Can diabetics enjoy desserts? – David Downing of ChipMonk Baking proves they can!
INTERVIEW VIDEO (Length – 57:55)
PODCAST AUDIO[sc name=”sponsors”]
David Downing of ChipMonk Baking shares how he and his partner Jose Hernandez started an online desserts business that sells delicious sugar-free cookies using healthy and natural ingredients.
People & Resources Mentioned in the Episode
Book: Traction by Gino Wickman
What You’ll Learn
Interview with David Downing of ChipMonk Baking
|00:52||Inspiration for the business|
|11:41||About the product|
|17:19||Investment and funding|
|47:24||Mistakes made, lessons learned|
|50:44||Rapid fire round|
In this segment, the guest will answer a few questions quickly in one or two sentences.
David Downing of ChipMonk Baking
- Book recommendation that you would make to entrepreneurs or business professionals (Response: Traction by Gino Wickman)
- An innovative product or idea and the current eCommerce, retail, or tech landscape that you feel excited about (Response: Athletic Brewing)
- A business or productivity tip that you would recommend (Response: Calendly)
- A startup or business and eCommerce retailer tech that you think is currently doing great things (Response: Obvi)
- A peer entrepreneur or business person whom you look up to or someone who inspired you (Response: Arshad Bahl)
- Best business advice you ever received (Response: Your business has to grow beyond yourself, which means you’re gonna have to have a team… if you can nail the people part, you’ll probably have a successful business.)
Sushant Misra of TrepTalks: Hey, they’re entrepreneurs. My name is Sushant and welcome to Trep Talks. This is the show where I interview successful eCommerce entrepreneurs, business executives, and leaders, and ask them questions about their business. And also dive deep into some of the strategies and tactics that they have used to start and grow their businesses.
And today I’m really excited to welcome David Downing to the show. David is the co-founder of Chip Baking. Chip Baking is a host Houston based specialty bakery that produces healthy local glycemic cookies and other dessert products. Sweden with mon fruit and allulose to naturally occurring sweeteners that don’t impact blood.
And today I’m gonna to ask David a few questions about his preneur journey and some of the strategies and tactics that he has used to and grow his business. So thank you so much for joining me, ATS, really
David Downing of Chipmunk Baking: appreciate. Yeah, thanks for having
Sushant Misra of TrepTalks: me. So very interesting, um, I that the idea for it or the inspiration for it came from your own personal story or struggle with the, uh, sugar.
David Downing of Chipmunk Baking: Actually, it, uh, came from my co-founder Jose’s experience with type two diabetes. Uh, he and I were roommates back in 2019 when we founded the company. But basically, uh, when he was in university, he was unexpectedly diagnosed with diabetes. Uh, he, his diet was pretty poor. Like most college kids. Uh, lots of pizza and beer, lots of carbs, sugar.
And, uh, he noticed that he, uh, was having very little energy falling asleep all the time. When he went to see his doctor about it, the doctor actually said like, Hey, you’ve got type two diabetes. Um, and when that happened, instead of taking any prescribed medications, he decided to attack it via an improved diet.
Mm-hmm. . And so he cut out all the processed carbs, he cut out sugar, and he lived like that for, uh, almost a decade before he and I. And, uh, managed to get his blood sugar well under control. And then if you look at him today, he’s sort of like a spitting image of a healthy guy. Um, but of course, dessert was always a struggle for him because most desserts available out there are packed with sugar.
And, uh, yeah, we were, we were rooming at the time and he ended up making his own desserts to avoid that. Uh, sugar crash and all the, the bad stuff involved there. And, uh, made the first chipmunk prototype cookie. And, uh, of course, me being next to him on the couch, he gave me something to try and, um, I kind of have more of a business background.
So when I tried it, I was like, Hey, you know, maybe we could. We could build a business out of this concept. There’s a lot of people, uh, in the United States and in the world that have diabetes. They’re pre-diabetic or they’re just struggling with reducing sugar in their daily diets.
Sushant Misra of TrepTalks: And when you did maybe some kind research, like did you find, were there any similar kind of products that we’re using a similar, you know, similar ingredients?
Or that were already in the market catering to this audience with a similar kinda an idea? Or was this like a completely original thing?
David Downing of Chipmunk Baking: Sure. I mean, there’s been sugar free kind of desserts for decades, uh, that are on the market. A lot of them. End up using ingredients that are like really artificial or are kind of just as bad for you as sugar might be, but just in different ways.
Uh, a lot of brands use sugar alcohols, which can cause stomach issues pretty quickly. Uh, just Google like. Uh, sugar, alcohol, gummy bears, . You’ll find a lot of very interesting scenarios that happen to people. Uh, and then in generally too, I think sugar free desserts were, that were on the market just were known not to taste very good.
Uh, I mean, there’s a reason there wasn’t mass adoption. And so for us, when we, we sought to create kind of a sugar free cookie, um, we really wanted to focus on two things. One was like really clean. Natural ingredients that weren’t gonna have, uh, strange side effects or negative impacts that could be as bad as sugar.
And two is like the taste, the taste and texture needed to be just as good as a regular cookie. Otherwise, uh, you know, people would feel like they’re sacrificing something when they ate our product. And then eventually they would find themselves going back to, you know, sort of the sugar alternative. So are
Sushant Misra of TrepTalks: these, do these two items, the monk fruit and the allulose, um, are these like now well known as the sugar substitute?
Because I, I would assume like these would be more well known because there are so many people who are affected by diabetes. Um, are these, like, are these a substitute that, you know, medical doctors would, um, would, uh, recommend to, to people suffering from.
David Downing of Chipmunk Baking: Uh, absolutely. Um, monkfruit has been around actually for centuries.
Um, it’s much more known in kind of the eastern part of the world. Uh, it originates in China, it’s called Monkfruit because it, the sort of historical story is that monks, um, in China would actually grow it and steep it in their tea. Uh, it was known to have antiox. Sort of healing properties. Um, and yeah, so it’s, it’s been around in the US for quite a bit.
