Noosa Yoghurt: Koel Thomae

In a small beach town on Australia’s sunshine coast, Koel Thomae tasted a yogurt that would change her life: creamy, infused with honey and piquant with passion fruit, it became an obsession–something she was determined to recreate in her adopted home of Boulder, Colorado. With no knowledge of dairy, Koel forged an 8,000 mile partnership between the Australian yogurt-makers and a Colorado dairyman. Noosa Yoghurt faced a near-death experience as the founders scrambled to meet the pace of demand; but by 2018, the brand was available in 25,000 stores, with over $200M in sales. Today, the company is owned by the food conglomerate Campbell’s. This episode was produced by Devan Schwartz with music composed by Ramtin Arablouei. It was edited by Neva Grant with research from Olivia Rockeman. Our audio engineers were Robert Rodriguez and Gilly Moon. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 1:32Guy Raz?

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• 4:27Guy Raz?

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• 5:19Speaker 01

  Shoprite is probably one of the hardest operationally retailers to work with. Everything that could go wrong was going wrong. We were literally hemorrhaging cash for this customer, from spoils to the slotting fees.

• 5:36Guy Raz?

  Yeah.

• 5:36Speaker 01

  And finally, I was like, this is not working. Like, this retailer could sink the entire operation from a cash flow perspective.

• 5:45Guy Raz?

  So what did you do?

• 5:47Speaker 01

  We pulled out.

• 5:48Guy Raz?

  You pulled out?

• 5:49Speaker 01

  We pulled out. And, I mean, they pretty much said, you'll never, you'll never sell at our store again.

• 6:02Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:14Guy Raz?

  I'm Guy Raz, and on the show today, how Koel Tome discovered a delicious passion fruit yogurt in an Australian beach town, became obsessed with bringing it to the US, and built Noosa into a major yogurt brand.

• 6:34Guy Raz?

  Koel Tome, like a lot of the founders on this show, was an accidental entrepreneur. She left her native Australia in the late 90s and moved around the Rocky Mountain States doing different, mainly temporary, jobs. She waited tables, worked at ski resorts, and in shops. But eventually, she landed a junior role working supply chain for a startup in Boulder, Colorado. That startup was a sparkling beverage brand called Izzy. And while working there, she caught the bug. She started to think that maybe she could come up with an idea as well. And the idea actually came to her

• 7:13Guy Raz?

  on a visit back home to Australia in 2005. Koel was visiting her mom and tasted what she thought was the most delicious yogurt of her life. It happened to be a local brand made in a small beach town in Queensland. But for years, she didn't do anything about it. She just dreamed about finding a way to bring that kind of yogurt to America. How she did it? With no experience working in dairy or running her own business? Well, that is today's story. How Koel Tome and her partners managed to turn Noosa into a multimillion-dollar yogurt brand that was eventually acquired by Campbell's,

• 7:55Guy Raz?

  as in the soup company. Koel grew up in Australia in the 70s and 80s. She came to the US after college and bounced around Oregon, Montana, and Utah before landing in Colorado.

• 8:09Speaker 01

  And so, in 2000, I landed in Boulder.

• 8:14Speaker 01

  And ultimately got a job working for this IT company.

• 8:21Speaker 01

  Thinking, again, you know, that it would be this sort of Kickstarter to a real career.

• 8:26Guy Raz?

  Yeah.

• 8:26Speaker 01

  And realized pretty quickly that I was not very passionate about the IT world.

• 8:34Speaker 01

  Dying, you know, in a cube, but I loved living in Boulder and I really wanted to stay.

• 8:40Guy Raz?

  Boulder was and is an IT hub, but it also was and is a food hub, I think in part, in large part because of Hain, Hain Celestial, which I think is based there and kind of started there, I think.

• 8:53Speaker 01

  Hain Celestial, White Wave.

• 8:55Guy Raz?

  White Wave, yeah. Some of these really big brands have started there and, and so Boulder became kind of like the Silicon Valley of food. And did, were you aware of that when you were living there in 2000?

• 9:06Speaker 01

  I wasn't initially. Food has always been the sort of common thread in my life, you know, from growing up and going to farmer's markets, I think, being raised by a single mom who just sort of had bigger expectations of, you know, me being independent and sort of helping. So I started cooking at a younger age.

• 9:28Speaker 01

  I'm a weird nerd. I like going grocery shopping, like I like just cruising grocery aisles.

• 9:33Guy Raz?

  There's nothing nerdy about that. That's what I do in every city I go to.

• 9:37Speaker 01

  It's so fun, like just the discovery of things.

• 9:40Guy Raz?

  It's the best.

• 9:42Speaker 01

  And so, yeah, so food was this sort of passion point for me, I realized. And here I am in the Mecca of natural food and I just decided, I was like, I'm going to work in the food industry.

• 9:55Guy Raz?

  You, you stayed in that, this sort of job that you hated for at least three and a half, four years, right? For this IT company, you were there for quite a while.

• 10:03Speaker 01

  I was, and, you know, once I sort of had this epiphany that food was where I should be, I didn't really have any defined career role within food. I was like, I'll do anything just to get my foot in the door. And because I had been nomadic. My resume looked very spotty. And so it was probably over a year and a half of applying for every job that I thought I was reasonably qualified for. Before I landed my first food job at Izzy Beverage.

• 10:33Guy Raz?

  And Izzy, of course, the sparkling juice brand.

• 10:36Speaker 01

  Yeah.

• 10:36Guy Raz?

  And that had started in Boulder. And so presumably this is more interesting for you than than the IT job that you had before.

• 10:44Speaker 01

  Yeah, well, I learned so much, you know, sales, marketing. I was loving it, absolutely loving it.

• 10:52Guy Raz?

  I guess you're in Boulder and and around 2005, from what I understand, you you go to Australia with your new boyfriend at the time. A guy named Tate.

• 11:05Speaker 01

  My now husband.

• 11:06Guy Raz?

  So you go to you take him to Australia to meet your family. So clearly you're serious about this guy.

• 11:13Speaker 01

  Yeah.

• 11:14Guy Raz?

  And you go stay with your mom and she has a small beach house in on the Sunshine Coast in Queensland. And tell me about that trip.

• 11:24Speaker 01

  We were on the Sunshine Coast. We so we had gone to the beach, we'd gone surfing and we're walking back. We had stopped in at this little local corner shop and, you know, back to my love of just perusing stores. I ended up in the back and there was a cooler. And there was this container which was clear. It wasn't really very apparent what it was, but I could tell that it had passion fruit in it. And in Australia, passion fruit's a pretty actually traditional flavor. And for anyone that doesn't know, passion fruit, when you cut it open, is this vibrant orange, has black seeds. So it's very distinctive if you know what you're looking at. And so I picked it up, turned it over.

• 12:09Speaker 01

  There's a label on the top of the lid, Discover It's Yogurt. So I buy it and we walk back to my mom's apartment and I immediately try it. And it was one of those just stop you in your tracks taste moments. Like, think about eating the best peach in the dead of summer or, you know, things like that where you're just like, you don't want to think about anything else. And it was like that for me. So I'm like, Tate, this is you've got to taste this. This is like literally the best thing I've ever tasted. He tastes it. He's like, it's good, but it's just yogurt. And I'm like, hey, look, you don't understand. This is amazing. This is revolutionary.

• 12:53Speaker 01

  And so I end up calling my mom later that day and I'm telling her about this yogurt that I've just discovered. In Australia, it's called Queensland yogurt. And, you know, throughout my whole life, my mom has been somebody to dare me to do things out of my comfort zone. And so she said, you know, you should call them. And I was like, and tell them what? That their yogurt's delicious? And she's like, well, why not? Like, okay, you know, I turn it over. There's a phone number on the lid. And so I call and I end up connecting with this woman, Kay Mathiessen. And it's this small family business. They've only been around for about 18 months.

• 13:35Speaker 01

  And, you know, I give her this sort of like mini pitch. Hey, I'm an Aussie expat. I live in Boulder, Colorado. It's this amazing food community. Have you guys ever thought about doing anything with the US? She's like, no, we're way too busy. I was like, okay, well, you know, here's my, here's my email address. If anything changes, would love to hear from you. So I go back to Colorado, you know, having tasted this yogurt literally one time. And I'm back in Colorado. I'm back working at Izzy. And I start just looking for something that tastes remotely like this yogurt.

