Pod Insights How I Built This with Guy Raz Siete Family Foods: Miguel and Veronica Garza About this episode Miguel and Veronica Garza grew up in Laredo, Texas, in the kind of family that did almost everything together. So when Veronica realized that a grain-free diet was helping her cope with debilitating health issues, the rest of the family—all six of them—adopted the same paleo-friendly diet. Soon Veronica was making her own almond flour tortillas at home and selling them at a CrossFit gym that the Garza family had launched in Laredo. The grain-free tortillas were a hit, and by 2016, Siete Family Foods products were being sold in Whole Foods Markets across the country. Today, Veronica and Miguel head the company with the help of the whole family, and Siete has become one of the fastest-growing Mexican-American food brands in the U. S.
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1:30 Guy Raz? based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association, pursuant to a license from Visa USA, Inc. Some restrictions apply. Our presenting sponsor today is Anthropic, the team behind Claude. Every founder on this show started with a hard question. Not the marketing plan, the 2:00 AM kind. Is this idea any good? Am I the one to build it? Should I quit my job? Anthropic got built the same way. A public benefit corporation founded on one Hard question. How do we make sure AI goes well for people?
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5:24 Speaker 01 The conversation usually centered on me saying that I thought the tortillas could be successful and her not being able to make the leap because of health insurance.
5:36 Speaker 02 Yeah, that's exactly how it went. And it was really my brother telling me that if you don't take this risk, you're going to be really upset with yourself if somebody else does it.
5:46 Speaker 01 And I think this is what got her over the edge. I told her that she was going to be more upset, like having to buy an almond tortilla from somebody else knowing that it could have been her.
6:03 Guy Raz? From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.
6:16 Guy Raz? I'm Guy Raz, and on the show today, how the Garza family opened a CrossFit gym in Laredo, Texas, pivoted into selling paleo-friendly tortillas, and built Siete Foods into one of the fastest-growing Mexican-American food brands in the country.
6:36 Guy Raz? The first business idea you will ever have is unlikely to be the one that works. I mean, how many times have you heard entrepreneurs on this show talk about ideas they considered before they landed on the one that actually took off? And how many businesses start out as one thing and then turn into something slightly related, but bigger and smarter? Starbucks began as a shop that only sold coffee beans. The e-commerce platform Shopify grew out of an online store that sold snowboards. Stacy's Pita Chips was originally an outdoor sandwich cart. In today's story, the Mexican-American food brand Siete Foods
7:21 Guy Raz? can trace its origin to an earlier and totally unrelated business idea: a CrossFit gym in Laredo, Texas. The Garza family, all seven of them, pitched in to launch the gym. And as they got more into CrossFit, they also got more into the paleo diet that many CrossFitters swear by: no grains, no legumes, no dairy, no refined sugar. Now, it also happened that one of the Garza siblings, Veronica, had developed an autoimmune condition, and when she ate grains, her symptoms got worse. So together, the Garza family decided to basically go paleo. In fact, their family motto is juntos es mejor.
8:06 Guy Raz? Together is better. Now, this is no small feat for a fourth-generation Mexican-American family that loves food, especially Mexican food. Because the building blocks of Mexican food include corn, wheat, beans, and rice. And if you're paleo, you can't eat any of it. But instead of turning taco night into lettuce wrap night, Veronica Garza started experimenting with grain-free flours with the hope of making authentic Mexican-style tortillas. And eventually, she started selling her tortillas at the family CrossFit gym. Laredo, Texas, after all, is a border town.
8:49 Guy Raz? And it turns out, paleo-eating CrossFitters really missed Mexican food. But how that CrossFit gym became Siete Foods, now the largest paleo-friendly Mexican food brand in the US? That is our story today. Miguel Garza and his sister Veronica, who originally founded the company, grew up in a family of five kids, all of whom work together at Siete Foods today. Miguel is the youngest. His family, by the way, calls him Mike. And Veronica, who's known in the family as Vero, is in the middle. They grew up surrounded by a hybrid of Tex-Mex culture in Laredo.
9:31 Speaker 02 I think it very much felt like one big community. A lot of people had family, you know, living on one side, but spending a lot of time together because it was, it's so easy to just cross back and forth. And we were probably in the minority in not speaking fluent Spanish. I know I always felt a little embarrassed that I didn't, you know, I wasn't as fluent as I should be because most everybody that I was friends with did speak Spanish, even if they were, you know, third or fourth-generation Americans.
10:06 Speaker 01 But we definitely do have tios and tias. And my tio and my tia, they are not my aunt and uncle. Like, I just wouldn't, I wouldn't know them as that.
10:16 Guy Raz? Right.
10:17 Speaker 01 But I think what was very fun about our house was it wasn't just all of the siblings, but all of the siblings had friends, or we had cousins. And so I'm the youngest. My oldest sister is...
10:33 Speaker 01 I think about 12 years older than me. Hopefully, I don't know, maybe less. Yeah, I'm gonna say 10.
10:39 Speaker 02 Nine.
10:40 Speaker 01 Nine or 10, yeah. Because if I get that wrong and she hears it, I'm gonna hear about it after.
10:45 Speaker 02 She's not that old.
10:46 Speaker 01 Yeah, so, but everybody invited friends. And there was always this, like, there were just always people in and out of the house.
10:56 Guy Raz? Did you, growing up, did you grow up with a strong sense of identity? Did you, was Mexican culture and Mexican heritage really an important part of, you know, family traditions and gatherings and get togethers? Just the contours of, of your lives?
11:13 Speaker 02 I think it was an important part, you know, but I didn't really realize it at the time. Part of that was because I grew up in a town that was, you know, 98% like me.
11:25 Guy Raz? Yeah.
11:26 Speaker 02 I didn't really realize that it was Mexican culture. It was just our culture. And it actually took me leaving Laredo to realize how much my life had been influenced by Mexican culture. I was no longer around so many people that looked like me and were part of that same culture.
11:48 Guy Raz? Yeah. Tell me about food when you were growing up. What was, what, what, what kind of food did you guys eat?
11:56 Speaker 02 So, we always had a ton of food in our house. I remember my mom cooking, like, very simple food. But it was a combination of Mexican food, lots of tacos and tortillas. But, you know, we would also have a lot of, like, spaghetti nights and pizza nights.
12:15 Speaker 01 Yep. I remember a lot of picadillo, which, again, simple, just like ground beef, chopped onions, some potato. I think I went through a phase where I was the biggest brat and I just wanted, like, McDonald's every night. I, I do remember that. And the family doesn't let me live it down. They're like, oh, my gosh, you used to beg and cry for McDonald's every night. You were so annoying.
12:42 Speaker 02 He's not joking, but actually cry.
12:45 Speaker 01 But we ate a lot at home. So, my mom, she was cooking for seven people every day. It was 7 o'clock and we're eating dinner and my mom made something and we were sitting around the table.
13:03 Guy Raz? And Veronica, I guess, from what I've read, you started to have some struggles around the time you were in high school with your health. Is that right?
13:11 Speaker 02 So I would say I was very healthy throughout my childhood. And when I was 17 years old, a senior in high school, that's when I first got sick.
13:22 Guy Raz? What happened?
13:24 Speaker 02 So I was in cheerleading and I was very active. And I started noticing that I just had bruises all over my body. And I kind of just told myself, oh, you know, I must have gotten hit.
13:38 Guy Raz? Hit somewhere, yeah.
13:39 Speaker 02 Doing a stunt or tumbling, but it just kept happening.
13:43 Guy Raz? Wow.
13:43 Speaker 02 And the bruises were just black and huge. So I finally went and got it checked and it turned out that my platelet counts were just extremely low. And they couldn't figure out why. So the diagnosis was an autoimmune condition called ITP.
14:01 Guy Raz? And it just happened. It just came, I mean, your entire life, you'd never experienced anything like this. And then at 17, bam, all of a sudden, these symptoms start to show up.
14:11 Speaker 02 Yeah, so it really changed my lifestyle. So at the time, you know, doctors were kind of like, well, you know, you probably shouldn't be doing the type of exercise you were doing before, like no tumbling, no this, no that. And, you know, I was put on medication, a lot of steroids and start gaining a lot of weight. And it was tough.
14:33 Guy Raz? And then eventually they diagnosed lupus and something called Hashimoto's. And essentially, these are autoimmune conditions.
