PLH 110 | Nui Foods

 

Everybody wants a sweet life, but when it comes to food, too much can become an addiction. Victor Macias and Kristoffer Quiaoit, founders of Nui Foods, are on a mission to annihilate sugar addiction by creating products that are both indulgent and healthy. Victor and Kristoffer take us into their journey, starting from having no baking background to producing a product that brought them to Shark Tank. As rookie entrepreneurs, Victor and Kristoffer know the struggle of starting, and they share to us the ways they overcame those challenges.

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I have a twist on what we do. We normally are talking about how to do stuff and everything, but I thought because we had Kevin Harrington on, that we would twist it up and start to get some lessons on what not to do and what to do from a couple of founders. Nui cookies are the product and Nui Foods is the company. Nui cookies sound yummy. I’ve got Kristoffer Quiaoit and Victor Macias. They have started this company because they want to annihilate sugar addiction. After baking cookies yourselves and having lots of people who love them, you started posting your cookies on Reddit, which is an unusual choice. You got some of your first orders. You did two successful Kickstarter campaigns. We have to talk about that because crowdfunding is not always the preferred method for certain products. Food is one of them. You also have a Shark Tank story to tell us. I would love for you guys to get started and tell us a little bit about the background of the stories. First, what I want to know is, do these cookies taste good?

Absolutely. They’re amazing.

How many iterations of them did you go through before you got to something that tasted good?

For the first one, it took us twenty-something tries. We were in my mom’s kitchen. We had no baking experience. We had to figure out how to make a cookie from scratch. We were YouTubing on how to make a cookie from scratch. I said, “We can’t have gluten or sugar. Let’s figure out how we can replace it.” We eventually created something that we both love.

Imagine two guys going into Kris’ mom’s kitchen asking if we can borrow aprons. It was the middle of summer and we were going to try to figure out cookies. We didn’t know how to bake. We know what good cookies taste like. It was a ton of experimentation until we found something that we liked and his mom liked. We wondered, “Would anybody else like it?”

What made you guys try to kick the sugar addiction? Tell me that story.

I heard about this diet called the ketogenic diet on a podcast. I was like, “This sounds amazing. Let me try it.” Once I went on that diet and it cut out the sugar, I felt my energy levels were through the roof. I stopped napping. I used to nap twice a day. My anxiety levels dropped way lower than it used to be. I used to get hangry and that went away. I told Victor. I said, “You should try this for a few days and see how you feel.”

I was skeptical at first because in high school I used to be the kid that can eat a whole pizza and not gain any weight. I could eat a large pizza by myself. I was a skinny kid but then I went to college and I discovered beer. I gained a ton of weight. I had to try different “diets” where I would lose some weight, I would crash and burn and start again. I was like, “It’s the same thing.” I decided to try it. What was different is it was easy. It was food that I loved, the food that I could indulge in. It’s because of that, the weight melted off. I lost over 40 pounds on a low-carb ketogenic diet.

You guys miss cookies. What cookies did you miss?

Chocolate chip for sure.

Peanut butter was something I missed.

One of the ways that we reverse engineered what cookies to start with were one, what do we love? Two, is what the most popular cookies were at the time. We looked at data and used that to determine what flavors we’d start with to lessen our risk.

This wouldn’t be Product Launch Hazzards and my readers would be all up in arms if I didn’t call you guys out on this. You almost fell victim to the first trap of product design and development. The first trap is picking something that you like, share it with your friends and family and they tell you that they love it. It’s not a sign of something that likely will be successful. You guys didn’t stop there. You did go on Reddit, which is an interesting choice, to test it out. That’s our rule here on Product Launch Hazzards is that it doesn’t matter how many people love you, love your cookies or love your thing. It only matters if they’re ready to plunk down dollars for it.

