BLS Interview with Karen Posada, Founder of The Good Promise, Part 2

Derek continues his interview with The Good Promise founder, Karen Posada.

Part 2 – Read part 1 about Karen getting started with her product and how she got into Wal-Mart.

Listen to the Podcast

Derek: A couple of things that really stand out to me. I mean, one is, you’ve had quite an experience but you did get to experience those joys of success or opportunity pretty quickly in your development. Our business took a couple of hard years of bootstrapping. I mean, you did that as well but that’s really impressive and exciting that you go that kind of attention early on but kind of got thrown into the big game pretty quickly.

Karen: And made so many mistakes because I kind of wish it had been the other way around, to be honest because if we had gotten maybe 10 stores, we could have test marketed our product, with 10 stores. Even though it was so exciting-  I mean, I think so far we have sold close to $350,000 but we’ve made no money, we’ve lost like $70,000. So even though we’ve sold a lot, it wasn’t smart. So I feel like if Walmart would have given me five stores, maybe they wouldn’t have given me 500 stores and I would have been like, “Oh my God, this was a disappointment in five stores” but maybe because we were so thrown into the game so quickly, I could have possibly not jumped into the big leagues right away. As frustrating as it is because when you go with the little guys, you’re possibly only going to make $10 per store and it’s going to be really hard to sustain yourself with that. But maybe you have to do that in order to truly test the consumer and your product, before going with the big guys.

Derek: Right. It’s interesting how yours happened in reverse. I like how your mindset – one thing that stands out to me – in an interview the other day, someone else, who actually had been on Shark Tank as well, said that, “The market is brutal but it won’t lie to you, so listen to it.” So when you’re putting your product out there to test it, it’s really important. So I like that you’re not only listening to it but you’re changing the price and even the product and the packaging.

Karen: And we have, yes. I mean, even after we went to- and the distracting thing was- it was [laughs] I’m still kind of- I was in absolute shock because we’d created this product. We had just gone to Walmart, we did the “Made in the USA”, we got featured in the Wall Street Journal. The buyer who had been at Walmart for 16 years, Paul Wren, tried it and he was like literally, “This is the best stuff I’ve ever had.” So it’s not like I was crazy that I just went in there with a product that no one had ever tasted and we even paid, we paid a consulting firm $15,000 to create the flavors. I like that we just cooked something in the kitchen and threw it together and went in there. Then I get there and they’re literally- and plus, you deal with producers up to a point and the producers are like your biggest cheerleaders and they’re telling you, “This is the most amazing stuff we’ve ever tasted.” So you’re so pumped up, you walk in there thinking, “Okay, even if they don’t get me a deal, they’re going to love my stuff and-

Derek: Endorse your product and it’s just going to fly off the shelves.

Karen: – and then, they said- and then they start with the faces and I was sitting there being like, “Oh my God, what did I just do? I just killed my business. I should have never come here!” It was obviously, it’s way more for TV because they want it to be scandalous and it was just like a rude jokes and the sort of things they were making. But even at one point, Lori – which I thought – I went in there thinking, “Lori’s going to be awesome.” She was like, “Well, you’re a woman, right?” and I said, “Yeah, I’m a woman” and she was like, “Well maybe you’re just in stores because you’re a woman.” I was so – I thought, “Wow, I can’t believe you would say something like that.” So it just was a horrific experience, I think I cried the day they told me it was going to air because I was like, “Oh God, this is going to be terrible.”

So it aired, I had maybe two or three glasses of wine, trying to calm myself [laughs] and I had- surprisingly enough Derek, we have like – I don’t know, out of the- 50,000 people went to our website and about maybe, I’d say maybe a hundred people were like, “How could you take – How could you go onto Shark Tank and take away the opportunity from someone else? When your stuff is so horrible!” And we hadn’t even launched the product yet and we had some people being like, “This is the worst $2 I have ever spent” and at first I was like, “Don’t answer to social media, it’s not worth it” but I’m like, “I have to.” I’m like, “Where did you buy the product?”, “I bought it in Texas” and I’m like, “It’s not sold in Texas yet.” “I bought it in California”, then I’m like, “It’s not sold there. It’s not sold anywhere until now!” you know.