14:42 Speaker 02 Yeah. And over the years, there've been additional diagnosis. So I think lupus was in 2004, maybe.
14:50 Guy Raz? And from what I understand, lupus is basically, it's like when your immune system becomes overreactive. And then it kind of attacks the tissue in your body, right?
14:59 Speaker 02 Right. And they don't know what causes it. So it's very hard to treat because you don't know what the underlying cause is.
15:08 Guy Raz? So you're kind of dealing with these health challenges. And but you still went off to college. You and you graduated from University of Texas in Austin, I think in 2003. And what did you do after college?
15:24 Speaker 02 So from 2003 to
15:27 Speaker 02 Two thousand seven, maybe? I was lost. I had gotten my degree. And when I was living in Austin, I had gotten really into music. And I started looking into how I might have a career on the business side of the music industry. And I found this program in Austin. The focus was, you know, in all of the different entertainment industries like music, film, and television. So I just wanted to work in the music industry and thought, well, let me get this MBA because then maybe somebody will hire me. But I never got a job in the music industry.
16:10 Speaker 02 Instead, there was an adjunct role for an instructor at the university in my hometown. So I started as an adjunct faculty and ended up doing that for six years.
16:24 Guy Raz? And what were you teaching?
16:26 Speaker 02 So the course was called University Seminar. And the easiest way for me to explain it is that it's like an intro to college class for freshman students. So they're really learning all about time management and study skills. And I felt terrible because I am probably the worst person to learn any of those things from.
16:51 Guy Raz? All right, so you're doing that. You're back in Laredo. Tell me about, because this is an important part of the story, because there is another brother. And what's his name, by the way?
17:00 Speaker 02 Roberto, but we usually call him Rob.
17:03 Guy Raz? And am I right that Rob is like, was like a cross, maybe still is, but at the time was getting into CrossFit?
17:09 Speaker 02 Yeah, so I think in about 2008, he discovered CrossFit. And I think through that, he had learned about, you know, this different way of eating.
17:21 Guy Raz? Because a lot of CrossFitters are, eat like a paleo diet, like no grains, no legumes, no dairy, no sugar, no refined oils. Like, I did it for a while. I think people listening to this show have heard me say this, I'm sorry. I've done it before. And did he kind of adopt that diet?
17:40 Speaker 02 You know, I don't think he fully had at that time. I think initially, when he had read about it, he had seen people talking about how it had helped them deal with different autoimmune issues. So he suggested that I try it. And probably around the same time, my brother Mike and Becky had also gotten into CrossFit at the time. And they had also started sort of dabbling in eating this way. It was almost like we all just sort of decided we should just all like go all in and do this together. So yeah, I think it was kind of a group decision.
18:23 Guy Raz? Right. What like, where were you guys getting like almond flour and I don't know cassava, whatever you were using to, or were you just not doing that stuff? You were just like eating vegetables and meat?
18:35 Speaker 02 Yeah, no, I remember having to go online and order almond flour. I think I went to like nuts.com or something like that and bought a bunch of almond flour. And I do remember even my parents got in on this. And my dad would just eat whatever my mom would put in front of him.
18:52 Guy Raz? Sure, right, right.
18:53 Speaker 02 As long as it tasted good. But my mom really got into the kitchen and started, you know, working on different recipes, just, you know, so that we could continue to sit together around the dinner table and have a meal as a family. So my mom got very creative in the kitchen and she and I were often in there and also with my sister. And we would try to recreate a lot of the meals that, um, you know, we would normally have. So whether that was like, Mike, do you remember eating like mitsas? We would do that often.
19:25 Speaker 01 Yeah, there was, I remember my mom and Vado and my sister Becky making all sorts of paleo recreations or grain-free recreations of.
19:39 Speaker 01 Different foods that we missed.
19:42 Speaker 02 Yeah, so we would try to make bread and pizza and whatever we could.
19:46 Guy Raz? Right.
19:46 Speaker 02 So that we could follow a grain-free diet, but still enjoy, you know, a lot of the foods that we loved.
19:53 Guy Raz? So here's kind of a curious part of the story, which is around this time, right? You decide to adopt this diet, the whole family decides to adopt this diet to see, right? If this would help your condition. And by the way, did it, I mean, did you start to see effects pretty quickly on how you felt?
20:10 Speaker 02 Yeah, so I actually have a memory of being in the backyard, working out with my family. We were doing squats and I distinctly remember not feeling pain in my knees. And they used to be like very squeaky, like I could actually hear the squeak in my knees. And it wasn't there anymore. And that was probably like several months, maybe three or four months into eating paleo.
20:38 Guy Raz? Wow.
20:38 Speaker 02 And I looked over at my mom and I was like, my knees don't hurt. This is crazy. So I knew it was helping.
20:45 Guy Raz? I'm still, I'm still hung up on the idea that the whole family was doing squats together. You guys must be, you guys are like a, like an Instagram family. Like the whole family, like all seven of you, like doing CrossFit in the backyard and like doing this together. Like, that's pretty cool.
21:00 Speaker 02 Well, let me paint a picture for you, though, of kind of how that started. My mom and I would watch my brother and his friends and my sister do CrossFit in the backyard. And they invited us to join them. And I was terrified of working out in front of people. To me, that was scary. I don't want anybody to see me exercising. What if I do it wrong? So she and I started doing sort of our version of CrossFit workouts inside the house while everybody else was doing CrossFit in the backyard. And I remember Mike coming inside the house and trying to help my mom do a squat without falling. And that probably happened a couple of times.
21:44 Speaker 02 And very quickly, my mom got really good at CrossFit. And then we got comfortable enough to join them in the backyard. But now my mom is a beast and she can do more pull-ups than me. So it's kind of embarrassing.
22:00 Guy Raz? So, all right, so you guys are doing CrossFit in the backyard. You're eating basically a paleo diet. And I guess, Miguel, around this time, you had plans to go to law school.
22:13 Speaker 01 Yep.
22:14 Guy Raz? And then in the middle of all of this, you guys actually opened up a CrossFit gym in Laredo. How did that happen?
22:22 Speaker 01 There really wasn't an intent at first, but we were all working out together a lot. And so we had like, a couple of my friends, two or three of my sisters, my mom. We had a couple of neighbors and then our neighbor's friend. So there were 20 people in the backyard and I actually had a fight. You know, my dad was an attorney and we had this argument where I told him, hey, I'm like, I don't want to go to law school. I really like this like gym, business type stuff. I'm going to do that instead. And he looked at me and he was like, no, you're not.
23:02 Guy Raz? You wanted to, you wanted to open up the CrossFit gym?
23:05 Speaker 01 Yeah, I wanted to stay in town. There was all this momentum and everybody, like the whole family's together. Everybody's having fun and the gym was born at that point.
23:16 Guy Raz? But Miguel, you did actually wind up going off to law school in Austin. And so who was the driving force behind opening the gym?
23:24 Speaker 02 So my sister and I were the two that were in town that were sort of managing the opening of the gym.
23:34 Guy Raz? And I'm assuming it's not like rent is not that crazy high in Laredo, right? You can probably get a reasonable deal for a space.
23:41 Speaker 01 Yeah, I think so. I don't think it was like ridiculous, but I do remember feeling a little bit of anxiety because both of my sisters were texting me saying, hey, we're, we found a space and we're about to actually make this a gym. And they just did it. G7 Athletics was born.
24:03 Speaker 02 Yeah, I sometimes do just do things without thinking about it.
24:09 Guy Raz? And, and I mean, but so you, you found a space to open up a gym and I mean, I don't know that much about CrossFit, but I'm imagining you have to become a certified trainer to train. So who was the trainer? Who were you, were you guys the trainers?
24:22 Speaker 02 Yeah, it started with my sister and I, and I think we even hired some of my brother's friends who had been doing CrossFit with him in the backyard. So four of us who would coach classes in the evenings after we all got out of our full-time jobs and then on the weekends as well.
24:41 Speaker 01 I mean, the gym just started growing at that point. Everybody was actually like mom and dad were there every evening. And then I think my older brother, he maybe saw that there was some fun happening and he eventually moved from Sugar Land to Laredo because we needed somebody to manage the gym full-time. So yeah, we jumped through the hoops, became a business, had a gym and were coaching people in the evenings.
25:10 Guy Raz? And you were living in Austin and going to law school and what, kind of helping them manage it from Austin?
