kava, which we've done on the show. Because Snickety never really took off. It didn't work out.

00:28:16 Speaker_02
But this was a kid's snack company that you were

00:28:19 Speaker_05
Yeah, it essentially sustained my family while I was getting Noosa off the ground. And we were in sort of this little co-working office with a few other consultants. So they sort of became my in-house advisory board.

00:28:34 Speaker_02
All right. So it's going to be you, Rob, and the Matthewsons. And that company was called like Queensland Yogurt Company, but that was not what you were going to call it in the U.S.

00:28:45 Speaker_05
No, I really felt like that had no connection to Colorado, to the US, no one would have any understanding of what Queensland is. But I wanted it to have a link back to its Aussie heritage.

00:29:00 Speaker_05
And the family, the recipe, it all comes from the Sunshine Coast. And I was like, well, what are some of the beaches on the Sunshine Coast and Noosa? I was like, OK, it's easy to say. It's not very long. It ties into the storytelling. This is the name.

00:29:17 Speaker_05
So, you know, it took a little bit of convincing, but finally, everyone agrees. It's Noosa.

00:29:23 Speaker_02
All right. So you call it Noosa Yogurt.

00:29:26 Speaker_05
Yogurt with an H, too.

00:29:28 Speaker_02
Yogurt with an H. Yes. Right. OK. Because that H is really important in the word yogurt. Without it, you would not know how to pronounce that word.

00:29:38 Speaker_02
I mean, part of me would've been like, well, are we gonna have to pay the typesetter a little extra money for that H? Like, could we save a few pennies by removing the H? But no, I get it. You wanted the H in there, okay.

00:29:49 Speaker_05
Yeah, but just, again, linking it back to its Aussie heritage.

00:29:55 Speaker_02
when we come back in just a moment, how Coelle brings her first tubs of Noosa to a major retailer, and how she responds when they say, we hate this packaging. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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00:32:59 Speaker_02
Hey, welcome back to How I Built This, I'm Guy Raz. So it's 2009, and to launch her new yogurt brand, Coelle has built a partnership that's 8,000 miles long.

00:33:10 Speaker_02
In Australia, the Mathewson family is handling the recipe, and in Colorado, Rob Graves, the dairy farmer, he's getting ready to make it.

00:33:20 Speaker_05
So Rob's building his new bottling plant and as things go with construction, it's delayed. Yeah, so we initially thought we were going to launch in 2009. The building's taking longer to get finished.

00:33:35 Speaker_05
I'm with the direction of the Australian family trying to find equipment at auctions and ultimately, you know, it really is, we're going to push to a 2010 launch. Things are just too delayed. Right.

00:33:50 Speaker_05
I think another thing to note too is just people thought we were crazy because this is coming off the heels of the global financial crisis. So I think there was sort of like, what? You're going to invest all this money?

00:34:01 Speaker_05
You're going to start a new business when the world is sort of imploding? And I didn't even really consider that. I just was like, I still think even in hard times, people are going to invest in delicious food.

00:34:15 Speaker_02
Yeah. Um, all right. I want to just go back to the process for a moment, right? Because you had the the Matthewsons come and show you guys how to make this yogurt, right?

00:34:26 Speaker_00
Yeah.

00:34:26 Speaker_02
And I'm assuming there's probably I know, we'll get to this, because you're not with the company anymore. So there's probably some proprietary things that that maybe can't be discussed. But I Can you sort of generally describe what made it so complex?

00:34:41 Speaker_02
Because, again, what did you have? What what did it require was required to make this yogurt into this creamy yogurt that you loved so much?

00:34:51 Speaker_05
You know, I don't know that it ultimately was that complex, but I think part of what made it unique initially was that it was being made in 10 gallon buckets, which is crazy.

00:35:04 Speaker_05
Like, I mean, I remember doing runs to the Home Depot cause we were running out of buckets. So you essentially are cooling the yogurt faster because it's in a smaller volume vessel.

00:35:16 Speaker_05
So that changes the way the cultures are interacting with the product. I think the fact that we were infusing it with honey, I mean, there was certainly sugar added as well, but infusing it with honey gave it a different flavor profile.

00:35:31 Speaker_05
And what made that unique made it harder to scale as we grew.

00:35:35 Speaker_02
And also, were you like, was it Is fermenting the right term? I don't know. Was it culturing for how long, like eight hours, 12 hours, 15 hours? Was that an issue too?

00:35:48 Speaker_05
Certainly, right? I mean, again, taking it from this small vessel to a larger vessel to a larger vessel and trying to have consistency in the flavor profile was really unique.

00:36:00 Speaker_05
And it's sort of a testament to Rob, because it was sort of his engineering brain that really figured out how to develop that. Yeah.

00:36:08 Speaker_05
I mean, we were making it in 10-gallon buckets for over a year, which gave the state health inspector a lot of heartache. He gave us a pretty long runway, but out of the gates, he said, you can't do this long term.