[laughter]

Derek: It’s an amazing story. Again, that you launched in – and tell me the timeline, how quickly you presented to Whole Foods-

Karen: Literally, we launched August 2012. Formulated the product by January of 2011, presented it to Whole Foods February of 2000 – I mean 2013. So presented it to – formulated the product January 2013, presented to Whole Foods like March, they completely killed us and emailed Walmart right after that, met with Walmart in May. We launched in 500 stores by October.

Derek: And then within a couple of years, you’re being featured with Wall Street Journal and Shark Tank and-

Karen: well, then after, it was like one and a half year of absolute – literally the most stressful time of my life because now we had taken on investors and I had now my mom and I had myself. It was part of her retirement money and then when you have a small business, the incredible amount of guilt that every decision that you make, is going to impact these other people. Now it’s not just you and your mom, it’s other people involved and you can’t control consumers, I can’t force them to buy. I – it’s just a product that they have to either accept or not accept.

So it just was extremely, extremely frustrating and there were nights that I was literally thinking, “What did I ever get myself into” because here I am driving through South Carolina and North Carolina, begging people to buy my product. And some people were like – so I’d realized some markets were just – they weren’t going to get it and they were like, “Why did you make it organic? We don’t eat organic.” You’re like, “What? Why because it is good for you.” So it was just like you were saying, the market kept saying to me, “We don’t care about organic enough, for the price. If the price – if organic is cheap, we will buy it. IT I thought, “It’s true. I am thinking as a working mom but only has one child but if I had four or five kids, I can’t maybe afford the $4.99.” But as a manufacturer, I’m thinking, “I’m giving you the best stuff, I’m barely making any money. Why won’t you pay $4.99?” So it was a very frustrating time in the business and I think it probably aged me incredibly, two years probably brought on 10 [laughs].

Derek: You were on Shark Tank fairly recently; I think I talked to you pretty soon after you were on-

Karen: Yes, so the Shark Tank was actually a two-year ordeal and I’ll tell you when that started. So we get into Walmart and we’re not selling how we wanted to, we’ve now driven across the country and begged people to buy our product but they weren’t buying as much as we needed them to. So then I thought, “We’re going to go on Shark Tank.” So I did a whole video for Shark Tank, like, “We’re in Walmart”, said the whole story about Walmart and we got to the producers, the producers loved it. They were going to showcase us in 2014, so by the end of 2014, or like mid 2014, I was telling my buyer, “Okay, we just- I think we’re going to be featured on Shark Tank, I don’t know, maybe that’ll be what does it.” Then they dropped us from the show at the last minute, which was another devastating thing because you think – which is also very silly of me – to think that a TV show is going to make or break your business because you shouldn’t have to depend all on that. Especially because you never know what the outcome is going to be.

So that didn’t happen and I think my buyer became – the people in Walmart move fairly quickly and now she’s like the head of a bigger department and another buyer came in. He was kind and responsive but we had now been through two and a half years of really a struggling brand and he said – and I even said to him, I was like, “Russ, I don’t want to keep wasting your time or space, you guys have been extremely kind to me” and it was a very sad moment when I had to say, “This isn’t making sense for us or for you because we’re just not making enough money. I mean, you can keep producing product and keep losing money but you’re losing the opportunity of having something that probably moves a lot faster through your shelf and we’re losing – we’re bleeding money here.”

He was – what’s so awesome about Walmart, is he said, “Well, we really like you and the other products you may have, we’re always here for you”, he was very, very kind. So we finally came to realize that we were going to drop the line but Walmart kept buying until our – at the end of- until they pulled is out of store, so that helped us go through our inventory. Then we got a call from Shark Tank and they said, “Now that you’ve created this new product line, now we’re really interested and now you’re going to be featured.”

