Real simple - real snacks!

[mt_myke]

This is the progress thread for the new business I accidentally started at an event last weekend - for more about that check out https://www.thefastlaneforum.com/community/threads/startupweekend-post-mortem.55165/

To summarize:

• The business was pitched in 60 seconds on a Friday night, ignored until the team's other plan finally fell apart for good Saturday night, worked on for a few hours Saturday night and about 5 hours before presentations on Sunday afternoon. By that point the team was just me and one other guy (and he was half-hearted about it).
  
• In that time I spoke with at least ten people face-to-face, with prototype in hand, and wrote down what they would pay and their comments. After my presentation I spoke with many more people - huge groundswell of support and enthusiastic positive reaction. Initial validation - check!
• Over half the people would pay $25 or more for $15 worth of product - even with shipping, the money works out. I didn't even realize until a few days later that someone emailed me right after my presentation, offering to buy the prototype box for $25. First dollar - check! - and less than 24 hours after starting the business!
• On Monday morning two of the people involved in putting on the event contacted me. They want this to be a real thing, they have the contacts and resources to make this happen. I was hoping to meet some people and maybe get a few minutes of advice, instead I got an entire startup team. To put it another way, when I left the event Sunday night I thought I might get a few emails and send boxes out from my home...by Monday afternoon the team had already contacted their Amazon guy and confirmed that Amazon could do fulfillment.

Big conference call Monday and I've still got a bunch of homework before then. For Fastlaners I thought I'd do a quick CENTS analysis here:

1. Need - YES! Everyone eats, but buying food is inconvenient, and finding new things to eat is a bother! I think only one person I talked to wasn't enthused about the idea, and several told me about variations I hadn't even considered (I don't have kids but apparently if you do then pre-made snacks are hugely appealing, as one example).
2. Entry - Low, everyone and their brother has and already is doing it - and that's why no one does it. Come again? Basically this play crucially depends on two things (at least in my ever-evolving understanding of what I'm even doing here). One is that the product mix is unique and compelling enough for people to pay a premium. Two is the brand - people have to be willing to pay a premium (again) because of the brand. If I'm successful then I'm really the only company selling in the space of what my company offers, much like Red Bull is the only player in the Red Bull market. For those calling BS, consider this - why do grocery stores now have multiple shelf units full of various energy drinks when the coffee aisle has been around for years? For that matter, how can there even be dozens and dozens of different brands of energy drinks all sold right next to each other? And yes, not everyone I talked to was a customer...some people only offered to pay $10 - $11 for my product (seemed to be sharp moms who were highly aware of what my box of snacks actually cost).
   
3. Control - Fairly high, of course outsourced fulfillment means I give up a big chunk of control, but as discussed elsewhere on this forum that's OK as long as you have alternatives, and there are a lot of companies who can provide this service, at various levels/layers of integration. In other words if Amazon doesn't work out I still have the possibility of making it work with another partner, it's not like MLM where I'm stuck with a single partner/supplier and have no business without them.
4. Scale - This is where the high degree of outsourcing shines. Not only can shipments for this business scale to what Amazon can provide (megaparcels/hour? ... a whole lot, anyway) but after I learn how to perfect selling to this niche I can create new "front ends" for the company, using the same backends (same ecommerce platforms, same fulfillment partners, and in many cases, the same products!) to sell to entirely new markets. A post-workout box has already been floated...the possibilities are limitless.
5. Time - Ideally this business can run 100% without my involvement, obviously not next week or next month, but it will be built from the start so that all business functions run either on a computer or are performed by employees - and not me. If I decide to be MIA CEO then the business in its current state should be able to keep running indefinitely.

Anyway that's enough for now. By the way this is a completely different business than the one I was writing about earlier. That business is still around, but this one necessarily has to take priority. I think the situation can work out well actually, the other business may work out best if the underlying product is developed in "stealth mode" with users acquired slowly and organically, as that one requires a minimum sized user base to really be compelling.

Comments welcome! Part of my pitch was obsessive/fanatical engagement with my customer base (that includes anyone who might ever buy a box of snacks from me), and you guys are pretty much the demographic I highlighted - people on the go who don't have time to find neat things to eat who would find value in having a box of such snacks delivered to them.

