How I Built This with Guy Raz - Sir Kensington's: Scott Norton and Mark Ramadan

Episode Date: October 23, 2023

Scott Norton and Mark Ramadan were only college students when they created Sir Kensington’s, a $140-million-dollar condiment brand – with a backstory that’s completely made up.These days, it seems like every brand – every start-up – is trying to tell a story about its authentic and humble beginnings. Scott and Mark went in the opposite direction when they had the idea to create a gourmet ketchup in 2008. They wanted to take on a juggernaut: Heinz. So, to stand out, they told a story about their ketchup that differentiated it from Heinz in every way. Sir Kensington was a fictional luminary of imperial Britain who invented his eponymous ketchup one night while dining with Catherine the Great. And the true story of how Scott and Mark grew and then sold the company to Unilever – it’s a real yarn in its own right.This episode was produced by Alex Cheng, with music by Ramtin Arablouei.Edited by Andrea Bruce.Our engineers were Gilly Moon and Maggie Luthar.You can follow HIBT on Twitter & Instagram, and email us at [e-mail] episode is brought to you in part by Canva, the easy-to-use online design platform for presentations, social posts, videos, websites, and more. Start designing today at Canva – the home for every brand.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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Airbnb.ca.ca.com. Hey, before we start the show, you know, we hear a lot about pivots on how I built this, how a simple change in perspective can create a whole new opportunity. This made me think of a conversation I recently had with Seth Myers. He told me about the moment he realized that he could find success and fulfillment on Saturday Night Live, not as a performer, but as a writer. Check out my interview with Seth Myers over on my other podcast. It's called The Great Creators. Just search for The Great Creators with Guy Raz wherever you listen to podcasts or go to the great creators.com. And now on to today's show. 2011, 2012, 2013. We were only catch up. Yeah. But it's super hard to sell to restaurants.

You know, grocery stores are saying, okay, what do we do with that? that people would ask us, you know, are you going to go into other condiments? Are you going to make mustard? You're going to make mayonnaise? And we said, oh, you know, the market structure isn't quite there. We just have to keep cracking this nut. If we had not been able to raise money, we would have long since been out of business. We were trying to figure out where to go to save the company. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists,

and the stories behind the movements they built. I'm Guy Raz, and on the show today, how Scott. At Norton and Mark Ramadan, two guys with no experience in food, took on Heinz and made their own ketchup brand called Sir Kensington's. The term storytelling has become a little tiresome in recent years. Every brand, every startup seems to bend and stretch in infinite ways to tell you a story about its authentic and humble beginnings. Sometimes it works. Sometimes no one cares. But what if your story, or rather the story of your brand, is intentionally made up?

What if the story you tell is so absurd, so ridiculous, so silly, that people who encounter it don't care if it's true or not? Well, today's episode is that story. It's about two friends from college who decided to take on one of the most dominant products in a very narrow category. Catch up. And you can guess which product. dominates ketchup. Hines. Back in the early 2000s, Malcolm Gladwell wrote a now-famous article about why that is. Gladwell argued that Heinz had figured out how to perfect the balance of flavors, sweet, salty, sour, and umami. And he also said that their recipe was pretty hard to beat.

Anyway, in 2010, the year Mark Ramadan and Scott Norton decided to start a ketchup brand, Heinz sold $10.5 billion of the stuff. Can you imagine, we humans consume more than $20 billion worth of ketchup a year? And half of it, Heinz. Anyway, Scott and Mark were inspired in part by Malcolm Gladwell's article, and they wondered, could you actually take on Heinz? And more importantly, is there a story we can tell around ketchup? Well, the story they came up with was about an aristocrat.

who happened to serve as a colonial officer for Imperial Britain. His name was Sir Kensington. He wore a monocle and top hat. He graduated with a double first from both Oxford and Cambridge, and he was a Renaissance man with extensive travel experience. He also happened to invent his own ketchup one night while dining with Catherine the Great. So, inspired by Sir Kensington, Scott and Mark put his cartoon image on their bottles of ketchup and named the brand after him.

But what they didn't tell you, although it wasn't hard to figure out, was that the whole story was made up, designed to let you, the consumer, in on the joke. And guess what? It worked. The story was so weird and the packaging so intriguing that people tried it. And by 2015, the two founders had sold over two and a half million jars of product. Growth was so good that by 2017, Unilever can't.

knocking, but we'll get there. Before that sale, there was quite a bit of drama and many, many challenges. At one point, Scott and Mark's relationship as co-founders almost unraveled. Mark was born in France, but grew up in Southern California. His mom is British and his dad is Lebanese. Mark's dad ran a hospitality business and the family loved travel, cooking, and Michelin-starred restaurants. To me, food felt like something that was special and sacred, and We always sat down for dinner together. Scott grew up in Northern California, and his parents were also entrepreneurs, TV journalists, who started a corporate communications firm. I grew up around the art, really, of commercial storytelling.

Scott and Mark first met in college at Brown University in the mid-2000s. Mark was bookish and interested in earth science, and Scott, well, he was all about getting to Hollywood. In fact, Scott jokes about how different they were. I like that, you know, an aspiring filmmaker and a geophysicist walk into a bar and now comes a condiment company. Yeah, right. Exactly. Yeah. Yeah, exactly. How did you guys meet? Well, we first met, Mark and I first met in a financial institutions class where I felt really behind. And there was this guy like two rows behind me who would put his hand up when every question was asked and knew all the answers to the questions. And my first recollection of Mark was, oh, wow, this guy is really sharp.

I'll also never forget, Scott in the middle of class would show me the latest issue of Monaco magazine, which was mind-blowingly interesting to me at the time. Because my whole world was like school and study. And Scott was this worldly person who, I don't know, we were just so different. But it just, it was the beginning of a friendship. And I think what was interesting about our friendship was we didn't really like party together so much. I mean, we probably did a little bit. But I think a lot of our meetings, you know, were lunches where we would discuss ideas,

definitely talk about kind of our career plans. And it was more almost like we were sort of co-conspirators. Much like Scott, I ended up becoming an econ major. And the path that was most obvious to most econ majors at Brown was you either go into banking or you go into consulting. So Scott picked one and I picked the other. Yeah. Before you guys graduated, your senior year of college, Scott, you came across another friend. of yours who's talking about ketchup. Tell me what happened. Yeah, so Brown has a very long

winter break and it was in January that I went down to visit a very good friend of mine from high school at USC and we were in his old car. We're listening to Afrobeat. We had our shirts off. And at this point, I was Tiang a class in entrepreneurship at Brown. And so he said, dude, I have to tell you about something. I have an idea that's going to be huge. And I kind of looked at everyone like, oh, give me a break. Like I hear ideas all the time. Like I grade papers and final projects and entrepreneurship.

Like, what do you got for me? And he goes, gourmet ketchup. And I'm like, what? Gourmet ketchup. Like, I don't know about that. You know, Americans don't even know what's in ketchup. It's sort of this commodity product. It's totally dominated by Hein.

And he's like, well, exactly, think about it. There's 10 different types of mustards, right? There's like Dijon mustard and spicy brown mustard and yellow mustard, but there's only one type of ketchup. Like, why not? Why not create something that's better, with better ingredients? This was in the winter of 2007-8, 2008, so it was in early 2008. Yeah, when you had a conversation. Yeah.

But you go back to college, and Mark, do you remember when Scott first started to talk? to you about this? Absolutely. Scott invited me to a lunch at the local crephery in Providence, Rhode Island, which was not a place that we frequented often, but I figured it was something special. Scott sits me down and he says, I have this idea, and I think we should work on it together. And it's gourmet ketchup. And I don't know, there's something about Scott. He has an infectious positive energy about everything. And it just felt like an incredible opportunity to say yes, just to say yes to the idea and to explore it. And I basically said, yeah, hell yeah, let's do it. That sounds cool. What was beautiful about this is we had this wonderful time-bound experiment, our second

semester senior year. We both had jobs that we knew we were going to. And I think that's what started the momentum at the beginning was not even having these big expectations for like changing the world. And so in the middle of that, that crepe lunch, what he said was, we should make it. Like, we should actually make the ketchup with our own. two hands. But what was the proposition was, hey, let's see if we could make a business or what? I think the way that the way that I was seduced was just, it is a crazy idea, but it's also a really intuitive one. This idea that food was changing, you know, Greek yogurt's becoming a thing, and I think this was around the time that Chobani was just becoming big, and this famous

entrepreneurship pair in Tom and Tom, who started Nantucket Nectars. And so we were thinking about, like, where is the next disruption coming from? And so, you know, when he said gourmet ketchup, it felt like this really tantalizing David versus Goliath disruption story that we could write. Yeah. Yeah, there had been no innovation in ketchup in 70 years. And every other category of culture and of food had change. And so really, it was we saw this open space as an invitation to create something.