I, I would say probably in the past, like five years, it’s become more mainstream. Um, a lot of American consumers hadn’t heard of it, but you started to see some bigger brands start to use it. Um, it’s a fully plant-based extract. So it’s literally like this Gord, that they extract the pulp, they dry it, and you literally put that powder in.
Uh, so it’s, it’s very clean. Um, the most kind of similar, sweeter in terms of that concept that is very widely adopted in the US is Stevia, the Stevia leaf. Um, but Stevia is known to have sort of a strange aftertaste and a lot of people, not big fans of it. Monk fruit, I think has a cleaner taste. Um, allulose on the other hand is actually.
Relatively new unknown ingredients. Um, I would venture to guess that most American consumers have never heard of. Uh, and a part of that is because it, it was only approved by the fda, uh, for human consumption in the US I think back in 2016. And then in 2019, the FDA actually reclassified it from a sugar to a carbohydrate, uh, on, on your package.
And that it makes a big difference when people are looking at packages and they’re trying to cut sugar. The reason the FDA originally classified it as a sugar. And what’s interesting about Allulose is it’s actually, uh, technically a rare natural sugar. Um, it occurs in almost every fruit in really tiny quantities.
Um, chemically it is almost identical to fruit toast, sort of like regular sugar. But one of the carbons in its molecular structure is flipped upside down. And so the human body does not have like the, I guess you could call it like the metabolic key to actually break that down into calories and get it into your blood in the same way we would with sugar.
So it’s sort of like this weird natural mutation of sugar that the human body just never evolved to be able to digest. Um, So that, that one’s newer. And what’s really exciting about Ulus and, and I think the reason it kind of differentiates our product and, and makes it more akin to regular cookies is because it is so close to regular sugar.
Um, it’s taste and the way it behaves when you’re baking it. Is very similar to sugar too. So it does things like, uh, when you apply heat to it actually browns and caramelizes in the same way that sugar does. Uh, it retains moisture really well, so you get like kind of these nice moist, soft baked, uh, desserts when you use it.
Uh, so you know, a lot of sugar or some sugar alternatives before then, didn’t have. Kind of chemical attributes that sugar had. And so companies were forced to add in a lot of extra things to, you know, sort of make it look and behave like sugar versus allulose. It’s just naturally that’s how it is. So we don’t need to add in a bunch of strange ingredients to achieve the the end result we want.
Sushant Misra of TrepTalks: That is very interesting. So is all lows and monk fruit are these. Available in the market, like as sugar substitute. Cause I’m thinking, you know, I’m, I’m an Indian, right? So I like Indian sweets. Uh, there’s lots of them. And, you know, I would want the, the reason I don’t eat it cause, you know, sugar, um, uh, and I would want like a sugar that do something like this, that I can, you know, or my family can use to still create Indian sweets and, you know, I, I can enjoy.
I would think like if from a business perspective, maybe there’s a much bigger market to educate people on these products and, and make it a sugar substitute, um, that people buy instead of sugar, uh, for on a day to day basis rather than, you know, just, just selling cookies, uh, made from that.
David Downing of Chipmunk Baking: Yeah, I think, um, You know, that’s a really good point.
We actually do sell our sweeter, uh, by the pound so that people can use it in baking or they can add it to their tea or really, however you would use sugar. Uh, most grocery stores today, you’re starting, you can definitely find monk fruit, um, or at least monk fruit blended with something else. And then Allulose is starting to become more widespread.
Uh, I’ve seen it in our local grocery stores. I’ve actually seen Allulose and Costco a couple times. You know, I think one issue when you start thinking about, uh, putting these sweeteners out on a mass scale, uh, so that like every consumer can use it in any way that use sugar is that monk fruit and Aus are, are relatively rare, uh, and, and, and expensive to make, um, versus sugar, which I mean, we’ve been mass producing sugar for, for hundreds of years.
And, um, so. I just don’t think that there’s, there’s literally enough production capacity in the world, uh, to make enough of those ingredients at this time to fully offset sugar and to get the price where it would be, you know, comparable. I mean, I don’t know off the top of my head the price of sugar right now, but I think last time I checked, It was literally one 10th of the cost of, uh, monk fruit and Allulose blend.
So that, that just, it makes it, it makes it difficult to market that to, you know, everybody. Uh, but I do agree, I think as time goes, as those ingredients get more acceptance in the market, and as companies, you know, like chipmunk kind of focus on selling it, uh, as a sugar alternative, you will see. Kind of more people trading off sugar for, for those things.
And you’ll just see it more widely available. You can go to your local, you know, like Indian restaurant and get all those desserts, but they could be made with, without, uh, without sugar or without as much sugar. .
Sushant Misra of TrepTalks: That, that’s very, very interesting. I’m gonna do a little bit more research on this, . Yeah. Um, what, uh, so, so you had this idea and.
How did you think about creating, you know, cookie rather than something else? Like what were some of the first steps that you t took in order to really think about your product and you know, how you’re going to bring it to market?
David Downing of Chipmunk Baking: Right. Um, I mean, In some ways it was kind of simpler than you might expect.
Jose made a bunch of different stuff and out of all the things that he made, the cookie tasted the best. So it was kind of like, Hey, we have a, a head start with this recipe or this formula. Um, beyond that, I think there’s a few reasons we decided to focus in on a cookie. Um, one cookies are probably the most popular dessert in the United.
Like the chocolate chip cookie right? Is just such a classic. Everybody is familiar with the cookie. Everybody probably eats dozens of cookies every year. Um, so it’s just a, it’s just a very well known form factor. And, you know, when we’re coming in with sort of these newer ingredients, new sweeteners, uh, it makes sense to take like a traditional form factor in some ways that people know kind of what to expect and, and you’re not, you’re not asking them to make it like a yet another leap of faith in trying your product.