 

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[Blhhi]

I love the idea, and how fast things are going for you, so I thought I'd offer some thoughts. Keep in mind that I'm only being critical to give you some dissenting ideas to think about.

Validation: I'm glad you ran around asking people what they would pay for your product, but don't underestimate peoples' desire to be liked and cooperate. I think you should pick a target audience, decide on a certain number of units you'd like to sell over a short testing period of time, try your hardest to hit that number, and then review your results at the end. Until people pull out their credit cards/dollar bills in a large enough bulk, you have no idea if this thing is really worthwhile. The same would be true if, conversely, all you got was terrible negative feedback. I'm assuming you haven't already sold a huge amount of course. Maybe you have.

Control: I think you're overlooking a ton of control you don't have. Since you're repackaging a bunch of snacks other people make, you have basically no control over the cost of your product. If you're throwing in drinks, and every drink manufacturer you use hikes their prices up, your costs go up, and something has to give. You'll either have to eat the cost and sell more, or raise the price and pray people will still buy.

Need: I think the need is there, but I think your ideas about who exactly might need this are a little off. I can't imagine parents getting this for their kids. But I can imagine buying this for myself at the campus bookstore. Hackers and college kids, 99% of them males between 18 and 30, just to be arbitrarily specific. Going specifically for a single niche would help you make decisions much easier about what snacks to include, branding/packaging, etc.

Entry: Again, I really like your enthusiasm, but imagine what it would be like if you brought this thing on shark tank. It's two years from now, you're at 150k annual gross, and you're standing in front of Kevin O'leary. I can just hear him saying it now: "There are international brands in the food industry already. What are you going to do if a month from now there's a box called Red Bull Snax, for $5 less, in every grocery store and 7-Eleven in America? They'll squash you like the bug you are." He would then, of course, encourage you to license your idea, or sell it to one of those big companies. Maybe that's worth considering.

Keep us updated. It was fun reading about your quick progress. Very motivational!

 

[MattCour]

If you believe you can make it work and turn a profit, I say go for it. You already know it's a huge market so executing and building a sick brand will be crucial, but the customers are out there.

 

[dochustle]

Love the idea and great to see your momentum building.

The biggest thing I learned from running a subscription-product business (Toothbrush Subscription Service) is try your best to make the experience of getting the package/product in the mail a great one. For example, every month with Toothbrush Subscriptions we would include an educational insert in the toothbrush package (Ex, "Coffee Drinkers Guide to Oral Health or "4 Alternative Uses for Your Toothbrush) and we would also include an inspirational word (Happy, Smile, etc.) on the handle of each toothbrush with an inspirational quote to go with with (Example: Two things: If it makes you happy, do it. If it doesn't, don't)

These little things get customers talking to their friends and make receiving the package more than just a toothbrush or snacks, it makes it a surprise and fun experience each time. From my experience, word of mouth is one of the biggest drivers of consumer subscription businesses new customers and these little things help with that.

Would love to help you any way I can!

 

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[mt_myke]

Thanks for the replies! I'm at the point now where I can continue validation by putting together prototype boxes and selling them to whoever will buy, and getting all the feedback I can from those sales. Someone came up with the idea of making them available at the local gaming store (old school tabletop gaming, not GameStop) for game nights, as getting together snacks for his weekly event is a need he experienced. I'm putting together a list of other local stores that might be willing to sell these boxes, or at least talk to me.

Control: I think you're overlooking a ton of control you don't have. Since you're repackaging a bunch of snacks other people make, you have basically no control over the cost of your product. If you're throwing in drinks, and every drink manufacturer you use hikes their prices up, your costs go up, and something has to give. You'll either have to eat the cost and sell more, or raise the price and pray people will still buy.

The biz model right now is to break even or possibly lose money on some products and make it up with other high margin ones. The trick will be finding that balance where people still find value in the total box contents. At this point I'm not letting people pick out their own items so at least I have a lot of leeway there.

Entry: Again, I really like your enthusiasm, but imagine what it would be like if you brought this thing on shark tank. It's two years from now, you're at 150k annual gross, and you're standing in front of Kevin O'leary. I can just hear him saying it now: "There are international brands in the food industry already. What are you going to do if a month from now there's a box called Red Bull Snax, for $5 less, in every grocery store and 7-Eleven in America? They'll squash you like the bug you are." He would then, of course, encourage you to license your idea, or sell it to one of those big companies. Maybe that's worth considering.