25:16 Speaker 01 Ish. I was doing the programming, but I was also coaching classes here in Austin at a gym called CrossFit Austin.
25:23 Guy Raz? Um, I'm looking at a family photo of the seven of you guys. Your dad, how old is your dad, by the way?
25:29 Speaker 01 What is he currently? Sixty, sixty-six? Gonna turn sixty-seven?
25:34 Guy Raz? Your dad is like, like Lou Ferrigno, man. He is ripped.
25:40 Guy Raz? All right. So, so you've got this CrossFit gym going. And how was that as a business? Was that, were you guys making money?
25:48 Speaker 01 It's freaking hard.
25:50 Guy Raz? Right.
25:50 Speaker 01 This, it was the topic of conversation at our dinner table for about five straight years. Okay, it's a business. How do we grow it? What do we do? Are we missing anything? Maybe we need to go get another certification. Maybe we have to offer another class. Because it was really like, the model is service-based, right? It's like personal training, but in a group setting. And that kind of business is hard. Service-based businesses are hard. So I remember just feeling constantly defeated, but also very excited about the community that we were building at the gym.
26:29 Guy Raz? Yeah, because it is a community. I mean, CrossFit is, I mean, some people call it a cult, but it is, I mean, in a good way, right? But it is a community. And I wonder, was the investment significant? Did you guys have to put in a lot of money? I mean, yes, you signed a lease and you had to have a space and presumably had to buy some equipment, right? So did you have to put in considerable money into this venture?
26:53 Speaker 01 Yes, luckily, my parents were giving enough and they had a little bit of savings for the gym. And so they bought the equipment. And for them, it was like, okay, now we have a gym that we come to. And then after that, after the equipment expense, it was, I think that's when we really learned a business has to make money in order to be sustainable.
27:15 Guy Raz? What was the, what was the, I mean, what was so hard about the money side? I mean, you're charging people, what? 20 bucks a class or 30 bucks a class? Or a monthly fee or something like that?
27:25 Speaker 01 Yeah, at that point in time, it's like a monthly fee. It's probably anywhere from 75 bucks to 115 bucks a month, if my memory serves me right. And you can only have so many people in this space. So at some point, you outgrow the space. And then you have overhead and then you, you're paying coaches. And then at some point, you're trying to pay yourself. And I'm speaking again mostly from afar because my brother started to manage it full-time. But it is a tough business. That's my own, my own experience.
28:05 Speaker 02 I honestly don't think we ever really saw it as a money-making business. It was more just, my parents made this investment because it allowed us, even though we were all living in separate houses, working different jobs, we could all get together every evening and exercise as a family and then with our extended gym family. I think we, we were always talking about potentially closing the gym because it wasn't bringing in money, but it was. It was okay. It was kind of the decision we always came to as long as, you know, Rob could support himself, you know, pay himself a salary as the general manager. You know, as long as we weren't losing money, we felt like it was okay.
28:49 Speaker 01 And I think that's an important distinction. Everybody was working on it, but like Vettel still had a full-time job at the university and my sister Becky still had a full-time job at the university, as did my, uh,
29:03 Speaker 02 My mom.
29:04 Speaker 01 My mom, my other sister and my dad. So this was really about like, the gym became this after-work place to exercise, hang out and be with family.
29:19 Guy Raz? Meantime, Veronica, um, I guess around, you're in Laredo, you're experimenting with different recipes. And I guess, I mean, given that you guys have a Mexican heritage and you did eat Mexican food growing up, I mean, there is a challenge with Mexican food because it's not grain-free friendly. Like it's like corn and flour and it's not, you know, and rice and it's not paleo friendly. It's beans. I mean, it's, I'm assuming that, you know, this would have posed a problem when, you know, when you guys wanted to have like a Mexican dinner.
29:56 Speaker 02 Yeah, there were a lot of times. So my family and I loved to, um, you know, we would get together after we did our workout and just have a meal together. And then on the weekends, we would love to get together in the backyard and, you know, somebody would grill and, um, you know, we'd enjoy these carne asada with tortillas and we couldn't really do that anymore.
30:22 Guy Raz? Yeah.
30:22 Speaker 02 And then we would just take like a piece of lettuce and put it in there and call it a taco, but
30:28 Guy Raz? I've done that. It's not the same.
30:30 Speaker 02 It wasn't fun.
30:30 Guy Raz? Let's be honest.
30:31 Speaker 02 It was not the same.
30:33 Guy Raz? They're not the same.
30:35 Speaker 02 That was okay when I did it with my family. Not fun, but at least everybody else was eating, you know, a lettuce wrapped taco. But then I would go to like carne asadas with my friends and it was really awkward showing up with like a bag of lettuce so that you could have your taco while everybody else
30:53 Guy Raz? You would do that?
30:54 Speaker 02 Yeah.
30:54 Guy Raz? Oh, you'd show up with like a bag of lettuce? Yeah.
30:57 Speaker 02 Mm-hmm.
30:58 Guy Raz? And, and, yeah.
30:59 Speaker 02 There was definitely this sense like, especially being in Laredo.
31:04 Speaker 02 Like, we were missing out on part of the culture there. Every household has tortillas, every meal has tortillas. Sometimes even if you're not eating like Mexican food, you still have your tortillas on the table as your bread. So it was, it was really tough.
31:20 Guy Raz? Did you guys grow up with tortillas at home often? I mean, cause or just every day? Oh, you always and flour or corn tortillas or both?
31:29 Speaker 02 So, growing up in Laredo, I, at least in our household, it was more flour. I grew up mostly eating flour tortillas because that's what our grandmother would make us. So when I would go to Baytown and visit her, we would always show up to a fresh pile of tortillas and a pot of beans that she had freshly made, you know, and got a chance to make them with her sometimes. I think probably every single one of her grandkids had an opportunity to do that. So she would make the, they're called testales, the dough balls.
32:03 Guy Raz? Yep.
32:03 Speaker 02 And then, you know, we would help her roll them out with some flour on the table.
32:08 Speaker 01 And these things are like pillows of deliciousness.
32:12 Guy Raz? Yes, she'd cook them on a cast iron pan.
32:15 Speaker 01 Yeah, and all you need is like, you don't need to add anything to them, but you may add a little bit of butter or you add some beans or you add, I mean, they're just like.
32:26 Speaker 02 Yeah, they were often a snack. At grandma's house, you would just walk into the kitchen, get some butter and roll up a tortilla and walk around with it as a snack. So yeah, they were a big part of our life and it was kind of sad being without them.
32:42 Guy Raz? Yeah. So it sounds like you started to think about ways you could make a version of them that you could eat.
32:49 Speaker 02 Yeah, so I had already started experimenting with almond flour to make breads and pizza crusts. And I don't know, I had just had this idea that maybe it could somehow work in a tortilla and just started experimenting with it. I didn't really tell anybody that I was, you know, working on this, but as soon as I had something that resembled a tortilla and tasted decent, I sort of put it on the table and. Just one day at dinner, let people grab from the pile. Didn't really say much. I was like, I made those, but I'm not going to tell you what's in them. Uh, and watched their reactions. And when everybody wanted to know more and continued eating them after their first bite,
33:33 Speaker 02 I realized that, okay, that's a good start. But at the time, they were probably a little more like a postada. They weren't.
33:40 Guy Raz? Yeah, they're crispy. Yeah.
33:41 Speaker 02 Yeah.
33:42 Guy Raz? They weren't, they weren't like chewy with that, that like chewiness. Cause it was basically what like almond flour and water and salt.
33:48 Speaker 02 My initial recipe was, yeah, very close to that. But I did a lot of internet searches of just like grain-free flowers and ingredients that were fairly easy to find, not in a grocery store, but I could go online and order some almond flour, tapioca flour and, you know, see what worked. And thought, maybe there's something here that I could call a tortilla and continue to eat my fajitas. Maybe even share them with some friends, you know, show up to a carne asada with them and not feel embarrassed about, like if somebody else tried them, I wouldn't be, you know, nervous about it.
34:30 Guy Raz? Were you always a baker? Like, were you always into baking?
34:35 Speaker 02 I'm actually a horrible baker, horrible. Um, I accidentally made a lot of good things, but I am really bad at measuring and weighing things. And my mom had to stand over me and watch me make them so she could write down exactly the measurement so that I could do it over and over again. Otherwise it would have been a different product every single time.