This conversation that you're having at this moment is happening just a few years after an article that I thought was groundbreaking. other people did too. It was an amazing article that a lot of people remember reading in the New Yorker in like 2004. A story about why Heinz ketchup totally dominated ketchup. It had like 60% market share or something like that. Basically, the premise was that Heinz had kind of nailed the perfect ketchup. It had everything, had salty, sweet, sour, bitter, umami. You couldn't challenge it. And so I have to imagine that both of you at the time had read this article or maybe that article was to Scott to your friend even saying, you know, somebody should do ketchup. Definitely this article was in the air and it had come out a couple of years prior,

this excellent article by Malcolm Gladwell. But one of the first things we did actually, Mark and I, was reread this article. So, you know, you wouldn't think, well, then let me see if I can challenge this premise, right? Because it's Malcolm Gladwell. He's written an article that basically it's the defining article about ketchup and that's it. End of story. But both of you saw this as a possible challenge? I think when we read this, as food people, it didn't make sense to us that the only thing that matters to market dominance is the formula of a product. Of course it's not. That takes zero account of how people think about brand, how people discover brands, how people shop in grocery stores, how people consume food in restaurants, how people think about pairing different types of brands and foods with different types of experiences and emotion. All right, so you guys took this on as a project, your senior year of college, a last semester.

But I guess even before you started to experiment, you were thinking about, well, how are we going to differentiate this? Like, how are we going to make this into something that a brand, an idea? Exactly. It was a recognition that people have tried and failed to introduce other ketchupes to compete with Heinz. Yeah. Of course, they differentiated based on the ingredients and the flavor. But every other ketchup out there would copy Heinz, the market leader, on the packaging, the materials, the brand positioning. It looked like a copycat, right? It was Heinz, but less so.

We said, okay, what would it look like to be the exact opposite of Heinz? Like, how could we be dramatically different from any other ketchup that's come before? Well, okay, if most ketchup comes in plastic, then we should be glass. if most ketchup is squeezing, well, let's use the language of a European preserve and have a wide mouth jar and be scooping. And if most ketchup is Americana and, you know, synonymous with the roadside diner and fast food, and what's kind of the cultural opposite of that? ketchup is kind of English. So let's make it English.

And if we're going to be English and we're going to be. fancy and upper crust and go on high teas and beef wellington's well we should have a character that embodies that attitude and that's how we came up with the idea of of creating this fictitious night sir kensington in order to get someone to break a habit you've got to spark some kind of emotion food is so subjective but we knew that if we could create something character or brand a package that made people smile, then it would stand out a little bit. But we were just having fun, right?

I mean, we're looking backwards now. Like, we were just riffing. We were just having fun. So we're not sitting there with a bunch of spreadsheets thinking, okay, well, exactly, how do we position this or the modern consumer, you know, purchases at higher velocity.

We're just, like, creating this character of Sir Kensington's and, like, yelling at each other and, like, spilling ketchup all over my apartment. But you were sure that you weren't going to call it Scott's ketchup or Mark's ketchup, or Scott and Mark's ketchup. We were totally sure we were not going to call us Scott and Mark's catch up. Like to us that was totally boring.

We wanted to come up with something that was so radically interesting and different and was a world that people could inhabit. Okay, how can we create a jar of something that's like an object and you can imagine an entire film set around that object? You can imagine an entire cast of characters at a dinner party surrounding that object. The idea was to create a story, and the story was through this character, Sir Kensington. And he's sort of a caricature of what non-Britz think of like as a posh English gentleman, right? He's even a caricature of what Brits think of as a posh English gentleman. Right, this guy who has a monocle and a fancy mustache and a top hat. Yeah.

All right. So, Scott, you kind of came up with a backstory of this guy, Sir Kensington. Can you tell me the backstory? Who was he? So Sir Kensington went to Cambridge undergrad, Oxford for graduate school, and then he, in service of the queen, transferred to Constantinople, now known as Istanbul. But at the time, he wrote a treatise on ionian chutneys and other spiced sauces from the region. The condimenteering was his true love, but for practical reasons, he also went into finance and invented reinsurance. Oh, okay. Very, very British, okay? He thought who was insuring the insurance companies? And it turned out at the time no one had thought of that before, and so he started insuring insurance companies.

And of course, from that, he made a fortune, but his true love of condimenteering shone through when he was hosting a salon back in England at his manor house. And at the time, this particular one, he was hosting Catherine the Great of Russia as well as the emperor of Japan, who had brought a very special sample of Kobe Be. Catherine the Great said, oh, I'd love to try this with some ketchup. Do you have any ketchup? And he went into the kitchen to look for ketchup, and he realized the only thing he had had high fructose corn syrup in it, which of course you can't actually serve to a czarice of Russia. I didn't know they had high fructose corn syrup in the 18th century, but sorry, keep going. That's the power of industry for you.

And in that moment, he thought, well, let me create my own ketchup. and he took some tomatoes and some organic raw sugar and whipped up right there, Sir Kensington's ketchup for Catherine the Great, to try on this Kobe beef. And of course, she, you know, took a bite and loved it. That's amazing. And all this happened in a salon and some European salon in like, now 1780 or something like that. Yeah, the year is lost to history. Yeah. But a long, long time ago.

Got it. All right. So you have this character. Now let's talk about just making ketchup. Where did you start? I mean, was it, did you just find a recipe on the internet? Neither of us had true culinary chops, right? We didn't have culinary training.

And so that was what began the process was Googling and looking for cookbook recipes for what's in ketchup and then creating variations of those ketchup. And so tell me how you started. I mean, what did you just buy a bunch of like tomato paste and some spices? and just simmered it down? You know, the way ketchup is made industrially is pretty difficult to replicate at home because it's essentially a rehydrated paste. But if you want to make it at home,

you start with whole tomatoes, much like you're making a pasta sauce and you just reduce, reduce, reduce. So we found these recipes and we bought a bunch of ingredients. And, you know, we were just throwing stuff into the shopping cart partly because we knew we wanted

to make a bunch of different classic ketchup formulas to test, but also we wanted to test some flavors, some spicy ones, We had a misguided idea around a blonde ketchup. And we went back to Scott's apartment and we cooked them all there. And we just spent days cooking ketchup. What we learned pretty quickly was that when ketchup is reducing and the steam is coming off,

there will be air bubbles that form in the ketchup. And they'll essentially pop and they'll spray the tomato all over the kitchen. And they'll spray it all over you too. And it's hitting our skin and burning us. and we'd start dubbing those Kensington kisses. By the end of our prototyping process, we had covered the entire interior of my kitchen with cut up trash bags

so that the walls wouldn't get stained and the cabinets wouldn't get stained. I was wearing sunglasses as we were reducing this ketchup. And the idea was you would sell those around Providence? I mean, because you were still students at the time. So we wanted people to tell us what they liked And kind of by accident, we developed a community fan base. And so traditional companies, right, consumer food companies would host a focus group.

Sure. And we said, well, why don't we throw a tasting party? And so we designed these invitations that said, Sir Kensington invites you to a ketchup tasting. And we slip them in people's college mailboxes. And we said jacket required as the dress code. And that's how we first got people introduced to the idea. Where did you have the party? We had it at my apartment.

Okay, I got you. Okay. And you had this sort of affect, like you were all speaking with these sort of... I'd imagine throughout the night, the more wine that was consumed, the stronger our accents got. Right. What was interesting is we, it was the night of a blizzard, but much to our surprise, people did show up. And I think to their surprise, we did take the tasting very serious. So, you know, of course it was fun, but we gave everyone rating cards and we asked them go around the room and taste each of the ketchups.

And they were all laid out in bowls around the apartment alongside various eating instruments, you know, different types of fries and different types of chicken nuggets and all sorts of different foods. And the response was what? What did people say? I mean, you had Heinz ketchup there. I imagine it as a control, right? We saw that there were two recipes that rose to the top, one which we would then call our classic ketchup and one that we would then call our spiced ketchup. What was it like then? What did it feel like and taste like? It was pretty chunky and pretty flavored. I think our perspective was make it more like a homemade sauce rather than an industrial product. So it had texture, it had the flavor of lime juice and cilantro and other spices that you wouldn't typically find in a ketchup.

The spiced one in particular had Chipotle and, you know, a little bit of heat. And when it first launched in that very first tasting party in spring of 2008, it was the most different from Heinz that it ever was. Heinz was and is a squeezable plastic bottle, although I think, of course you can still get the glass in restaurants. And they're lovely. They're iconic. But you're like, let's make it different. So what were you going to do? You weren't going to do a squeeze bottle.

You were going to do a glass jar. Exactly. Sir Kensington's is something you were going to scoop, a scooping condiment. Like, yeah, a high-end European preserve. Not something that just should be indiscriminately, you know, squeezed and high quantities, but each teaspoon doled out delicately and savored. Yeah. And for some reason, we thought it would be cool to use a square jar.

You know, we basically, again, started like Googling, and we found a glass manufacturer in Springfield, Massachusetts, probably 150 miles away. Yeah. Oh, it was kind of a nightmare because we called them. We were like, can we order some jars, please? And they said, how many cases do you want? And we said, how many are in a case? I think it was like, 196 or something in a case. We were like, can we just get 40, please?