Absolutely, being bought out by one of those companies (or possibly one of our main snack vendors) is my preferred exit strategy. Ironically if this flies it validates the idea/market for a big player to try the same thing. Or...we may become experts in subscription monthly food boxes and start buying up all the other companies in niches like paleo, candies of the world, natural foods, ... there's a ton of these! There's a few heavies like naturebox but it seems like a lot of these outfits are tiny and disorganized. In the case of naturebox I've heard (both online and from past customers I've talked to personally) that they do a poor job of customizing their boxes or listening to feedback. With a really slick backend you could eventually get customers exactly what they want, especially if they have dietary restrictions (vegan only, nut allergies, etc) or specific desires ("I'm only in it for the caffeine baby!!!") From what I've seen this is not the direction any of these companies are taking, they seem to focus only on vendor partnerships and getting their products exposed. I may have accidentally stumbled into a great time to start this kind of business, as "virtual warehousing" (where a single warehouse stores inventory for many different clients, sort of like how modern "cloud" data centers work) is only now starting to become a thing. The business may be ready to scale up right when it becomes possible to do per-customer packing/fulfillment directly from such warehouses, and already set up for that model. Not ever having done a business anything like this I've still got a lot to learn so this post may seem embarrasingly naive a year from now...that's OK, as my most immediate concern is just selling boxes one at a time and figuring out what works at all!

 

[Blhhi]

Not ever having done a business anything like this I've still got a lot to learn so this post may seem embarrasingly naive a year from now...that's OK, as my most immediate concern is just selling boxes one at a time and figuring out what works at all!

I love it. Good luck. With that attitude, I know we can count on you making something out of this : )

 

[dochustle]

Looking forward to following your progress!

I love the idea of selling to offices/businesses. You're not selling them on the actual snacks coming to the office every week or month, you're selling them on employee productivity: these snacks will keep employees in the office instead of going to the store for snacks, it keeps them in their seats which means more work done, it keeps them energized for the day. Find studies of certain foods that increase productivity. Back it up with science. For example, here's an article I found: 20 Foods To Snack On For Enhanced Productivity

Back it up with the science and find out where your customer is. Where do business owners hang out? Your local chamber of commerce, meetup.com events, free conferences, business message boards etc. Businesses have money to spend. If you can sell them on making more money (through increased employee productivity), it's a no-brainer.

 

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[Seppo]

Wow. When I started reading I had to pause and just think it through for a second. This is pretty much exactly the business idea I have thinking of for the last 6 or 7 months. Feels wierd reading almost exactly what I have been thinking from someone else. I have presented the idea to a couple of business owners I know and I have only gotten positive feedback and reactions sofar. A person close to me also is in the managing bord of a 1100 employee company, so obviously I see a big opportunity there, I mean, other than to regular customers, delivering to their homes. Futher on I contaced some different local producers of snacks/dried meat and some other vacuum packed products, making it 'easier', atleast for the business, to handle. I got a mixed response on my original idea, but I suspect it might have been the way I presented it. And my age. At the time I was only 18. A fully grown 19 year old now.

I didn't even know about Naturebox before, so seeing the size of them and someone else with similiar ideas gives me alot of inspiration, as I havn't done anyting to it, or about it for a couple of months.

Anyways, I am extremely interested in seeing how this works out for you, and I wish you all the luck in the world. Let's get the grind on!

I do not live anywhere near the US by the way.

 

[mt_myke]

Merry SnaXmas!

Time for the next step. Biz partner and I have sold some "friends and family" prototype boxes. We've looked at similar businesses and have spreadsheets full of numbers. Next week (at the latest) we're going to be launching a marketing campaign for SnaXmas - christmas oriented snack boxes, to be sent as gifts or a gift to yourself. What happens there determines the next step in January...will see.

I know a guy locally that delivers water. He says he knows a lot of customers that are older and would buy these as gifts for grandkids or nephews/nieces. Says he once bought $120 worth of lottery tickets for a guy, after the lottery was on the news the night before. I've already got a display box for him to take on his route. I figure if I can do a better job of generating value from fixed income cash flows then I'm properly serving the markets...will see how it goes.