35:00 Speaker 01 Yeah, I was just gonna say that, um, there's like creative genius where people are like, I don't know how it works, but like I do it and it works.
35:10 Guy Raz? Yeah.
35:10 Speaker 01 And if you were to see my sister in the kitchen, the entire time she would be telling you, don't watch me. I don't know what I'm doing. I don't know what I'm measuring. And then at the end you're like, holy crap, this tastes good. What do you mean you don't know what you're doing? When I don't know what I'm doing, it doesn't taste like this.
35:31 Guy Raz? At what point did you like, in your experimenting with tortillas, did you come up with something where you were like, this is actually pretty close to the thing that my grandma used to make?
35:41 Speaker 02 Ooh, I, I am a little bit of a perfectionist, so. I think even to this day, I'm still trying to get it to be like my grandma's tortilla. But it was very telling. There was a point, probably maybe a year and a half after I started making this tortilla, maybe two years. My mom didn't tell me this, but she took up a sample to my grandmother in Baytown and let my grandma try the tortillas and recorded her trying them and then commenting on what she thought. And there's still a video that my mom has of my grandma saying, "Bero, these tortillas are good."
36:25 Speaker 03 These tortillas are good.
36:27 Speaker 02 "They're better than mine."
36:28 Speaker 03 "They're better than mine. They're delicious."
36:30 Guy Raz? Wow.
36:31 Speaker 03 "I like them."
36:32 Speaker 02 And then very grand-- at least it's very much my grandma. She said, "They're too expensive for my belly, but they're very good."
36:42 Guy Raz? When we come back in just a moment, how Veronica's tortilla recipe eventually moved out of their mom's kitchen and onto grocery store shelves in Austin. And also, some advice from Miguel on what not to do if you're looking to sell your tortillas at Whole Foods. Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR.
37:14 Speaker 04 With a Spark Cash Plus card from Capital One, you earn unlimited 2% cash back on every purchase. And you get big purchasing power, so your business can spend more and earn more.
37:34 Guy Raz? Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So it's around 2012, and after a bunch of trial and error experiments with different ingredients, Veronica's feeling confident enough about her recipe for grain-free tortillas that she's starting to sell them to a few friends.
37:55 Speaker 02 I was making them and people in Laredo who were, you know, members of our CrossFit gym and friends, they were asking me to make them for them.
38:03 Guy Raz? Yeah.
38:03 Speaker 02 So I had sort of started selling them as a side hustle.
38:06 Guy Raz? Like a dozen of them in a package or something?
38:09 Speaker 02 Exactly, yeah. And we'd love to, you know, gather with our extended gym family and have these carne asadas together. And I actually never told anybody what the ingredients were. And people trusted me buying these tortillas and eating them, even though they, all they knew was that there's almond flour in them. But they knew no other ingredients because I was so scared that somebody was going to copy me. But yeah, they started asking for them. And then it became this thing where every weekend, my mom and I, we'd get together and make just this huge batch and sell them to people at the gym throughout the week.
38:49 Guy Raz? And how much were you selling it for?
38:50 Speaker 02 I think at that time, it was like a dollar a tortilla. So it was $12 for a dozen.
38:56 Guy Raz? Was there any part of you that was thinking, this could be really big? Or were you really focused on just kind of making it for people who were asking for it?
39:06 Speaker 02 I don't know if I was thinking it could be really big, but I think I thought it was a possibility that maybe I could start making these tortillas and perhaps get them into like some local stores. Also, I didn't love the job that I had at the time. And I really wanted a way out of it. And if I could sell enough tortillas just to allow me to do that, like make up for the salary that I'd be losing teaching, which wasn't much, by the way, so it wouldn't have been that hard. That was enough for me. But I wasn't thinking it would be what it is today. That was just not even imaginable to me.
39:47 Guy Raz? Yeah, I'm curious, we're, I mean, given that, you know, Mexican culture is such a huge part of Laredo culture. Were people like tortillas that are not made of flour or corn? Like what? Like, what are you? What is this? Like, this is weird. Were you getting any of that?
40:05 Speaker 02 Yeah, I got a lot of that comment.
40:07 Guy Raz? Right.
40:07 Speaker 02 And I was very nervous anytime, you know, somebody tried them. Because I knew that they they understood what the real thing was supposed to taste like.
40:17 Guy Raz? Yeah.
40:17 Speaker 02 But I think they usually set that skepticism aside after they would try it. And it just tasted so good because, I mean, almonds are just so sort of buttery because they have, you know, a lot of oil in them. And for a lot of these people, they weren't even following a paleo diet like we were. They were still eating flour and corn and all of the things. And they still wanted to buy the product. So it was really interesting to see that. And then they would tell me how they would keep them in their fridge and try to hide them from their husband or their kids because these were like their tortillas they didn't want to share. It was pretty funny to see that happening, like just people getting so excited about it.
41:00 Guy Raz? And and were you and your mom just making them at home for people who were buying them in Laredo?
41:05 Speaker 02 Yes, so we didn't have a business. We probably weren't supposed to be doing this.
41:12 Guy Raz? No, no, no, no judgment. I was trying to figure out how you, how did you cook so many tortillas? Because I understand you roll them out yourselves, but like you'd have a lot of cast iron pans in your kitchen at home to make this work, even even if you were only selling it to like 20 or 30 people.
41:28 Speaker 02 Yeah, we were able to purchase some griddles that you sort of place over two burners at a time.
41:34 Guy Raz? Oh, right.
41:34 Speaker 02 And I think my mom had a kitchen with four burners. So we had the whole stove top set up sort of like a flat top.
41:42 Guy Raz? Yeah.
41:42 Speaker 02 Where we could flip tortillas, maybe put, I don't know, six to eight at a time. So I think we would maybe do like 50 packs of tortillas in a weekend.
41:54 Guy Raz? Wow, but that's still like super time consuming. I'm like thinking one side. It's like a minute, minute and a half, then flip it over and you might be on a hot spot on the griddle and you gotta move it to another spot and then you get some burn spots and that one's not good. Like, that's a lot of work.
42:11 Speaker 01 Yeah.
42:11 Speaker 02 And we would recruit whoever was willing to help that weekend. So it was at my mom's house. So sometimes, you know, my dad would have to help with like packaging and my younger sister would help make the tortillas when she could. So it was, that was a family affair in itself.
42:28 Guy Raz? Meantime, I'm trying to figure this out because I imagine this is, this is how it went. Miguel was in law school. He's like thinking about, all right, what am I gonna do? He's got all these ideas in his head. And you start scheming in your head thinking, wait a minute, maybe Veronica's onto something. Maybe this is a business. Is that, was it that linear? Or did it, did you kind of stumble on, on that thought over time?
42:51 Speaker 01 Almost. I think my sister would tell you I snuck into the business at some point in time. I, I think I pulled the baby of the family card. But no, I, I had a, I had graduated from law school in 2012.
43:03 Guy Raz? Yep.
43:05 Speaker 01 I'm here in Austin. And then I saw, like, if you walk into cafes in this city or you walk into Whole Foods and you're just seeing these people that are building businesses from behind a MacBook. And I, that fascinated me. So I actually started to sell my sister's tortillas to the gym that I was a coach at. It was around that time where I started having conversations with Vero and the conversation usually centered on her saying that she wanted to do something new, me saying that I thought the tortillas could be successful.
43:49 Speaker 01 Getting stuck at this point of her not being able to make the leap because, I mean, really because of health insurance. I think that was like a big thing.
44:00 Guy Raz? Well, yeah, I mean, because you had presumably you had health insurance through the university where you were teaching, right?
44:05 Speaker 02 Right. And they would just have to approve my health insurance, it being like a group plan. They were not looking at the fact that I had all of these pre-existing conditions. And every time I thought about leaving, my parents would be like, ah, but your health insurance, this is really important. So I think health played a big part in me never doing it. And then also a lot of fear, because initially, it would have been something that maybe I would have done alone.
44:33 Guy Raz? Yeah.
44:33 Speaker 02 So I kept staying.
44:35 Guy Raz? And Miguel, you were what? You were saying to your sister, hey, maybe we should start a business around this? Is that, was it that explicit?