I 100% agree and it was great. You like it, I like it, your mom likes it, but do we have a business? We don’t have a business unless people will buy it. We go on Reddit because there are various focus groups on there. There was a keto group on Reddit. We threw up this simple looking website with a picture of a chocolate chip cookie, a stock photo we found, a PayPal button and some copies saying, “Low-carb, keto-friendly and delicious.” We paid $20 to advertise. We said, “Kris, we have a rule. If we sell fifteen of these, then we have a business.” We launch it. We sell one and then three. All of a sudden, we’re getting 10 orders, 20 orders, 30 orders and I was like, “What is going on?” Kris calls me after we had hit twenty and he was like, “Do we have a business yet?”

It doesn't matter how many people love you or your products. It only matters if they're ready to plunk down dollars for it. Click To Tweet

You got upvoted on Reddit. That’s what happened to you. It got shared within the group. You went into a place where it’s not typical to test market a product. We test the market on Etsy or we test market on Amazon. We test the market on Instagram, but Reddit was an untapped territory. You guys tapped into something. You had a group there that you were already jumping into that were already focused on the topic. They were interested already. This is something that we talk about all the time here on the show. We’re talking about finding your core audience, finding the tribe you can gain access to the quickest to test market your product. That’s what you did. You went straight to the tribe that’s already interested and passionate about keto. You got valid feedback. In this case, it validated the results and said, “Go for it.” What’d you do from there? You got to build a business.

At that time, we were buying all our ingredients from Whole Foods. We were losing money on every single order, so like, “Let’s put a pause on this.”

If you are losing money on your initial test but you find out you have a business, you can always lower your costs. It’s way more than if you invested in all of this, going all out in it, making thousands of cookies a day at some facility and then discovered you didn’t have an audience. You’d spend way more money that way. That’s still okay. It’s an okay way to test the market.

We wanted to reduce the risk involved. It wasn’t that risky to put a $15 ad on Reddit. What’s the next thing that we can do to level up without risking a lot? We were like, “Let’s do Kickstarter.” We decided to run a Kickstarter. We looked up all these different articles, how to hack a Kickstarter or watching all these YouTube videos because we’ve never done it before. One of the biggest things that we took away was the biggest mistake that people make are that they go on Kickstarter expecting that their project will get funded magically out of nowhere. They say, “I’m going to put on a Kickstarter. People are going to find me. They’re going to fund my project. Everything’s going to be good.” What we learned was that 99% of the work happens 45, 60 days before. We did a little bit shorter than that. We did it in 30 days to launch it. We started building a community. We talked about community. We started looking into what other communities that we could start talking to. One of the biggest things that we found was Instagram. We started looking up, “Who are the influencers that love keto that maybe have 10,000?” At that time, 10,000 and 25,000 were huge numbers. We would message them, “Can we send you some cookies? It’s free to try them.”

You have good low-hanging fruit in terms of a product that’s not too expensive. You didn’t have to wait like most Kickstarters until the Kickstarter is funded to be able to send out samples. You had a benefit to going forward with that. Plus, you already did know your profile. You already knew the keto community. You knew who was in it. You knew what kind of people they were. That’s smart. I would also suggest if you had consulted me at the time, podcasters, because we have a huge number of keto podcasters out there and/or biohackers, whatever you want to call them. There are a huge number of them. If you’re in that world, those are influencers. Their communities are 10,000. We call them micro and nano influencers. The micro and nano influencer levels have a higher influence over their community and the conversion rate is higher than it is if you got into a big group. In your early days, that’s a good plan. You guys have stepped on all the good things right away. Did you have a marketing background before?

Victor was deep into digital marketing.

You had a little sense of how things work, how advertisements get placed. That’s a benefit that you have that experience.

I was running social at the time. I had no idea how to run social media. I knew that influencers were the key. I was like, “How can I bribe them with cookies?”

We were giving them something. A lot of times, the mere fact that we’re giving them something and not expecting anything back, they’ll talk about you.

Especially if they love the product. It’s like, “If they don’t talk about us, that means they don’t love the product. You don’t want them talking about us anyway.” Fortunately, people loved it. That’s how we got the word out.

You probably got a few more clients in the process. That led you to something. I buried the lead on this when you said that you went on Shark Tank. You have a cool Shark Tank story that’s exciting. In a way, I’m not surprised this is a choice because I’ve been seeing him post a lot about ketogenic type thing. He’s off his sugar addiction as well. Tell us your Shark Tank story. Tell us who you decided to go with.