• 14:15Guy Raz?

  And the yogurt was, it wasn't like Greek yogurt. It was like, uh, thick, but not as firm as Greek yogurt?

• 14:24Speaker 01

  Yeah. So it's a whole milk yogurt. I mean, the best way I can describe it is eating velvet. It was just so creamy. And then it's infused with honey. Uh, and then that paired with the passion fruit was just this like beautiful, sweet tart sort of flavor opposition. And yeah, I couldn't find anything like it in Colorado.

• 14:47Guy Raz?

  And Greek yogurt, by this point, 2004, 2005, you started to see Chobani and Faye was around. There were some Greek yogurts that were available.

• 14:57Speaker 01

  Yeah, they were they were just coming on to the market. So I could I could see that there was a trend happening with Greek. But it to me, it didn't taste as good as Queensland yogurt.

• 15:08Guy Raz?

  Yeah, and you keep thinking about this, but obviously, you just go back to your job at Izzy because it is what it is. But but I guess you you were telling a lot of people about this yogurt, right? Like, you it becomes like a weird obsession for you when you go back to Boulder.

• 15:25Speaker 01

  Yeah, I mean, I sort of embarked on what I like to describe as my my yogurt, like PhD, right? Like, I literally would go to my local Whole Foods. There was a guy working in the dairy section. His name is Joseph. He still works at my local Whole Foods. And he and I would just ruminate about like all the different brands and what did you think tastes the best? And and then we started talking about packaging. And, you know, we just had like very deep, meaningful conversations about yogurt.

• 15:56Guy Raz?

  But while you were in Boulder, like, you know, sometimes you'll meet people who are born in another country. Like, I've noticed somebody from Bulgaria and they'll say, oh, in Bulgaria, the tomatoes and cucumbers are so much better than they are in the US. And you're like, are they really? I think there's pretty good cucumbers and tomatoes in California. But, you know, whatever, I get it, you know, I get it. And so you would have been saying to me, oh, the Australian yogurt is the best in the world. And I would have been like, OK, great. And I would have kind of, you know, sort of subtly rolled my eyes. But I would have, you know, I would have listened to you. You were that person.

• 16:30Speaker 01

  I was that person. I mean, driving my husband crazy, driving everyone at Izzy crazy. I think when you're an expat, you become very nostalgic about things that you can't eat in your new home. And so I think that was part of it for me. But I just couldn't find anything that tasted that good, in my opinion.

• 16:50Guy Raz?

  Yeah. All right. You go back to Australia in 2007 for another family visit. But this time, you go back with the idea of making an appointment of meeting the owners of this Queensland yogurt company. So you're really thinking, all right, I'm going to take another shot at this and see if there's something there, there. Like, you really...

• 17:11Speaker 01

  I was obsessed. And it was actually my boss at Izzy, who was really the one that encouraged me to reach out to them again.

• 17:18Guy Raz?

  That's cool. I love that you told you that.

• 17:20Speaker 01

  I do, too. So I actually had my mom call the second time. She definitely has the gift of the gab. And my mom organized a meeting with the Queensland yogurt family.

• 17:30Guy Raz?

  And you met the, these are the owners, the Mathewsons.

• 17:34Speaker 01

  The Mathewsons. So it ends up being Kay, the two sons, and one of their wives. We meet in my mom's beach apartment. And, you know, I go back to, I live in Boulder. It's this amazing food community. And I said, I really believe that the American palate is not that different from, from an Aussie palate. And there's just nothing like it. I said, you know, yogurt is growing as a category. I can attest to that from just having watched it over the past two years. And I think there's this amazing opportunity. And again, my vision wasn't to create this national brand. I just thought I could have

• 18:15Speaker 01

  this really cool Colorado-based company, and then I selfishly get to eat it more than once a year.

• 18:22Guy Raz?

  And the idea was, maybe could I license it from you? Like, did you even ask at that lunch?

• 18:28Speaker 01

  Yeah, it was, would you, would you consider licensing the recipe to me? And when you do an Aussie lunch, you definitely have some beers. And they essentially said, look, yeah, we, we think there is an opportunity in the US. So... We'd happily license to you. We'd want to invest in the business and we'd be happy to bring like a yogurt maker over and just help with the initial startup of the business.

• 18:57Guy Raz?

  And did they?

• 18:57Speaker 01

  This from a three hour lunch and a handshake.

• 18:59Guy Raz?

  And but no, no numbers were discussed at that point?

• 19:01Speaker 01

  None.

• 19:02Guy Raz?

  None, okay. And and just out of curiosity, I mean, as somebody who makes yogurt myself in my Instant Pot, it's not, you know, commercial quality yogurt, but is it that like, did you, did you need to license the, the recipe? Was it that complex? Could, could, was there a world where you could just have figured it out?

• 19:21Speaker 01

  Maybe, but that was not what I was thinking. I just felt like this was so unique and why try and reinvent the wheel?

• 19:29Guy Raz?

  Fair enough. And, and you're, this is now 2007.

• 19:34Speaker 01

  Yeah.

• 19:34Guy Raz?

  You go back to Boulder. Let's just pause for a second and talk about where you were at this point in your life. Because Izzy had sold to Pepsi.

• 19:42Speaker 01

  Yeah.

• 19:42Guy Raz?

  And you got some equity when you joined. So you got a nice sized check when, when Pepsi bought out Izzy, I would assume.

• 19:50Speaker 01

  I did, and more money than I ever envisioned having in my life.

• 19:54Guy Raz?

  Do you mind telling us, telling us how much you got from that equity?

• 19:58Speaker 01

  Uh, I got about $75,000.

• 20:01Guy Raz?

  Wow, that's pretty good because you're, you were like in your early 30s at that point.

• 20:05Speaker 01

  Yeah, I mean, and just a junior position, had just bought my first house. Yeah, it was sort of revolutionary to have this, this kind of money.

• 20:15Guy Raz?

  All right, so you get back to Boulder. You've got probably after you bought the house and the down payment, maybe you got, I don't know, maybe between 25 and 50 grand.

• 20:23Speaker 01

  Yeah.

• 20:23Guy Raz?

  That you'd be willing to put in. What was your next step? I mean, now you had, you, you, you knew that they were willing to commit to, to this.

• 20:32Guy Raz?

  But I'm assuming, I mean, what did you know about the yogurt business? What did you know about, uh, how did it start it or anything? Did you know anything?

• 20:40Speaker 01

  I knew nothing about dairy. I just knew I loved to eat it.

• 20:44Guy Raz?

  Yeah.

• 20:44Speaker 01

  Um, but yogurt, as I realized, very different.

• 20:50Speaker 01

  Industry from the US to Australia, like way more regulated in the US. You know, the Mathewsons were pretty adamant that we would only be able to make this yogurt if we built our own manufacturing facility. And so I'm like, okay, I can figure this out, you know, thinking more small scale commissary kitchen.

• 21:11Guy Raz?

  Right.

• 21:12Speaker 01

  Then ultimately realize I have to go talk to the state health inspector.

• 21:17Guy Raz?

  Right, because that's right, because.

• 21:19Speaker 01

  You don't want to kill people.

• 21:20Guy Raz?

  You don't want to kill people with the bacteria or something, right? So, so you go to the state health department to get more information. What did you find out?

• 21:30Speaker 01

  I found out that I was even more ill-equipped than I imagined. And, you know, this state health inspector is kind of like, figures me out pretty quickly that I am completely green when it comes to dairy. And he asked me, do you even know what the PMO is? And I say, I have no idea what you're talking about. So the PMO is the Pasteurized Milk Ordinance. And it is this voluminous document that governs dairy, essentially. And he handed me a copy and sent me packing and said, don't come and talk to me again until you understand this document.

• 22:08Guy Raz?

  Fair enough.

• 22:09Speaker 01

  I walk out of the building and literally like shed a tear.

• 22:13Guy Raz?

  What was the, what was the problem with the document? Was it just impenetrable?

• 22:17Speaker 01

  I mean, I felt like it would take me an entire year to read it and really understand it.