 

[mt_myke]

The site is live: http://hackersnax.com/

Always surprised how much work it is to do even a simple 3-page web site. There's actually a blog in there as well, though there aren't any blog posts yet. Next step is advertising on social media.

 

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[Y.B.]

I have a great domain for a project like this, GymSnacks.com, will trade for a lifetime supply of snacks lol

 

[Ronnie]

The site is live: http://hackersnax.com/

Always surprised how much work it is to do even a simple 3-page web site. There's actually a blog in there as well, though there aren't any blog posts yet. Next step is advertising on social media.

Love the idea and product.

Hate the website... Just feels crowded

Check out these for some inspiration

https://naturebox.com/
https://www.graze.com/us

 

[mt_myke]

Love the idea and product.

Hate the website... Just feels crowded

Check out these for some inspiration

https://naturebox.com/
https://www.graze.com/us

Thanks for the feedback. I'm coming into this as a back-end web developer. I have limited experience and aptitude for front-end work (which is pretty obvious) and zero experience doing online marketing, which is one of the reasons I picked this business. The business model and product are simple so the entire focus is really the marketing end of things. I realize now that I need to learn how to get potential customers and then convince them to buy (or try a free app, or whatever) regardless of what business I'm doing. All my other ideas involve a lot more risk (new/novel products/services, critical mass of users before the business model works, much more upfront work before there's a minimum viable product to show anyone, etc).

The way the site is set up makes it very easy to create and link to new pages that are completely independent of each other. I can experiment with entirely different styles without affecting any of the other pages. I'll be making several new landing pages and doing some A/B testing to see what kind of results I get. I've been obsessively monitoring my web logs and quite a few of you have been following my link here to check it out, so thanks for that.

Naturebox and graze were some of the first competitors I found, a list that's now quite long. Naturebox uses remarketing/retargeting aggressively, so I often get their ads on many sites I visit (including this one). Just that much more motivation!

 

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[sklawllc]

I'm in "pre-launch" right now for my subscription business and I am very grateful for coming across cratejoy for creating subscription based websites. It's not free, but well worth it in my opinion. You can EASILY integrate it with Stripe, which will allow you accept credit cards.

 

[sklawllc]

I'm in "pre-launch" right now for my subscription business and I am very grateful for coming across cratejoy for creating subscription based websites. It's not free, but well worth it in my opinion. You can EASILY integrate it with Stripe, which will allow you accept credit cards.

Also, wanted to note that cratejoy gives you a free 20 day trial period. I am in no way affiliated with cratejoy. In fact, I haven't even paid yet, I'm still in my 20 day trail period.

 

[MJ DeMarco]

I am very grateful for coming across cratejoy

Hope people see the underlying Fastlane in this dynamic...

CrateJoy is the Fastlane ... selling shovels to gold miners...
Starting a subscription box company is now becoming beaten down by entry, hence becoming a hitchhiked path, attracting money chasers, and lessening the opportunity.

Just a point of information... carry on.

 

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[mt_myke]

I'm in "pre-launch" right now for my subscription business and I am very grateful for coming across cratejoy for creating subscription based websites. It's not free, but well worth it in my opinion. You can EASILY integrate it with Stripe, which will allow you accept credit cards.

Wow, didn't know about Cratejoy. Thanks for the link! One of the ideas I had was developing a subscription platform for my business that I could then monetize as SaaS - exactly what Cratejoy is already doing. Doesn't look like they do fulfillment though, which is another way to go (and would be a good complement to Cratejoy). You would offer essentially virtual warehousing + fulfillment. The customer would pay for inventory, some space in a warehouse, and packing/shipping costs. In return they'd never have to touch physical product, just select what to order from a huge list of suppliers. Of course that's not a fast/cheap startup, it would require significant up-front investment, but seeing how many billions of dollars investors are desperately throwing at pretty meh messaging companies it seems there's plenty of cash out there.

 

[sklawllc]

Hope people see the underlying Fastlane in this dynamic...

CrateJoy is the Fastlane ... selling shovels to gold miners...
Starting a subscription box company is now becoming beaten down by entry, hence becoming a hitchhiked path, attracting money chasers, and lessening the opportunity.