And they were like, absolutely not. You can get one case, but you have to come pick it up. So we went and picked it up, and they were all looking at us like we had eight eyes. And as we were leaving, we were like, are there lids in here for the jars? And they said, what are you talking about? This is a glass factory, not a lid factory. So we had to get the lids from a separate place. I mean, we had no idea what we were doing.

And we also had to funnel the ketchup into the jars in the first place. And we had no funnel. So we used a Gatorade bottle that we had cleaned and we had cut off the bottom. And we could just quite fit the top into the jar. So we poured the boiling hot ketchup. It wasn't, it was slightly risky. But you know, you got to do what you got to do. And then the next goal for us was, okay, well, how would we actually sell these jars?

And we thought, well, let's go to that same group of people, maybe a bigger group of people, and throw another ketchup tasting party. And along with buying a ticket to the party, you would get two jars of ketchup. And for that, we did that in a restaurant in downtown Providence. And we hired a friend of mine who is a DJ and put together this event. And all of this was done with probably very little money. I mean, you bought some glass jars, you printed out labels on a laser printer, right? This was not expensive.

Almost no money. Yeah, a couple hundred bucks, right? And then we, you know, whatever we invested in the inventory and renting the restaurant for a night, we basically just made back and broke even on the ticket sales and the ketchup sales. The party was a little bit like a wrap-up party, you know? Right, I got to feel like the beginning of something. It felt like the end. Yeah, but I mean, I got to ask why you didn't run with it.

I mean, I know you both had, you know, great jobs lined up, but you made money. I mean, you broke even. You had a catch-up with a brand, so why didn't you take the leap and do Sir Kensington's for real at that point? We never thought this would be a viable business because everybody's starting companies around us if they were starting companies, it was like Facebook and social networks, right? Like, we didn't think that a physical products business was like a viable startup idea. Yeah. I, you know, was friendly with one of the founders of Airbnb that was at RISD right down

the hill. But again, like, that was a technology-enabled business, not a tomato concentrate enabled business. When we come back in just a moment, how a prank and another lucky class connection at Brown convince Scott and Mark to stick with Sir Kensington's. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Every business needs a great website. If you're building something, Squarespace has the tools you need to easily create a dynamic website,

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Grab your smartphone and record a short memo short, like less than 30 seconds, and tell us your name, where you live, and which episode is your favorite and why you loved it. So, for example, I might say, hey, it's Guy Raz here in San Francisco. and my favorite episode of the show is the one about Hamdi Ulakaya and Chabani, because I learned so much about how to just push through when nothing seems to be working out. And it gave me a whole new perspective on being resilient. So that's it, something like that, you know, and by the way, that's not my favorite episode. I love them all equally. Anyway, once you're done with the recording, email or message it to us at hibt at id.

wendery.com. And we'll share your favorites right here in the ad breaks in future episodes. Thanks so much. You guys are the best. Hey, welcome back to how I built this. I'm Guy Raz. So it's 2008 and Scott and Mark

are just about to graduate from college, head off to corporate jobs, and leave Sir Kensington's behind when, well, inspiration of a sort hits them. I don't know exactly what prompted this, but we used fake letterhead for the law firm Scadden Arps.

And we wrote a letter to the Brown Daily Herald, the campus newspaper, accusing them of stealing Sir Kensington's recipe as a way to get the newspaper's attention after this party. And we happened to be both friends with the editor-in-chief of the paper. And she basically responded being like, ha-ha, that's funny and weird. And also, we could write a story about this. And then I got a phone call from someone who had read that article. And he said, hey, you might not know me, but I know you because we're in a class together. I don't talk that much.

You talk all the time. And my family's in the food business. And I think what you're doing is really interesting. Like, maybe I can carry this forward so it doesn't wrap up. Can we meet? Who was that? And so that's how we met Wyn Bennett, who, you know, he shared with us that his family is part of a very large. agricultural business called Cargill, which is actually one of the biggest privately owned

food businesses in the world. And we thought, okay, that's really interesting. Like, this person has the understanding and the resources and the network. And like, we were total nobs in the space. Like Mark and I didn't know anything about the food business. And also, very importantly, when was a junior and we were seniors, right? So we were leaving. And he had another year in college that he could kind of work on this and carry it forward. So you guys, really, you're going to wrap it up, but this guy, Wynne Bennett sees the article and contacts you and says, hey, I think you guys may be on to something. Yeah.

So we go to Wiccenden Pub and we end up writing for him like a couple of page word document of like the annals of what we had done. And we sort of bulleted out like, well, what would be next? Like you could explore what would be a manufacturer that could make this for us, right? Like how would we go about like getting our first customers, you know, the sort of the next steps? So we kind of, we left it with him temporarily. And meantime, you guys are leaving for your job. So I think Mark, you went to New York, right, to go work for McKinsey.

And Scott, you went straight to Tokyo to start working at Lehman Brothers? I landed Japan at the end of August. That's unbelievable. Unbelievable. You were going to go work at Lehman Brothers in August of 2008. Yeah, I think I spent literally four weeks there. Before it all came crashing down. Yeah, before it went bankrupt.

So much for stability. So much for stability. But Scott, I'll get back to you in a sec. Because, Mark, you spent two years at McKinsey consulting. Eventually, I think, working on some consumer products and then even food. But you were also devoting time and brainpower to Sir Kensington's at that time, too, right? Yeah. And you were in New York and Scott was in Asia.

So you were like meeting on Skype or? It was Skype. Yeah. FaceTime. Zoom. Yeah. The tech didn't always work perfectly. You know, and they were always super inconvenient times because Scott was, I guess,

like 12, 14 hours ahead. Eventually, Wynn found a company called Stonewall Kitchen based in Maine that would end up becoming our first co-packer. Yeah. Mark would FedEx me, you know, a package of different ketchup samples to taste halfway around the world. And it was about this time when we started, you know, thinking about like incorporating the business. So this was serious. I mean, this was a series of conversations you were having over, I guess, a year and a half, two-year period. And Mark, first to you, when did you decide, let me do this? Let me, like, jump into this.

I think by early spring of 2010, it was becoming clear that we were going to hit a point where there were no more steps to take without someone committing themselves full time. Meantime, Scott, when Lehman Brothers collapsed, what did you do? Where did you go work? My group and I went to another Japanese bank until I then decided to quit that. I traveled around Asia on a folding bicycle for 10 months. So you knew that you were going to come back to the U.S. and do something. Yes, but again, I didn't really expect it to be the catch-up until I got a phone call from Mark, and I remember being absolutely shocked that he had decided to go whole house. and to go full time on Sir Kensington's.

Because I had known Mark as someone that was so intelligent and so logical, and I almost interpreted that as being risk averse. And I thought, wow, you know, if this guy who's one of the smartest people I know is going to do it, like, I should probably do it too. Let me ask about the two of you because you clearly had very different interests and skill sets around this. Like, Scott, it sounds like you were a lot more. interested in sort of the branding and the backstory. And Mark, it sounds like you, I guess you were more focused on like operations and sales and distribution and in the sort of the nuts and bolts

business challenges. Is that, is that right? Yeah. I mean, we both did a little bit of everything, but certainly we gravitated towards where we were more comfortable. Yeah. All right. So, Scott, you come back to the U.S. This is 2010 after Mark decides to jump into this full time. And And you guys had to raise some money to get this going because now this has to be a professional operation. So where did you go to seek out money? Because I can't imagine that private investors or, you know, VCs were going to back a food company, you know, two guys with no experience. Well, so actually, by the time Scott arrived, we had already raised a bit of the money. You know, like we found Stonewall Kitchen.

We had done all this R&D with them. They were ready to do the first run. And they said, you need to order the minimum order. And this is like lessons and minimum runs 2.0. We didn't have the capital to do it because it was going to cost us $50,000. Right. So that's when we had finished this business plan in the spring of 2010. And I went out to raise money.

And I think the very first check into the business was my parents and then Scott's parents and a few other people who were very close to. And that allowed us to order this minimum run. But the minimum run was one palette of each flavor. And we didn't really know what a palette was. Oh. So this stuff was produced in Maine and then shipped all the way across the country to northern California to this fulfillment center called Lalu, who absolutely does not specialize in food. And then the other pallet came to my apartment in New York because I thought, I'll just store the pallet here. Why not?

Why pay for storage when I have an apartment? Yeah. I happened to be traveling for McKinsey the day that the pallet arrived and I got a super angry call from my doorman saying, what the hell did you get shipped here? And I was like, oh, it's just some ketchup. Can you, I'll explain when I'm home. Can you just bring it inside? He's like, there's a pallet on the sidewalk. What am I supposed to do with this?

How many jars of ketchup were on the palate? I think it was like 200 cases of 12 jars each. So I, well over a thousand jars of ketchup. It was like a plastic wrapped palette. Yeah. I mean, the truck, this 18 wheeler just dropped it on the sidewalk. Yeah. So much to my fortune, they were kind enough to using the like the carts that the building had.

They moved it all inside. And when I got back that night, I moved all of this stuff like case by case into the elevator and then up to the apartment where it lived for months. I hope you gave a good tip. Oh, very much. That was part of the initial fundraise. It was the tip to the doorman. Yeah. So you had 200 cases of ketchup stacked in your apartment.