• 22:22Guy Raz?

  So you felt like you just did not have the skillset to do it? And, and so at that point, what do you do? I mean, I mean, this is the point where a lot of early-stage founders just kind of say, you know what?

• 22:35Speaker 01

  Too hard.

• 22:36Guy Raz?

  This isn't for me. I'm gonna move on.

• 22:39Speaker 01

  I decided to pivot. I was like, okay, I can't do this by myself. I need a dairy expert. And so I sort of reached out to my network and I said, do you have dairy consultants? Do you have anybody that's in dairy?

• 22:55Guy Raz?

  And who was your network, by the way?

• 22:57Speaker 01

  My Izzy people. Um, yeah, it's just a small network.

• 23:01Guy Raz?

  Yeah, just, and asking if they knew people in Boulder who are.

• 23:07Guy Raz?

  Connected. You just started asking people you knew, do you know anybody in dairy?

• 23:10Speaker 01

  Yeah, exactly. And it's, it's an old world process. And what I'm thinking is very entrepreneurial.

• 23:19Guy Raz?

  When you say old world, it's like small families, generational families.

• 23:25Speaker 01

  Exactly.

• 23:25Guy Raz?

  In this business, because a lot of dairies are small, but then they sell to larger brands.

• 23:30Speaker 01

  Yeah.

• 23:30Guy Raz?

  That just, you know, right. And a lot of these, as far as I know, in, in this area, they're, they're families that have been in the business for two, three, four generations. And, and that's what you're running into?

• 23:42Speaker 01

  Exactly. But I don't see them as somebody that I can necessarily partner with. Until one day, I'm at my local coffee shop, and I see a flyer for this fourth generation dairy farm in Northern Colorado called Morning Fresh.

• 23:59Guy Raz?

  A flyer advertising what?

• 24:01Speaker 01

  Uh, that just sort of gives a little blurb about their family story, how they're treating their cows, how they're growing their own feed. Um, I do a little bit of research and realize that they're selling their bottled milk already at Whole Foods.

• 24:17Guy Raz?

  Oh, so it was a flyer advertising the dairy because they were, they were branding their milk Morning Fresh Milk at Whole Foods in Colorado?

• 24:25Speaker 01

  Yeah. And so I ultimately cold call, getting really good at cold calling at this point. And I connect with, uh, Rob Graves, Farmer Rob, as we like to call him.

• 24:39Guy Raz?

  And he was, who, who was Rob? Was he the owner?

• 24:41Speaker 01

  Rob is the owner of Morning Fresh, fourth generation dairy farmer. You know, I sort of give him a little mini pitch on the phone.

• 24:48Guy Raz?

  And your pitch was what?

• 24:50Speaker 01

  That I've discovered this amazing yogurt. I have a license to make it, and I'm looking for, almost like a co-man, or a co-manufacturing facility that can help me produce it. And he's intrigued. He invites me up to the farm.

• 25:06Guy Raz?

  How far, how far away from Boulder was it?

• 25:08Speaker 01

  It's about an hour north.

• 25:10Guy Raz?

  Mm hmm.

• 25:10Speaker 01

  Yeah.

• 25:11Guy Raz?

  Okay.

• 25:11Speaker 01

  You know, he was generous to, to even have the meeting. I think he thinks I'm pretty crazy at this point. Cause I don't have any product, right? Cause tasting is believing.

• 25:24Guy Raz?

  Right. You're just saying, I have this amazing yogurt, but, and he's like, where is it?

• 25:28Speaker 01

  Yeah.

• 25:28Guy Raz?

  You're like, it's in Australia.

• 25:30Speaker 01

  Exactly.

• 25:32Speaker 01

  So then I call my mom, I ask her to ship me some samples. I don't even remember how we got them through customs because you can't technically ship dairy internationally.

• 25:42Guy Raz?

  She just like ships them in, in, in like with dry ice or something?

• 25:45Speaker 01

  I think she froze like milk jugs.

• 25:49Guy Raz?

  Oh.

• 25:49Speaker 01

  I mean, imagine this yogurt gets to me and it's probably not food safe at this point.

• 25:56Guy Raz?

  Yeah.

• 25:56Speaker 01

  But I go back up to the dairy to Morning Fresh, meet with Rob again, and I get him to taste the product. And at this point, he has the same taste moment that I did back in Australia.

• 26:10Guy Raz?

  He finds it to be as amazing as you do?

• 26:12Speaker 01

  He does.

• 26:13Guy Raz?

  Right? Because, because he could have been like, you know, it's pretty good, but it's not amazing.

• 26:17Speaker 01

  No. So he's, he's immediately intrigued, agrees that this is a huge opportunity. He's like, you know, good timing. I'm in the process of designing and developing a new bottling plant for my fluid milk. He's like, we can probably add a little extra space to make yogurt.

• 26:38Guy Raz?

  So they were not making yogurt. They were just bottling milk and maybe cream?

• 26:42Speaker 01

  Yep.

• 26:43Guy Raz?

  Because that's a whole different process.

• 26:45Speaker 01

  Yeah.

• 26:45Guy Raz?

  That's a, that's a whole nother line that he's got to put in.

• 26:49Speaker 01

  Exactly. But he's like, yeah, we can do it. So then as we, you know, the conversations sort of continue, we realize it probably makes more sense for him to come on as.

• 27:00Guy Raz?

  As a partner.

• 27:00Speaker 01

  As a partner.

• 27:01Guy Raz?

  Fair enough.

• 27:02Speaker 01

  Yeah.

• 27:03Guy Raz?

  All right. Let's, let's kind of break this down because this is really important. And it's always one of the most complicated, awkward, frustrating, and just generally unpleasant parts of starting a business, which is talking about the details of, of, of, of what to do, how to divide it up, especially when you, when it has no value. Like this is worth zero dollars and zero cents. And you know that the partners in Australia are willing to put some, some money in and, but in exchange for ownership.

• 27:34Speaker 01

  Yep.

• 27:34Guy Raz?

  You, you want to own a significant amount because it's your idea.

• 27:38Speaker 01

  Yeah.

• 27:39Guy Raz?

  Rob is going to have the equipment. He's going to make it. You probably, first of all, in terms of overall startup cost, did you, were you able to figure out how much you would need by this point?

• 27:51Speaker 01

  We would lease the space from Rob, right? So that's, that's cash, but it's not like huge upfront costs.

• 27:58Guy Raz?

  Yep.

• 28:01Speaker 01

  The Australian family was willing to do a pretty

• 28:05Speaker 01

  pretty minor lease on the product. Basically, it was a dollar license agreement.

• 28:10Guy Raz?

  Okay.

• 28:11Speaker 01

  Because they wanted to be investors.

• 28:12Guy Raz?

  Right.

• 28:13Speaker 01

  And we were thinking about, okay, who are the retailers in Colorado? What's the opportunity set here? How much do we need to make to service this market? And sort of backed into this number of $400,000.

• 28:30Guy Raz?

  That would cover the costs of getting off the ground.

• 28:33Speaker 01

  Exactly.

• 28:34Guy Raz?

  How did you have, you didn't have that money?

• 28:37Speaker 01

  I had some of that money.

• 28:40Speaker 01

  Had a chat with my mom and my stepdad. So they were on board. They had tasted the product. They were believers. And then the Mathewsons and Rob. So we were the three sort of blocks of investment.

• 28:54Guy Raz?

  So you put all your money together to start this thing. And then in terms of figuring out ownership and equity, did you just make it simple and just divide it a third, a third, a third?

• 29:05Speaker 01

  It was a half, a quarter, a quarter. It's because the Mathewson family put in a larger share of money.

• 29:10Guy Raz?

  Got it. Okay. So you, you and Rob each got a quarter. They got half. And you would try and make a go of it with, with the 400,000?

• 29:18Speaker 01

  Yeah.

• 29:19Guy Raz?

  And, and I mean, here you are, you are approaching maybe your mid 30s. Were you in any way nervous about putting all that money into this business, all your life's, like, all the money you saved up so far?

• 29:31Speaker 01

  No, I mean, I think.

• 29:33Guy Raz?

  No, you were not nervous. There was nothing nerve wracking about that.