If it were some strange shape or something they’ve never heard of and it’s got weird sweeteners they’ve never heard of, then they might not even give you a, give you a shot. I would say, you know, from an operations and scaling perspective to cookies are relatively easy to make, uh, early on. I mean, literally we made it in our apartment, kitchen.
Anybody who’s got like a bowl and a a scoop in an oven can make some. Um, and so for us, it allowed us to create a product. Immediately and start selling it immediately, which allowed us to, uh, you know, basically validate whether there was any demand for a product like that. Uh, cuz we could start getting sales and we could then eventually go to investors and be like, Hey look, even though like we’re just making this in our apartment, we managed to sell, you know, X number of dollars.
Um, and it just allowed us to scale quicker as well, cuz it, it’s relatively standard. Baking processes involved. It’s just you need to bring in some bigger equipment, but it’s nothing crazy or that’s gonna require millions of dollars of capital, uh, investment to, to mass produce. So I think that’s the main reason why we started with a cookie.
Um, I do think as we’ve gotten bigger, we’ve definitely experimented with. A little more complicated, uh, but maybe perhaps more exciting and differentiated products and, you know, eventually we would like to launch those, uh, as well. So in terms
Sushant Misra of TrepTalks: of the initial idea evaluation, did you just, uh, share the cookies with your family and friends or like, did you go to like a flea market and sell, try to sell the cookies there?
How did you try to understand like if someone is actually willing to pay. And they like the case
David Downing of Chipmunk Baking: and things like that. I think that what you just said there is the key is, is someone willing to pay for this, um, and that someone cannot be your, can’t be your mom. And they can’t be like your girlfriend or your spouse, you know, is someone off the street willing to exchange their hard earned money for the product.
Uh, and that’s what real traction is. And so for us, yeah, of course we shared it with our friends and our family and we kind of tried to gather some feedback. But in the back of my mind, I’ve always discounted that feedback. Um, if, if I know the person, they’re probably not gonna wanna hurt my feelings. The ultimate feedback is to go out to strangers.
Make the pitch about the product and then see if they will, they’ll, they’ll buy it. And then the real kind of ultimate feedback that you wanna get for is that they come back and buy again. Um, so we started pretty simple. We were working in like a coworking, uh, office building. So there, you know, there were a bunch of different companies, but they share this cafeteria.
So we just went in the cafeteria every lunch, uh, we, and we started this as a side hustle. We had full time. And, uh, set up in the cafeteria for an hour each day and just like put up a sign that said, you know, like sugar free, low carb cookies, put out some samples. And we just tried to sell them for, I think it was like $4 for a pack of two cookies.
And, um, we did that for a few weeks and people were willing to pay a lot of money for these cookies. So eventually we moved and kind of expanded that idea to like our local farmers’. Here in Houston. So on the weekends we would set up a tent. Uh, you know, these are places where people come to shop, look for artisanal things, and we would just, you know, shout at people, get them to try samples, make our pitch, uh, sold a bunch of cookies, and then, um, also use those as opportunities to gather feedback on maybe there’s ways we could improve the product.
Um, and then I think really importantly, from a marketing perspective, it taught. What are the common pushbacks or questions or concerns that a potential customer might have about this product? Uh, and then, you know, we can start creating almost like a, an faq, uh, so that when we are asked those questions or if someone is on our website, like we can immediately resolve the questions and kind of overcome whatever their, their, uh, reluctance is up front.
Um, so yeah, those, those in-person events in sales were really key to kind of proving out traction, but also teaching us how to market the product.
Sushant Misra of TrepTalks: Now you did briefly mention about getting investment. Did you, did you actually, once you have proven the idea, did you go out to get some investors or was it like completely uh, self-funded?
David Downing of Chipmunk Baking: So for the first year, uh, when we were basically operating out of our apartment, it was fully self-funded. Um, I, I think we maybe put in like $10,000 or so. Um, you know, mostly just for ingredients and such. And, uh, Jose and I kind of set a goal where we, we started in February, 2019 and we said if we can reach.
$10,000 a month in revenue, uh, by the end of the year, then we should raise some money to either, uh, one, build out like a place where we can, um, you know, do our own baking. Cuz obviously we can’t, we can’t operate in our apartment and, and. We did operate in a shared kitchen for a while, but you can’t do that for long, uh, or, uh, money to help us find a contract manufacturer that could make our cookies at scale.
And yeah, so that we hit that milestone. And so we kind of attacked the fundraising, um, from two. Different, uh, approaches. One, we did a crowdfunding campaign, uh, with a local company called Siege, which is now part of Republic, uh, which is a pretty big player in the crowdfunding space. And then we did, um, I guess you got like a friends and family round.
We’re pretty much anybody that we knew, um, through our careers or, or family or, or whatever, you know, we created a, a pitch presentation. A fundraising presentation, and, and tried to raise money on an individual by individual level. Um, some of the investors though also were customers of ours, uh, and so you could call them like angel investors.
They were high net worth individuals. You like, were buying our product. They really like the product. And so when we, we kind of made an announcement for the crowdfund and the via email. We had a couple people just in invest kind of individually as well. How much,
Sushant Misra of TrepTalks: I mean, how investment does it,
you know, millions. Are we talking hundreds of.
David Downing of Chipmunk Baking: Uh, we raised I think a little over $300,000, um, via those two combined kind of processes, I would say, uh, the build out of our bakery where we operate today. Was about $200,000. Um, and I, and so, and then that left us with, you know, an additional a hundred thousand of what you could call it growth capital, right?
Like money we could put into marketing or hiring people. I think we did it, we did it really cheap, like we did a great job. I think most people, if you’re building a bakery, it’s gonna cost you more. Um, fortunately we found a really, uh, experienced restaurant tour here in Houston that had opened tons of restaurants and like built them out.
And so he was able to, Um, help us be very efficient in our construction. And then, uh, the other thing I would say is like, if you’re raising money, it’s like you always should probably raise twice as much as what you think you need. Um, cuz. Even that $300,000, uh, it wasn’t like we, we ended up having to go back and raise like, I think another a hundred from investors.