Just a point of information... carry on.

True, you make a good point. Although, for someone like me who is just getting started, the subscription based model is a low entry, low risk way to get my feet wet. Am I going to make millions, no. Am I gong to make passive income, maybe. Am I going to gain experience, YES.

 

[MJ DeMarco]

True, you make a good point. Although, for someone like me who is just getting started, the subscription based model is a low entry, low risk way to get my feet wet. Am I going to make millions, no. Am I gong to make passive income, maybe. Am I going to gain experience, YES.

Absolutely agree. Nevermind me, just was pointing something out.

 

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[mt_myke]

Starting a subscription box company is now becoming beaten down by entry, hence becoming a hitchhiked path, attracting money chasers, and lessening the opportunity.

That's actually one of the reasons I picked this particular business. Subscription "X of the month club" boxes have been around since before the internet. One of the first articles I came across when doing initial research said there were so many new subscription box startups in 2012 that it had become somewhat of a joke. The product (customer gets stuff in a box) and business process itself (you or a fulfillment service packs a box with stuff and ships it to the customer) is simple and well-established. That leaves 1) working the margins and 2) marketing and customer acquisition.

I'm not really convinced it's a problem anyway, based on what's happened with online retail. People who want to buy something online will usually get it from Amazon or one of the other mega-etailers. That's fine enough for everyday products where price is the only concern and you know exactly what you need. For niche products you can still run a successful specialty online store - isn't this a popular approach for many of the members of this site? Web sites that offer easy online store management have been around since the 90s and are available at sites like Amazon and Ebay as well, and yet people are still opening new online stores and making them profitable. As long as there's a USP for each store and they sell different things it works out. Likewise, I don't think customers of NatureBox have their experience diminished by the existence of LootCrate, because they contain completely different products that meet completely different needs.

People shopping strictly on price won't find value in my product, that has to come from somewhere else (convenience and discovery are two possibilities). It will almost certainly depend on building up the brand and a community around it, which I don't expect to be easy or quick. The money chasers would be the ones who try to set up a new subscription box in an hour and then make a quick buck by reselling the same thing everyone else is (generic viagra subscription boxes?) Most of them will fail the same way they failed trying to hawk theay same oversold/overexposed products thru online stores and unsolicited commercial email.

Anyway I hope that matches up with the real world, until I sell a bunch of boxes I may be completely wrong about everything I wrote above

 

[mt_myke]

So it turns out selling stuff online is hard.

(waits for the experienced online marketers to stop ROFLing)

Anyway...site is up, google adwords are up, reddit ad is up. I've learned a few things about ads (I knew a bit about Adwords from my day job). Google and Reddit use different models, Google only charges you if you get a click while Reddit charges you every time your ad is shown. It's much harder (read: expensive) to get your ad shown on Google but also easier to control costs. Reddit's system will get your ad seen by a lot more people but also burns down your ad budget regardless of how many (few) people click on your ad.

Been spending more time in the last few days dealing with Twitter than I ever have before. Last time I really used it was in 2008, when phones were not so smart and Twitter seemed to solve a genuine technical problem and allowed you to chat with people on the internet pretty close to the same way you'd have one-on-one chats via SMS. Now it seems to be populated by two demographics: bored teens (and older people who have chosen to hold themselves back mentally) and businesses. The businesses seem to use Twitter as a write-only medium. Follow more people to get more followers, which then gives you a crazy amount of tweets that you couldn't possibly follow up on. Scan them and click on a bunch to retweet later (with one of the many tools that's designed to do exactly that, with one click). That's how it works, yea?

Could use some help with Facebook. Every other site lets me use the name Hacker Snacks ("The name is Snacks. Hacker Snacks.") EXCEPT Facebook, which complains that it only wants real people. I suspect Amazon's Facebook page is not linked off of Jeff Bezos' account. What's the proper way to do a brand/business presence there? I have a Hacker Snax page but just about everything I want to do links to the persona I created, which is confusing and dumb and so far has prevented me from doing much of anything with Facebook.

Huge thanks to @dochustle for his time and insights, I will be trying some of the things he suggested after I redo all my pages to look like my competitor's pages.