• 29:37Speaker 01

  Not really. I think I was so excited by this opportunity. And, you know, I grew up where I didn't have a lot of money as a kid, but my mom always prioritized experiences over things. I've always been a hard worker. So I just felt like if it. All went up in flames, I could always get a job again.

• 30:00Guy Raz?

  And, and I have to assume that, and you're still working at Izzy, right?

• 30:04Speaker 01

  At this point, I had actually left Izzy. I had gone to work with one of my Izzy alums who had started another company called Snicketty.

• 30:12Guy Raz?

  So you became a, it's just interesting because How I Built This always comes together in these, like, I know that Izzy, a check from Izzy also helped to finance the start of SoulCycle. We did that episode years ago, and I know one of the founders of SoulCycle was an early investor in Izzy, and they got a $200,000 check, and that helped to finance SoulCycle. And then Snicketty, I think that it was founded by the wife of Brett Schulman, who would go on to help create and scale Kava.

• 30:38Speaker 01

  Yeah.

• 30:38Guy Raz?

  Which we've done on the show. Because Snicketty never really took off. It didn't work out. But it, but this was a snack, kids snack company that you were?

• 30:46Speaker 01

  Yeah, it essentially sustained my family while I was getting Noosa off the ground. And we were in sort of this little co-working office with a few other consultants. So they sort of became my in-house advisory board.

• 31:00Guy Raz?

  All right. So it's going to be you, Rob, and the Mathewsons. And that, that, that company was called like Queensland Yogurt Company, but that was not what you were going to call it in the US.

• 31:12Speaker 01

  No, I, I really felt like that had no connection to Colorado, to the US. No one would have any understanding of what Queensland is. But I wanted it to have a link back to its Aussie heritage. And, you know, the family, the recipe, it all comes from the Sunshine Coast. And I was like, well, what are some of the beaches on the Sunshine Coast? And Noosa. And I was like, okay, it's easy to say. It's not very long. It ties into the storytelling. This is the name. So, you know, it took a little bit of convincing, but finally, everyone agrees. It's Noosa.

• 31:50Guy Raz?

  All right. So you call it Noosa Yogurt, and, and?

• 31:53Speaker 01

  Yogurt with an H, too.

• 31:54Guy Raz?

  With an H. Yogurt with an H?

• 31:56Speaker 01

  Yes.

• 31:57Guy Raz?

  Right. Okay. Because that H is really important in the word yogurt. Without it, you would not know how to pronounce that word. I mean, part of me would have been like, well, are we going to have to pay the typesetter a little extra money for that H? Like, could we save a few pennies by removing the H? But no, I get it. You wanted the H in there. Okay.

• 32:16Speaker 01

  Yeah. But just, again, linking it back to its Aussie heritage.

• 32:22Guy Raz?

  When we come back in just a moment, how Koel brings her first tubs of Noosa to a major retailer, and how she responds when they say, "We hate this packaging." Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 32:45Guy Raz?

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• 33:29Guy Raz?

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• 34:12Guy Raz?

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• 34:57Guy Raz?

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• 35:41Guy Raz?

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• 36:18Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2009 and to launch her new yogurt brand, Koel has built a partnership that's 8,000 miles long. In Australia, the Mathewson family is handling the recipe. And in Colorado, Rob Graves, the dairy farmer, he's getting ready to make it.

• 36:39Speaker 01

  So Rob's building his new bottling plant. And as things go with construction, it's delayed. Yeah, so we initially thought we were going to launch in 2009. The building's taking longer to get finished. I'm with the direction of the Australian family, trying to find equipment at auctions. And ultimately, you know, it really is, we're going to push to a 2010 launch. Things were just too delayed. I think another thing to note, too, is just, people thought we were crazy because this is coming off the heels of the global financial crisis. So I think there was sort of like, what? You're going to invest all this money?

• 37:20Speaker 01

  You're going to start a new business when the world is sort of imploding? And I didn't even really consider that. I just was like, I still think even in hard times, people are going to invest in delicious food.

• 37:34Guy Raz?

  Yep. All right. I want to just go back to the process for a moment, right? Because you had the Mathewsons come and show you guys how to make this yogurt, right? And I'm assuming there's probably, I know we'll get to this because you're not with the company anymore. So there's probably some proprietary things that maybe can't be discussed. But can you sort of generally describe what made it so complex? Because again, what did you have? What did it require? What was required to make this yogurt into this creamy yogurt that you loved so much?

• 38:10Speaker 01

  You know, I don't know that it ultimately was that complex. But I think part of what made it unique initially was that it was being made in 10-gallon buckets, which is crazy. Like, I mean, I remember doing runs to the Home Depot because we were running out of buckets. So you essentially are cooling the yogurt faster because it's in a smaller volume vessel. So that changes sort of the like the way the cultures are interacting with with the product. I think the fact that we were infusing it with honey, I mean, there was certainly sugar added as well, but infusing it with honey gave it a different flavor profile. And what made that unique made it harder to scale as we grew.

• 38:54Guy Raz?

  And also, were you like, was it, was it fermenting the right term? I don't know. Was it, was it

• 39:00Speaker 01

  Culturing.

• 39:00Guy Raz?

  Culturing like for how long, like twelve, eight hours, 12 hours, 15 hours? Was that an issue too?

• 39:06Speaker 01

  Um, certainly, right? I mean, again, taking it from this small vessel to a larger vessel to a larger vessel and trying to have consistency in the flavor profile was really unique. And I, it's sort of a testament to Rob because it was sort of his engineering brain that really figured out how to develop that.

• 39:26Guy Raz?

  Yeah.

• 39:27Speaker 01

  I mean, we were making it in 10 gallon buckets for over a year, which gave the state health inspector a lot of heartache. You know, he gave us a pretty long runway, but out of the gates, he said, you can't do this long term.

• 39:41Guy Raz?

  You couldn't do it long term because there was a risk of contamination?

• 39:44Speaker 01

  Yeah. I mean, there was too many touch points was his opinion. Yeah.

• 39:48Guy Raz?

  You, you wanted to do it in like a few 100 gallon buckets.

• 39:52Speaker 01

  Yeah, sealed.

• 39:53Guy Raz?

  Okay. So once, once you guys get manufacturing going, you, you obviously have to start getting the yogurt into stores. And you said earlier that Rob like was already selling milk to a few Whole Foods in Colorado. So at least he had an in right with Colorado Whole Foods, which is not, not the entire country, but still, it's still something. And, and I guess you guys were able to, to get a meeting with a buyer to see if they would be willing to sell your yogurt.

• 40:21Speaker 01

  Yeah. So by this point, we've, um, you know, we've invested in the equipment, we've invested in the packaging. And, you know, with the packaging, we really wanted it to be reflective of that first experience I had in Australia, which was transparency, letting the product sort of speak for itself. And, you know, in that initial sort of startup capital, we didn't really factor in a custom mold. We just sort of assumed that we'd be able to find a traditional dairy cup that was transparent.

• 40:57Guy Raz?

  Off the shelf.

• 40:57Speaker 01

  Off the shelf.

• 40:58Guy Raz?

  Just a clear, like a clear container off the shelf.

• 41:01Speaker 01

  Exactly.

• 41:02Guy Raz?

  Okay.

• 41:02Speaker 01

  And it actually didn't exist. So, you know, at that point, most yogurt was sort of between 5.3 to 6 ounces. And there was nothing. There was nothing available in stock packaging in those sizes.

• 41:18Guy Raz?

  Right.

• 41:18Speaker 01

  I was pretty adamant that we needed to be in transparent packaging. And so that ultimately led us into this eight ounce container. It looked more like a hummus tub. But, you know, with some refinement, I felt like it could stand out. It could be unique. But it was a little nerve wracking because we knew that just by volume, it would drive us to a higher price point on shelf. And so this is what we've got as we go to our first meeting with Whole Foods.

• 41:49Guy Raz?

  With Whole Foods. You show them this packaging. Okay.

• 41:52Speaker 01

  Yeah. They just see the packaging and are like, we hate your packaging. And I'm like, okay, I understand. I was like, but let's taste the food. Like, let's taste the yogurt. So we do a taste testing. They're raving about the product. But then they immediately go back. And they're like, but we hate your packaging.

