Vol. 127 - NO. 39

Blog Startup CPG

SINCE 2019

Building from Scratch:
Insights and Lessons from a Founder

Maria Koval is the Founder of Masha’s, the first line of low-carb paleo and vegan baked goods made with a few ingredients. The company is currently selling frozen bagels and stuffed bagel bites online direct-to-consumer on its website and in grocery stores nationwide. Maria shares 4 solid tips for starting a CPG Brand.

HOW I STARTED MASHA’S

I was born and raised vegan in a very meat-and-potatoes loving country: Ukraine. It’s still ironic to me now that I sell bagels for a living when I was practically raised off of 800-calorie white bagels in my home country as a kid. After my family immigrated to the US, I started my journey in business school, followed by investment banking and after just one year, I dumped everything and went to culinary school – The Natural Gourmet Institute. I started my plant-based catering company in NYC for 3 years up until the pandemic hit in March 2020. During that time I also worked with many families as a private chef and saw firsthand how difficult it was to access food products that would accommodate my clients’ allergen restrictions. The current gluten-free alternatives are laden with fillers, sugars, gums, refined oils and starches, leading to chronic gastrointestinal issues. When COVID took my catering company out of business, I immediately started experimenting with healthy paleo recipes that I could turn into a product. As a chef, I’m a methodical ingredient label reader so I started my business selling products that I would personally buy if I saw them on the shelf at a grocery store. After a few months of ideating during quarantine, our bagel was born and came in 3 flavors (Everything, Sesame, and Blueberry). In January of this year, we also released our stuffed bagel bites in 3 flavors (Cream Cheese, Pizza, and PB&J).

WHERE WE ARE TODAY

After launching at the end of 2020, we started selling online, shipping frozen directly to customers using dry ice. Several months later, we began selling in NYC grocery stores, building out the business locally for over a year. In April 2022, We were finalists in Foxtrot Markets Up & Comers competition, which put us in all of their locations nationwide. Following this, our business started growing exponentially. We now have a successful drop-shipping process (direct to customer and to independent grocers), 2 distributors, a sales team, and purchase orders from some of the largest chains in America. Even after 2 years into the business, I’m still involved in every single aspect of the business — creating social media content, website design, getting our product into stores, delivering orders to those stores, online order fulfillment, making product by hand in a commercial kitchen, assembling pallets, corresponding with customers, handing out samples in stores, the list is endless. Since I’ve started this business I’ve had the darkest days of my life. But also the brightest – like when a customer emailed me yesterday to let me know that our high-protein bagel lets her enjoy bread again without feeling guilt and stomach pain.

Now as we approach over 100+ retail locations in the US, these are the lessons I’ve learned:

1. Learn to be resourceful – I used to think you needed at least $50k to “properly” launch a food CPG business. And it’s true – even just research and development for your recipes can cost you $30k minimum if you do it “right.” If you have a great idea that you think the world can benefit from, the real question is – how resourceful are you willing to be? Do you have a skill that you can offer to the company instead of outsourcing? In my case, I’m a professional chef who developed and mass-scaled our recipes and will continue to do so for future product lines. Are you willing to learn how to play the other 20 different roles of your business? Don’t pay for an expensive market test or spend a year asking for feedback before you launch; it’ll leave you very confused. The best way to see if the product will sell is to actually start selling it. By the time I launched Masha’s e-commerce platform late 2020, I spent a total of $3,500 ($2,200 on brand design, $1,000 on plastic pouch packaging, and $300 on a simple website). I only spent money on the things that I could not do myself. It wasn’t a splashy entrance into the market but it got us started. From that point on, every customer order funneled our growth.

2. Put a face to the brand – After going through a months-long naming exercise, I decided to keep things simple and call us “Masha’s”, my Ukrainian birth name. Easy-to-remember, paying homage to my culture, and the type of company name that begs the question – who is Masha? You realize that you’re not just selling a product but you’re creating a brand where the company’s image revolves around the founder and their story. This means plastering your face and personal startup journey on social media (even when you’re extra introverted and the idea of dancing on TikTok holding a bag of bagels makes you queasy), and constantly retelling your vision to everyone you cross paths with. This personal touch has really resonated with our customers who are interested in connecting with the person behind the brand.

3. Dominate your local region before scaling nationally – Our product is frozen and this can get very expensive (shelf space in grocery freezer, freight carrier costs, storage costs, to name a few). The farther away a state is from NYC, the more money you need to spend on getting it there. When we received  our first retail chain PO from Foxtrot Market, I prematurely jumped on that opportunity and for the first time we took our product out of NYC and into Texas, Chicago, DC, and Virginia. Immediately after, we were flooded with large purchase orders from other chains, and we simply were not ready. Recently, as we continue to raise money from investors, I’ve scaled back and am now only focusing on increasing our brand exposure in the Northeast and Mid-Atlantic regions of the US.

4. Treat your food product company like a tech company – Unless you’re interested in running a lifestyle business (and this is equally as impressive!), it’s in your best interest to scale fast and not worry about being profitable on day one. I’m not saying that your profit margin doesn’t matter; in fact, we have a 45% profit margin on every unit sold. What I’m saying is that after you spend on trade shows, slotting fees, quarterly promotions and incentives, being profitable in the short-term is not an option. Similar to most tech companies, raising external funding as soon as you have proof-of-concept is going to be your best bet for scaling fast. There’s no slippery slope like taking out 5 credit cards to fund $60k monthly production runs. We are currently raising $750K from private angels to take our company to the next milestone (the trials and tribulations of fundraising can easily fill up another blog post alone).

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