00:36:22 Speaker_02
You couldn't do it long term because there was a risk of contamination?

00:36:26 Speaker_05
Yeah. I mean, there was too many touch points, was his opinion.

00:36:29 Speaker_02
Yeah. You wanted to do it in like a few 100-gallon buckets.

00:36:33 Speaker_05
Yeah. Sealed.

00:36:35 Speaker_02
Okay. So once you guys get manufacturing going, you obviously have to start getting the yogurt into stores. You said earlier that Rob like was already selling milk to a few Whole Foods in Colorado.

00:36:47 Speaker_02
So at least he had an in right with Colorado Whole Foods, which is not not the entire country, but still it's still something. And I guess you guys were able to get a meeting with a buyer to see if they would be willing to sell your yogurt.

00:37:03 Speaker_05
Yeah, so by this point we've invested in the equipment, we've invested in the packaging, and with the packaging we really wanted it to be reflective of that first experience I had in Australia, which was transparency, letting the product speak for itself.

00:37:26 Speaker_05
You know in that initial sort of startup capital we didn't really factor in a custom mold. We just sort of assumed that we'd be able to find a traditional dairy cup that was transparent.

00:37:38 Speaker_02
Off the shelf. Off the shelf. Just a clear, like a clear container off the shelf.

00:37:42 Speaker_05
Exactly.

00:37:42 Speaker_02
Okay.

00:37:43 Speaker_05
and it actually didn't exist. So, you know, at that point most yogurt was sort of between 5.3 to 6 ounces and there was nothing, there was nothing available in stock packaging. in those sizes.

00:37:59 Speaker_05
I was pretty adamant that we needed to be in transparent packaging. And so that ultimately led us into this eight ounce container. It looked more like a hummus tub, but with some refinement, I felt like it could stand out. It could be unique.

00:38:18 Speaker_05
But it was a little nerve wracking because we knew that just by volume, it would drive us to a higher price point on shelf. And so this is what we've got as we go to our first meeting with Whole Foods.

00:38:30 Speaker_02
With Whole Foods. You show them this packaging. OK.

00:38:33 Speaker_05
Yeah. They just see the packaging and are like, we hate your packaging. And I'm like, okay, I understand. I was like, but let's taste the food. Like, let's taste the yogurt. So we do a taste testing.

00:38:48 Speaker_05
They're raving about the product, but then they immediately go back and they're like, but we hate your packaging.

00:38:54 Speaker_02
We hate the packaging.

00:38:55 Speaker_05
Yeah. It's eight ounces. It's going to take up all this space on the shelf. Like, you know, they're thinking all of these unit metrics and I'm like, look, all I could do is be honest.

00:39:05 Speaker_05
I said, we have already invested all of our startup capital in this equipment, in this packaging. We can't pivot at this point. Like we've just got to go. So I just wore them down. I'm like, let's ignore the packaging. Let's think about the food.

00:39:20 Speaker_05
If you give us this opportunity, I will be in every one of your Colorado stores, demoing the hell out of it, and we're going to make it successful.

00:39:29 Speaker_02
All right, that which is great that you did that, because Whole Foods, they know what they're doing. And here you are a new entrepreneur. And so the fact that you stuck to it, I guess you didn't have a choice. You kind of had to.

00:39:41 Speaker_02
But I wonder, I mean, before even before you, they agreed and you went into Whole Foods, right? How did you?

00:39:49 Speaker_02
How are you going to differentiate it just in that millisecond or one second that somebody would just pass by this brand on in the refrigerated yogurt aisle?

00:39:59 Speaker_05
The only thing that we had on the packaging besides the name Noosa, we had a little tagline that said Aussie culture, which obviously has a double meaning, Colorado fresh. That was the only thing that implied

00:40:14 Speaker_05
that there was sort of a link to Australia. Again, I think because it was in transparent packaging, you could see the freshness of the product, the fruit puree with the white yogurt really popped.

00:40:28 Speaker_05
And nobody on the shelf at that point in time was doing transparent packaging.

00:40:32 Speaker_05
So I just had this strong belief that if I had discovered it purely because I could see the product when I first tasted it in Australia, somebody else was going to take that leap of faith.

00:40:44 Speaker_02
All right. So finally, finally, you get this first run into Whole Foods, I think, in January of 2010. And it's just in Colorado, just all in all over Colorado.

00:40:57 Speaker_05
Yeah, only the Colorado stores because the Rocky Mountain region at that point umbrellaed, I think, Idaho, Utah, but the bulk of the stores were in Colorado.

00:41:06 Speaker_02
And how much yogurt at this point? I read that at this point you could only make about 200 gallons of yogurt a week, which was probably plenty at that point.

00:41:15 Speaker_05
Yeah. Yeah. So we, I mean, we were making one, maybe two batches of yogurt a week to start.

00:41:22 Speaker_02
And what were your first flavors that you were going to put on the shelves at Whole Foods?