Family and friends have always been going to us and saying, “Why don’t you guys go on Shark Tank?” We probably got asked a hundred times to go on it. We always dismissed it like, “There are many applicants.” There’s one day it clicked. It’s like, “What do we have to lose?” We only have to lose time, but the amount that we gain by being on the show is tremendous. We don’t have to spend money. It’s a day or two. We decided to go to open-casting call. We got there. There were a thousand people there already in line. We were like, “How are we going to stand out amongst all these people?” We saw the casting agents walking together, handing out wristbands. I was like, “This is our chance to make an impression on them because we need to stand out.” I went sprint to the car. I grabbed all these cookies, as many as I could hand. I held them in my hands. I started handing it to them and said, “I’m not trying to bribe you or anything, but I know it’s going to be a super long day and you’re going to be hungry. Here are some cookies.”

You were serving. They’re cookies and they’re not all sugary, so you’re good.

It was a long day. It was twelve hours that we were there. We were trying to condense our story into a short fragment.

PLH 110 | Nui Foods

Nui Foods: The micro and nano influencer levels have a higher influence over the community.

 

Tell people about how that works. I’ve written about it a few times, but I don’t go into great detail on it often because the articles are short. There’s a lot of prep that comes with it, working on your pitch and getting that right that comes with that. How does that work?

We can talk in a little bit how we learned how to prep from Beyoncé and Destiny’s child. In order to make our first impression, you take eleven hours, you know they’re going to be exhausted by the time that they see you. How do we stand out? Our whole question was, “What do we do to stand out?” We went up and we pitched the first round when we were there at the casting call. We were like, “Here’s why you should not invest in us. Neither of us has any baking experience. Neither of us has any experience in the industry. Neither of us has any blank, blank, blank,” they were caught off guard, “but here’s why you should.” We showed all our traction and their eyes lit up. We looked over and they had a bag of Nui cookies on the table.

They were already eating our product. It sold. We won.

That’s a great way to do it. What you’ve done is not only set yourself apart, but you already handled objections right from the beginning. People say that they invest in people they like. The reality is that most inventors, most people who go on the show are all about their product. They think it’s their product that they want to like, but it’s not. It’s you guys. It’s, “Can you guys do what you say you’re going to do?” and then you pull out proof. You have proof you did it. You’ve already been doing it. You honestly don’t need them. Why isn’t that the best time to invest in someone when they don’t need your money? They’re going to be able to do amazing things with it. They’re not desperate. You get in front of the Sharks. Tell them who the guest shark was.

It was Alex Rodriguez.

He and JLo have been doing nothing but posting about totally breaking the sugar habit. Did that happen before or after?

They started posting afterward. Before we got to the show, I had a dream that someone was eating our cookies. That person happened to be JLo. She was sitting at a breakfast nook eating our cookies. I didn’t think much of it at the time. I brought it up to Victor. I said, “I had this weird dream. JLo was eating our cookies. Maybe that’s a sign or something.” He said, “You know that Alex and JLo are dating?” I was like, “No way.” That set the tone before we even went on stage.

He was the guest. You got multiple offers, which is great. You pitched well. You got an offer from Kevin O’Leary. You got an offer from Barbara Corcoran. The thing about them is they all have food in their portfolio already. That’s a pitching match. It’s important to whoever you’re going to pitch in front of. You don’t want a total overlap. If they had your specific cookies, that’s going to be a conflict of interest. If they’ve got cookies, they already understand or they’ve got the food they already understand processing and issues. It’s not something new they need to learn. That means that they’re always on the lookout for new food groups, new products and new companies to bring in to their portfolio. You hit on something that they already had a specialty in. That’s a safe bet. That would have been the safe choice that most people would make to say, “I’m going to go with them because they already understand the food processing. They can scale us. They’ll know about how to do that.” Instead, you went with A-Rod because he made you an offer as well. Why?