44:43 Speaker 01 Yeah, kind of. And I think at the time, I actually didn't envision myself being a part of it. I just knew that she really didn't like her job. And what I was realizing was, man, life's too short to not chase what you really want to do, or to stay somewhere that you're not happy. And so it wasn't selfishly motivated at that time. Maybe it was later when I asked to join the company because I needed a job. But at that point in time, I was, I was mainly telling her like, look, and I think this is what got her over the edge. I told her that she would, if she didn't start this business, or didn't at least attempt, that she was going to be more upset seeing another person put this product to market
45:29 Speaker 01 and having to buy that product, like having to buy an almond tortilla from somebody else, knowing that it could have been her.
45:36 Speaker 02 And then he said, and I'm going to help you do this. So you're not going to leave your job yet because I know health insurance is important. We're just going to see if this works out. Let's go to a store and see if they want to carry them. And then we'll take it from there. We'll see what happens.
45:53 Speaker 01 Yeah, it was, let's go get a customer. And that's going to be our proof point. If we can go get a customer. A retailer that's going to put our product on the shelf, then that's going to be an indicator that maybe we should pursue this further.
46:08 Guy Raz? So what did you do? Who did you approach?
46:10 Speaker 01 So there's a food co-op here in town called Wheatsville. And I remember it was.
46:15 Guy Raz? An unfortunate name for a paleo product. Well, yes, keep going.
46:20 Speaker 01 So it's a, it's one of the only food co-ops in Texas. They have two locations and it was just after Christmas, so into the new year. And I remember me and Vado meeting in the parking lot. We walked in, we had a very small appointment with this buyer.
46:39 Guy Raz? And, and was it relatively easy to get the appointment? Cause Wheatsville is like a relatively small company?
46:44 Speaker 01 It wasn't a very difficult, and they're good about working with, um, supporting local vendors. And so this guy named Chris Moore, I think is his name. He, uh, comes to the front of the store and we hand him a tortilla. And I knew that we had to get him to try it right on the spot. And so he grabbed the bag and he was about to head to his office again. And I remember stopping him and saying, come on, man, like, you gotta try this in front of us because I want to know what your actual feedback is like. I think it's really good. I want to know what you think. And so me and my sister are there. He tries the tortilla. And you could tell he went from maybe like skeptic to, oh my gosh.
47:28 Speaker 01 Tell me again what's in this. And my sister explained to him like it's paleo, it's vegan almond flour and tapioca and.
47:35 Guy Raz? And, and did you, and you presented it to him? Were they were warm? The tortillas were warm?
47:40 Speaker 01 Yeah, I, I think what we had done was we didn't have access to a stove top. So we did probably one of the things that we would never do again, which is, uh, microwave the tortillas. I think my sister was probably like, no, please, like, we gotta present them in a way. Like, do they have a kitchen or can we put them on a cast iron? And I'm maybe more of the 85% is good enough person. I was like, no, it's fine. Microwave. He's gonna try it. They're good. And so he ended up telling us on the spot, he said, I like this. Go to our website and on our website, there's a list of everything you need to have. In order to be a vendor for us.
48:22 Speaker 01 And I remember we walked out, we called my mom on speaker. She's like, oh, my gosh, how was it? And well, we told her like, yeah, we they accepted the tortillas. Like now we gotta go do everything else. And immediately my mom started crying. I'm so proud of you guys. I can't believe you did that. That is so awesome. But that was really just the beginning because from there was, oh, now we have to figure out how to start a business. And we've done the gym thing, but the food business is very different in what's required.
48:56 Guy Raz? Yeah, I mean, you need packaging and a logo and like ingredients in your label. And you probably need to be making your tortillas in like a health department inspected kitchen, which, which is relatively easy to find a commercial kitchen like that. I mean, right, they exist. I think they exist all over the country.
49:14 Speaker 01 It is, but we had to find a gluten free one.
49:17 Guy Raz? Oh, yes, of course, right. With no.
49:20 Speaker 01 So 2014, finding a gluten free kitchen. I think there were maybe two in Austin and we found one that was about probably 10 minutes outside of Austin.
49:31 Guy Raz? And you pay like a fee to get to use the kitchen for a couple of hours a day, something like that?
49:36 Speaker 01 Yep.
49:37 Guy Raz? And in terms, and then you need packaging and things like that. But these are not huge expenses, but they still cost some money, probably at least 10,000 bucks to get started. Or maybe I'm wrong. I don't know.
49:51 Speaker 01 No, I actually think so. Ziploc bags, not Ziploc, but like twist tie top bags, stickers for the label. Like we went as scrappy as possible. Yeah, it was probably maybe like under, just to get going, maybe under 2,000.
50:08 Guy Raz? Yeah. And what did you call? I mean, you had no name at that time. So he was like, yeah, what's your company called? What was it called?
50:14 Speaker 02 Yeah, Mike, Mike came up with the most brilliant idea.
50:20 Speaker 02 He decided that we should call our tortilla brand Must Be Nutty. And it wasn't like B, like B E.
50:27 Guy Raz? Yeah. Just.
50:29 Speaker 02 It was just the letter, just the letter B.
50:30 Guy Raz? Just must.
50:31 Speaker 02 Letter B.
50:32 Guy Raz? Letter B nutty.
50:33 Speaker 02 Nutty.
50:33 Speaker 01 Yeah, I, I thought, I thought just with the letter B easier to trademark.
50:40 Guy Raz? Right, that's right, because you're thinking like a lawyer, because you're a lawyer. All right, it's okay, it's, it works.
50:45 Speaker 02 There was a little bit.
50:48 Speaker 02 We weren't excited about it, but the discussion that we had and told ourselves this could work. Maybe we could change it later if we need to, but it made a little bit of sense at the time because we all had these graduate degrees. I had an MBA, Mike had his law degree, my dad his law degree, practicing attorney, my mom counseling psychology. It was primarily the four of us who kind of kicked the business off of the ground. And we were like, yeah, we must be nutty to be doing this.
51:18 Guy Raz? All right, so you got Must Be Nutty and you got, and you find a commercial kitchen and you start making tortillas?
51:26 Speaker 01 Yeah, and I actually, like, I think along the way, we got really lucky finding this gluten free kitchen, Better Bites Bakery. The individual's name was Leah Lopez and she was kind of like a guardian angel in our first few weeks, months of getting started because she had a food business and she had already figured out a lot of this stuff. And so we would ask her questions like, hey, what stores are you in? And so she was letting us initially use her kitchen weekends and then eventually nights and weekends.
52:03 Guy Raz? So describe how this would work. I mean, it was the two of you and who else was helping you out?
52:10 Speaker 02 Yeah, so Mike was living in Austin and my parents and myself were living in Laredo. And we would drive up from Laredo, it's a three and a half hour drive. And we would do this on a Friday evening after we all got out of our full-time jobs. Hop in the car, drive to Austin, meet up at the kitchen. So we probably wouldn't arrive at the kitchen until about 9:00 PM.
52:33 Guy Raz? Yeah, wow.
52:34 Speaker 02 And get started with making tortillas for maybe till 1:00 in the morning. Get back up early the next day to do the same thing. So it was primarily the four of us, but often with help from my now sister-in-law, Alex. She would help with a lot of the like packaging and stuff and my now husband, David.
52:54 Guy Raz? This is your wife, Miguel, right?
52:56 Speaker 01 Yeah, this is my wife.
52:57 Guy Raz? And David, your husband, who was not your husband at the time.
53:00 Speaker 01 Yeah, and we really like what was crazy was we were trying to make as many as possible because. So we had put these tortillas on the shelf in May of 2014 at Wheatsville. And we put two cases to the shelf. And we had learned a little bit from owning the gym on like marketing a service-based business. So what you know, what we did was we took a picture, we posted it to Instagram and we posted it to Facebook. And I came back the next day and we were sold out of two cases.
53:33 Guy Raz? Wow, which is how many tortillas?
53:35 Speaker 01 At that point in time, that would have been 30 packs of 10, so 300. And they were, they were selling like $12 at the shelf at Wheatsville. Again, that was super exciting, but it basically it meant that for the next year, my sister and my now brother-in-law and my parents and my wife were going to a kitchen every weekend.
54:03 Guy Raz? To make tortillas?
54:04 Speaker 01 Yep, just making tortillas.
54:06 Guy Raz? But you could only make tortillas on the weekend?