• 42:13Guy Raz?

  We hate the packaging.

• 42:14Speaker 01

  Yeah. It's eight ounces. It's going to take up all this space on the shelf. Like, you know, they're thinking all of these unit metrics. And I'm like, look, all I could do is be honest. I said, we have already invested all of our startup capital in this equipment, in this packaging. We can't pivot at this point. Like, we've just got to go. So I just wore them down. I'm like, let's ignore the packaging. Let's think about the food. If you give us this opportunity, I will be in every one of your Colorado stores demoing the hell out of it, and we're going to make it successful.

• 42:47Guy Raz?

  All right, which is great that you did that because Whole Foods, they know what they're doing, and here you are, a new entrepreneur. And so the fact that you stuck to it, I guess you didn't really have a choice. You kind of had to. But I wonder, I mean, even before they agreed and you went into Whole Foods, right? How were you going to differentiate it just in that millisecond or one second that somebody would just pass by this brand in the refrigerated yogurt aisle?

• 43:17Speaker 01

  The only thing that we had on the packaging, besides the name, Noosa, we had a little tagline that said Aussie Culture, which obviously has a double meaning, Colorado Fresh. That was the only thing that implied that there was sort of a link to Australia. Again, I think because it was in transparent packaging, you could see the freshness of the product. The fruit puree with the white yogurt really popped. And nobody on the shelf at that point in time was doing transparent packaging. So I just had this strong belief that if I had discovered it purely because I could see the product when I first tasted it in Australia,

• 44:00Speaker 01

  somebody else was going to take that leap of faith.

• 44:03Guy Raz?

  All right. So finally, finally, you get this first run into Whole Foods, I think, in January of 2010. And it's just in?

• 44:13Speaker 01

  Colorado.

• 44:14Guy Raz?

  Just all over Colorado?

• 44:16Speaker 01

  Yeah, only the Colorado stores because the Rocky Mountain region at that point umbrellaed, I think Idaho, Utah. But the bulk of the stores were in Colorado.

• 44:25Guy Raz?

  And how much yogurt at this point? I read that at this point, you could only make about 200 gallons of yogurt a week, which was probably plenty at that point.

• 44:33Speaker 01

  Yeah. Yeah. So I mean, we were making one, maybe two batches of yogurt a week to start.

• 44:40Guy Raz?

  And what were your first flavors that you were going to put on the shelves at Whole Foods?

• 44:43Speaker 01

  So we had four flavors. We had honey, we had raspberry, blueberry, and mango.

• 44:50Guy Raz?

  So you did not do the passion fruit?

• 44:52Speaker 01

  We did not do the passion fruit.

• 44:54Guy Raz?

  Tricky in Colorado to get, I mean, probably expensive to get.

• 44:57Speaker 01

  Yeah, at that point, like, just even trying to figure out how to source that puree was more than we wanted to address. And I think knowing that yogurt consumers are still pretty traditional, we wanted to sort of stay in that bandwidth of having flavors that we knew would sell. And mango was sort of maybe the most exotic in that lineup.

• 45:20Guy Raz?

  All right, so you get into the Whole Foods and then you spend every opportunity you have to go to each of these Whole Foods in Colorado. And how many, roughly how many were there in Colorado in 2010? It couldn't have been more than seven or eight.

• 45:33Speaker 01

  Yeah, it was, I think, max, maybe 10 stores. So I would just sort of, you know, we hired a few other demo people, but just sort of rotating through those stores, really sort of connecting with the store managers. Because I really, I think from my time as being a server, right, like really understanding relationships and how they can serve you when you're getting out of the gates, I really wanted to build those relationships with not just the store manager, but the people stocking the yogurt. So like, in a sense, I would not only sample consumers, but I would go and sample all the store employees as well.

• 46:09Guy Raz?

  So you would make sure that the employees at the store tried it too?

• 46:12Speaker 01

  Yeah, absolutely.

• 46:14Guy Raz?

  And, and did, did that work? I mean, in-store sampling?

• 46:19Speaker 01

  It did. It absolutely did. And obviously, as we grew, I couldn't be in all of these places. But when you actually meet the founder of a business, there is sort of a more openness and emotional connection to trying something and believing in it. So I actually had a lot of friends and family do sampling events for me as well. I just, I tried to think of as many avenues where I could get people to taste this product.

• 46:47Guy Raz?

  And also doing farmer's markets?

• 46:49Speaker 01

  Yeah, so that started spring of 2010. That was sort of a, actually a harder sell than Whole Foods was getting into the Boulder Farmer's Market. It's considered one of the top 10 farmers markets in the country. So essentially, if you come to Colorado in the summer, you'll probably end up at the Boulder Farmers Market.

• 47:09Guy Raz?

  And when you were doing this at the farmers market, again, like probably weren't that many people selling yogurt at the farmers market.

• 47:16Speaker 01

  We were the only yogurt vendor. I still have to laugh thinking about how crazy it got. And that just sort of built a groundswell. And people obviously were then like, well, where can I get it? You know, if I can't make it to the farmers market on the weekend. And at that point, we still were really only available at Whole Foods and a few independent markets.

• 47:38Guy Raz?

  Did that have, I mean, did that get you? I mean, were there people coming up and saying, hey, who are you guys? Like, can we talk? I mean, did you start to hear any of that?

• 47:49Speaker 01

  Yeah, so we actually had a lot of inbound emails from out of state. And one of those inbound emails was actually from a retailer called Hy-Vee, which is in the Midwest in Iowa. And essentially, I don't know if I sampled him or somebody else did, but the president of Hy-Vee had been at the farmers market and tried Noosa and loved it and basically told his dairy buyer to contact us, that they wanted to carry it. So we said yes. And I think the learning from that was that yeses with the right partners were good opportunities. But we learned that not every opportunity was the right one.

• 48:33Guy Raz?

  And you did not presumably have the logistical capacity to really go that far beyond Colorado, maybe into the Midwest.

• 48:43Speaker 01

  Yeah, I mean, at that point, we were producing the product with about 28 days of shelf life,

• 48:49Speaker 01

  which is short. I know there's other products out there with even shorter shelf lives. But you know, you add in shipping and like logistics of getting it onto the shelf.

• 48:58Guy Raz?

  And you got like 15 days.

• 49:00Speaker 01

  Yeah.

• 49:02Guy Raz?

  And how did they do at Whole Foods in Colorado?

• 49:04Speaker 01

  Like, it was hard to keep up with the growth in Whole Foods.

• 49:08Guy Raz?

  Wow.

• 49:08Speaker 01

  And they quickly expanded us into their Rocky Mountain stores.

• 49:13Guy Raz?

  Yeah, I think, and in your first full year of business, so you really launched in January of 2010.

• 49:22Guy Raz?

  Were you profitable?

• 49:23Speaker 01

  I mean, getting there.

• 49:25Guy Raz?

  Getting there, so pretty great first year.

• 49:28Speaker 01

  Yeah, I mean, not accounting for the fact that we weren't paying ourselves.

• 49:32Guy Raz?

  Yeah, right. I guess you got an opportunity to work with a pretty big retailer in New York in 2011. First of all, who was the retailer?

• 49:41Speaker 01

  The retailer was Shoprite.

• 49:43Guy Raz?

  Oh, that's a big one.

• 49:44Speaker 01

  It's a big one.

• 49:45Guy Raz?

  And they wanted to carry your products. Now, that's New York. That's not Iowa. That's far.

• 49:49Speaker 01

  It's far.

• 49:50Guy Raz?

  That's not Colorado. But it was a big opportunity.

• 49:53Speaker 01

  Yeah.

• 49:54Guy Raz?

  To go in there. And how many, how many stores were you, they want you in?

• 49:57Speaker 01

  They were, I think, about 250 stores.

• 50:01Guy Raz?

  Wow.

• 50:01Speaker 01

  Yeah.

• 50:02Guy Raz?

  And you guys said yes?