 

[Rinzler]

I could try helping you with your Facebook presence. If I understand it correctly, you need to make a Hacker Snax Page?

Unless they just changed the rules, you can create new "Pages" that you would use your personal account to manage, and one of the options for Pages are for Businesses. Pages will never show who they're ran by. For instance, my real name is Jay but I manage two Facebook "Pages" under my personal Facebook login, and when I run ads it's going to ask me which of the 2 pages the ad will link to, or say it's posted by. So my ads say "RollerBladeBusinessMen Posted : Insert Awesome FB Ad here"

Assuming I haven't made much sense so far, log on to your normal Facebook account on the Desktop version of the site. On the left of your News Feed you should see a few things. On mine I have, Groups, Apps, Friends, Interests, Pages and under Pages it has the option to create a new one. From there it's pretty simple to get a Page up and running, and they normally allow any name as long as it's appropriate.

Once you get your Page all set up, from now on when you log onto your Facebook, it'll show a shortcut to the page, on the left of your News Feed! Anytime you click on it and make posts on the Page, it'll show the Page name (In this case, the business) as the original poster. It even gives you the option to share Admin privileges to other Facebook users! Which means you can eventually assign someone to help run the Page for you.

I hope this helps! Let me know if you have any more questions.

 

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[mt_myke]

Unless they just changed the rules, you can create new "Pages" that you would use your personal account to manage, and one of the options for Pages are for Businesses. Pages will never show who they're ran by. For instance, my real name is Jay but I manage two Facebook "Pages" under my personal Facebook login, and when I run ads it's going to ask me which of the 2 pages the ad will link to, or say it's posted by. So my ads say "RollerBladeBusinessMen Posted : Insert Awesome FB Ad here"

Sorry I wasn't clear. Within the Facebook "ecosystem" it's fine enough (as you describe). The problem is when linking to facebook from other places. That always requires you to use a FB account, not a page. I set up a separate account since in the future someone other than me would be doing this. I still can't create one as "Hacker Snax", so I had to make up another more real sounding name, and that's the name that shows up everywhere outside of FB. Every other site lets me use Hacker Snax as a name.

 

[mt_myke]

Unless they just changed the rules, you can create new "Pages" that you would use your personal account to manage, and one of the options for Pages are for Businesses. Pages will never show who they're ran by. For instance, my real name is Jay but I manage two Facebook "Pages" under my personal Facebook login, and when I run ads it's going to ask me which of the 2 pages the ad will link to, or say it's posted by. So my ads say "RollerBladeBusinessMen Posted : Insert Awesome FB Ad here"

Sorry I wasn't clear. Within the Facebook "ecosystem" it's fine enough (as you describe). The problem is when linking to facebook from other places. That always requires you to use a FB account, not a page. I set up a separate account since in the future someone other than me would be doing this. I still can't create one as "Hacker Snax", so I had to make up another more real sounding name, and that's the name that shows up everywhere outside of FB. Every other site lets me use Hacker Snax as a name.

 

[mt_myke]

Love the idea and product.

Hate the website... Just feels crowded

Redid the entire web site this weekend in a more modern one-page style.

http://hackersnax.com/

 

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[Ronnie]

Redid the entire web site this weekend in a more modern one-page style.

http://hackersnax.com/

Looks so much better. I like it!

 

[mt_myke]

All good things must come to an end. So must not so good things.

Pretty much this business idea didn't work out. The snack box in its current format is not a viable product. From the little feedback I got, the teen market didn't like it because they were expecting everything to be repackaged with cool branding. The old people did like it, but only because they perceived they were getting a good deal, which isn't even true. Also the current size is in an anti-goldilocks zone where I could either get cheaper shipping by moving down to a smaller box (not surprisingly, the same size Graze uses) or twice the volume for the same shipping.

There are probably ways to make this work. All but one of the people who did buy the box, bought it for someone else. Half of the recipients were college aged or younger. Marketing to parents/grandparents/aunts as a gift to college or high school kids might be feasible. I found one company doing just that and they didn't appear to be doing well...then again that could just mean it's not a great opportunity.

Still I can't ignore the initial market response, or rather lack thereof. At the end of the day...nobody gets that excited about a box of snacks. I'm going back to the original but revised plan A (which has another progress thread).