54:09 Speaker 02 Yeah, so what happened was I think we put tortillas on the shelf in May and then in October. I decided to leave my teaching job because we had gotten so busy where we needed to produce every night at least so that we could keep up with the demand. So I couldn't pay myself anything, but I took out my little retirement with teaching and just decided that I could use that to survive for a few months and then hopefully pay myself a salary. But I packed up a bag and started staying at Mike's house every single day. And I remember not going home for like two months because we got into the kitchen every single day. Just got so busy.
54:54 Speaker 01 It really started to take off. Like, so the reason we were in there every night is because at this co-op at Wheatsville, we had become the number one selling item in the entire refrigerated case.
55:09 Guy Raz? So, I mean, you guys are making these things. Like, imagine it was hot in there because you have all the burners on, you've got all the cast iron pans going. Like, you've got people patting the, you know, like, then rolling it and then like, somebody just cooking them on the cast iron pans, everybody's sweating. Was it like that?
55:28 Speaker 01 Yeah.
55:31 Speaker 02 It was hard work. So instead of rolling the tortillas, we found these little tortilla presses where we could, you know, press one tortilla at a time. So it took a lot of arms to get that pressed down. And I remember always having to go and get my shoulder worked on just because it was always in pain from pressing so many tortillas. And we would often like, just go home with our eyebrows probably like halfway burned off. We were just like burning ourselves.
56:04 Guy Raz? Getting singed from the heat?
56:05 Speaker 02 Yeah, exactly, yeah.
56:09 Guy Raz? I don't know if this is true or apocryphal, but I read this story that at a certain point, like you needed help for people to make tortillas for you. And like, you were in a grocery store and saw some lady with like a bunch of masa in her shopping cart. And you're like, hey, you want to help us make tortillas? Is that, did that happen?
56:25 Speaker 02 Yeah. Well, so we started with just recruiting like friends, but even that wasn't enough. And happened to see a woman in the aisle where they sell the tortilla masa. And she actually had like three or four of those in her basket. So I just approached her and asked if she would be interested in a job making tortillas. And so she ended up being one of our first employees.
56:53 Guy Raz? And Miguel, you were what, doing the biz dev stuff, like going out and, and trying to drum up more stores to sell at? Or were you still mainly focused on Wheatsville?
57:03 Speaker 01 No, so we were trying to drum up more business and we were trying to do it in a way that we could manage against. And so obviously the big account that we really wanted was Whole Foods. And I made the mistake of showing up to Whole Foods office and leaving a Ziploc bag of tortillas. And I thought, oh, this worked for Wheatsville. But when I did that at Whole Foods, they thought that we weren't a real business. And so they were like, yeah, we're not gonna carry you because you just showed up with a Ziploc.
57:34 Guy Raz? Of tortillas. That clearly didn't work. So how, what did you, I mean, did you go back and try again?
57:41 Speaker 01 Yeah, we actually kept on trying, sending emails. And then I was driving around doing deliveries one time, and this individual messaged us and said, hey, big fan. I buy them at the Wheatsville that y'all started at. Like, I live really close. And I'm actually a, a director, producer. And we're, we're doing this film, you know, with Whole Foods. And so I, I saw John Mackey the other day, and, and I told him, he should carry your tortillas.
58:13 Speaker 01 And so here's like, the deal is that I didn't know much about the food industry. And so even the mention of that name, I had to Google.
58:22 Guy Raz? Do you know John?
58:23 Speaker 01 No, I know. So I, I Google and I'm like, oh, my gosh.
58:26 Guy Raz? The founder of Whole Foods.
58:30 Speaker 01 So I'm having this moment where like, I remember calling my sister and my mom. And I'm telling them like, hey, we just got this message. She told me that we should be expecting to hear something soon.
58:41 Guy Raz? From Whole Foods.
58:42 Speaker 01 From Whole Foods. And I kid you not that we got an email the next day or the day after. And it was a forwarded email from a forwarded email from a forwarded email.
58:52 Guy Raz? And that's all because this filmmaker like mentioned it to John Mackey. And John Mackey's like, sounds great. He sent an email to somebody and he's like, hey, check this, this company out. And then they forwarded and they forwarded. And then like this person's like, well, it's coming from John Mackey. I guess I better call him.
59:04 Speaker 01 Yes. And it came from our local buyer who bought for like the five Austin stores. And so I think that is, I don't know, luck is very important. You know, we were working hard. We were making tortillas night and day and on the weekends and trying to build this thing. But we couldn't get in the door of Whole Foods. And then it ended up being a fan of the brand that kickstarted this.
59:32 Guy Raz? When we come back after the break, how Miguel and Veronica renamed the company, got a chunk of money and were poised to expand even further when they got the worst news imaginable. Tortillas covered in mold. Stay with us. I'm Guy Raz and you're listening to How I Built This from NPR.
1:00:11 Guy Raz? Hey, welcome back to How I Built This from NPR. So it's around 2015. And after struggling to get their grain free tortillas into Whole Foods, Veronica and Miguel are starting to get them into a few stores. So far, only in Texas, but it's a start.
1:00:29 Speaker 01 We put the tortillas on the shelf and this is gonna sound redundant, but we like we had built up this following on Instagram and on Facebook. And I remember taking a picture and then coming back the next day and the same thing had happened. Like we had sold through the product that we put on the shelf.
1:00:46 Guy Raz? Wow.
1:00:47 Speaker 01 And people were really excited about it and we were based out of Austin. So I think there was this added excitement about being local.
1:00:55 Guy Raz? What's remarkable also is that you were introducing a product that wasn't only new and different and a little bit, you know, weird unless you were already familiar with grain free products, but it was expensive. So like a business school professor might look at this and say, well, the barrier to entry is really high because it's expensive and it's different. But actually, in some ways, because these were like 12 bucks a pack, right?
1:01:18 Speaker 01 Yeah. Well, when we got into Whole Foods, we moved them to 10 bucks, but yeah, still very expensive.
1:01:24 Guy Raz? Still expensive.
1:01:25 Speaker 01 Yeah, still expensive.
1:01:25 Guy Raz? And did you guys get pushback from initially from people who were saying, hey, why is this so expensive? How would you answer that question?
1:01:34 Speaker 01 Our answer is that we are using more expensive ingredients.
1:01:40 Guy Raz? Yeah.
1:01:41 Speaker 01 And almond flour at the shelf is expensive. So I think there was also an association of people that were walking the baking aisle and they saw almond flour. I think there was a price correlation that people, people could have made with that.
1:01:58 Guy Raz? All right. So you are, you get a couple of cases into Whole Foods and this is in February of 2015 that they agreed to do this. At what point do you become Siete Foods? When do you drop the name Must Be Nutty and become, and actually get a, I mean, no offense, but get a great name? When do you drop, when do you drop that name? Did that happen shortly after you got into Whole Foods?
1:02:24 Speaker 01 Ish. So we ended up going through an accelerator here in town called SKU.
1:02:29 Guy Raz? You got like, you applied to, to become part of this accelerator?
1:02:32 Speaker 01 Yeah, we, so we were essentially just dissecting our business. And I think one of the most meaningful exercises that we did was put everything we were for on one half of a whiteboard and everything we were against on another half of a whiteboard. And then we actually got to talking to one of the mentors. He told us that like, we should really understand who we are and then leverage that in the marketplace. And I think what he meant by understanding who you are is we had been producing this tortilla and it was authentic because this is what we grew up eating.
1:03:16 Speaker 01 So we ended up coming to Siete because the number of family members that we have in our family and using Spanish, it was kind of written there the whole time, like G7 Athletics. Like, family is so much a part of who we are and Siete was the representation for that.
1:03:39 Guy Raz? Yeah. So, all right. So you guys, you've got your name. And I guess another part of this accelerator program was also helping you to get ready to, to raise money from potential investors because you guys were starting to get to that point, right?
1:03:51 Speaker 01 Yeah, for sure. And we ended up, at the end, we, we did a pitch. Like, we pitched to a, a room of investors and we did end up raising money about a few months after the accelerator ended.
1:04:05 Guy Raz? I think it was about a million dollars that you raised, right?
1:04:08 Speaker 01 Yeah, we raised a million dollars from a few angel investors here in town and then a natural foods broker who's based out of Chicago.
1:04:18 Guy Raz? Yeah.
1:04:19 Speaker 01 And we were really trying to raise money for a pretty specific reason. We wanted to make sure that we could buy a piece of equipment that could help us make the jump from manufacturing by hand to utilizing a machine that would automate a good chunk of the process.