• 50:03Speaker 01

  We said yes. So in 2011, we brought on a business development manager. He was an outside contractor. And, you know, a very good salesperson, let's just say. And at this point, we still have not ever sat down and created any type of strategy for the business. We're just pinch hitting. Like, if an opportunity comes up, we're going to say yes. And so we get this meeting with Shoprite. We know that we have to invest with these retailers as far as, you know, potentially slotting fees and all of their in-store marketing programs. But we started asking and tried to get creative where we would say, look,

• 50:45Speaker 01

  we're willing to invest whatever that slotting fee is to get on the shelf. But can we put it into demos? Can we put it into your retail marketing programs? Where we have a real opportunity to get off the shelf because we're proving out in Colorado that if we can get people to taste this product, it's going to sell. And interestingly, Shoprite said, okay, well, we're willing to defer your slotting fees. We're going to give you a 12-month time horizon.

• 51:16Guy Raz?

  So you would have to pay them the fee to?

• 51:18Speaker 01

  Pay it upfront, yeah.

• 51:20Guy Raz?

  Because again, and we've said this on the show before, a grocery store, if it works, is an amazing business because they get the markup and they make money from that. And then they make money because the brands have to pay them to put, you're essentially renting space on their shelf. So they have all of these multiple revenue streams.

• 51:37Speaker 01

  Yeah. So it was really learning on the job for me. But yeah, so Shoprite says, we're going to, instead of charging you $100,000 out of the gates, we'll bill it quarterly.

• 51:51Speaker 01

  I'm like, okay, well, this sounds like, you know, something that we can

• 51:55Guy Raz?

  Yeah.

• 51:55Speaker 01

  that we can cash flow. So we launch. So we're already $100,000 in the hole, out of the gates.

• 52:03Guy Raz?

  And you gotta ship it, truck it out there.

• 52:05Speaker 01

  We're trucking it out LTL, which, you know, doesn't move as fast as a full truck, is more expensive than a full truck.

• 52:13Guy Raz?

  These are refrigerated trucks, obviously.

• 52:15Speaker 01

  Yeah. Come to learn that Shoprite is probably one of the hardest operationally retailers to work with. Like, if you miss, if you miss their delivery window by like five minutes, they'll refuse you and then you have to reschedule.

• 52:30Guy Raz?

  Wow. Getting it, I mean, you're making this in Colorado. It's got a 28 day shelf life, the product.

• 52:38Speaker 01

  Yes. And to your point, yeah. So we've got 28 days of shelf life. We just get rejected at the dock. Takes another two days to get rescheduled. I mean, it was, it was a nightmare.

• 52:50Guy Raz?

  Yeah.

• 52:51Speaker 01

  There was sort of a disconnect between what was coming from corporate down to the individual stores. So we were seeing not all the stores were getting set. So everything that could go wrong was going wrong. And I mean, we were literally hemorrhaging cash for this customer from spoils to the slotting fees to not getting a much velocity because it wasn't getting set in all the stores. And finally, I was like, this is not working. Like, this retailer could sink the entire operation.

• 53:27Guy Raz?

  So what did you do?

• 53:28Speaker 01

  We pulled out.

• 53:30Guy Raz?

  You pulled out?

• 53:30Speaker 01

  We pulled out, which

• 53:32Guy Raz?

  And you just ate it? You just knew you were gonna, how long before you, how, how long did you, before you made that decision? A year, six months?

• 53:38Speaker 01

  It was probably about six, six months that we realized that we couldn't continue to do it.

• 53:44Guy Raz?

  You were just, and, and you basically lost at least 100 grand off that deal.

• 53:48Speaker 01

  And some, and some. It was such a hard, even though I knew we were losing so much cash, it was a really hard decision to make because I knew that if we pulled out That might be the last opportunity to ever sell at that retailer.

• 54:03Guy Raz?

  Right. And we've had these examples on the show where, you know, it's a struggle, it's a struggle, it's a struggle. And then eventually, you know, after just bleeding for years, like it works out. And that could have happened here. But what you're saying is you didn't do all of the kind of planning and projections in maybe in the way you should have done because that would have, you would have realized that this was not going to be sustainable.

• 54:30Speaker 01

  Absolutely. I mean, we didn't do any of that. We just were kind of operating in the Wild West.

• 54:37Guy Raz?

  Yeah. You know, it's interesting. We did an episode on this brand called Zumiez, which sells skate wear and snowboard gear. And Tom Campion, who was on the show, and I remember him saying something which was, what makes a retail brand successful is basically relentless focus on inventory control.

• 54:56Speaker 01

  Yeah.

• 54:57Guy Raz?

  And the point of that was like, it's this little boring things. Because I think accounting is so boring.

• 55:03Speaker 01

  It's so boring.

• 55:04Guy Raz?

  It's just the most boring part of a business. But it's so critical. Like, it's sometimes, that is not sometimes, often, it's that which can make or break a business.

• 55:14Speaker 01

  Absolutely. I hundred percent agree. And we weren't focused on that in the first, I'd say, two years, until we had that big misstep.

• 55:24Guy Raz?

  Yeah. So I guess you were on the East Coast in New York. It's an influential area. Like, it must have also shattered the idea that, that, oh, the American palette, it's just like, like, it must have, part of you, I would assume, must have thought, maybe I was wrong. Maybe this is just working, going to work in some parts of America.

• 55:43Speaker 01

  Yeah. I still had this strong belief that New York could be a great market for us. And it's, you know, ShopRide is an amazing retailer. Like, they do a ton of velocity and a ton of volume. But for where we were at the time, it was too much. And, I mean, they pretty much said, you'll never, you'll never sell at our store again. And I was like, okay. But I'm not going to be a business if I don't do this.

• 56:15Guy Raz?

  When we come back in just a moment, the delicate partnership between Koel, Rob, the Dairy Man, and the Mathesons starts to break down. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 56:41Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2012, and after an abrupt exodus from ShopRite in New York, Koel has managed to steady the business and is even thinking about expanding again. So she takes Noosa to Expo West, the big natural food show in California. All right, so you guys have a booth there. You've got a lot of buyers and vendors, all kinds of people are walking around and trying different things. And one of the, I guess, a group of people who came by were from Target.

• 57:16Speaker 01

  Yes.

• 57:18Guy Raz?

  Did you know they were from Target? Or were they hiding their badges?

• 57:21Speaker 01

  I didn't know they were from Target, no.

• 57:23Guy Raz?

  Right.

• 57:23Speaker 01

  Yeah, no, they were hiding their badges. A lot of those buyers are pretty good at being stealth. Yeah, it wasn't until post Expo that we actually got an email from Target. I think Target maybe had been a little bit behind the curve with Greek and wanted to be ahead of what they saw as sort of the next evolution in yogurt. And they thought Noosa could be that. So they essentially offered us a test in, I think it was about 250 of their Super Target formats.

• 57:58Guy Raz?

  Wow. And did you have the capacity to fulfill that? I mean, at this point, how much yogurt were you making a week?

• 58:06Speaker 01

  We're now probably operating at least four to five batches a week. So we're starting to butt up against what I would consider some capacity constraints, right? Because you're now having to bring on probably two shifts of people to work a seven-day schedule. And at this point, I'm happy to say we're out of the 10 gallon buckets. And so it was just, it was sort of this constant leapfrog.

• 58:30Guy Raz?

  Yeah.

• 58:30Speaker 01

  We've got, at this point, we have a line of credit from a traditional bank who's allowing us to buy more expensive equipment and we're just constantly investing in the manufacturing process.

• 58:43Guy Raz?

  By the way, out of curiosity, what is the maximum shelf life you can get for cold pasteurized yogurt?

• 58:51Speaker 01

  You know, I'm not sure about some of the competitors, but we were at 45 days.

• 58:56Guy Raz?

  Okay, so huge improvement over 28.

• 58:59Speaker 01

  Yes.

• 58:59Guy Raz?

  But still, it just shows you like, the minute that leaves the warehouse, the clock is ticking. Otherwise, you have to throw it away.

• 59:06Speaker 01

  Absolutely.

• 59:07Guy Raz?

  I mean, it's just an argument for going into dried beans.

• 59:10Speaker 01

  Oh, 100% Guy. I will never start a perishable food company again.

• 59:15Guy Raz?

  Yeah. All right. So you guys have some automation and you financed this mainly through loans. So, once you're going into a target, you're also going to go from like, you could go from like 2 million in sales to like 10 million in sales, 15 million in sales within months, a year.