Mr. Wonderful came to us with an offer. He usually does royalty deals. For us, it was hard to have a royalty deal because our margins weren’t super high at the time. It didn’t make sense for our cashflow. Barbara, she was like, “I’ll come in.” We were like, “Awesome.” We were super excited because we know she works with food companies and then she comes out with a royalty deal. I was like, “Barbara, why would you do that?”

Those weren’t great deals for you then. It wasn’t a good match. This is a sign. You know your numbers. You know your pricing. You know what would work for you. You also know how you wanted to scale. How did A-Rod fit that?

A-Rod comes out. His evaluation was a lot lower than what we wanted. It’s tough and the bright lights were shining on us and there’s all this pressure.

It’s not a good time to be making a good decision.

One thing for us is we believe in the Law of Attraction. We started looking at each other after he started talking about JLo. He goes, “I happen to know someone that loves cookies. Jennifer has a cookie every single night.” After he said that, Victor and I looked at each other. We were like, “That’s a sign.” We decided to go with Alex.

They went on their whole ketogenic push. She looks incredible for her age. I can say that because I’m the same age. She looks way incredible. You also have a personality match with Alex Rodriguez. He comes from immigrant parents. He wrote in the bio, Poor, Hungry and Driven, PHD, which I relate to. I love that’s how you guys all are. That helps him understand what you’re struggling with. Too often I find a lot of venture capital groups, all of them come in and they don’t understand that you don’t have the cash to show up at a trade show because they tell you to. They don’t get that. To have someone who already gets that is important because they’re not going to put you in a position on which something you can’t do and yet you can’t refuse them because he’s your money guy. That’s not a good place to be. Having them get it is important.

The greatest gift of having no money is how it forces you to be creative and resourceful. Click To Tweet

That was a selling point for us. The Founder of Alibaba has a quote. I’m paraphrasing, but it says, “The greatest gift I had was having no money because it forces you to be creative and resourceful.” That’s what’s done. It’s like, “We bootstrap this with $3,000 each.” It was what we had saved. To take that and use that to grow a company is one of the best gifts we can ever have because it forced us to do a minimum viable product. It’s forced us to do things with lower risk and a higher upside. To have somebody empathize with that was important to us.

You couldn’t have hit into all this like great timing and luck. It’s not all that. There were a lot of things that went wrong. What went wrong?

One is we almost burned down the kitchen. We moved to a commercial one.

That would have gotten your insurance rate through the roof. You would have gotten fully kicked out. That’s not good.

We moved into a commercial kitchen. We thought the ovens operate like my mom’s. We were like, “It’s the same thing.” It was the same temperature and time. All of a sudden, all the smoke came puffing out. We sprinted off and turned it off. People came running in. They were like, “Are you okay?” We were red because we were so embarrassed. We were like, “These people probably think we’re noobs.” That was a learning experience.

We were talking about resourcefulness. We were at a point where we were growing so fast that we had money, let’s say from the Kickstarter, that we were like, “We’re anticipating we’re going to be at this pace. Let’s jump ahead.” At one point, we had an office that was 4,000 square feet. We’re four people. We justified it by saying, “We’re going to fulfill X amount of orders. If we fill X amount of orders here versus going somewhere else, we’re going to save X amount.” We got in there and we were in a lease for $4,000 about a couple of months in because we were moving so fast we realized, “Amazon is crazy cheap and now we send all of our products to Amazon. We’re saving money on the shipping and now we have a place that’s 4,000 square feet a month.” We were able to get out of that agreement. That was an example of we were excited that we were growing but we didn’t take into consideration how fast things change. You need flexibility.

It is a rookie error to think that you should reinvent it, do it yourself and it’s going to be cheaper that way because it isn’t at scale. When you have somebody who’s as efficient as Amazon utilizing their process in their facility, you can’t catch up to that at any point. It distracts you from being able to grow your product line, which I’m sure you’re going to need to do because you’ve got to have some more ketogenic foods. We don’t all want cookies. My daughters would like cake and if it can have frosting all the better. Whatever that is that you’re getting asked for by your customers, you want to be working on that and not necessarily on these things that aren’t going to matter should you get on the retail shelf somewhere. It’s such important lessons that you were learning. What is the biggest thing that keeps you up at night? When you have a company that’s growing fast, you’re stressed. There are things that are always making you worry. There are always things that you’re thinking through. What are some of the biggest opportunities that are nagging at you? I want to take advantage of that, but we’ve got to slow ourselves down a little bit.