00:41:25 Speaker_05
So we had four flavors. We had honey, we had raspberry, blueberry and mango.

00:41:31 Speaker_02
So you did not do the passion fruit?

00:41:33 Speaker_05
We did not do the passion fruit.

00:41:35 Speaker_02
Tricky in Colorado to get. I mean, it's probably expensive to get.

00:41:38 Speaker_05
Yeah, at that point, like just even trying to figure out how to source that puree was more than we wanted to address.

00:41:45 Speaker_05
And I think knowing that yogurt consumers are still pretty traditional, we wanted to sort of stay in that bandwidth of having flavors that we knew would sell. And mango was sort of maybe the most exotic in that line lineup.

00:42:01 Speaker_02
All right, so you get into the Whole Foods and then you spend every opportunity you have to go to each of these Whole Foods in Colorado. And roughly how many were there in Colorado in 2010? It couldn't have been more than seven or eight.

00:42:15 Speaker_05
Yeah, I think max, maybe 10 stores. So I would just sort of, you know, we hired a few other demo people, but just sort of rotating through those stores, really sort of connecting with the store managers.

00:42:27 Speaker_05
Because I really, I think from my time as being a server, right, like really understanding relationships and how they can serve you when you're getting out of the gates.

00:42:38 Speaker_05
I really wanted to build those relationships with not just the store manager, but the people stocking the yogurt. So I, in a sense, I would not only sample consumers, but I would go and sample all the store employees as well.

00:42:50 Speaker_02
So you would make sure that the employees at the store tried it, too.

00:42:54 Speaker_05
Yeah, absolutely.

00:42:55 Speaker_02
And did that work? I mean, in-store sampling?

00:43:00 Speaker_05
It did. It absolutely did. And obviously, as we grew, I couldn't be in all of these places. But when you actually meet the founder of a business, there is sort of a more openness and emotional connection to trying something and believing in it.

00:43:17 Speaker_05
So I actually had a lot of friends and family do sampling events for me as well. I just, I tried to think of as many avenues where I could get people to taste this product.

00:43:28 Speaker_02
And also doing farmers markets.

00:43:30 Speaker_05
Yeah, so that started spring of 2010. That was sort of a, actually a harder sell than Whole Foods was getting into the Boulder Farmers Market. It's considered one of the top 10 farmers markets in the country.

00:43:44 Speaker_05
So, you know, essentially if you come to Colorado in the summer, you'll probably end up at the Boulder Farmers Market.

00:43:50 Speaker_02
And when you were when you were doing this, the farmer's market, again, like probably weren't that many people selling yogurt at the farmer's market.

00:43:57 Speaker_05
We were the only yogurt vendor. I I still have to laugh thinking about how crazy it got. And that just sort of built a groundswell. And people obviously were then like, well, where can I get it?

00:44:11 Speaker_05
You know, if I can't make it to the farmer's market on the weekend. And at that point, we still were really only available at Whole Foods and a few independent markets.

00:44:20 Speaker_02
Did that have I mean, did that get you? I mean, were there were there people coming up and saying, hey, who are you guys? Like, can we talk? I mean, did you start to hear any of that?

00:44:30 Speaker_05
Yeah, so we actually had a lot of inbound emails from out of state. And one of those inbound emails was actually from a retailer called Hy-Vee, which is in the Midwest in Iowa.

00:44:42 Speaker_05
And essentially, I don't know if I sampled him or somebody else did, but the president of Hy-Vee had been at the farmer's market and tried Noosa and loved it and basically told his dairy buyer to contact us that they wanted to carry it.

00:45:00 Speaker_05
So we said yes. And I think the learning from that was that yeses with the right partners were good opportunities, but we learned that not every opportunity was the right one.

00:45:14 Speaker_02
And you did not presumably have the logistical capacity to really go that far beyond Colorado, maybe into the Midwest.

00:45:24 Speaker_05
Yeah, I mean, at that point, we were producing the product with about 28 days of shelf life, which is short. I know there's other products out there with even shorter shelf lives.

00:45:34 Speaker_05
But, you know, you add in shipping and like logistics of getting it onto the shelf.

00:45:39 Speaker_02
And you got like 15 days.

00:45:41 Speaker_05
Yeah.

00:45:43 Speaker_02
And how did they do at Whole Foods in Colorado?

00:45:46 Speaker_05
It was hard to keep up with the growth in Whole Foods.

00:45:49 Speaker_02
Wow.

00:45:50 Speaker_05
And they quickly expanded us into their Rocky Mountain stores.

00:45:54 Speaker_02
Yeah. And in your first full year of business, so you really launched in January of 2010, were you profitable?

00:46:04 Speaker_05
I mean, getting there.

00:46:07 Speaker_02
Getting there. So pretty great first year.

00:46:09 Speaker_05
Yeah. I mean, not accounting for the fact that we weren't paying ourselves.

00:46:13 Speaker_02
Yeah, right. I guess you got an opportunity to work with a pretty big retailer in New York in 2011. First of all, who was the retailer?