• 59:32Speaker 01

  Yeah.

• 59:33Guy Raz?

  I mean, just because of the scale of a target.

• 59:35Speaker 01

  Well, I mean, so we launched, it was probably like mid-year that we launched in Super Target. They came back four months later and expanded us into 1,000 stores, 1,000 more stores.

• 59:46Guy Raz?

  A thousand stores. And, and were you at breaking point, like at that point as a business?

• 59:52Speaker 01

  Yes, we were at breaking point and basically I had to stop selling at that point.

• 59:57Guy Raz?

  You had to stop signing contracts with retailers?

• 1:00:00Speaker 01

  Yeah, which is, I mean, a good problem to have, but like hard once you're sort of in the groove of, of selling. You know, because again, like in the back of my head, I have sort of like, okay, well, if I say no now, will that opportunity exist in 12 months?

• 1:00:16Guy Raz?

  Yeah. And are you putting all your eggs in the target basket, which could or could not work?

• 1:00:21Speaker 01

  Yes. Thankfully, it worked.

• 1:00:24Guy Raz?

  Tell me a little bit about the business by this point, end of 2012. You're in a thousand targets. But from what I've read, you guys were really running lean.

• 1:00:34Speaker 01

  I mean, we were profitable at end of 2012. We were close to a $20 million business. So we were able to pay people reasonable market, like competitive salaries. But it was still such a small team.

• 1:00:49Guy Raz?

  Right. To attract a good COO, you would have had to have paid at least 150 grand.

• 1:00:54Speaker 01

  150 grand. And then we were able to offer some options.

• 1:00:58Guy Raz?

  Yeah.

• 1:00:59Speaker 01

  They ended up being the only person that we offered options to, which actually became a bit of a point of contention between the partners as we started growing even further.

• 1:01:09Guy Raz?

  Yeah, I imagine.

• 1:01:11Speaker 01

  And we never had a board of directors. We never had an internal advisory board. So it just became sort of butting heads as far as how do we continue to grow this business? And put appropriate team members around it.

• 1:01:27Guy Raz?

  Yeah, I mean, who was in charge? It was you, there was Rob at the dairy, and then the brothers, the Matheson family in Australia. Who actually was the decision maker? Was that ever, was that ever kind of discussed? Who would ultimately make the decisions?

• 1:01:41Speaker 01

  No.

• 1:01:41Guy Raz?

  No. So everybody had a veto, in a sense.

• 1:01:44Speaker 01

  Exactly.

• 1:01:44Guy Raz?

  Which is not great.

• 1:01:46Speaker 01

  It's, it's definitely a recipe for not great, especially when you're on a rocket ship of growth.

• 1:01:54Guy Raz?

  Why didn't you guys have that discussion? I'm not, I'm not browbeating you because I've made the same mistakes. I'm just curious why you didn't. Was it just an oversight? Was it like you never thought that this would be required?

• 1:02:05Speaker 01

  Yeah, for me personally, you know, it was my first time ever being in business. You know, I could see that other companies were doing it, but I had a naive sense and trust in my business partners that we could just all get along and be aligned because things were pretty rosy in the beginning. But with growth and harder decision making, it just became readily apparent that we were all not super aligned in how we wanted to go forward.

• 1:02:36Guy Raz?

  What were the disputes over?

• 1:02:39Speaker 01

  Oh my gosh, I mean, ranging from should we pay ourselves, you know, I was sort of the poor business partner where I had to have that second job where the other two partners had businesses that they could rely on to pay themselves. To, yeah, how to grow the business, you know, even with that mistake at Shop Right, there was still sort of this pressure to say yes to every opportunity where I was sort of pushing back and saying we actually have to have more strategy if we want to keep cash flowing this rather than taking outside investment. And then sort of coming into 2013, 2014, and I could just sort of see that we were going to hit this wall.

• 1:03:22Guy Raz?

  Around, around.

• 1:03:24Speaker 01

  If we couldn't, if we couldn't agree how to hire a real team of people to help us run the business because

• 1:03:30Guy Raz?

  Yeah.

• 1:03:31Speaker 01

  when things start to really take off, sometimes founders need to get out of their own way.

• 1:03:37Guy Raz?

  Yeah. Just reading between the lines here, and again, they're not here to kind of refute this, so I'll do my best to, you know, we always try to be very fair to everybody because it's a great product that you're selling, but it sounds like the clashes really were with you and the Australian partners.

• 1:03:56Speaker 01

  And Rob, I mean,

• 1:03:57Guy Raz?

  And Rob.

• 1:03:58Speaker 01

  And Rob, we all just had very different viewpoints on how to go forward with growth.

• 1:04:04Guy Raz?

  They were more, you felt like they were more conservative?

• 1:04:06Speaker 01

  More conservative, really didn't want to give up equity. And I understand that too. Like, I understand that perspective, but I think I knew that that's what it would take to really recruit.

• 1:04:17Guy Raz?

  Skyrocket, yeah.

• 1:04:17Speaker 01

  Yeah, to recruit the right people. And we essentially hired a salesperson without sort of that equity ask and literally had to fire them two months later, right? Like, we just couldn't get the right people.

• 1:04:31Guy Raz?

  When they have no skin in the game, they're just, you know, I mean, you're just, it's a crapshoot, it's just, they could be great.

• 1:04:36Speaker 01

  Yeah.

• 1:04:37Guy Raz?

  But if they have skin in the game, they're incentivized to really do well.

• 1:04:41Speaker 01

  Yeah. And then I had had my daughter in 2013, so I was starting to like max out on just my capacity.

• 1:04:49Guy Raz?

  Wow, that's a lot.

• 1:04:51Speaker 01

  That's a lot. And then, interestingly, we had sort of created or revolutionized Whole Milk Yogurt, and we started getting Big players coming in and directly competing with us. So within, I would say, sort of that 2012 to 2014 timeframe, there was probably six knockoffs that came into the market. From Danone, from Haince Celestial, to even Kroger doing a private label version of Noosa.

• 1:05:25Guy Raz?

  All right, so I imagine you're starting to think, we gotta do something about this, or this might all go down the tubes.

• 1:05:31Speaker 01

  Yeah, so it was beginning of 2014. The Australians were starting to talk about wanting to take some chips off the table. And Rob probably could have just gone in perpetuity because he's a fourth generation dairy farmer, right? Like, I feel like dairy farmers, people of that world, just work hard and just keep going, no matter what. And so it just became this sort of dialogue of like, how do we solve all of these problems?

• 1:06:00Guy Raz?

  So I think by 2014, you guys are doing like $40, $45 million in revenue and growing.

• 1:06:07Speaker 01

  Yeah.

• 1:06:07Guy Raz?

  You were feeling like the four of you guys were not necessarily the right team to turn this into a $100 million business.

• 1:06:16Speaker 01

  Maybe not the right team is not the right way to sort of view it, but it really was a bigger team. Somebody that was positioned to take it into that 100-plus million realm. Because it does become a very different business, right? Like, you are an important brand to retailers. There's just different expectations from your business partners. I mean, I feel bad for a lot of our employees that were with us from the early days in the sense that they never really got, you know, a lot of oversight. You know, we weren't building like actual career paths for these people. So even though we were a cultured product, I didn't feel like we had a great internal culture in the sense of

• 1:07:01Guy Raz?

  Interesting.

• 1:07:02Speaker 01

  You know, creating real business opportunities or, you know, growth opportunities for our employees.

• 1:07:08Guy Raz?

  Hmm.

• 1:07:08Speaker 01

  And then we finally sort of got alignment around, okay. We don't think we want to sell to a strategic at this point.

• 1:07:17Guy Raz?

  You don't want to be acquired.

• 1:07:18Speaker 01

  We don't want to be acquired because, you know, Rob still really wants to be part of the business. I'm sort of on the fence. I could have probably gone either way. And then, you know, the Australian family just really wanted to sort of realize their investment. So we ended up hiring an investment banker and sort of running a process to find more of that private equity type investment that would support the growth and help us build out that team.

• 1:07:43Guy Raz?

  All right. So 2014, you do get a strategic investment from a group called Advent.

• 1:07:49Speaker 01

  Yes.