And then we recently, uh, took out an SBA loan, um, for like a quarter of a million dollars to, you know, to continue to fund the company. Um, it’s just, there’s always unexpected costs and then there’s sort of this weird cycle where like the faster. Your company grows, um, the, the more intense the cash or capital requirements can be.
Uh, and so if your goal is to just like really, really grow, you need to make sure you have, um, a good amount of capital on hand. That’s not to say you can’t be successful with lower amounts of capital, it’s just the growth is probably gonna have to come, come slower, at least in the like specialty food, consumer packaged good space.
Uh, you know, obviously like technology. Or other industries, it could be very different. Um, because your, your product costs, like once you’ve developed a product might be zero .
Sushant Misra of TrepTalks: Did you ever try to go to like a tank or any of these where. It seems like what may be very useful to your company would be more, um, you know, more of marketing or, you know, eyeballs or, you know, more of the education piece in the market, which I think someone with more celebrity power can, can easily bring.
Have you ever tried to go that way?
David Downing of Chipmunk Baking: Yeah, we’ve, we’ve applied to Shark Tank a couple times. You know, I think it’s just an incredibly competitive process, so no luck there. But obviously if you are a startup, you should just apply to Shark Tank cuz the publicity is worth millions and millions of dollars.
You don’t even need a deal with the sharks, uh, to benefit from. And then, I mean, we’ve, we’ve done like some pitch competitions mostly like locally here in Houston with like the Houston Angel Network, um, things like that, but nothing too showy. Um, it is a good point though, like as a startup, one thing, um, that can really benefit you early on, especially if you sell a product, you know, that people can buy kind of at the click of a button on the website is, um, getting good press coverage or, or what’s called like earned media.
So basically you get somebody to write an article about you or put you on a TV segment for free, like you were not paying for it, and that can have a huge impact. Early on, we actually managed to get a pretty large story written about Jose. And his experience with diabetes and how that led to chipmunk in the Houston Chronicle, which is like the, our city’s largest newspaper.
And uh, I remember when that went out, it just absolutely blew up our website sales. Um, we were. Baking nonstop and packing and shipping orders for almost like an entire week just because of that one article, which cost, you know, the article didn’t cost us anything, so I, that’s definitely something I would recommend to early stage entrepreneurs with limited resources is like, If you can get any kind of press coverage, do it.
Uh, cuz it, it can, it can really give you that like, boost of momentum, um, to take you from sort of a side gig to like, oh, this is a real business now.
Sushant Misra of TrepTalks: Definitely. Um, so is your business completely direct to consumer? What, what channels are you, um, selling
David Downing of Chipmunk Baking: from? So our business, uh, I guess you could say we’re kinda like a multi-channel.
Uh, we do about half of our revenue from e-commerce. Um, I would, within that kind of half, two-thirds is our website, chipmunk baking.com. And then the remainder is Amazon. Uh, we sell on amazon.com. We, we do both, uh, fulfilled by Amazon, so Amazon Prime, and then we do, uh, fulfilled by Merchant where we, we ship the orders ourselves.
Um, the other half of our business is we, we broadly classify it as whole. Um, basically we sell larger cases of our cookies, um, to accounts that then turn around and resell those cookies to the end consumer. Um, so we’re in grocery stores, coffee shops, there’s hotels, gift shops. Um, we’re even some other websites that, you know, like weight loss websites.
Uh, it kind of runs the gamut of things. Um, and then the kind of last piece of that too. Which is a little bit interesting because we make our own cvis. Since we have our own bakery, we do what is called private label manufacturing. So we will, uh, we will make. Kind of low carb cookies on behalf of other companies, and then we will put it into their branded packaging as well.
Um, so like, a good example of this is like a, maybe like a big chain of meal prep companies. Like they make, uh, they make meals for thousands of customers a day. Well, they might wanna add a dessert option for their, their customers. And so we can make, you know, thousands of, of low carb cookies and put it into like their meal prep packaging.
And then we just sell it like that. Um, it’s something unique because we do, you know, we own the manufacturing of the, of the product.
Sushant Misra of TrepTalks: Definitely. Um, I mean one idea as you were talking about it is like maybe, but maybe the price point of the, you know, healthcare organizations or hospitals, maybe, you know, this may be a good fit for, um, you know,
David Downing of Chipmunk Baking: hospitals.
Yeah, no ho hospitals. . Um, I mean that’s an ideal place for us to sell our products. I think, you know, one thing I’ve learned when it comes to selling food products though, is there are so many middlemen. Between you and the end consumer. So it’s, you can’t just like walk into a hospital and like, you know, talk to whoever’s making the food to the hospital and sell your cookies, that they almost always use what’s called a distributor.
Um, you know, like I’m sure you’ve heard of like Cisco or US Foods, these big companies, they’re always the middle men between the actual brands and manufacturers, the food, and then the. The physical locations that are selling set of food, um, which it’s, it’s sort of like this weird chicken and the egg, uh, struggle because the distributors don’t ever wanna work with you as a brand until you can say, Hey, I’ve got like a hundred accounts that are gonna order my stuff.
But then the accounts don’t ever wanna work with you until you have a distributor carrying your product, . Uh, so it’s, it’s a, it’s a huge struggle for an early stage food brand.
Sushant Misra of TrepTalks: One thing that I’m really interested, so on your website, it seems like you sell through some of these wholesale marketplaces like Fair and Abound, and quite a few of them.
Have you had good success selling through these marketplaces? And I mean, you’re in quite a few different ones. Um, is there like our, some, are some marketplaces working better than others? Or like what is the difference? Is it just that different marketplaces are catering to different kinda. Sellers and, and so you want to be in all the different kinds
David Downing of Chipmunk Baking: of places?