00:46:23 Speaker_05
The retailer was ShopRite.

00:46:25 Speaker_02
Oh, that's a big one.

00:46:25 Speaker_05
It's a big one.

00:46:26 Speaker_02
And they wanted to carry your products. Now, that's New York. That's not Iowa. That's far. That's far. That's not Colorado. But it was a big opportunity to go in there. And how many stores were you, they want you in?

00:46:38 Speaker_05
They were, I think, about 250 stores.

00:46:42 Speaker_02
Wow.

00:46:42 Speaker_05
Yeah.

00:46:43 Speaker_02
And you guys said yes.

00:46:44 Speaker_05
We said yes. So in 2011, we brought on a business development manager. He was a outside contractor and, you know, a very good salesperson, let's just say.

00:46:57 Speaker_05
And at this point, we still have not ever sat down and created any type of strategy for the business. We're just pinch hitting. Like if an opportunity comes up, we're going to say yes. And so we get this meeting with ShopRite.

00:47:14 Speaker_05
We know that we have to invest with these retailers as far as, you know, potentially slotting fees and all of their in-store marketing programs.

00:47:22 Speaker_05
But we started asking and tried to get creative where we would say, look, we're willing to invest whatever that slotting fee is to get on the shelf. But can we put it into demos?

00:47:33 Speaker_05
Can we put it into your retail marketing programs where we have a real opportunity to get off the shelf? Because we're proving out in Colorado that if we can get people to taste this product, it's going to sell.

00:47:47 Speaker_05
And interestingly, ShopRite said, OK, well, we're willing to defer your slotting fees. We're going to give you a 12-month time horizon.

00:47:57 Speaker_02
So you would have to pay them the fee to pay it up front.

00:48:01 Speaker_05
Yeah.

00:48:01 Speaker_02
Cause again, I know we've said this in the show before, grocery store, if it works as an amazing business, because they get the markup and they make money from that.

00:48:10 Speaker_02
And then they make money because the brands have to pay them to put, you're essentially renting space on their shelf. So they have all of these multiple revenue streams.

00:48:18 Speaker_05
Yeah. So it was really learning on the job for me. But yeah, so ShopRite says, we're going to, instead of charging you a hundred thousand dollars out of the gates, we'll bill it quarterly.

00:48:31 Speaker_05
And I'm like, okay, well this sounds like, you know, something that we can, that we can cashflow. So we launch, so we're already a hundred thousand dollars in the hole out of the gates.

00:48:44 Speaker_02
And you got to ship it, truck it out there.

00:48:46 Speaker_05
We're trucking it out LTL, which, you know, doesn't move as fast as a full truck, is more expensive than a full truck.

00:48:54 Speaker_02
These are refrigerated trucks, obviously.

00:48:56 Speaker_05
Yeah. Come to learn that ShopRite is probably one of the hardest operationally retailers to work with. Like if you miss, if you miss their delivery window by like five minutes, they'll refuse you. And then you have to reschedule. Wow.

00:49:12 Speaker_02
getting it. I mean, you're making this in Colorado. It's got a 28 day shelf life, the product.

00:49:19 Speaker_05
Yes. And to your point, yeah. So we've got 28 days of shelf life, we just get rejected at the dock takes another two days to get rescheduled. I mean, it was it was a nightmare.

00:49:32 Speaker_05
Yeah, there was sort of a disconnect between what was coming from corporate down to the individual stores. So we were seeing not all the stores were getting set. So everything that could go wrong was going wrong. And I mean, we were literally

00:49:48 Speaker_05
haemorrhaging cash for this customer from spoils to the slotting fees to not getting a much velocity because it wasn't getting set in all the stores. And finally, I was like, this is not working. Like, this retailer could sink the entire operation.

00:50:08 Speaker_02
So what did you do? We pulled out. You pulled out. We pulled out. And you just ate it. How long before you made that decision? A year? Six months?

00:50:20 Speaker_05
It was probably about six months that we realized that we couldn't continue to do it.

00:50:25 Speaker_02
And you basically lost at least $100,000 off that deal.

00:50:29 Speaker_05
And some.

00:50:31 Speaker_02
And some.

00:50:32 Speaker_05
It was such a hard, even though I knew we were losing so much cash, it was a really hard decision to make because I knew that if we pulled out, that might be the last opportunity to ever sell at that retailer.

00:50:45 Speaker_02
Right. And we've had these. examples on the show where, you know, it's it's a struggle to struggle to struggle. And then eventually, you know, after just bleeding for years, like, it works out. And that could have happened here.

00:50:58 Speaker_02
But what you're saying is, you didn't do all of the kind of planning and projections in maybe in the way you should have done because you because that would have, you would have realized this was not going to be sustainable.

00:51:12 Speaker_05
Absolutely. I mean, we didn't do any of that. We just were kind of operating in the Wild West.