• 1:07:49Guy Raz?

  Right. But until they actually acquired or put in the investment, you guys were trying, they were probably in your data room, looking at your business. Meantime, you're running out of product, like, there's a lot, and that that deal could fall through.

• 1:08:05Speaker 01

  Absolutely. Which was nerve wracking, right? Like, I knew this was sort of like, if we lose this deal, we're pretty screwed. Like, it was probably the most stress I've ever endured in my life.

• 1:08:22Guy Raz?

  But thankfully, that, and somewhat ended when they they made the investment.

• 1:08:26Speaker 01

  Yes.

• 1:08:27Guy Raz?

  And they buy a majority stake in Noosa. I think they're based in Boston.

• 1:08:32Speaker 01

  They're Boston based, yeah.

• 1:08:33Guy Raz?

  Private equity firm. They buy a majority position in Noosa. But you guys stay on, I mean, at least you and Rob stay on as employees.

• 1:08:43Speaker 01

  We do. And actually, we rolled over a pretty significant minority ownership in the business. That, you know, that was sort of how the deal was structured.

• 1:08:51Guy Raz?

  You were incentivized to make it work.

• 1:08:53Speaker 01

  Incentivized, that's the right word.

• 1:08:55Guy Raz?

  Yeah.

• 1:08:56Speaker 01

  But, you know, it makes a lot of sense, right? Like, we're in the middle of this growth growth. And to your point, we do bring a lot of value to the business at that point, even if we feel like we need to sort of start to hand over the reins.

• 1:09:09Guy Raz?

  And was it fairly quickly after they, because I think November 2014, they made that investment. Was it like by early 2015, the whole new executive team was brought in?

• 1:09:17Speaker 01

  Yes.

• 1:09:18Guy Raz?

  And these are people with deep experience in food?

• 1:09:22Speaker 01

  Yes. And it was a game changer. It really was a game changer.

• 1:09:25Guy Raz?

  You actually liked it. You were like, oh, God, these people know nothing about this business. I hate working with them. They don't believe in the quality or the spirit. No, you didn't feel that way.

• 1:09:35Speaker 01

  No. So I sort of see these two very distinct chapters.

• 1:09:40Speaker 01

  That I was involved with at Noosa was sort of like the Wild West chapter. And then our professional chapter, which we, I think we created an amazing internal culture. And I had an absolute blast in sort of that second chapter because I didn't have the tension with my business partners anymore. And so.

• 1:10:02Guy Raz?

  So you were committed to staying with them, I think for what, for about four years?

• 1:10:08Speaker 01

  I mean, we were committed until, you know, they decided to sell the business.

• 1:10:12Guy Raz?

  And they did eventually sell it, I think in 2018, right? Oh, it was, it was a merger, aqua merger kind of thing with a, a, a company called Sovos Brands. And they owned or own a bunch of brands like Rouse, I think Pasta Sauce is one of the brands they, they owned, maybe they still do own it.

• 1:10:33Speaker 01

  They did until Campbell's.

• 1:10:34Guy Raz?

  Campbell's bought it, right. Campbell's bought them out, yeah.

• 1:10:36Speaker 01

  Yeah, beginning of this year.

• 1:10:38Guy Raz?

  And so you were, your remaining shares were bought out at that point. And I have to imagine you actually may, may have made more money as a minority owner than when your majority stake was bought out.

• 1:10:48Speaker 01

  Yeah, I mean.

• 1:10:49Guy Raz?

  You had two bites at the apple, as they say.

• 1:10:52Speaker 01

  Two bites the apple. Yeah.

• 1:10:55Guy Raz?

  I mean, this business that was started really in 2010, I mean, it was, it was kind of like an eight and a half year journey, which from one perspective, doesn't seem that long, but I'm sure from your perspective, it was a long journey.

• 1:11:10Speaker 01

  It was a long journey because there was, you know, those startup years too, right?

• 1:11:13Guy Raz?

  Yeah.

• 1:11:14Speaker 01

  So it was over a decade of my life that I literally, all I thought about was yogurt, which is a really long time to think about one thing. And I feel like I worked a lifetime in that decade.

• 1:11:28Guy Raz?

  When you, when you were done, which are sort of when you stepped out of the business after the acquisition in 2018, you were well positioned financially, probably easily for the rest of your life. What did you, yeah, what did you, did you want to do all the things you weren't able to do while you were building the business?

• 1:11:45Speaker 01

  Yeah, I didn't eat yogurt for an entire year.

• 1:11:49Guy Raz?

  Really?

• 1:11:49Speaker 01

  No.

• 1:11:50Guy Raz?

  Nothing?

• 1:11:51Speaker 01

  No, I didn't even want to, I didn't want to shop the yogurt aisle. I just didn't want to think about yogurt for a while. I decided I would say yes to any sort of travel opportunity.

• 1:12:01Guy Raz?

  Yeah.

• 1:12:02Speaker 01

  And. I just needed to be like a little chill for a while and hang out with my kid, hang out with my family more. Like, probably one of the most important things I'll do in my life is raise a good human. And I finally have a little more time to focus on that.

• 1:12:21Guy Raz?

  Yeah. And so there was no plan, there is no plan for you to start another business. Like, you've done that and you have no ambition or desire to go through that again?

• 1:12:32Speaker 01

  Yeah, it would be hard. I think it would take something incredibly special to want to go back into the trenches again.

• 1:12:39Guy Raz?

  You can make more yogurt if you want.

• 1:12:40Speaker 01

  I could even, I could even explore buying Noosa back if I wanted to.

• 1:12:44Guy Raz?

  Right. It's, I think it's for sale. I think that, that Campbell's is looking for a buyer.

• 1:12:48Speaker 01

  It is. I don't think I'm going back into yogurt. Though I am, I am very interested in sort of the dairy-free space. I know that sort of seems counterintuitive, but...

• 1:12:58Guy Raz?

  No, no, it's interesting.

• 1:13:00Speaker 01

  I sort of feel like I'm back at university, that university phase, right? Where I'm like, what the hell do I want to do with my life? And so I'm just exploring a lot of different things.

• 1:13:12Guy Raz?

  When you think about, about the journey you took, you know, and, and I mean, starting this business in Boulder, thinking it was going to be like a local business and getting the family in Australia to work with you and, and meeting Rob and the dairy and all that that happened and, and then making a lot of money off of this thing, which probably, I'm sure wasn't in your plan, but of course was a very pleasant ending, I'm sure. How much of, of what happened do you attribute to luck? And how much do you think had to, had to do with the, the work you put in?

• 1:13:42Speaker 01

  I think there's a huge element of luck, right? I think about 2008 and sort of seeing this emerging trend of Greek yogurt. And in, in some ways, I actually think we thought we had missed the boat. Ultimately, we timed it just perfectly because it just reinvigorated the category, Greek yogurt. And we got to ride that wave with the big players. But coupled with that is, you know, as much as I may have disagreed with my business partners over different things, the one thing I think we can attest to is that we all worked really bloody hard. You know, I've mentored...

• 1:14:25Speaker 01

  Some startup companies where they sort of say, well, we want to be where you are. And I'm like, okay, well, I don't know if I can actually help you because you have to be willing to work really hard and your eye cannot be on this big outcome, right? And that was never what it was about for me in the beginning or for Rob. It was, you know, a passion around this product that kind of took on a life of its own.

• 1:14:55Guy Raz?

  That's Koel Tome, co-founder of Noosa Yogurt. By the way, the company did eventually get around to launching a passion fruit yogurt, the flavor that inspired the whole thing. But today, out of the 18 different Noosa flavors, including cinnamon roll and pomegranate and tart cherry, passion fruit has sadly been dropped from the rotation.

• 1:15:19Guy Raz?

  Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at guyraz.com or on Substack. This episode was produced by Devin Schwartz with music composed by Ramtin Arablouei. It was edited by Neva Grant with research from Olivia Rockman. Our engineers were Robert Rodriguez and Gilly Moon. Our production staff also includes Alex Chung, J.C. Howard, Carla Estevez, Sam Paulson, Chris Messini, Kerry Thompson, John Isabella and Elaine Coats. I'm Guy Raz and you've been listening to How I Built This.