So we started the whole audition process again and when that happened, AGB of Texas, which is a really big supermarket chain in Texas; picked us up and said that they wanted us a primo pick, which is the best of, best of Texas. So we were chosen as a finalist and so stuff started happening fairly quickly again. then Shark Tank airs and it’s an absolute nightmare. It’s so devastating how terrible-

Derek: It seemed like they liked the product at first and then it took- I remember watching it and then it seemed like it all of a sudden, took a turn.

Karen: Yes, I just- it’s like the veg- because they first tried the protein drink, which I think you tried and then they tried the vegetable drinks, which were actually really good. Granted, it was 6 o’clock in the morning in California when we were filmed. Anyway, so the show aired and we had 50,000 people go to the website, about a hundred people said why was I even born? Then maybe another thousand hate emails but we had sold about – maybe- we got from the show, I’d say about 3,000 orders. Which was huge for us online because it made me realize- and I think most of them bought honestly, to see if it was as bad as Shark said it was. Because there were lots-

Derek: 3,000 orders pretty quickly too, I mean-

Karen: Yes, like in a weekend. They tried them and what was awesome, was that most of those people started re-ordering but now I thought, “Oh my God, we never even thought about our line because we met with Valero, the gas stations, they loved them and they were going to launch us in the summer. But I thought, “Holy cow, I’ve been ignoring something that could be huge for us, which would be online so we don’t have to depend on the carriers and the retailers and slotting times which al l- for instance, we were getting slotted into AGB for 2017. And if a small company doesn’t have the capital to wait until 2017 or 2018, you’ll be dead by the time they put you on the show or you won’t have a product anymore.

So I thought it was sort of like a devastating effect again, to be destroyed on Shark Tank in such a terrible way but it was also like an awakening of realizing we now have over 12,000 emails of people that were interested. We now have – I changed the whole website super quick because we found out about Shark Tank about three weeks before it aired and we had a mediocre website. Then we went into Shopify fairly quickly because I thought, “What’s the only website that won’t crash immediately if you get a lot of people?” So I did the website through Shopify fairly quickly and found that Shopify has a bunch of different apps, like a consumer reward. Like discounts, just a bunch of things that makes the consumer experience a lot better and it was like a very free moment when I thought, “As much as I love the retailers, they don’t have to be our only source of income.”

We changed – because we listened to the consumers that bought, we changed our packaging from Aid because most of them were like, “I don’t want to buy Aids.  So again, really, really listening to your consumer and here it made me truly see what people are ordering. Like people and who are re-ordering and I’m seeing that most of the people that are re-ordering are in the West Coast and then that was my conversation with Sam’s. They said, “Well, we want to give you Texas” and I said, “Out of the people that order from me, I have very few in Texas. That is saying something, it’s saying that there may not be big enough of an interest at this time in Texas but there is in California. So why go against the current? I’m tired of going against the current, I want to go where it’s easy.” So I’m hoping that with what we’ve learned, this new chapter is not as challenging, per say.

Derek: Well on Shark Tank you handled yourself very well, even though you were taking a beating from them.

Karen: I cried, literally the producers were very kind. I was bawling, so they were very, very kind, to show me in the lightest of ways because I was like- you get- you’re standing there and here’s like- you’re in front of the Sharks, which is so surreal. Even being in TV and being in-

Derek: Yes, I wondered about that because you have it- I mean, you’ve got an impressive TV resume. You’ve been on camera for years and you were-

Karen: Yes but even then, you’re still standing- I- it’s one thing to report as a job. You know, to get a story and to tell a story of another human being and get on camera and tell somebody else’s stories. It’s a whole other world when you’ve created a product and now you have the weight of the world on your shoulders because you have your mom who you dragged into this business. Now your investors who are counting on you to make sure that it’s successful and now you have a brand new product that you’re trying to introduce to the world. So you’re so much more vulnerable than you’ve ever, ever probably been and you’re at the mercy of these four people who are just people but people listen to them. Like they’re not just people and also, they’re looking at your product and they’re saying it’s the worst thing on earth and that they’ve ever tasted. It just- literally, I felt like my whole world just collapsed and I thought, “Oh my God, what am I going to do when this airs?”