00:51:18 Speaker_02
Yeah. You know, it's interesting. We did an episode on this brand called Zoomies, which sells skate wear and snowboard gear.

00:51:25 Speaker_02
And Tom Campion, who was on the show, and I remember him saying something, which was what makes a retail brand successful is basically relentless focus on inventory control.

00:51:37 Speaker_05
Yeah.

00:51:38 Speaker_02
And the point of that was like, It's this little boring things, because I think accounting is so boring. It's just the most boring part of a business. But it's so critical. Like it's sometimes that is not sometimes often.

00:51:52 Speaker_02
It's that which can make or break a business.

00:51:55 Speaker_05
Absolutely. I 100 percent agree. And we weren't focused on that in the first, I'd say, two years until we had that big misstep.

00:52:06 Speaker_02
Yeah. So I guess you you're on the East Coast in New York. It's an influential area like it must have also shattered the idea that that, oh, the American palate. It's just like that.

00:52:17 Speaker_02
Like it must have part of you, I would assume, must have thought maybe I was wrong. Maybe this is just working going to work in some parts of America.

00:52:25 Speaker_05
Yeah, I still had this strong belief that New York could be a great market for us. And it's, you know, ShopRite is an amazing retailer. Like they do a ton of velocity and a ton of volume. But for where we were at the time, it was too much.

00:52:44 Speaker_05
And I mean, they pretty much said, you'll never, you'll never sell at our store again. And I was like, okay, but I'm not going to be a business if I don't do this.

00:52:56 Speaker_02
When we come back in just a moment, the delicate partnership between Coelle, Rob, the dairyman, and the Mathiesons starts to break down. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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00:55:38 Speaker_02
So it's 2012 and after an abrupt exodus from ShopRite in New York, Coelle has managed to steady the business and is even thinking about expanding again. So she takes Noosa to Expo West, the big natural foods show in California.

00:55:55 Speaker_02
All right, so you guys have a booth there. Got a lot of buyers and vendors, all kinds of people are walking around and trying different things. And one of the, I guess, a group of people who came by were from Target. Yes.

00:56:12 Speaker_02
Did you know they were from Target or were they hiding their badges?

00:56:15 Speaker_05
I didn't know they were from Target, no. Yeah, no, they were hiding their badges. A lot of those buyers are pretty good at being stealth. Yeah, it wasn't until, you know, post-Expo that we actually got an email from Target.

00:56:29 Speaker_05
I think Target maybe had been a little bit behind the curve with Greek. and wanted to be ahead of what they saw as sort of the next evolution in yogurt. And they thought Noosa could be that.

00:56:43 Speaker_05
So they essentially offered us a test in, I think it was about 250 of their super target formats.

00:56:52 Speaker_02
Wow. And did you have the capacity to fulfill that? I mean, at this point, how much yogurt were you making a week?

00:57:00 Speaker_05
We're now probably operating at least four to five batches a week. So we're starting to butt up against what I would consider some capacity constraints, right?

00:57:09 Speaker_05
Because you're now having to bring on probably two shifts of people to work a seven day schedule. And at this point, I'm happy to say we're out of the 10 gallon buckets. And so it was just it was sort of this constant leapfrog.

00:57:24 Speaker_05
We've got at this point, we have a line of credit from a traditional bank who's allowing us to buy more expensive equipment. And we're just constantly investing in the manufacturing process.

00:57:37 Speaker_02
By the way, out of curiosity, what is the maximum shelf life you can get for cold pasteurized yogurt?

00:57:44 Speaker_05
You know, I'm not sure about some of the competitors, but we were at 45 days.

00:57:50 Speaker_02
Okay. So huge improvement over 28. Yes. But still, it just shows you like the minute that leaves the warehouse, the clock is ticking. Otherwise you have to throw it away.

00:58:00 Speaker_05
Absolutely.

00:58:01 Speaker_02
I mean, it's just an argument for going into dried beans.

00:58:04 Speaker_05
Oh, 100% guy. I will never start a perishable food company again.

00:58:09 Speaker_02
Yeah. All right. So you guys have some automation and you finance this mainly through loans.

00:58:13 Speaker_02
So once you're going into a target, you're also going to go from like, you could go from like 2 million in sales to like 10 million sales, 15 million in sales within months, a year, like, I mean, just because of the scale of a target.

00:58:29 Speaker_05
Well, I mean, so we launched, that was probably like mid year that we launched in super target. They came back four months later and expanded us into a thousand stores, a thousand more stores.

00:58:40 Speaker_02
A thousand stores. And, and were you at breaking point, like at that point as a business?

00:58:46 Speaker_05
Yes, we were at breaking point. And basically, I had to stop selling at that point.

00:58:51 Speaker_02
You had to stop signing contracts with the retailers.

00:58:54 Speaker_05
Yeah. Which is, I mean, a good problem to have, but like hard once you're sort of in the groove of selling.