Yeah, it’s um, I, online wholesale marketplaces, they’re very interesting. Um, cuz they’re basically like a technology play that’s trying to solve that distribution problem I just mentioned. Uh, I think they’re all those companies you just mentioned, they’re all. Competing very hard with each other right now to try and capture, uh, kind of the market of brands like me and these like wholesale accounts that would want to use the platform.
I think it’s a great, I mean, excellent idea. It’s, it’s, uh, something that’s need, needs disruption seriously. So I’m so happy that those platforms are available. Um, I will say that some of them are far more successful than others. Uh, it, you know, I, which is probably. It comes down to like how much budget, like money do they have to dump into marketing and, and to support, uh, the platform.
Uh, for us, if you look at all those platforms, fair, uh, is definitely takes the lion’s share of the sales generated. Um, it’s probably more than 90%. Versus all the other platforms. So fair. Whatever they’re doing on the back end to get accounts on the platform and engaged, uh, I think is working really well.
Um, I do think there’s a little bit of differentiation where some of the platforms focus more on like, you know, uh, CPG products that you maybe don’t eat like candles or makeup. And, and some of them are more like food focused, uh, but it seems like fair in general is, is becoming kind of the, the giant in the, in the room, uh, in that space.
Sushant Misra of TrepTalks: So, so what kind of a business would purchase through fair? Like, is it going to be like a mom and pop shop kinda a thing? Or is it more like, um, uh, an internet. Retailer that’s selling a whole bunch of brands and they, they want to include your brand, uh, in their
David Downing of Chipmunk Baking: inventory. Pretty much anything you can think of.
Uh, if, if your core business is to buy something cheap and then resell it at a higher price to the end consumer, then you, you could be on fair. Um, and so, I mean, you, you mentioned a couple like Yeah, there’s a lot of, uh, mopa, like small convenience stores that buy from us there. There’s juice bars, coffee shops, um, hospital gift.
We, and yeah, there’s, there’s, um, literally like influencers that run their own live sale selling pages on like Instagram and stuff where they’ll do like a live sales event. Um, we have a couple accounts like that and they’ll, they’ll buy a lot of cookies. They’re very successful. Um, so it kind of runs the gamut.
I, I think, uh, it could be interesting if, if, uh, you know, you were starting a new business, you could go on to fair and sort of see what’s available out there and maybe create a business. You know, just around that whole concept. Wow. Very interesting.
Sushant Misra of TrepTalks: Um, in terms of selling, uh, actually I wanted to ask you, uh, is there, because it’s, these are edible products, is there a shelf’s life to it or, um, how do you, uh, how does someone know if you know when, uh, for what period?
They’re actually good.
David Downing of Chipmunk Baking: Yeah, shelf life, um, when you’re a food product is very important. Um, usually when you’re selling wholesale, right, you need to give the wholesale account enough time. In terms of shelf life to be able to resell the product. Uh, so what we’ve done and what most companies will do is they’ll run, uh, shelf life studies where you can work with like a food scientist or like a lab.
You send them samples of your product and then they will, um, they’ll kind of measure over time what happens to your product. From like a microbiological level, but also from like a taste, appearance, smell. And then, um, pretty much you kind of set this point where, okay, the product no longer is delivering the same experience that I would, you know, the ideal experience.
That’s when you would say like, this is the shelf life of the product. So for us, our, our cookies have a, a shelf life at room temperature of eight months. So that’s when, when we were running those studies, we said like, Hey, at eight months, you know, the cookie isn’t like bad for you. It’s not dangerous or anything, but it doesn’t taste as good.
And so, you know, it doesn’t, it doesn’t represent what the product sort of should be. Um, that, that’s kind of how we approached it.
Sushant Misra of TrepTalks: Do you, um, do you have a preference of, you know, what business model works best for your, what business model you would prefer, you know, a direct to consumer versus like this wholesale kind a model?
Like if you’re looking five years down the road, like do you have a preference that you want to be in major? Grocery chains and, and you just want to work through distributors, or you would still, uh, prefer to, you know, ship, you know, three cookies to, to a customer
David Downing of Chipmunk Baking: directly? Yeah. I think, um, wholesale, like in store, physical store sales.
That’s where like the lion’s share of any major brand is gonna be generating their revenue. That’s just, that’s where most people buy those types of things. Right. Um, and so I think as you get larger as a brand, that’s where your growth is gonna come from. Uh, and really e-commerce can only grow so far, um, especially if you’re sticking to just like a single product line.
Uh, so the way I kind of view it is, If you’re starting out a food brand, e-commerce is the best place to start cuz the barrier of entry is so low. You can literally make something, you know, small batch, put some bags, sticker it and sell it. Um, and then you can kind of iterate really rapidly. You learn from it, you improve the product.
Um, but it gives you early traction. And what it gives you too is like data and feedback. Um, and so, You know, as e-commerce gets a, becomes a smaller portion of your revenue, it’s still really important. I think that a business maintains that channel, uh, and, and invests a lot into it because it’s, it’s ultimately like your listening tool for the end consumer.
It’s how you interact with your, your end customer, uh, and you know, how, how you can improve the product, gather feedback. Uh, cuz at the end of the day, the customer, the end customer is the one buying your product. And so your marketing, everything you’re saying, needs to be directed to them. Um, I think some brands, like if they’re too far disconnected from consumers, they end up doing things or making things that nobody really wants.
And, uh, and then it, it doesn’t work out for them. Uh, like a good example of how we’ve used kind of our e-commerce data, uh, on the wholesale front is everything on our packaging. Like literally every word on there, all the call outs. That’s based off of customer surveys and, uh, direct customer interviews that we did with like our top repeat website customers.
You know, we asked them questions like, you know, what, what occasions of the day do you eat our product? Uh, you know, why did you try us out in the first place? You know, what, what about our product surprises you? Things like that. And that all kind of got distilled down into, you know, the, the messaging that we put when the product is on the shelf.