Derek: So you were confident with your product because you – the response you got for years in Walmart and consumers giving you good feedback and so to then go in there. I mean you probably felt pretty confident that they were just going to give accolades right?

Karen: I didn’t think they were going to invest any money, to be honest with you because it’s very rarely that they invest in a food product per say. But I did think that they were at least going to like it and maybe give me a beating for my numbers or some of the decisions that I’ve made but not because of the taste of the product or because of the look-

Derek: You went through a lot to get on there and talk to others on the show and what a lengthy process it is that – to even get on it is like winning the lottery.

Karen: Exactly and so costly because you have to do your displays and you’re flying out there and you’re doing all these things and you’ve got to stop everything else that you’re doing, to do this. Then you tell the world, which you’re not supposed to but you do because you’re like, “I’m going to be on Shark Tank” and then your investors tell the world. Then there’s so much pressure, you’re standing there and they’re telling you that this is the worst idea you’ve ever done and you’re thinking to yourself, “I hope that Walmart’s not watching this.”

[laughter]

Karen: “I hope that Sam’s Club is not watching this. I hope AGB’s not watching, oh my God, how do I make my investors not-

Derek: Did you get any feedback? What kind of feedback did you get from your retailers or from your distributors or from your investors?

Karen: I mean, my investors – it was not good. So it was literally- I think when you leave the show, they have a shrink come up to ask you- [laughs] they’re like, “So what are you going to do now?” “Um, cry.” They’re like, “Do you have any friends, family?” Like, “Yes, I’ve got a child and husband and stuff, I’m not going to go kill myself.” I was praying that it wouldn’t air – we filmed in July of last year. So it had taken – and the show just aired in March and I was thinking – I was hoping by the time – and so the year ended and I thought, “Great, it’s not going to air”, [laughs] and then we got into got into AGB but all these- the thing about getting into all these stores, which is just so great, the problem is it takes years. From the moment you shake hands with a retailer like a Valero gas station like CSC brands. Or an AGB, they’re talking about 2017 or 2018 because they have to – because the way that it works with products, is – and they can’t just put your products in tomorrow. So they have to wait until they have enough time to truly review a product before they pool it and then you have to wait for your turn to go in. So you’re meeting with someone today for two years from now.

Derek: Wow, that takes some patience and planning.

Karen: And that takes a lot of capital sitting. That you’re thinking, “How am I going to feed myself for two years while you guys are waiting?” and right before the two years, it may happen that they changed their mind. So there’s a lot of things – the only retailers that I’ve met that went from handshake to order the product, product being in store, was Walmart, the only one. Walmart moves super, super quickly, they have two to three modifications per year because they have the space and they have the amount of stores; that you can go from handshake to having your product in stores so quickly. But if someone else gets that opportunity and anyone that’s listening out there- I don’t know if any of your viewers and listeners – you have to make sure that your price- I mean, it’s like I’ve never, ever truly understood the price and what it means.

I have several mentors, one of them is a SCORE mentor, it’s a program by the government, that they – people that are very well- in terms of they have some experience in your type of business, they gave you advice. I remember coming to him years later and I said, “Why didn’t you tell me the pasta sauce was not a great idea? Why didn’t you just shake me and say, “$4.99, just don’t do it.” He said, “Because if I would have said it to you then, you were so passionate and you were so blindsided, that you would have never listened to me because you thought, “This is the best product in the world, I don’t care what anyone else says. This is the price; the consumer will understand.” Now you know that you’re wrong.”

Derek: Expensive lesson.

Karen: A very expensive lesson.