Yeah. And then that summer, you know, we launched at the fancy food show, which is a big specialty food trade show at the Javitt Center. Yeah. Scott, I think at the time you were doing your bike trip. I was still traveling. Asia. Yeah. You were still traveling.

I launched with my sister, actually, at the fancy food show in New York. And this was like the early days of Sir Kensington's. Everything was in the style of Sir Kensington. So I wore a three-piece suit. My sister wore a nice dress. And we stood behind this very small little folding table asking people to give us a shot, asking people to try this gourmet ketchup. And it was like 110 degrees.

It was insanely hot. I remember just sweating through the undershirt, the shirt, the vest, the jacket, stifling. But then that summer, I really, I spent as much time as I could going door to door to every high-end cheese shop or specialty shop I could think of. And kind of telling a version of the story that we're telling here, which is ketchup deserves choice. Yeah. And I remember there was a, there was a woman who Mark met at that first fancy food show named Maggie, who was essentially a scout for...

It was Dean and Deluca. And she said, I love this and I believe in this, and I want to take it to Dean and Deluca. Wow, which is obviously one of the most influential... At the time, certainly was one of the most influential kind of food boutiques in New York. Exactly. New York is one of the few places in the world where this is a really good place to start a small food business, just because there's so many influential stores like Dean and Deluca,

Marie's Cheese Shop and, right? I mean, don't you think that New York also just gave you a slightly unfair advantage at that time? 100%. A hundred percent. And part of that is the presence of these restaurants that were globally influential, which became a big part of the business later. Yeah. And by the way, in that seed round, you guys raised like, I think about $200, $250,000, right?

Mm-hmm. And what was the valuation? Two and a half million. Two and a half million. Yeah. It was some, like, extremely complicated. discounted cash flow model. We were going to raise at $1 million evaluation, and then I met with someone who said, you should raise that $10 million. And I said, $10 million seems crazy. And so Mark

and I agreed on $2.5. Right. Fair enough. So here's, I mean, this is, I think, a really important conversation that co-founders have to have, right? But it's how do you divide up the business? Sometimes it's easy. Sometimes co-founder's like, oh, it's easy, just $50. You guys, it was the two of you, you had Brandon and Wynn, who were also part of this, you had investors, family and friends. Tell me how you guys split it up. In the beginning, it was easy because it wasn't anyone's business full-time. So when we first incorporated the business, none of us were full-time. I believe it was 2009. And so I say it was easy in the sense that there were four of us. So it was, you know, 25% all around. And then it became hard when I decided to go full-time because it felt

to me like an opportunity to renegotiate and to ensure that the person who's doing this or the people who are doing this full time would have a greater stake in the business. Right. Because you were doing most of the work at that point. Right. So there was a, I would say, a fairly painful renegotiation where, you know, they say the hallmark of a good negotiation is that everyone leaves unhappy. I think there was a bit of that, you know, everyone left a little unhappy. Yeah. Yeah. It was it was rejiggered, you know, multiple times. You know, Mark emailing me being like, you know, if I go full time, you how the equity splits would change. And I was basically like, yeah, this makes sense.

And then probably three months later, you know, he then kind of reproposed it to make it real and actually ink it. And I'm like, oh, well, no, I think this makes a little more sense. He's like, but three months ago, you said this made sense. And I was like, yeah, it makes sense in concept. Like, not the actual numbers, right, to the decimal point, but like in concept. And I think we learned a very important lesson, which is once you give someone something, you cannot take it away.

The experience of having it being taken away is a very difficult emotional experience at that point. I mean, it was very stressful. Yeah. Because as the first person to go do this full time, it felt like were it not for me, this absolutely will continue to be worth zero. Because when you're in the founder's seat, it's really easy to think, like, I am the only one doing anything, even though that's certainly not true, right? So, all right. So now, Mark, you are full time in this. slowly but surely, Scott is going to join.

And what about Winn and Brandon? Did they ever jump in full time? They didn't. No. No. You know, one of the beauties of the product that you chose to focus on is that it's not that hard to make. Or am I wrong? You still have a lot of trial and error on the manufacturing side.

I'll give you an example. So we meet with a co-packer. You know, we went through a long list of their capabilities. Okay. can you do these shape of glass jars? Yes. Okay, can you put the label on? What type of cooking and processing capabilities do you have?

Can you be kosher certified? You know, yes, yes, yes, yes. And so we design all these labels for our first run with William Sonoma. And of course, we had talked to them about being kosher certified. So we put the kosher logo on the package. And, you know, we overnight at like a holiday inn. We show up, I think, at 6 in the morning for the first run. everything's gearing up and the lead of the manufacturing plant was looking at our labels and he's like talking to his colleague is like,

is this run kosher? And then it's like, oh, what are you talking about? No, this isn't, you know, this isn't a kosher run. This isn't a kosher line. And like they had answered this question of like, yeah, we can conceptually be kosher or, you know, we have done kosher before, which we took to assume like, oh, like you can just put kosher on the label. So we sat there with a Sharpie and we put a dot over every. single kosher logo on every single label for that first run that we had for William's Spine.

Wow. I think it was 5,000 jars. And so people would have gotten a mysterious, indelible black dot over, you know, some sort of a symbol of rabbinical approval that we didn't deserve at the time. He's the other, by the way, how much was it, Mark, how much was a jar of ketchup at the time when you launched? When we launched in stores, they hit the shelf at $9. So $9 ketchup, like if I'm in William Sonoma or Dean Duluca, I'm one of those people that I would see a $9 drive ketchup and I would say, you know what, I'm going to buy it. Even if it's just once, I've got to know what $9 ketchup tastes like. So in a weird way, even though it's a super high price point, was that actually an advantage?

Yes and no. Yes, for the reasons you just said. And also yes, because to a retailer, that's an interesting proposition. if they only sell one jar of Sir Kensington's for every five jars of Heinz they sell, they come out on top. Right. So if the price is higher, it can offset a lower rate of sale. But I say no, because, you know, these first months, we spent so much time behind the demo table.

I mean, I personally did hundreds of demos. At Dean and Deluca. All over, Dean and Deluca, the Chelsea Market, Murray's Cheese. So we would do these demos, and I'd say, you know, amongst some, they got it. They'd love it. But then there were others who, they'd say $9 is outrageous. No way am I going to spend that for ketchup as a buck at Walmart. And even now, I think there are certain things people are willing to pay more for and certain things they are not.

Sometimes that's logical. Sometimes it's not. I mean, in this time, 2010, 2011, this was like when juices were getting really big. Like if you remember Suga or Blueprint friends. It was like $7, $8 juice bottles. Yeah. No more. $10?

And we would see people in Dina Duluca, they'd pull up to our demo table with a shopping cart with like 27 bottles of suja in there. And they taste the ketchup and say it's too expensive. Mark, I read that one of the mistakes that you made early on was that you didn't focus enough on distribution. What you were selling directly to stores instead of going through distributors, is that what you were doing? In many cases, yeah, which sounds good. But when you're smaller, they can introduce all sorts of. of additional costs and complexity and distractions. It's not really your core, it wasn't our core competency to be figuring out the logistics of getting jars to every William Sonoma in the country.

Yeah. I think the other part of distribution is we picked early on the specialty channel as the one that we wanted to really be big in. And specialty is like the cheese shops that you're talking about, the Dina DeLuca's and the Murray's Cheeses of the world. And it wasn't until much later, maybe a year or two in, that we realized, the much better way in for the business we're trying to build, and the brand story we're trying to tell is more in the natural grocery stores, like the Berkeley Bowls of the world or the Whole Foods. When you become a specialty brand,

it can be really hard to change people's perceptions into your natural brand. So there's a huge differentiation in the minds of consumers between specialty and organic. Like if they see something in William Sonoma, they don't think of it as a Whole Foods product. My takeaway is that there are things that, are everyday food items, and there are things that are specialty food items. The specialty food items come out three, four times a year for special occasions. That's what you buy in William Sonoma. It's not your everyday staple. And we knew that for a certain group of people, we wanted

to be their everyday staple ketchup. And the path to do that, we eventually figured out it was more through grocery than it was through specialty. So I'm assuming that you really wanted to crack Whole Foods. That was probably the first big partner you were trying to, to, to get into. How did you even get a meeting with them? Well, we were very fortunate that Whole Foods invests the time in finding and pioneering local brands, especially. And so luckily, it really was at the end of our first year in business that we were accepted into Whole Foods. And we launched at the beginning of 2011 in just the New York region of those stores. How did you do at Whole Foods? I mean, Whole Foods is a different beast than William Sonoma.

Yeah. Undoubtedly, it was slow going at first. Yeah. We had to work on the relationships. We had to work on the merchandising. We had to put the time into the demos. We had to lower the price point over time. And we needed to show improvement over that year.

What were some of the things that you, I mean, because you didn't have a whole lot of money to market this. So how did you get the word out? We had basically three pillars of marketing. We had food service. We had influencer digital marketing. and we had field marketing, basically demos in stores. But the food service strategy was very much actually a part of the business strategy from the beginning because our insight was 70% of ketchup by volume is consumed on premise in the U.S.

