A Balance of Passion, Luck and Patience
Jesse Thomas is the co-founder & CEO of Picky Bars, not to mention a professional triathlete and two-time ironman champion. Born and raised in Bend, Oregon, Thomas excelled in track and field while at Stanford University and later narrowly missed earning a spot on the U.S. Olympic team, largely due to an injury he suffered during steeplechase trials. After he shifted to cycling, Thomas ultimately put a stop to his athletic career when a fall while biking left him with a broken neck. Rather than give up, however, he shifted his focus to the startup world.
“I was a startup guy working in San Francisco for about five years until I reconnected with my on again off again girlfriend from Stanford, who’s now my wife, Lauren,” says Thomas. Together, their passion for athletics and a market need for energy bars containing more natural ingredients led to the launch of Picky Bars and triumphant return to athletics.
Chris Guest, advisor to Lean Startup Co. and host of the Lean Startup Co. Podcast talks with Jesse Thomas about the impact of passion, patience and a focus that led to consistent, year-over-year growth for the energy bar company.
The Reality of Life in a VC-funded Startup
Jesse Thomas’s early career took him down a path that led him to life in a venture capitalist funded startup. His story, and his experience, serve as a lesson for aspiring entrepreneurs looking to venture down the same path.
“It’s a very one-dimensional life,” Thomas says of the years he spent working with a VC-funded startup. “I probably, over that four years, averaged 60 to 70 hours per week. I had very little life outside work, and that just didn’t feel appropriate after a while.”
From his high school days into his early career and beyond, Thomas was always pulled in multiple directions. His obvious passion for athletics was in constant competition with a pursuit of academics and business.
“I feel like I’m actually a better professional because of having some type of athletic pursuit and probably because I have some type of pursuit outside of my athletics, and certainly a better and happier person when I pursue all of those in some balanced form.”
Take a Step Back to Find Your Passion (and New Ideas)
Thomas completed his MBA degree at perhaps the worst time to earn an MBA. The housing bubble had just burst, and companies were laying off MBAs and other business professionals by the thousands. The job market was flooded with applicants, and the path ahead wasn’t clear.
His wife, Lauren, is one of the top middle-distance runners in the country with five NCAA titles, two USA Championships, and five World Championships berths for Team USA. At the time, she had been running for Nike for years and was going to spend the summer in Europe.“I just decided I’m just going to go with Lauren to Europe, take three months off and just see what I want to do in the fall when I come back.”
During his time in Europe, a spark was ignited that led him back to a focus on athletics. The renewed pursuit of athletics resulted in the consumption of 5000 calories a day, typical of triathletes in training. To compensate for the burned calories, Thomas relied on energy bars, not without consequence.
He acknowledges that stomach issues he encountered were likely “set off by a whole bunch of energy bars and other energy products that contain highly processed ingredients” he was consuming a lot of. From this need for an energy bar with real food ingredients, “free of the typical allergens” rose the concept of Picky Bars.
Lauren “started messing around in the kitchen with her friend and other co-founder, Steph Bruce, and eventually, they came up with this thing we called a Picky Bar because we were very picky and specific about the ingredients that were in there and the nutritional profile and all that type of stuff. And that was it,” he says, “That was the genesis of the product and then the company, slowly kind of started from there.”The VC-startup world didn't afford him the balanced life he sought. Jesse attributes this pursuit of multiple passions and need for a balanced life to his current career and athletic success. Click To Tweet
The Benefits of Self-funding and Keeping Expenses Low
Thomas, Lauren and the team kept costs low, choosing not to spend a lot on marketing but instead seeking to grow organically.
“It just kind of happened and more people learned about it, and we weren’t spending on anything,” says Thomas about the company’s approach to growth. “It was people’s friends or friends of ours or people that were following us on social media. And it really just slowly, slowly grew as a result of that.”
The company was and still is, self-funded. As a result, the owner percentages have stayed consistent over the years. The choice to invest their own money rather than seeking venture funds has enabled Thomas and Lauren to avoid dilution.
“We are still 100% self-funded. Lauren and I have put some money into the business but a lot of that was just recently in kind of like a supply chain hiccup,” notes Thomas when asked about the impact the choice to self-fund has had on the business.
Self-funding hasn’t been without its downfalls, however. “No dilution. Yeah. But at the same time, in full transparency, I just paid myself for the first time in 2019,” says Thomas. “It’s going to take time and a lot of patience. And like I said, I think that was okay with us because it was a secondary priority for us.”
“The thing that’s interesting is that it wasn’t consciously done to fit our model, but what ended up happening was we developed a really early subscription business that ended up being the core kind of revenue generator, and really like the backbone of the business financially.”We developed a really early subscription business that ended up being the core kind of revenue generator, and really like the backbone of the business financially. Click To Tweet
Thinking Outside the Traditional Food and Beverage Model Box
In the food and beverage industry, Thomas notes, “the typical model is you develop a product, you go start sampling it in your local grocery store, and then you get it into a small chain and you bring it into a distributor.”
“What ends up happening is you get wide distribution, you can say your sales are big, but your margin is really low and it requires a ton of cash because you’ve also paid the contract manufacturer prior to even getting the product in a lot of times,” he continues.
Within this model, “you don’t get the money back from that product for 60, 90, 120 days.” This can result in low margins and issues with cash flow. To eliminate these issues, the Picky Bars team applies a subscription model. Product orders are shipping in just 1-3 weeks, and payment is received immediately upon shipping via credit card.
“We pay our contract manufacturer for it, we literally ship that product out in seven to 10, 20 days. And we receive credit card payment immediately,” says Thomas. “All of that cash can come back and can be put right back into our next order with the contract manufacturer, as opposed to sitting back out there.”
“As a result of that, you need so much less cash to scale. And that’s a big part of why we didn’t have to raise money versus other food businesses that are doing it more through typical distribution.”
Building Community Through Blogging and Social Media
Inbound marketing via content and social media can be essential tools in the success of businesses running a lean marketing operation. Thomas and Lauren had both built up strong social media presence over the years through their athletic careers, which became key as they began building Picky Bar’s own online community.
“Lauren was already a nationally known distance runner when we started the company. She had a pretty good Twitter following and blog,” says Thomas about the early promotional efforts of Picky Bars. “That was a big part of how we launched the product.”
Fans began stopping the two at triathlons and other athletic events to compliment them on a blog post they read or pose to get a picture. Thomas notes their fans became their “initial customers.” This organic growth, fueled by content and social media followers and engagement, helped save on often high costs of marketing to boost the company’s ability to grow and attract new customers while creating a loyal base of existing customers.
Thanks to Anthony Gaenzle for contributing this piece. If you seek to bring the entrepreneurial spirit to your organization, Lean Startup Co. can help.