One of them is retail. All our sales have been online. It’s been great, but there are a lot of opportunities to have a retail presence. Retail helps online sales. We know from talking to people that it costs money to be in retail and the margins are a lot lower. We’re trying to figure out, “How do we navigate this in a way we’re not bleeding cash and while growing?” One of the biggest things that we’ve learned is people focus so much in revenue. We also have to focus on the profit because the profit is going to help us with scaling. If you do it responsibly, you won’t find yourself in a cash crunch. That’s one thing that we’ve learned from our mistakes of overspending.

You need to build a sustainable business. Having a profit focus is critically important to that. As you grow, the margins get less for you. Your profitability needs to be there to be able to make that happen. Those are some critical stages for you. It’s the stages of going into a mass-market retailer, going in the Whole Foods and going into those places. That can be giant pitfalls if you do it too soon and you’re not ready. You have a bunch of revenue, but you don’t have a sustainable company at the end of the day. What else do you want us to know is on the forefront for Nui Foods? You said foods, not just cookies. Is there something on that you can tell me? I’d love a scoop if we can.

Our mission, our goal is to be the Nabisco of low-carb, low-sugar foods. Everything that pains you not to eat, but also pains you to eat because it’s hurting our health, we want to create those indulgences to solve that problem. Instead of grabbing an Oreo, they’re grabbing our cookies. Instead of grabbing a Hostess Ding Dong, they’re grabbing our stuff. I can’t get into the details of the products.

There’s expansion line coming. Have you gotten yourself a professional cook, somebody who has a chef experience, who has food experience here, not just you guys?

We’re no longer an army of people hand scooping cookies. I can say we’re more of a marketing company. A lot of that is handled by other people that are more capable than we are.

Luckily, we found these amazing food scientists that know low-carb and low-sugar. I said, “Can we make this?” They’re like, “Yes, we can do it.” I’m like, “Let’s do it.”

Have you gotten yourself a process for testing it out? Testing out amongst yourselves is still not a great idea.

PLH 110 | Nui Foods

Nui Foods: You need to build a sustainable business, and having a profit focus is critically important to that.

 

We test it out with ourselves. We send it out to some of the people that are close to us, in terms of our influencers. We’ll have them try it out and get their feedback. We’re in an office with another company that’s focused on writing about food. We’ll give them samples.

You also understand how to be more editorial too because that matters. I am glad you guys came on the show and gave us some insights. I can’t wait to see you guys on a shelf somewhere. I’m sure it’s in your future. You certainly have all the makings of a great brand new, big brand food company.

Thank you so much.

It means a lot to hear that. Thank you.

We will be back with another story, another set of lessons. For now, thank you so much for reading and don’t fall victim to all those hazards of product launches.

Tune in to Kristoffer Quiaoit‘s next Office Hours. Connect with and find out more about Kristoffer Quiaoit in our Experts Directory.

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About Nui Cookies

PLH 110 | Nui Foods

Nui Cookies were created by first-generation American entrepreneurs Kristoffer Quiaoit & Victor Macias who struggled with their own weight and fitness.

They set out on a mission to annihilate sugar addiction. After baking Nui cookies in their home kitchen for themselves, friends and families, Quiaoit and Macias, created a website and posted about their cookies on Reddit which led to initial orders.

The next step was two successful Kickstarter campaigns that raised over $200,000 and a fateful Shark Tank audition that led them to cast for Season 10. In the tank, they were offered investment deals by Kevin O’Leary, Barbara Corcoran, and guest Shark Alex Rodriguez.

The founders of Nui decided to go with the deal Rodriguez offered which was $300,000 for a 25% stake in the Company. The MLB Superstar related to Quiaoit and Macias because they all have immigrant parents and “grew up with Ph.D.” ( Poor, Hungry, Driven) backgrounds.

 


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