Sushant Misra of TrepTalks: So, as an entrepreneur, um, or the, I’m assuming you are more of the business prints and you partner with more on the, you know, the product and, and. Operations side, how do you like what kind thought processes that you go through on a daily basis? I mean, do, I’m assuming your thought process are more around how can I grow the business?
Right. And doing some of these things like customer surveys and so forth. Um, what are you thinking about on a day to day basis? What is, where is your focus and how do you keep on, like where, where are your ideas coming from?
David Downing of Chipmunk Baking: Um, I feel like my, my focus can shift a lot. Um, I’d say overall it’s, uh, probably like two main things though.
It, it’s, it’s kind of like what is our strategic plan for growth? Um, so like at the highest level, where is company growth coming from? Uh, and, and then, you know, that aligns with profitability too, right? Let’s make sure that as we grow, uh, we’re doing it a financially like efficient and profitable way. Um, so I, you know, I think that’s something I think of a lot about too.
It’s like, well, yeah, we’ve got sales efforts, we’ve got marketing spend, but like what channels are we focusing on? What types of accounts are we focusing on? What kind of products are we, um, you know, are we investing in or are we marketing the most? Those types of. Uh, are top of mind for me? Uh, I would say the other kind of thing that I think about the most is really like people and the kind of organizational structure and processes behind the scenes.
Um, and like, One, are they working as intended? Like is it working efficiently? Uh, are the people that are in the roles, are they doing their jobs, you know, efficiently? Are they, are they hitting kind of their goals and their metrics? Um, and yeah. And that’s, that’s sort of, and I guess just like continuous improvement around that too.
Like, uh, mapping out like our operations process, our fulfillment, our sales, our marketing, um, even like boring stuff. You know, payroll, uh, bookkeeping, you know, what does that look like? Um, are we doing it in a cost effective way? And then for me too, because Jose and I literally, you know, we did everything for a very long time.
Um, something I think about a lot too is like redundancy. Uh, you know, am I able to step away from the business? And the business can still. Uh, or like if this key person in operations goes on vacation for two weeks, or if they get sick or whatever, or they just quit. You know, do we have backups in place?
Do we have things documented? Uh, you know, can we survive? So that, that kind of stuff is, uh, what I think about a lot.
Sushant Misra of TrepTalks: Yeah, that makes sense. In terms of marketing and customer acquisition, both I’m, I’m assuming direct, you know, the consumer side looks a little bit different than, you know, the kinda marketing or promotion that you do to, for, for wholesale or, you know, um, can you share a little bit about that?
What are some of the things that work well for you? I’m assuming there’s, is there a lot of education piece also?
David Downing of Chipmunk Baking: I would say most of our, um, e-commerce customers, they understand kind of our product. Uh, that, you know, that most of our customers are doing some kind of keto or like low carb diet, so they, they understand sort of the, the nature of the product.
I think, you know, the biggest thing to communicate to them is like, one, this product fits into your lifestyle. Like it’s, it, it’s low carb. Um, it’s gonna be keto friendly or, or if you, you know, like it’s gluten free, it’s diabetic friendly, those types of things. And then, um, after that it’s about just like, Hey, this product is amazing.
You know, like you’ve tried these other keto cookies before, these other sugar free desserts before you probably had a bad experience with them. Well, you know, here’s literally a thousand reviews and a bunch of, of videos of like influencers doing real live tastings showing that this product is, is the real deal, you know?
Oh, and by the way, like if, if you’re worried about not liking it, we will give you all your money back. You know, that, that kind of stuff. Um, so I think that’s, that’s sort of the main focus, uh, with, on the e-commerce. In terms of like channels like that work the best for us. Most of our spend is still in like Facebook, Instagram ads.
Um, we’ve dabbled in like Pinterest, uh, TikTok, uh, you know, we run some, some quite a bit on like Bing and Google. We’ve messed around with YouTube. Our, our whole kind of concept is to just experiment a lot. Um, and then when we find channels that are working we’ll invest more. Facebook, uh, seems to be our lowest cpa uh, spot right now.
Amazon is much lower, but that’s sort of a different, you know, a different concept. Uh, and then I would say within Facebook, the thing that’s working best for us is those kind of influencer video compilations, where it’s like, here’s somebody, uh, trying the product and their, their real objective reaction to.
Um, and then just kind of harping in on those selling points that we mentioned. Uh, another really important piece that we’ve, we’ve more recently started is like, uh, creating like a, a landing page specific for your ad traffic. Um, so, you know, you kind of hook them with, hook them in with this ad, and then you send them to a, a very specific landing page that that’s meant to.
Um, kind of like address any questions or issues they might have right up front. And then present them with a really good offer, uh, to get them to make that first order, uh, and, and get that product, you know, get them to try the product. And then once we get them to try the product, um, they’re looped into our email and our sms.
Uh, Program, which is pretty automated. And then, uh, you know, most people really like the product when they try it. So they’ll come back as a repeat customer. And then that’s where we can, you know, we can actually start to make money as a brand.
Sushant Misra of TrepTalks: A little bit about your. Fulfillment strategy. I see that you do have a free shipping over $60 on your website.
Mm-hmm. , uh, and you, and you did mention that you were doing fba, uh, fulfill by merchant and I’m sure you have your own fulfillment channels also. What is the difference between, you know, Amazon doing fulfillment for you versus, you know, your own, um, channels? Like is the cost for Amazon fulfillment more or less?
Uh, and what have been your experience in terms. The whole experience, customer
David Downing of Chipmunk Baking: service, and so forth. Yeah. So, um, we, we do fulfillment ourselves out of our bakery, um, you know, for like our website orders, for example. So we don’t work with like a three PL or a separate party. Um, when we get a website order, it comes through on our computer and then every morning we pack it up in, in our warehouse and, and us p comes and picks it up, right.
I would say that with fba, with Amazon, you know, we’ll, we basically pack up like large shipments and just send it over to Amazon, uh, which is great because, uh, it, it does save us some time. And then Amazon’s rates are cheaper than US shipping ourselves. And, uh, you know, I’m sure that their fees are cheaper than the labor cost of us doing it ourselves.