At restaurants. So it's restaurants, it's sports stadiums, it's airplanes, it's trains, schools. Anywhere where you don't have to buy it where it's like free to you as a consumer, that's food service. But it's mostly in packets, right? Packets and pumps. Okay. Yeah. But then there's also in the higher end space, it's a lot of branded Heinz. And this is a cornerstone of their strategy, which is be omnipresent, be everywhere. Yes. And our thinking was, going back to the Malcolm Gladwell article, no one really has challenged Heinz, at least not in the premium space, in food service seemingly ever. Yeah. And so if we could be the first ones to really break through, not everywhere, but at some select, very famous in the spotlight,

restaurants, hotels. This is an opportunity to have a revenue channel that actually serves also as a marketing channel. Okay. And this is another reason why being in New York was so crucial, because by day, we could be pitching to Dina DeLuca, Whole Foods, and so on. And then by night, we are going to these restaurant kitchens, these world-renowned chefs making world-renowned burgers and begging and pleading with them to take a meeting with us. And then eventually to serve it, I mean, this is a channel that's hard to penetrate for a reason. Everyone's so busy. everyone has super thin margins and everyone hates change.

Yeah. So essentially when people would see it at one restaurant and then eventually you get into the spotted pig which for a time was a hugely influential gastro pub in New York like Bono would go there

and you know and Jay-Z would famously throw parties on the top floor. Yeah. Yeah. Before it all collapsed in the last few years. But I mean it was there. It was PJ Clark's ABC Kitchen

some really important restaurants in New York where people would, and they would see Sir Kensington's. It wasn't white labeled. It was your brand. In as many places as possible, we would do whatever it took to present the brand there. So for instance, for people that didn't want to put the jars in the table, we designed these custom ramekins, which were little dishes that were in the shape of a tiny top hat and that had the Sir Kensington's logo on them. And Mark, was your insight about restaurant food services, did that pan out with Sir Kensington? So did it soon become clear that that was the majority of your revenue was coming from that part of your business? It was never the majority of

our revenue, in part because it was so difficult. It was not a scaled strategy. Like this was me and Scott and other members of the team just going day after day to the same restaurants, these super cramped basement kitchens, and just hamming it up with the chefs and begging them to give us a shot. Yeah. And, you know, we had this other side of the business, right? We were in more and more grocery stores every year. We went from one region of Whole Foods to two to four to national. Then we were in, you know, bigger grocery stores. And the fundamental difference of the business of a retailer and a restaurant is that for a retailer, when they buy a product, if it's more expensive, then that actually means that there's more profit for them when they sell it.

The opposite is really true with a restaurant, Because with a ketchup like Heinz, they're giving it away, right? No one's charging you for ketchup packets. And so if we go in and say, we have a better ketchup, it's premium and oh, by the way, it's five cents more expensive, well, that means that for every time they serve it, they're losing five cents. Sure. And ultimately, it was really hard to crack big national chains and restaurants that

were really of any scale just because it's such a hard business and because they're so, so tight on profit margins. Yeah. That at the end of the day, they're not really willing to reprice their products for a better catch up. Mark, how did you guys, in the first few years, right, in the first two or three years, as you were getting more and more orders and getting into more retailers, how are you financing that?

And also growing your staff. I mean, presumably you had to hire people. So how did you finance all of the costs? Because I have to imagine you were far from profitable. Yeah, we were not profitable. And we raised more money. that $250,000 that we had raised up front lasted us probably about a year until we needed to raise again. And then we raised, I think it was maybe just shy of a million in the second round.

And I mean, we did three rounds over the course of the first three-ish years. All from the same, pretty much the same investors or maybe a few other new ones who would come in. New ones, but the same type of investors, like high net worth individuals and maybe people who ran funds, but it wasn't from a fund. I'm curious, like, as you started to get more exposure, and there was some buzz around this product, right? Certainly by 2014. Were there any other brands coming into the space that you started to see or not quite yet? At that point, not really quite yet anyone of any scale. But I think there was something really important that happened in 2013.

because for the first two and a half years of the business were only ketchup. We talked about ketchup. We talked about revolutionizing ketchup. We call ourselves Sir Kensington's ketchup. But 2011, 2012, 2013, it's super hard to sell to restaurants. You know, grocery stores are saying, okay, you're a two-skew, a two-item ketchup brand. Like, what do we do with that? How do we merchandise you?

Where is this going? People would ask us, you know, are you going to go into other condiments? You're going to make mustard. You're going to make mayonnaise. And we said, oh, you know, the market structure isn't quite there. The opportunity isn't there. The market is big enough for ketchup. Right.

We just have to keep cracking this nut. And ultimately, we said, we need to make a change here. We either need to do something really wild, right? And we actually experimented with should we create, you know, canned coffee that would be sold in vending machines and in grocery stores like they have in other countries. Or should we do something a little bit more predictable? bowl and make mayonnaise. And we actually really partnered with Whole Foods on creating a mayonnaise that we knew that they would be excited about.

And they said, can you create something that is really the highest goodness grade mayo that's on the market in America? And we did that. And launching the mayonnaise transformed our business nearly overnight. Now 50% of our sales are mayonnaise. Now 60% of our sales are mayonnaise. And then pretty quickly, we realized that we, are indeed a condiment brand and that mayonnaise had the frequency of how often people eat it because

it goes on sandwiches, which is something that people eat daily. It goes in salad dressings. It goes in deli salads. But for some reason, historically in America, mayonnaise is demonized. Mayanase is high fat. Mayanase is going to get bad if you leave it in the sun. And so all of a sudden, having a mayonnaise that was even premium, people were willing to pay that premium. People were willing to pay that premium. And they were excited to eat it over and over again. And mayonnaise, to me, it's like one of those products that just is confounding to me. Because like ketchup, I get that you'd buy it, right? Because if you want to make it, you're going to have to cook it and find the spices and it's going to take some time. But mayonnaise you can literally make in 25 seconds with a food processor. Like you crack an

egg and squeeze some lemon juice and just pour oil into it and just run the food processor. I mean, you're more comfortable than most. Yeah, most Americans aren't as enterprising as here. Maybe we should put a mayo recipe in the show notes, guy. I gave it away. But I think actually what you're saying, I, it's a real insight that we had when coming up with the recipe for the mayonnaise. We wanted it to be the first charred mayo that tasted more like a homemade mayo. And the reason that our mayo tastes thick and creamy and dense and like a culinary mayo is we don't pump air or nitrogen into it.

And we use almost double the amount of egg yolk that a more industrial, Mayo would use because that's all we could do at our scale. It was almost like the restrictions we had bred the innovation. And mayonnaise was like ketchup. I mean, it was like best foods, I guess, on the East Coast's Helmonds. Right. Like that really had a huge share of the market. That's exactly right. It's very similar market structure as ketchup. But people, our experience pretty quickly was that especially the natural food shoppers, they weren't really buying Helmonds and best foods anyway because they perceived it to be gross for whatever reason. And so it was an opportunity to actually say, well, here's a huge category that we can

sort of clean up in a way. And because there wasn't that diehard brand loyalty in the same way that there was for Heinz, people just had lower barriers to trying something new. And because mayonnaise carries flavors so well, all of a sudden, we were making a saracha mayo and we were making a Chipotle Mayo. And so we really created in whole foods and in grocery stores the first successful flavored mayonnaisees. So now what we were doing was we were actually growing the category. We were expanding what the merchandising assortment could be for

these retailers. And that was a winning strategy because it invited the partnership for us to grow with these grocery stores. Yeah. So now that you had mayonnaise, you were no longer a ketchup business. You were a condiments business, really. And that it's interesting because you would think, right, from the very beginning, when you were going out to people to sort of talk about it. You say, we're going to start with ketchup. But, you know, it's going to be everything, syracia and salsa, and we're going to do musters, and we're going to do sambal and everything. But really, that wasn't the vision. It was going to be ketchup until you decided to expand. Well, we only wanted to get into categories where we felt like we could really disrupt them and be additive to them and bring something

totally new. The reason where to this day we don't make a hot sauce is because there's plenty of delicious, flavorful, wonderful, unique, authentic hot sauces. We, to this day, haven't felt like we can improve on it. How fast

before the mayonnaise began to eclipse the ketchup as your leading product? Like within a quarter, almost immediately. Within a quarter! Yeah. And it was, the business would obviously not exist without that lifeline because. It's amazing. Now we had product market fit.

We had growth. We had a reason for retailers to take more products. We had a bigger base of business to finance everything else. Well, we also, I mean, it's probably worth saying the ketchup wasn't really working. If we had not been able to raise money, we would have long since been out of business. We were trying to figure out where to go to save the company. So the ketchup business really wasn't catching on. Yes.

The other thing I think that is really important to talk about here in the evolution of the ketchup, The other thing that we did over and over again with the ketchup is think about, well, how can we make it more palatable? How can we make it more attainable? We got feedback from people, hey, it's too chunky. It's too acidic. It's too earthy. All right, let's take out the apple cider vinegar. Let's mill the onions and the tomatoes more finely.