00:58:59 Speaker_05
You know, because again, like in the back of my head, I have sort of like, okay, well, if I say no now, will that opportunity exist in 12 months?

00:59:10 Speaker_02
Yeah. And are you putting all your eggs in the target basket, which could or could not work?

00:59:15 Speaker_05
Yes, thankfully it worked.

00:59:18 Speaker_02
Tell me a little bit about the business by this point, end of 2012. You're in 1,000 targets. But from what I've read, you guys were really running lean.

00:59:28 Speaker_05
I mean, we were profitable at end of 2012. We were close to a $20 million business. So we were able to pay people reasonable market competitive salaries. But it was still such a small team.

00:59:43 Speaker_02
Right. To attract a good COO, you would have had to have paid at least $150 grand.

00:59:48 Speaker_05
$150,000 and then we were able to offer some options. They ended up being the only person that we offered options to, which actually became a bit of a point of contention between the partners as we started growing even further.

01:00:03 Speaker_02
Yeah, I imagine.

01:00:05 Speaker_05
And we never had a board of directors. We never had an internal advisory board. So it just became sort of butting heads as far as how do we continue to grow this business and put appropriate team members around it.

01:00:21 Speaker_02
Yeah, I mean, who was in charge? It was you, there was Rob at the dairy, and then the brothers, the Mathewson family in Australia. Who actually was the decision maker? Was that ever kind of discussed who would ultimately make the decisions?

01:00:34 Speaker_05
No, no.

01:00:35 Speaker_02
So everybody had a veto in a sense.

01:00:37 Speaker_05
Exactly.

01:00:38 Speaker_02
Which is not great.

01:00:40 Speaker_05
It's it's definitely a recipe for not great, especially when you're on a rocket ship of growth.

01:00:48 Speaker_02
Why didn't you guys have that discussion? I'm not I'm not browbeating you because I've made the same mistakes. I'm just curious why you didn't. Was it just an oversight? Was it like you never thought that this would be required?

01:00:59 Speaker_05
Yeah, for me personally, you know, it was my first time ever being in business.

01:01:03 Speaker_05
You know, I could see that other companies were doing it, but I had a naive sense and trust in my business partners that we could just all get along and be aligned because things were pretty rosy in the beginning.

01:01:18 Speaker_05
But with growth and harder decision-making, it just became readily apparent that we were all not super aligned in how we wanted to go forward. What were the disputes over? Oh my gosh. I mean, ranging from should we pay ourselves?

01:01:37 Speaker_05
Um, you know, I was sort of the poor business partner where I had to have that second job where the other two partners had businesses that they could rely on to pay themselves, um, to yeah. How to grow the business.

01:01:52 Speaker_05
you know, even with that mistake at ShopRite, there was still sort of this pressure to say yes to every opportunity, where I was sort of pushing back and saying, we actually have to have more strategy if we want to keep cash flowing this rather than taking outside investment.

01:02:07 Speaker_05
And then sort of coming into 2013, 2014, and I could just sort of see that we were going to hit this wall.

01:02:16 Speaker_05
Around around if we couldn't if we couldn't agree how to hire a real team of people To help us run the business because yeah when things start to really take off Sometimes founders need to get out of their own way. I

01:02:31 Speaker_02
Yeah, just reading between the lines here. And again, they're not here to kind of refute this. So I'll do my best to, you know, we always try to be very fair to everybody because it's a great product that you were selling.

01:02:43 Speaker_02
But it sounds like the clashes really were with you and the Australian partners.

01:02:50 Speaker_05
And Rob, I mean, and Rob, and Rob, we all just had very different viewpoints on how to go forward with growth.

01:02:57 Speaker_02
They were more, you felt like they were more conservative.

01:03:00 Speaker_05
More conservative, really didn't want to give up equity. And I understand that, too. I understand that perspective. But I think I knew that that's what it would take to really recruit. To skyrocket. Yeah, to recruit the right people.

01:03:13 Speaker_05
And we essentially hired a salesperson without that equity ask and literally had to fire them two months later. We just couldn't get the right people.

01:03:25 Speaker_02
When they have no skin in the game, it's a crapshoot. They could be great.

01:03:29 Speaker_05
Yeah.

01:03:31 Speaker_02
But if they have skin in the game, they're incentivized to really do well.

01:03:35 Speaker_05
Yeah. And then I had had my daughter in 2013. So I was starting to like max out on just my capacity.

01:03:42 Speaker_02
Wow. That's a lot.

01:03:45 Speaker_05
That's a lot. And then, interestingly, we had sort of created or revolutionized whole milk yogurt and we started getting big players coming in and directly competing with us. So within, I would say, sort of that

01:04:02 Speaker_05
2012 to 2014 timeframe, there was probably six knockoffs that came into the market, from Dannon, from Hanes Celestial, to even Kroger doing a private label version of Noosa.

01:04:18 Speaker_02
All right. So I imagine you're starting to think, we got to do something about this, or this might all go down the tubes.