The main kind of hold up with Amazon and, and that like why we, um, I guess it, it doesn’t generate as much as our website is because we fulfill in-house with our website. It allows us to do a lot more. Kinda like customization of orders and gives us a lot more flexibility. So for example, we have a product on our website, um, it’s like our cookie bundle and it’s 12 cookies, but you can pick whatever three flavors of cookies you want.
And then our packing team will literally grab each cookie and build your bundle. For you to do that with Amazon would be really difficult, uh, because you would have to like kind of package each, you know, grouping of cookies and you’re paying kind of each time. So it is less flexibility. Um, one thing we do a lot too is because we have our own bakery, we will create like small batch, limited release products.
Um, you know, we’ll do like a specialty flavor or we’ve even done like donuts and brownies and like different form factors. And we will make like 400 units and we’ll sell it on the. Um, that drives a ton of traffic and it, you know, helps increase our sales. That would be impossible to do, uh, you know, with Amazon, just cuz of the lead times involved.
And with Amazon, your product needs to be, I would say, much more refined and like kind of optimized before you start, you know, adding it to the platform or so.
Sushant Misra of TrepTalks: By the way, um, does FBA. Can you fulfill orders that you receive through your website using FBA or is fulfillment by Amazon only for orders that are generated on.
David Downing of Chipmunk Baking: I’m not sure. Um, you know, I have never heard of that, but I would not be surprised if it’s something that Amazon is, uh, is doing or investing in. I know that Shopify themselves and what we run our website off of Shopify, uh, they have like fulfillment centers and they have like three PL services that e-commerce brands can basically send their product to, like Shopify warehouses and then shop.
We’ll ship stuff on your behalf. So, yeah, I, I haven’t looked into whether Amazon would do that, but it, you know, that’s kind of their wheelhouse. So I would, I’d be surprised if they didn’t offer it outside of the platform.
Sushant Misra of TrepTalks: Uh, what does your team look like right now?
David Downing of Chipmunk Baking: Our what? Oh, team. Your team. Yeah. Um, we’ve got about 12 people.
Um, I would say about half of our team is, uh, production related. So they’re working in the bakery, um, you know, buying ingredients, running tests. Coming up with new recipes and effectively making sure that we’re putting out like high quality cookies and enough of those cookies to fulfill all our orders.
Um, the rest of the team, Jose, my co-founder, he, his main focus is on like wholesale outreach. So he’s, he’s kinda like head of business development. Um, he has a couple folks that help him, um, with outreach on sales and then like account management, like checking in with all of our existing wholesale accounts, making.
You know, they’re, uh, being taken care of. And then, uh, we’ve got a few folks that help kind of like generalists, I guess you could say. Um, so they help with things like customer service, inquiries, um, daily fulfillment of orders. And uh, we also on like digital marketing, we do have a full-time. Digital marketing lead who runs, uh, you know, all of our paid advertising.
Um, they do all of our email, SMS marketing, and then anything on the website like, um, conversion rate optimization or like adding in new products. They, they’re kind of a lead there too. It’s, it’s a pretty big team. . Oh.
Sushant Misra of TrepTalks: And every entrepreneur’s journey, there’s always mistakes made, lessons learned, you know, um, in your own journey, are there like one or two things that really stand out for you where you thought this made or I could done differently or failure and what learning for you, what and what entrepreneurs
David Downing of Chipmunk Baking: learn from it?
Oh, man, I’ve, I’ve. So many mistakes, uh, make mistakes on the daily. Some of them have been really expensive. Uh, you know, I think a one that comes to mind just caught like immediately cost us money is like making packaging mistakes. Like if you order the wrong size packaging or like the wrong material.
Usually when you’re ordering packaging, you’re ordering like 10,000 plus units. So, um, that’s never really fun. Uh, I would say like other mistakes though, or maybe like advice for other entrepreneurs, it comes down to like people, um, two things is like, one, hire the right people. Like take, take that extra time to make sure that whoever you’re bringing in on the team, no matter what they’re doing, they could literally be just sweeping the floors every day.
They need to be like great people. Um, don’t let the pressures of your small business kind of force you into quickly hiring whoever you can first. Um, we’ve kind of been in situations like that where we’re like super shorthanded and you know, we’re like, oh, whatever. Like, can they, can they stand like put ’em in the bakery?
That’s great. Um, that always blows up in your face. In the end of the day, you need to find people who like, have the ability to grow and that they, they contribute to your overall, um, kind of culture of the team. Uh, cuz that, that, that’s ultimately like how you build real value, um, and kind of can grow together.
Um, And then I, I also on that note, it’s like if you are a leader, if you’re the entrepreneur or founder, is make sure you are investing time with your people. Um, again, no matter what their role is. So, uh, that’s something that I’ve, I’ve tried to kind of shift more of my time towards is like doing one-on-ones with all of our team members.
Um, just getting to know them on a personal level. Checking in with them, setting goals, um, both for work, but also like talking to them about their aspirations and their goals outside of work and seeing if there are ways you can support that, um, either through the business or just, you know, as a personal like mentor.
Um, but I, I think. Just, just getting like that FaceTime, um, is really important to making people feel like they’re valued, uh, making them feel like you care about their growth. And it, it, it’ll, it’ll help them put in that extra effort, uh, that you, you really need with a startup. Cuz like startups are just, you’re always gonna be under-resourced, you’re always gonna be overstressed.
And so you, you need people who. You know, they’re, they’re not just coming in to kind of clock in and clock out. Uh, they’re, they’re there because they’re excited. Uh, they wanna be a part of, of that team and whatever you’re trying to do, and, you know, as a leader, you have to, you have to invest the time to kind of plant the seeds of that excitement.
Sushant Misra of TrepTalks: Definitely. So now we’re gonna move on to our rapid around, and in this segment I’m gonna ask you a few quick questions and you have to answer them maybe one, one couple of words or a sentence as well. So one book recommendation for entrepreneurs or business professionals and why.