This was in 2013 when he reformulated the ketchup, I think, right? Yeah. And then the other thing that we did that year was that up to that point, we still have these short, squat little scooping jars that were highly impractical. If I'm at a barbecue and I've got literally a hot dog in one hand and a jar of ketchup in the other hand, I need a third hand to scoop it with. But then we move to these taller glass bottles and sales went up. And then eventually we went to squeeze bottles and sales went up. And so one of the things that ultimately, you know, we eat humble pie on this is that the closer that we got to category convention and ketchup, the more it would sell. So everything you'd been doing

was in opposition to Heinz. No, we're not going to do squeeze bottles. No, we're not going to do bottles. Right. We make a lot of noise. We're going to prove Malcolm Gladwell wrong. You know, like the Heinz doesn't belong here or there. Yeah, it's interesting. But in mayonnaise, all of a sudden, oh, well, now let's make it with avocado oil, mayo. Let's make it even more different than Helmonds or best foods. Sales went up. Bizarrely, right, the market is communicating to us. Hey, like, I know that you got your starting ketchup, gentlemen, but mayonnaise is really where you can let your freak flag fly. When we come back in just a moment, Sir Kensington's business finally clicks into place,

but trouble starts to brew between Scott and Mark. Stay with us. I'm Guy Raz, and you're listening to How I Built This. This episode is brought to you by Eight Sleep. I sleep on an eight sleep every single night, and it is completely transformed the quality and the amount of sleep I get. The 8Sleep tracks my sleep. It adjusts the temperature in the mattress automatically, and it tells me the quality of my sleep every single morning so I can get better and better at it. It's an incredible product. The pod cover improves your sleep by automatically adjusting your bed's temperature based on your individual needs. The cover can be added to any bed like a fitted sheet, and it allows you and your partner to cool or warm your side of the bed as low as 55 degrees, and up to 110 degrees. The last few months of the year can be stressful,

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You know, there's so much hullabaloo about digital marketing and about, you know, scalable tactics and targeting. And this was just at the time where a lot of these direct-to-consumer business were starting to get spun up. But we didn't have a product that really worked direct-to-consumer because of the price point. And it was a glass product and it was expensive to ship. And so we had a member of the team on named Pat Jameh, who had built the field marketing program for the legendary Honest T company. And so what he did with us was spin up a plan to start doing hundreds and then ultimately thousands of in-store demos that wouldn't really scale on their own. But when you get these down to a science and people can really try it in the store and they

buy a jar or two right there, then they'll come back three months later, six months later, and buy more and more. And so what we ended up creating was very low tech and very offline, but we could go to these grocery stores and say, hey, we know that we sell best when you put us in a special display. And they would say, well, that's a ton of inventory. And you're not a beverage. You don't move very fast.

You move pretty slowly. So it's going to sit there for months. And we would say, okay, well, we'll guarantee you that we'll sell through it because will keep doing demos in your store until that inventory is gone. Huh. So that's really how you spent probably a huge chunk of that money that you raised. Instead of going to like internet ads or another strategy, you really put a lot of eggs in that basket of doing in-store demos

because that was going to cost a lot of money to hire to run these demos. Unlike so many of our peers, you know, Facebook didn't see a cent from that $8 million raise. Yeah. Wow. I mean, the thinking was ketchup is one. of those things that, and mayonnaise and mustard, they're all habitual products. People are not looking to impulse by a new mayo. And so, you know, we could run a Facebook ad. We could run a physical ad in a newspaper, but there's nothing that is a substitute for the taste. And we really believe

in the taste. So our theory was if we could just get more people to taste this, they'll see what we see. And then the other part was there was no possible way we could effectively spend to support sales all across the country, from Whole Foods to Kroger to Target to everyone in between. So our thinking was if we could just prove we could become the number one condiment brand in Whole Foods, that'll be something that we could show to Crowley or show to investors or show to an acquire room. And we were able to eventually do that. And I think in 2015, actually, we were the brand that did the most number of demos in all

of Whole Foods. The most number of demos. In any category. We pushed it as far as we could. And so this is where we started to recognize that in order to really grow a brand in this industry, you need a strong air game and a strong ground game. And so this was our ground game. But what about the air game too?

And it was about this time that we had basically arranged an investment and did kind of a special deal with a really fantastic award-winning ad agency called Mother New York, where they would invest and they would get shares in the company, but they would get a discount because, they would deliver for us also an advertising campaign. Now, the catch was when we sat down to brief them, we said, oh, by the way, we of course have no budget for this campaign. And they said, well, you got to give us some number. And we said, okay, we can spend $50,000 on this campaign. And so what that meant was we weren't buying any billboards. We weren't buying any TV slots. We said, this campaign is going to have to earn media. And so let's do something that's really inexpensive, but that people can't help but talk about.

Yeah. And what they ended up with was the idea of creating a museum of French fries. We were going to create in New York City an exhibit about French fries just as the way that the Museum of Natural History would do a show on butterflies or dinosaurs. So they said rent a space and let's set up a French fry museum. Yes. Let's get a hundred different restaurants to give us a single. single french fry and we will put those french fries on display and we'll figure out a way to preserve them to coat them in resin we'll tell the history of condiments we'll tell the history of french fries

and what we thought was that we would basically be hanging out in this beautiful gallery for the three days and the weekend that the pop-up was open and we'd be lucky if we got some press around it and it turned out to be just a wild success so from the the minute it was open to the minute it was closed. It was full of people. Like, there were points where we had to limit the capacity in there. It was free to get in. It was free to get in. And we had little signs in front of the exhibits that say, please do not eat this specimen. I mean, in front of each fry under a glass display case, there was a little card and there was a little note from each chef that was about why they chose this shape of French fry, why they prepare it this way. It would say, like, this is a Jean-George

fry or this is a Joe Rubichon fry or like a, like this French fry is. This French fry is a, made by this chef or this restaurant. Yes, and it would have an artist statement. And we developed a taxonomy, right? Because there's only so many different sort of mother shapes of fry. Yeah. There's the alumet, which is kind of like a standard fry. There is the waffle fry.

There is the elusive palm souffle that maybe two or three. Very hard to do. Very difficult. Very technical. And then it puffs up. Exactly. Very hard to make. Temperature of oil.

Very hard. Guy, next time I'm in Northern California, I'm stopping by your place for dinner. I want to cook for you. Yeah. Let's make some mayo. Yeah, let's do it. I mean, that got covered in the New Yorker in other places. Like, it was a significant article in the New Yorker. Yeah, it was in the talk of the town.

It was in, you know, The Guardian. It was in the New York Times. It was on, like, Chinese television. Yeah. How much do you think that cost you? Like, 50,000 bucks to put up? Yeah, we went over budget. The whole thing cost $75,000.

Yeah, but it was worth it. I mean, yeah. Definitely the best marketing money alongside the demo funds that we've you've ever spent. Yeah. So, I mean, back to that $8.5 million for a second that you raised in 2015, what did it mean for the bottom line, right? Because you were still growing steadily. You were in, you know, like 5,000 stores. I mean, were you getting closer to becoming profitable? Well, it's funny, right? When you raise money and you have money to spend, actually, the opposite thing happens to the bottom line, which you spend it, right? Yeah. And I think that we started to really

ask the question of who do we need to bring on to scale this business and professionalize this business? I think 2015 was the pivotal year where a lot of good things clicked into place and a lot of bad things happened. You know, the good things that clicked into place were that we finally had a product portfolio that seemed to be working. We had legitimacy and capital. And that also created our first formal board of directors. Good and bad, but we needed it. But this is also when Scott and I started to hit some co-founder issues, some rough patches in the road. Tell me what those rough patches were. Scott, do you want me to start? Or you want to start? I think, yeah. I think it's, I think it's good for you to, yeah, share your perspective. So at the time, Scott and I effectively

ran the business together. I was the CEO. And I think at the time, Scott, your title was CMO. CMO, yeah. Most business decisions ran through both of us. So we were in almost every meeting together. All the investors were familiar with both of us. And the team wasn't very big. I think the team was maybe, I don't know, 10, 15 people. But when you're a two-person company, me and Scott, and you have zero sales, whether your title is CMO or C-O or CEO, it doesn't really matter, right? Everyone's doing a bit of everything.

And what marketing looks like when you're a zero-person company is also very different than what it looks like when you're a $5 million business with 15 employees. Yeah. And so we had started to get to the point where. through the growth of the business and the needs on the field marketing side, the needs of the CMO role were outstripping Scott's, I think, experience in that role, right? Neither of us had ever done any of this before. Yeah.