01:04:25 Speaker_05
Yeah. So it was beginning of 2014. The Australians were starting to talk about wanting to take some chips off the table and Rob probably could have just gone in perpetuity because he's a fourth generation dairy farmer, right?

01:04:39 Speaker_05
Like I feel like dairy farmers, people of that world just work hard and just keep going no matter what. And so it just became this sort of dialogue of like, how do we solve all of these problems?

01:04:54 Speaker_02
So I think by 2014, you guys are doing like 40, 45 million dollars in revenue and growing.

01:05:00 Speaker_05
Yeah.

01:05:01 Speaker_02
You were feeling like the four of you guys were not necessarily the right team to turn this into a hundred million dollar business.

01:05:10 Speaker_05
Maybe not the right team is not the right way to sort of view it, but it really was a bigger team. Somebody that was positioned to take it into that hundred plus million realm, because it does become a very different business, right?

01:05:26 Speaker_05
Like you are an important brand to retailers. There's just different expectations from your business partners. I mean,

01:05:36 Speaker_05
I feel bad for a lot of our employees that were with us from the early days in the sense that they never really got a lot of oversight. We weren't building actual career paths for these people.

01:05:49 Speaker_05
So even though we were a cultured product, I didn't feel like we had a great internal culture in the sense of... you know, creating real business opportunities or, you know, growth opportunities for our employees.

01:06:02 Speaker_05
And then we finally sort of got alignment around, okay, we don't think we want to sell to a strategic at this point. You don't want to be acquired. We don't want to be acquired because, you know, Rob still really wants to be part of the business.

01:06:17 Speaker_05
I'm sort of on the fence. I could have probably gone either way. And then, you know, the Australian family just really wanted to sort of realize their investment.

01:06:26 Speaker_05
So, we ended up hiring an investment banker and sort of running a process to find more of that private equity type investment that would support the growth and help us build out that team.

01:06:37 Speaker_02
All right. So, 2014, you do get a strategic investment from a group called Advent.

01:06:43 Speaker_03
Yes.

01:06:43 Speaker_02
Right. But until they actually acquired or put in the investment, you guys were trying you were they were probably in your data room looking at your business. Meantime, you're running out of product like there's a lot. And that deal could fall through.

01:06:59 Speaker_05
Absolutely. Which was nerve-wracking, right? Because I knew this was sort of like, if we lose this deal, we're pretty screwed. It was probably the most stress I've ever endured in my life.

01:07:16 Speaker_02
But thankfully that sort of somewhat ended when they made the investment. Yes. And they buy a majority stake in Noosa. I think they're based in Boston.

01:07:25 Speaker_05
They're Boston-based, yeah.

01:07:27 Speaker_02
private equity firm. They buy a majority position in Noosa. But you guys stay on. I mean, at least you and Rob stay on as employees.

01:07:36 Speaker_05
We do. And actually, we rolled over a pretty significant minority ownership in the business. That was sort of how the deal was structured.

01:07:45 Speaker_02
You were incentivized to make it work.

01:07:46 Speaker_05
Incentivized. That's the right word.

01:07:49 Speaker_02
Yeah.

01:07:49 Speaker_05
But you know, it makes a lot of sense, right? Like, we're in the middle of this growth curve. And to your point, we do bring a lot of value to the business at that point, even if we feel like we need to sort of start to hand over the reins.

01:08:02 Speaker_02
And was it fairly quickly after they, because I think November 2014, they made that investment. Was it like by early 2015, the whole new executive team was brought in? Yes. And these are people with deep experience in food?

01:08:15 Speaker_05
Yes. And it was a game changer. It really was a game changer.

01:08:18 Speaker_02
You actually liked it. I loved it. God, these people know nothing about this business. I hate working with them. They don't believe in the quality or the spirit. No, you didn't feel that way.

01:08:28 Speaker_05
No. So I sort of see these two very distinct chapters that I was involved with at Noosa. It was sort of like the Wild West chapter and then our professional chapter, which I think we created an amazing internal culture.

01:08:44 Speaker_05
And I had an absolute blast in sort of that second chapter because I didn't have the tension with my business partners anymore.

01:08:55 Speaker_02
And so so you were committed to staying with them I think for what for about four years I mean we were committed until you know, they decided to sell the business and they did eventually sell it I think in 2018, right? It was it was a merger

01:09:12 Speaker_02
aqua merger kind of thing with a company called Sovos Brands. And they owned or own a bunch of brands like Rouse, I think Pasta Sauce is one of the brands they own, maybe they still do own it.

01:09:26 Speaker_05
They did until Campbell's bought it.

01:09:29 Speaker_02
Right. Campbell's bought them out. Yeah.

01:09:30 Speaker_05
Yeah. Beginning of this year.

01:09:31 Speaker_02
And so you were your remaining shares were bought out at that point. And I have to imagine you actually may have made more money as a minority owner than when your majority stake was bought out.

01:09:42 Speaker_05
Yeah.