1:04:38 Guy Raz? And by the way, you guys were still making the tortillas? Or, or did you now have other people making them for you?
1:04:44 Speaker 02 I think at that point, we had hired like 10 people to help make the tortillas on a daily basis.
1:04:51 Guy Raz? Got it.
1:04:51 Speaker 01 Yeah. And right around that time, we end up flying up to Baltimore because this investor, this natural foods broker, had gotten us a meeting with Whole Foods up in Baltimore at Natural Products Expo East.
1:05:08 Speaker 01 And so we met with this guy Dwight Richmond. He was the Whole Foods buyer for us and we had been told like, hey, he doesn't, you know, he's not going to have much expression. He's just going to meet with you. And so just do your pitch and don't expect much.
1:05:24 Guy Raz? And by the way, was he like a mid Atlantic regional buyer or was he a national?
1:05:28 Speaker 01 No, he was a national buyer.
1:05:30 Speaker 02 National.
1:05:31 Guy Raz? Okay.
1:05:31 Speaker 01 So we end up going to Baltimore and we're making this pitch and I'll never forget because Dwight ended up cracking a smile, like he laughed a little bit, which was exciting to me. And then he ended up saying like, yeah, I'm going to tell the regions that that they should take this product.
1:05:47 Guy Raz? Wow.
1:05:48 Speaker 01 And so for us, that's like, we're super excited.
1:05:51 Guy Raz? Yeah.
1:05:51 Speaker 01 I remember like high fiving because you feel so good. And our parents are like, oh my gosh, that was awesome. And then Vettel gets a phone call and she looks at me and if this is wrong, Vettel, let me know, but I remember you looking at me and you just passed.
1:06:09 Speaker 02 My face went white.
1:06:10 Speaker 01 Yeah. And you passed.
1:06:11 Speaker 02 Did I look like a ghost?
1:06:12 Speaker 01 So she passes the phone to me and I'm like, okay. Uh huh. Uh huh.
1:06:18 Guy Raz? Who was on the other line?
1:06:19 Speaker 01 It was our regional distributor, Labatt. And so Labatt distributed to the Southwest region of Whole Foods. And so what they were telling us was, hey, you know, that pallet of product that you shipped us so that we could ship it to Whole Foods? Yeah, it's all moldy.
1:06:37 Guy Raz? Wow. This was the, the stuff you were going to ship to the Whole Foods in Texas, right?
1:06:41 Speaker 01 Yep.
1:06:42 Guy Raz? And that, that pallet of tortillas was moldy?
1:06:45 Speaker 01 Yeah. So the entire pallet of product, I guess, hadn't been kept to temperature. We had made one of a mistake, basically, which is don't store tortillas in a produce warehouse because produce warehouses are humid, right? There's a lot of moisture and. Produce has mold spores on it. So our distributor was telling us, hey, we're gonna throw this away and you gotta figure out how to replenish Whole Foods. And so we, we got on the first flight out of Baltimore, which is this 5:30 a.m. flight. We drove to the produce facility. It was pretty devastating. It was, it was a gut punch. It was so bizarre
1:07:30 Speaker 01 how it happened because I, I remember this moment. It was like euphoric. You're just excited. You, Whole Foods just said, yes, they wanted our product to go national. And then, yeah, but you have moldy pallets of tortillas.
1:07:46 Guy Raz? By the way, how much, how much money is a pallet? Like, how much like retail value did that have?
1:07:51 Speaker 01 So it must have been about like 20 to 30,000 dollars that was unsalable. And it was, it was also, you know, Vettel mentioned that we had these individuals helping us make tortillas. It was also about half a month's production.
1:08:07 Guy Raz? But so what did you do? How did you, I mean, now you have to produce those tortillas that are gonna go on the shelf. So what did you do?
1:08:15 Speaker 01 We actually got back in the kitchen. So the team was still producing what we had to produce. And then I remember going back in there, my parents coming back up again, and us just having to get back in the kitchen to produce more tortillas.
1:08:30 Speaker 02 Yeah, I actually think mom took some time off of work for like almost a week so that we could just be in the kitchen every single day making tortillas.
1:08:39 Guy Raz? Wow. So clearly you guys kind of get through this crisis moment because I think at this point you start to ramp up to sell to other Whole Foods regions in the U.S., right? I mean, and presumably they still want to go forward with you, right?
1:08:55 Speaker 01 Yeah, we, so we got lucky because what ended up happening was they had their regional call and four regions ended up being very excited about the product. And so January of 2016,
1:09:11 Speaker 01 We ended up launching in four regions.
1:09:14 Guy Raz? And I have to imagine at this point, you're out of the like the co-working kitchen and you're in a like a bigger facility, right? Like a co-packing facility. So did you find one?
1:09:24 Speaker 02 So even getting to that point of finding the manufacturer was tough. This was kind of a little bit of a coincidence, but one of my really good friends from Laredo, she had told me about this family friend of hers that owned this manufacturing facility in Austin, and I should reach out to them just to see if they had advice. And I was really terrified. I thought, well, why would I reach out to them? They're going to copy my idea. Like, I'm not going to reach out to them. But my brother is just on his own. He had started researching different manufacturing opportunities and came across this company and went and knocked on their door, just like literally showed up at the facility
1:10:08 Speaker 02 and asked to talk to somebody. And it turned out that that was the same family friend.
1:10:12 Guy Raz? This would be, this is like, I guess, what you call like a commercial manufacturer, and you give them your precise instructions and then they produce it for you.
1:10:20 Speaker 02 Yes.
1:10:20 Speaker 01 Yep.
1:10:21 Speaker 02 Yeah.
1:10:21 Guy Raz? And I mean, this is an interesting dilemma, right? Because you had this great idea and this great product, and clearly, you know, there was a market for it. And you rightfully worried that maybe if you went and worked with a co-packer, they would just steal your idea and make it themselves. But the reality is, they usually don't do that because to start a brand from nothing is not easy.
1:10:44 Speaker 01 Yeah, but we had heard some horror stories, and I think we had heard enough horror stories. And I actually think, so I cold emailed the CEO of Annie's at the time, John Foraker, and I asked him for 30 minutes of his time. And my question was, what's the biggest piece of advice that you might have to enough start brand? And his response was, run as fast as you can.
1:11:10 Speaker 01 If you have an innovative product, it'll probably get copied. And like, the only thing that you have to play defense against that is building a brand and running as fast as you can.
1:11:24 Guy Raz? Right.
1:11:25 Speaker 01 And so, I think we did just that. We were making hires and we were building this brand. And, and we felt that if we could do that, that that would be our best defense.
1:11:37 Guy Raz? So you did end up going with it with this co-packer, the co-packing manufacturer in Austin?
1:11:42 Speaker 01 Yep.
1:11:43 Speaker 02 Yeah, and they had never done anything other than flour and corn tortilla products and, and chips. So, taking on this little almond flour tortilla company, I remember having to cry to the owners of this manufacturer and just telling them, "Please, take us on. We need you. My shoulder hurts so bad."
1:12:10 Speaker 02 So I think partially having that friend connection, they felt really bad and decided to take us on.
1:12:18 Speaker 01 So we, we ended up, you know, we bought a piece of equipment, we installed it, and then we were there every day, basically, with this manufacturer, trying to make sure that we could get our product to run on this piece of equipment that we had bought.
1:12:37 Guy Raz? And, and the equipment was like, what, like a tortilla making machine?
1:12:41 Speaker 01 Oh, yeah. So, I, I actually remember the product not actually running on the line until about a day before we had to ship it to the four regions of Whole Foods.
1:12:54 Guy Raz? Wow.
1:12:55 Speaker 01 So we were, we were cutting it very close, and we were there till about 3:00 in the morning.
1:13:00 Guy Raz? But clearly, this man, I mean, if, if they weren't starting to make it until a few days before you were shipping it, it suggests that this was a much faster process than 10 tortilla makers in a shared kitchen, right? And this is, this is like a big, this is like a fast... Tortilla machine.
1:13:17 Speaker 02 Yeah, it was amazing to see. Like, I was in awe the first time I saw the product running. And I could just picture myself, like, pressing each tortilla one by one.
1:13:29 Guy Raz? And you just saw these perfect tortillas.
1:13:31 Speaker 02 How much that would have hurt.