And then a simultaneous but separate issue was that what we were hearing from the team was that the two of us were becoming a bit of a two-headed hydra as bosses of the business, which again, when you're three people, it doesn't matter, but when you're 15, it really does. In other words, some people would say, oh, well, Scott's saying this, and you're saying that. Exactly. Who's the final word? And you're both the boss. Yeah. It felt like it was getting to be toxic. So I felt like I was up against the wall where I had Scott, my close friend, co-founder, someone who was valuable to the business on one side and the team on the other side saying, this isn't working. And I went and asked for so much advice. I went to the board. I went to

investors. I went to people who were not involved in the business, just friends. And pretty shockingly, the advice I mostly got was number one, this happens to every co-founder set. It always happens. Co-founders have falling outs or fights. And then number two, the only solution is to remove Scott from the business. That's your path forward. Almost universally, that was the advice. And the advice wasn't specific to Scott, per se.

It was, this is how you solve these problems. There can only be one CEO. And now your business is at a point where you need a professional CMO. So what role does that leave for Scott? And it didn't feel like that was the only path available, honestly. I felt like Scott had given too much and had too much still to offer to the business and to me as a co-founder and a friend. And so I didn't accept that as the answer. And I ended up, I wouldn't say fighting with the board, but informing the board that that wasn't the path that was going to take.

But that we would go down a slightly different path, which is that I would ask Scott to step away from the business for a little bit for a few months. And that we would redesign a new role for him to come back into, which I didn't know what it was going to be at the time. Or I would leave. Or you would leave. Right. If we can't get there, then I would leave. How did you respond to it? Yeah, we had this restaurant that was two blocks from our office that we would fire people at.

So we wouldn't fire people in the office. We'd fire people at this restaurant. And Mark was like, I want to have a meeting with you at this restaurant. I was like, that's weird. And look, I knew that I wasn't the perfect person for the job, but I understood that none of us were the perfect person for the job because we were all trying to figure this out as we went along. And I have a very strong sense of personal responsibility that I wasn't really able to put my hand up and be like, oh, I can't own this or I can't get better enough at this or I want to cede more responsibility to you because I felt like it was. my job to take that responsibility and own it. I love putting on fries of New York, but the idea of constructing a national field marketing enterprise for me is mind-numbing.

And at the time, I was gutted. You know, I was shocked. I was so much of my identity was tied up in this. I was very confused. And I remember talking to my dad and he said, you know, you're probably really angry right now and you're probably kind of pissed at Mark. But, you know, a year from now, you might be writing him a thank you note no matter what happens. And I said, you know, I hope that's true. I mean, certainly this was the hardest thing I ever had to do up to this point in business. Certainly harder for Scott to hear it than for me to say it. But, you know, I didn't sleep for weeks leading up to this and I'd rehearse my speech over and over and over and over again. And I could barely get it out in the restaurant because it wasn't always obvious to me whether Scott

would want to, you know, to return and trust me again. Yeah. But the crazy part is this was on, I think it was either a Thursday or Friday. We left the restaurant. And then my son was born that Monday. So I immediately went out on paternity leave. And I wasn't allowed to come into the office. Yeah. Wow. So on Wednesday, the company has both a CEO and a CMO, and by Monday, we're both gone for months. So, I mean, credit where it's due to the team who kept lights on while we were gone. And so I spent a month and a half, in what I'll call the desert, like conceptually the desert. Literally, I went to a cabin in the woods for three days after I had talked to a whole bunch of different entrepreneurs, our team members, some of our investors.

And I pose this question to them, which is like, what is Sir Kensington need now? Because if I can figure out the overlap between what's holding us back from greatness and the way that I'm actually suited to contribute, then there might be a path forward. You know, Scott came to visit me. I was living in Westchester at the time. So Scott would come up and we would have all day sessions thinking about all this. And we had space to really think this through in a way that we maybe wouldn't have if I was in the business full-time day to day. Yeah.

And before this point, you know, we would talk about having a good culture as a company, but we didn't actually have any words to describe that culture. Like we didn't have a list of values. We didn't have a mission. We knew that we had like less sugar, right? and we knew that we were non-GMO verified, but it was kind of this collection of things that had emerged over time rather than a coherent system.

And one of the things that I then brought back to Mark and that we really volleyed on together was, well, what would that actually look like to formalize this kind of stuff? And I came back to the business with Mark's support and with a renewed sense of fire and a renewed sense of fierceness about this, and we started to create the story about who we were.

The business benefited tremendously from Scott coming back. And, you know, one of the concerns that I had was, what is that reintegration process back into the business going to be? And it could not, from my perspective, it couldn't have gone better, but that's a testament to Scott's focus on the people in the business and the mission that we had. And it's really a testament to him. Yeah. All right, so 2016 was a really transitional year for you.

You're growing, and I think you got up to about 25, 30 people. Meantime, Mark, I guess you get approached by an executive at Unilever just to talk, just to get to know you. How did that happen? It was actually fall of, I think it was around Thanksgiving of 2016, one of our earliest investors. a gentleman named Near. He was at an event and he's like, I just met this guy, Case Kroitov, who at the time was president of Unilever North America, telling him about Sir Kensington's. He loves the brand. He buys it. He wants to meet you guys. So we were like, well, we're not, I mean, this is not at all on our radar and acquisition at this

point. We're still so small. We're still so young. But sure, we'll meet him. Our board would have told us not to take the meeting. Your board would have said, don't take the meeting. Why would they've said that? Put your head down, grow the business. It's distractions. It's too early. Yeah. But as anyone who's met case can tell you, he has a magnetic personality.

But also by this point, we had really started to think about more broadly what positive impact can we create with the business. And Unilever at the time, in case in particular, was a big believer in B-Corps, which is essentially like the marker of your commitment to social equity and environmental justice, among other things. Yeah. And we really liked what he was talking about. And so we stayed in touch until many months later when more happened. Kraft Hines had actually made this unsolicited takeover offer for Unilever. Like almost like a hostile bid. Yeah.

It was kind of a perfect storm because Kraft Hines had offered like $143 billion for Unilever, a lot of money. And Unilever had to prove to its investors. It had to make some serious strategic decisions. and one of them was to shed some of its lines like country crock, I can't believe it's not butter, and then focus on other things. Like they had helmets. They owned that manis brand. But they needed brands and businesses that spoke to a younger generation and supported their mission around good food and healthy food and businesses that were growing.

And growth was something that we had. Yeah. And at this point, I had just had my first child. And so it was early February of 2017. and I was going to go on a trail run. And I remember at the beginning of this trail run, I got a call from Mark. And he's like, Unilever wants to buy us.

And I think they're serious. And I'm like, okay, that's very interesting. But like, you know, I'll talk to when I get back. And I had just read Shoe Dog by Phil Knight and had all this on my mind about like the legacy and like my newborn son and like, what were we doing? And, you know, what would Unilever be able to offer us? And by the end of that trail run, I was like, it's time. This makes sense.

Like, if we can do this, we should do this. So they started to talk to you, right? And you just kind of out of 2016. Are you able to talk about what your revenue was in 2016? I think it was probably about $20 million-ish. Okay. So we were small. Yeah.

You were still small. And, I mean, this was a really tough time for us because we first had to ask ourselves the question, is now the right time to be acquired, period. Yeah. We had just started to feel things clicking into place, right? But then the truth is we weren't profitable. And so when you're not profitable, you have an end date to your cash. And you can either keep raising money.

You can find a way to make your business profitable or you can sell it. We definitely had to face that very real decision of, are we such a believer in the long-term potential of this business that will roll the dice? Because who knows if you don't leave it will come knocking again? This might be a once-in-a-lawful. lifetime moment where they're feeling this pressure from Kraft Hines. We're in the right place at the right time. And we were also thinking Unilever is a great acquirer. They know the condiment space. They have brands that we aspire to. You know, then and now, we put Ben and Jerry's in the same league as

Patagonia. And so as we had conversations with the board, there was some amount of conflict and disagreement about valuation and other terms, but eventually everyone agreed that this was the right time, the right plates. So the deal went through reportedly for 140 million. I don't know if it ever was ever made public. Was it made public? That number is what was made public. Yeah, not by our parties. I got you. Okay. So both of you now become employees of Unilever. What was that

like to go from a small, scrappy group of like 25, 30 people to now running a Unilever portfolio company? I mean... Yeah. What's really interesting in these cases is that you're not really dealing with like a single board of like four people you're starting to now work with something that was pretty honestly like foreign to mark and i which is like a whole swath of you know a multi-national company and everybody has all these different assumptions of exactly what things are going to be like right so yeah oh okay great you've joined and oh so it's just going to be like the seventh generation integration oh no it's going to be more like ben and jerry's or oh no it's going to be oh but you're

part of the helman's you know sales organization you're just going to be like the seven generation And so really, you know, what started out is pretty clean. Ultimately, it gets complicated. And things start to fold in in unexpected ways. The reality of any deal is there is a big difference between your deal champions who acquire your business and the on the ground people who you have to work with day to day. They're just very different teams and different people, right? And sometimes you learn that the team who was to work with you didn't even know anything about the deal until the day the deal was announced. So it's all confidential.