01:09:43 Speaker_02
I mean, you had two bites at the apple, as they say, two bites, the apple.

01:09:48 Speaker_05
Yeah.

01:09:48 Speaker_02
I mean, this business that was started really in 2010, I mean, it was an it was kind of like an eight and a half year journey, which from one perspective doesn't seem that long. But I'm sure from your perspective, it was a long journey.

01:10:04 Speaker_05
It was a long journey because it was, you know, those startup years too, right? Yeah. So it was over a decade of my life that I literally, all I thought about was yogurt, which is a really long time to think about one thing.

01:10:18 Speaker_05
And I feel like I worked a lifetime in that decade.

01:10:22 Speaker_02
When you when you were done, which are sort of when you stepped out of the business after the acquisition in 2018, you were well positioned financially, probably easily for the rest of your life.

01:10:34 Speaker_02
What did you yeah, what did you want to do all the things you weren't able to do while you were building the business?

01:10:39 Speaker_05
Yeah, I didn't eat yogurt for an entire year. Really? No.

01:10:44 Speaker_02
Nothing?

01:10:44 Speaker_05
No, I didn't want to shop the yogurt aisle. I just didn't want to think about yogurt for a while. I decided I would say yes to any sort of travel opportunity.

01:10:55 Speaker_02
Yeah.

01:10:56 Speaker_05
And I just needed to be like a little chill for a while and hang out with my kid, hang out with my family more. Like probably one of the most important things I'll do in my life is raise a good human.

01:11:10 Speaker_05
And I finally have a little more time to focus on that.

01:11:14 Speaker_02
Yeah. And so there was no plan. There is no plan for you to start another business. Like you've done that and you have no ambition or desire to go through that again.

01:11:26 Speaker_05
Yeah, it would be hard. I think it would take something incredibly special to want to go back into the trenches again.

01:11:32 Speaker_02
You can make more yogurt if you want.

01:11:34 Speaker_05
I could even, I could even explore buying Noosa back if I wanted to.

01:11:37 Speaker_02
Right. It's, I think it's for sale. I think that, that Campbell's is looking for a buyer.

01:11:42 Speaker_05
It is. I don't think I'm going back into yoga, though I am very interested in sort of the dairy-free space. I know that sort of seems counterintuitive, but... No, no, it's interesting.

01:11:54 Speaker_05
I sort of feel like I'm back at university, that university phase, right, where I'm like, what the hell do I want to do with my life? And so I'm just exploring a lot of different things.

01:12:06 Speaker_02
When you think about about the journey you took, you know, and I mean, starting this business in Boulder thinking is going to be like a local business and getting the family in Australia to work with you and meeting Rob and the dairy and all that that happened and, and then making a lot of money off of this thing, which probably, I'm sure wasn't in your plan, but of course, was a very pleasant ending, I'm sure.

01:12:28 Speaker_02
How much of what happened to you attribute to luck? And how much do you think had to had to do with the work you put in?

01:12:35 Speaker_05
I think there's a huge element of luck, right? I think about 2008 and sort of seeing this emerging trend of Greek yogurt. And in some ways I actually think we thought we had missed the boat. Ultimately we timed it

01:12:52 Speaker_05
just perfectly because It just reinvigorated the category Greek yogurt and we got to ride that wave with the big players but coupled with that is You know as much as I may have disagreed with my business partners over different things The one thing I think we can attest to is that we all worked really bloody hard, you know, I've mentored a

01:13:19 Speaker_05
some startup companies where they sort of say, well, we want to be where you are. And I'm like, okay, well, I don't know if I can actually help you because you have to be willing to work really hard and your eye cannot be on this big outcome. Right.

01:13:36 Speaker_05
And that was never what it was about for me in the beginning or for Rob, it was, you know, a passion around this product that kind of took on a life of its own.

01:13:48 Speaker_02
That's Koel Thome, co-founder of Noosa Yogurt. By the way, the company did eventually get around to launching a passion fruit yogurt, the flavor that inspired the whole thing.

01:13:59 Speaker_02
But today, out of the 18 different Noosa flavors, including cinnamon roll and pomegranate and tart cherry, passion fruit has sadly been dropped from the rotation. Hey, thanks so much for listening to the show this week.

01:14:15 Speaker_02
Please make sure to click the follow button on your podcast app so you never miss a new episode of the show.

01:14:20 Speaker_02
And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at GuyRoz.com or on Substack.

01:14:29 Speaker_02
This episode was produced by Devin Schwartz with music composed by Ramtine Arablui. It was edited by Neva Grant with research from Olivia Rockman. our engineers Robert Rodriguez and Gilly Moon.

01:14:40 Speaker_02
Our production staff also includes Alex Chung, JC Howard, Carla Estevez, Sam Paulson, Chris Massini, Kerry Thompson, John Isabella, and Elaine Coates. I'm Guy Raz, and you've been listening to How I Built This.

01:15:00 Speaker_02
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