1:13:32 Guy Raz? These just saw these perfect tortillas just dropping, dropping, dropping, next over next, something like that.
1:13:37 Speaker 01 Yep.
1:13:38 Guy Raz? So, it sounds like 2016, your tortillas are kind of roll out into other Whole Foods around the country. And that's also the year where you start to develop your tortilla chips?
1:13:49 Speaker 02 Yeah, I had an idea, just based on kind of what I was doing in my own kitchen. I wasn't eating corn anymore. And if you're in Texas, I mean, any restaurant you go to, you're gonna be served chips and salsa, even non-Mexican restaurants. That's just something that you eat as an appetizer. So, I had already started, you know, taking our tortillas and cutting them up into triangles and either frying them up or putting them in the oven and creating my own chips. But the truth is, Mike kind of promised them to Whole Foods before I really had a product.
1:14:28 Guy Raz? They were like, hey, what are the things you guys have in the pipeline? You're like, oh, we got tons of, we got tortilla chips, we got queso, we got enchilada sauce. Meantime, Veronica's like, what?
1:14:38 Speaker 01 A little bit.
1:14:39 Speaker 02 Yeah, so he came to me and he's like, remember you played around with chips a little bit? Well, Whole Foods wants them, so can you have a sample in two days or whatever it was? So, I literally just threw some stuff together that first time. And thankfully, they were good enough for them to get approved. And in the meantime, while we were waiting for them to get on the shelf, I was able to experiment a lot more and pin a recipe down that we could work with.
1:15:07 Guy Raz? You know, I wonder when you, I mean, now you're making tortilla chips and you've got tortillas and there's more demand from Whole Foods. Were you guys profitable?
1:15:17 Speaker 01 Uh, yeah, yeah, because we were, at that point in time, we were making enough money to grow the business sustainably. And we were, we weren't making big bets beyond the innovation. And we were also lucky, like, my sister, um, I always say my sister is like a billion-dollar R and D department. And that's, and that's not what she gets paid. But we weren't have, like, we were able to do a lot of stuff in-house because we had this team of scrappy people.
1:15:49 Guy Raz? All right, so you are, obviously, you're in this kind of interesting position because you're growing, but sustainably, and you can't supercharge it because you don't have the financing to do it. But I guess in 2019, you did accept a huge investment, $90 million, from Stripe Group. Did they come to you? Did they say, hey, we were really interested in being involved with you guys?
1:16:12 Speaker 01 They actually reached out to us and we started to build a relationship. And we ended up raising money from them because we saw this opportunity in the marketplace where we could supercharge the growth. And we shared several meals with them in our, like, cafe that we have at the office. And I was having a conversation with one of them and I told them, here's what I want you to know, we are building a billion-dollar Mexican-American food brand.
1:16:49 Speaker 01 We're not building the next Tostitos, we're not building the next Mission, we are building a billion-dollar iconic Mexican-American food brand. And sitting across the table, you know, my family was there and they were there, they said, that's exactly why we want to partner with you, because we also see that opportunity.
1:17:13 Guy Raz? I mean, was this kind of mind-blowing that, like, they were like, yeah, we want to put $90 million into this business? I mean, it's, it's amazing, right? Because even at this point, I think when they invested in you guys, you just had, like, two or three people who were doing sales. I mean, you were a tiny group of people. Were you just like, oh, my God, this is, this is insane, this is huge?
1:17:36 Speaker 01 Yeah.
1:17:36 Speaker 02 Yes, then and still, I still feel like that. Looking back on it almost a few years later.
1:17:42 Guy Raz? And with that investment, I mean, you can be everywhere. You can be at Costco and Walmart, and I think you are there now in those places.
1:17:50 Speaker 01 Yeah, it's been a crazy two years. So we're now in a little over 16,000 retailers. We're in places like Kroger and Costco and Target and Walmart. And so it was, it was around that time, like right before we got the investment that we started, or Vettel created our cachu queso and we launched hot sauces. And we had started to really build out this full portfolio of Mexican-American food products.
1:18:25 Guy Raz? You know, what's so interesting to me about what you're doing is you're not competing against paleo or grain-free your products. You're competing against other Mexican food products.
1:18:38 Speaker 01 Yeah, yeah, yeah.
1:18:40 Speaker 02 In lots of different categories, yeah.
1:18:43 Guy Raz? Today, Miguel, you're the CEO. Veronica, you are the president and you head up innovation. And I think your dad and sister Linda do legal. Your mom manages purchasing. And then your other siblings, Rebecca and Robert, they handle customer service issues. Is that right?
1:19:04 Speaker 01 Yep.
1:19:04 Guy Raz? So every, this is, this is truly a family business. I mean, everybody is now doing this full time.
1:19:12 Speaker 01 Yeah.
1:19:13 Speaker 02 Yeah, we have to succeed.
1:19:16 Speaker 02 We have to do well.
1:19:17 Guy Raz? I mean, I hesitate to even ask this question because I think I know the answer, given the fact that you guys would do like air squats together and CrossFit-ing together and, you know, your backyard and stuff. Like, you guys really are like a YouTube family. But is there ever any tension? Like, do you guys ever argue about, you know, because running a business is stressful and intense?
1:19:39 Speaker 01 It is a, I mean, it's a business and I think there are disagreements. There are arguments. But we always take it back to our core values. And so our first core value, the one that we outlined right from the beginning, was family first, family second, business third. And like my mom wouldn't let us keep doing this if we weren't getting along. So knowing that we have to end at that place, that we always have to get along. Like, there's gonna be bumps in the road, but we're all kind of, we're all focused on this idea of building
1:20:21 Speaker 01 a Mexican-American food brand, and we're focused on doing it together, which is the Juntos Es mejor apart. And so we have to figure things out.
1:20:30 Guy Raz? When you guys think about this journey that you've gone on and, you know, all the things that happened from Veronica, you were like teaching a class that you weren't really that interested in teaching at a college, at a university in Laredo. And Miguel, you were sort of thinking about becoming a small-town lawyer in Laredo. When you think about where you've come now, I mean, how much of that do you, do you think is because of how hard you guys worked and how smart you are and how much do you, I don't know, chalk it up to luck? Miguel?
1:21:02 Speaker 01 I don't know, Vettel. What do you think?
1:21:04 Speaker 02 Um, for me personally, I feel like it's been a lot of luck and a lot of hard work, but I feel like when I look back on everything that's happened, I've been very lucky. I'm sure my brother has a different perspective.
1:21:24 Speaker 01 No, I think, um, I think we are very blessed. I think luck's a part of it. Hard work's a part of it, but there is a team of eighty-plus people that work at Siete. And all along the way, I would say where we have been blessed or lucky, whatever you believe, that's such a big part of it, and it's been because we've been able to work with amazing people.
1:21:56 Speaker 02 You know, especially when we were starting off, we were looking for mentors. And it had been my hope that I could find somebody who had done this before and maybe somebody like me, a woman of color. And that was really hard to find in our industry. So I think not being able to find these mentors ourselves, Mike and I decided pretty early on that we probably had to become that. So, you know, I hope that we're doing that today. I hope that we can be an example for other people, not just Mexican-Americans, but other people of color who, you know, are starting businesses. And that would make me really happy to know that.
1:22:39 Guy Raz? That's Veronica Garza and Miguel Garza, co-founders of Siete Family Foods. In 2020, Siete hit $200 million in total retail sales in the US. And by the way, even though their original family gym, G7 Athletics, closed down in 2015, they did open a small gym inside the Siete Foods office in Austin. And before the pandemic shut everything down, Miguel would actually leave CrossFit-style workouts most evenings for anyone in the company who wanted to join in.
1:23:18 Guy Raz? Hey, thanks so much for listening to the show this week. If you haven't subscribed to the show yet, please do so wherever you get your podcasts. If you want to write to us, our email address is [email protected] . If you want to follow us on Twitter, we're at HowIBuiltThis or at Guy Raz. And my Instagram is at Guy.Raz. This episode was produced by Casey Herman with music composed by Ramtin Arablouei. Thanks also to Liz Metzger, Farah Safari, Dareth Gales, J.C. Howard, Julia Carney, Neva Grant, and Jeff Rogers. Our intern is Janet Wu-Jung Lee. I'm Guy Raz, and you've been listening to How I Built This.
1:24:04 Guy Raz? This is NPR.
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