Yeah. So all of a sudden they go from having some work to even more work. And you are that work, right? And there's nothing against them. But it does get hard on people. Just the bureaucracy changes dramatically. Yeah. I mean, you know, in our case, it was very interesting because no doubt there are so many benefits that

we saw. And we said, hey, you know, we went from having a retail sales team of four people to Unilever's sales team of 400 people spread across these 50 states. And so together with the team and with the Unilever's fantastic team, the size of Sir Kensington's tripled. Right, because they could get you into Costco. They could get you. I mean, they had massive. We hadn't worked with Costco at the time. We hadn't worked with Walmart. We hadn't worked for Target right now all of a sudden. And they had massive leverage. Unilever can move industry. They can go to Kroger or Walmart and all these places and say, we want it there. Well, you know, Case himself would call up public.

and say that they should meet with us. But I think the culture that we had built was one of startup people. Like it's a type of fast-moving, you know, risk-taking, adventurous kind of team member who is very different than the style of person who joins, you know, a Unilever or General Mills. And so inevitably there's a culture mismatch. And so Mark and my job changed from sort of piloting this independent ship together to all of a sudden, it's more about broken these relationships and like the level of diplomacy and helping people simultaneously feel psychological safety, but also treating them like adults

and recognizing that we are living in change, right? And change is our business. Yeah, one huge mistake that I made is post-acquisition, we wrongfully, and maybe naively, painted a picture of there won't be change or the change will only be good. They're going to grow our sales and everything else will stay the same. And so we, in an attempt to create psychological safety, we created a false expectation of stability, which then ironically destroyed any psychological safety that the team had. Because when change came, not only was the change hard, but then we lost their trust.

So that, I think it was that fall, that November, maybe six months after we were acquired, we took two days off of working the whole team to do like an in the city retreat to take a step back and say like let's talk about these problems. And it was a really cathartic time for people. And it's what allowed us to start an honest conversation about, okay, change will happen. Yeah. It's true. So now how do we deal with it rather than how do we pretend it won't? You eventually, both of you would leave.

Mark, you eventually left in 2019. and we'll get to what you did in a moment. And then, Scott, you took over as CEO for about another year, a year and a half, and then you left to become an investor to basically start your own fund. Mark, I know that you were recruited by the founders of another brand when you were out in California for the trade show, the Expo West Show. Founders of this brand called Hugh, which is like paleo chocolate, but all made with no refined sugars. Again, sort of like you guys with Sir Kensington's, they were looking to eventually get acquired, but I guess they needed help. Is that more or less what happened? Yeah, exactly.

Yeah. Well, what had happened was at that same Expo West, Scott and I, we were meeting with our boss at the time. And we had breakfast at one of the Disneyland-themed restaurants where there were like Disney characters dressed up and singing at 7 or 8 a.m. And that was actually the moment where I delivered the news that I was officially leaving. Mickey Mouse was literally coming over to take pictures with us while Mark was breaking the news to the North American food. Yeah. Yeah. Yeah.

No regard that Mickey Mouse. But I met the Hugh team and, you know, very similar to Sir Kensington's in a sense, right? Yeah. Yeah. The timing worked out for me to join them in the fall of that year as the CEO. And with Hugh, you did eventually help them go get acquired. They were acquired by Mondalese. And that was a massive acquisition.

I mean, that was almost twice as big as the acquisition of Sir Kensington's. The nature of snacks and chocolate during the pandemic, it gave such incredible tailwinds to the business. Talk about luck in all of this. You know, I mean, I think a common story probably in all the acquisition stories you hear is the timing's got to be right in addition to everything else. You guys, one of the sort of factors in starting the business was that article by Malcolm Gladwell, which, you know, you wanted to show maybe you could challenge this premise that Heinz didn't need to be the dominant ketchup. And then in 2023, Unilever parent company of Sir Kensington decided to stop making Sir Kensington's ketchup and focus on the other condiments. And I wonder what you guys thought when you found out about. that decision. Well, aside from, you know, having our hopes dash that we would one day best Malcolm Gladwell in that argument, we felt really sad. Look, business is hard. Companies serve a lot of masters. And at the same time, too, we had gone through inflation, pandemics, international war

that impacted the food system. But, you know, ultimately, you know, it's sad to see this original baby that we had created and we concept when we put so much time in ultimately get snuffed out when that that news came out that the product was being discontinued I felt ashamed that I had 10 years to get this product right to get it to scale to prove that it could succeed and prove that it could be better and we had almost squandered that opportunity right and that it was somehow on me and I remember posting what I called this ketchup eulogy to link LinkedIn that Mark and I had worked on together. And what I heard and what I felt from people wasn't, oh yeah, like you tried and you failed,

but it was instead like all this outpouring of passion for the product, for the brand, for the other products. And it helped me realize that the ketchup served its purpose. Yeah, it doesn't exist anymore. But you know, it does exist is the culture that we had created. And all now the team members that we had that have gone. to start their own food companies, right? Or become leaders at other food companies or leaders in other industries. The ketchup served its purpose, right?

It was the seed that was planted and all the flowers that have bloomed from there. Yeah. I think I had a really, I had a tough time with this, hearing the news. But it was at this, or I guess it was a year ago at Expo West, when I reconnected with one of our old Sir Kensington team members, whose name is Elliot. it. And we were kind of lamenting this. And he's like, I got to show you something. And he pulls up his sleeve of his shirt. And on his arm is a tattoo of the Sir Kensington's bottle. And I was like, why would you get a ketchup bottle tattooed on your arm? And he said, because prior to working at Sir Kensington's, I had not felt connected in any real way to a workplace before. And he wanted to get this tattoo to sort of mark what's Kensington's meant to him. And it wasn't the ketchup or the mayonnaise. It was the team and the people.

Do you think in the end Malcolm Gladwell's premise stands that actually Heinz does make the best ketchup or a ketchup that appeals to the widest number of people's tastes? And ultimately, that is why it will continue to dominate its category. Deeply in my bones, I could never agree with that sentiment and my official on the record statement is that it just hasn't been sufficiently challenged yet. Exactly. So I await the next generation of ketchup entrepreneurs to fulfill the mission that we could not fully fulfill. Mark? My answer is no, because the premise itself is kind of ridiculous, right? Like no one makes the perfect food. No one makes the perfect soda. No one makes the perfect ketchup. I think any disruption to habit takes a lot of time, takes a lot of blood, sweat and tears,

takes a lot of capital, and we ran out of all three. And someone at some point will challenge that monopoly in a way that breaks through. And maybe we were just too early. Maybe we had the wrong product. Maybe we weren't the right people. But I firmly believe that change is inevitable. When you guys think about this journey you took and where you are, both of you are still young and you've got, I'm sure, a lot more product, innovation, businesses, ideas in you.

How much of what you did and where you are to attribute to luck and how much, how much you think is just because of how hard you worked in your, your skill and your smart. First to you, Scott. I attribute a large amount of what we have accomplished to luck, most definitely. I also believe that we have worked very hard and that we've been focused and that we put a lot of effort into what we do, but we are extremely fortunate. I mean, like Mark said, so much of what we did was right place, right time.

This is like in the changing tastes of America. It was the proclivities of our ultimate acquirer. And the fact that we've both come, you know, from some means, right? We had a little bit of a leg up just socioeconomically. All that is very much luck. But I always go back to, again, my dad, he has this great saying, which is the harder I work, the luckier I get. But I do feel like I'm a lucky guy. Mark?

It's all talent. No luck. No, I'm kidding. Maybe the only different thing I would say is there's being lucky and then there's knowing what to do with the fortune when it's handed to you. I think it was lucky that Scott came back to the business in a role that was so beautiful, but it took work to integrate that role into the business on both of our parts. And I think we've had a ton of luck from beginning to end. But, you know, I think we've also put in a lot of time to be self-aware of our faults and our deficiencies to keep our egos pretty low. to recognize that I don't think I know anything about being a CEO.

Honestly, I think I'm at the very beginning of figuring out how to do this job. And I approach every day thinking, like, what is the luck that I'm going to turn into opportunity today? That's Scott Norton and Mark Ramadan, co-founders of Sir Kensington's. Be honest with me, now that you can't get Sir Kensington's ketchup anymore, are you just going to use Heinz? I don't know. Like, that brand loyalty goes pretty deep, to be honest. I mean, yes, it's gone, but it's not gone in my heart. That's true.

I don't know about you, Mark, but when the announcement was made, I bought as much ketchup as I could. Same. On Amazon, I still have a stockpile. I'm still going through it. We'll see what happens. But right now you've got like an Armageddon's case, like room in your house, a garage full of ketchup.

Yeah, a safe room. A safe room of ketchup. Yeah. So at the end of the world, like when we're all like living the road, you'll just have a lot of Sir Kensington's. Yeah. Yeah, you bring the potable water and I'll bring the potable water and I'll bring the gourmet ketchup guy.

Perfect. I'll bring the ammo and ketchup. 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. It supports our show and it's totally free. This episode was produced by Alex Chung with music composed by Rumtin Arablui. It was edited by Andrea Bruce. Our audio engineers were Gilly Moon and Maggie Luthar.

Our production staff also includes Casey Herman, J.C. Howard. Sam Paulson, Ramel Wood, Carrie Thompson, Malia Agudello, John Isabella, Neva Grant, Chris Messini, and Carla Estevez. I'm Guy Raz, and you've been listening to How I Built This.