David Downing of Chipmunk Baking: Yeah, I, I kind of cheated, uh, wrote down some of these things.
Uh, , the one that came, came to mind, uh, is a book called Traction by Gina Wickman. Um, and it, it’s basically, it gives you a framework for. Building more of a process, system oriented business, um, that that grows beyond just yourself. So I think a lot of times when you’re starting a business, you or, and or your co-founder, you’re literally doing everything for a while.
That eventually, like you’re gonna start needing to bring in people and defining processes. And this book, uh, gives you a great framework for doing so in an early stage. So a lot of like how I manage Chipmunk is directly taken from that book. I would, I would recommend it. Okay.
Sushant Misra of TrepTalks: An innovative product or idea in the current eCommerce retailer landscape that you feel excited about?
David Downing of Chipmunk Baking: Um, product I, I’m a big fan of a company called Athletic Brewing. Um, they make non-alcoholic. Beer, but it’s like craft beer. So it’s like stouts and IPAs and sour beers. And I would say they taste like 80 to 90% as good as the real thing. Um, but they have half the calories and no alcohol. So for me, like I, I love to like drink cocktails and beer.
Um, but I also recognize that it, it doesn’t, you know, it can impact my performance. It can make me feel like crap. And so during the week, if I, if I’m trying to avoid alcohol, but I’m like stressed and I wanna treat myself at the end of the day, uh, I really like their beers cuz it, it feels like I’m having, you know, like an ipa.
Uh, but I’m not , I’m not getting all the negative side effects.
Sushant Misra of TrepTalks: Awesome. A business or productivity tool or software that you would recommend or a productivity tool?
David Downing of Chipmunk Baking: Um, I think the one that immediately comes to mind, cuz I use it a lot, I think it’s a little controversial, is Calen Coly. Um, it’s basically an app that just plugs into your, like your calendar, your Google calendar, and it allows you to send a link to anybody and then it can schedule time directly on your calendar.
Um, I just, the whole. Emailing back and forth, like, when are you available? When are you available? Like, it, it’s such a waste of time. Um, this, the link and just having someone book time when it works best for them is amazing. Um, I think some people don’t like it cuz it seems a little like, uh, I don’t know, informal or like, it’s cold in a way, like, oh, like book time into my schedule.
But it, for me, it’s just about saving time for everyone involved.
Sushant Misra of TrepTalks: Yeah, currently is definitely a great product, very useful, simple, and, and I think so many people need it. It’s a great, they’ve done a really great job. A startup or business in e-commerce, retail or tech that you think is currently doing great things?
David Downing of Chipmunk Baking: one founder, uh, is a guy named Roak Shaw. He’s the founder of Obvi. They do like collagen protein powder and collagen protein, um, kind of products. He’s. Like a really interesting person, uh, to learn about e-commerce tactics from, uh, actually all, all kinds of stuff too. He talks a lot about like, uh, financial tips and tricks too, um, to help fund your growth.
But if you like Google him or YouTube him, he’s got a few, um, talks and literally the ones I’ve watched, I like have a notepad and I jot down all these ideas and, uh, yeah, I, he’s, it sounds like he’s grown that brand a. And it there, from what I can understand, and not to knock him, it’s just, it’s literally just collagen protein powder.
Like, there’s nothing super unique about it, but their approach to digital marketing, uh, has been very successful. So I think that’s, that’s pretty cool. And there’s a lot, uh, a lot to be learned from that.
Sushant Misra of TrepTalks: Um, so I was going to ask you a peer entrepreneur business person whom you look up to as someone who inspires you.
What, what, whether that individual, or do you have anyone else, uh, that you would like to
David Downing of Chipmunk Baking: re. Uh, um, I don’t know about peers. There’s a lot of people, I would say, like LinkedIn in general is a, is an excellent place to, um, connect with people doing similar things to you. So I’ve met a ton of founders on there.
Um, there, there’s one, uh, guy named AAD Ball, who’s the, he’s the CEO of em, Rita Health Foods. He, his company’s very similar to ours. Um, like they self manufacture, they make like vegan protein bars. Um, I, I, he’s, he is a little bit older than me and a little more mature, so like, I love checking in with him and, um, I don’t know.
He, he is just a good person to talk to. But I would say like LinkedIn is just such a great tool to find people, uh, find people like that. Um, yeah, definitely reach out to your peers. I think entrepreneurs like. It’s just a tough . It’s very stressful. Um, sometimes you feel very alone, and so talking to others who may be going through the same thing can be a great way to just maybe release some stress, but also like to generate new ideas for your business too.
Sushant Misra of TrepTalks: Definitely. And final question, best business advice you’ve ever received or you would give to other con.
David Downing of Chipmunk Baking: Um, I mean, I think that, just go back to what I was saying about the people part of your business. Um, ultimately your business has to grow beyond yourself, which means you’re gonna have to have a team.
Uh, and it’s just, you know, hire very smartly. Take time to vet candidates, make sure they’ll be a good. Um, I would say fire pretty quickly too. Like if it’s clear that someone’s not gonna work out or they’re gonna detract from the overall culture. Um, you know, you need to, to ask them to move on and then, and then invest the time into your people.
Um, spend time getting to know them, spend time, setting goals and, and kind of pushing them to grow beyond just like day to day duties. Uh, I think all of that, that, that’s, that doesn’t really matter what industry, what you’re doing, what you’re selling. Um, if you can nail the people part, you’ll probably have a successful business.
Sushant Misra of TrepTalks: Definitely. Well, David, those were all the questions that I had today. I really do enjoyed speaking with you. Thank you much your time and for story and sharing, you know, some of the strategies that you have used in, in starting and growing your business. So yeah, really, really appreci uh, your time today and thank you for joining
David Downing of Chipmunk Baking: me.
Awesome. Thank you for having me, .
Sushant Misra of TrepTalks: Thank you.
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