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Ep. 102 - Doing Your “Homework” Before Launching Your Brand with Madhu Sharoff

Madhu Sharoff was an ex-pilot who ventured into the wine industry, selling millions dollars of wine per year, from high-end restaurants to big box retailers. 

Now, Madhu is the CEO/Co-Founder of Kimbala. He’s someone who's here to give Chai a new meaning in America. 

In This Conversation We Discuss: 

  • [00:00] Intro
  • [01:12] Madhu’s founding journey
  • [06:57] Sponsor: Klaviyo klaviyo.com/honest
  • [08:39] Motivation for founding his own business
  • [09:50] Satisfaction from production
  • [10:14] Sponsor: Rewind rewind.io
  • [10:51] Initial research breeds success
  • [12:45] Shortcuts vs dedication
  • [15:17] Sponsor: Gorgias gorgias.grsm.io/honest
  • [16:04] Saving money by going the long way
  • [17:27] Owning your numbers
  • [20:45] Sponsor: Avalara avalara.com/honest
  • [21:34] Multiple ways to success
  • [23:20] The advantage of getting expert help
  • [26:09] Understanding the value of your expenses

Resources:

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 Transcript:

Madhu Sharoff  

When you build a brand with a solid foundation and the fundamentals are in place, you have more fun with it and [it gives] that ultimate level of quality to your customers.

Chase Clymer  

Welcome to Honest Ecommerce, where we're dedicated to cutting through the BS and finding actionable advice for online store owners. 

I'm your host Chase Clymer, and I believe running an online business does not have to be complicated or a guessing game. 

If you're struggling with scaling your sales, Electric Eye is here to help. To apply to work with us visit electriceye.io/connect to learn more. Now let's get on with the show.

Alright everybody, welcome back to another episode of Honest Ecommerce. My name is Chase and today I am welcoming to the show, a fan of spicy foods, Madhu Sharoff. Welcome to the show. How are you doing?

Madhu Sharoff 

I'm doing well Chase. Thanks for the opportunity. Nice to be with you.

Chase Clymer   

Absolutely. But these days, you're not really selling spicy foods. As much as you're helping people with chai tea, you are the co-founder of Kimbala

And so let's take it back to the beginning. What was your journey up until founding a new tea brand in America?

Madhu Sharoff 

To dig back, we have to rewind to about 2018 when I had a full-time job. And I decided that I needed to part ways with it. 

And that also inspired my vision for wanting to create another beverage since my previous job was a beverage. 

I was in the beverage industry for about 15 plus years. So that led to thinking about chai. And it wasn't really just chai per se, I was thinking of beverages in general. 

But it came to mind... What is my strength and I know always been making chai for friends, for myself. And it's just a daily dose of  a little pick me up. 

Of course, I enjoy coffee as well, very much. But it came from just experimenting with making chai for friends. In fact, I would have friends... We would do like a little chai get together and I would take all my tea supplies and go to someone's place and then make tea. 

And I lived in Oakland, California in a very tiny studio. So it wasn't like I could invite 10 people to my apartment. So I would go over to friends places and I'd make tea. 

And this became a regular thing where I would bring all my supplies to their place, make tea and we’d all sit down and enjoy. 

And it would be like that very authentic style of chai, which is not something that we are able to easily achieve by your big brand retails outlets at the moment in the United States. 

So that led me to believe that okay, "Hey, there might be a market for this." But before I jumped into starting doing any research on bringing it to anyone for trial and taste, it was really just going with my friendly circle and recommendations from them. 

And also, I just saw... I dove into a lot of the research of "Okay, what tea companies do exist?" There were brands that I've seen in big name stores, Whole Foods and Target and whatnot. 

So I started buying every single tea that is out there and tea concentrate that is out there and see how someone who's not familiar with making chai make chai if they want to make chai. So and then, of course, I dove into the online aspect of it. 

And there were a million recipes of how to make an authentic chai, like on YouTube and so forth. So I took a considerable amount of time to dive into how I would make my product and how to differentiate from what's already out there. And so that took a long time. 

And as well as I went to India for a couple of trips to make sure that I actually go and visit my  potential suppliers at that time. I didn't even have any potential suppliers it was more so [like] "Okay. I can look here. I can look here. This is ideal." 

And I want, maybe, this quality to be available and people who are already in trade who are exporting to the United States, and the whole logistics of all of this. So this chewed up a lot of my time since I was doing this all by myself at that time. 

And then we fast forward from 2018, middle of 2018. It took me about 6, 7 months to do this. 

And then beginning of 2019, my wife got a job in Austin, Texas, and we decided that this would also be a perfect opportunity for us to set up the foundation to start this brand. So keeping that piece in mind when we were moving here. 

We bought a house big enough to make sure that we're able to store up supplies and those things instead of going after a warehouse or any of those storage facilities and those things. 

So, in fact, I did do some preliminary research in the Bay Area when I wanted to set up the brand and where it's going to be storing and manufacturing and those things. And do I even want to get into manufacturing? Or do I need to go to a co-packer

So many of these beverage industry questions when you want to launch a launch product. So we did decide Austin is the better alternative when moved here. 

And we really got set up in end of 2019, which is when we formed a company here in Austin and started putting together the supplier list of people where I'm going to start ordering my product from and working on the website, and so forth. 

So fast forward, we came into 2020, January, and I had given myself a deadline of the end of March to launch [the] brand and the product and all other moving pieces. So we're put together. 

And then we... Of course, mid-March, we had COVID. And that really made me pause for a second and understand what's going on out there. Is this a good time to launch or not? Come June, we just decided to go ahead and launch it. And then from there, we have encountered some hurdles and obstacles. 

And we're going forward with the brand and the launch and all of this by making those smaller adjustments and how we're going to proceed forward. 

So I would say fairly new with launching the brand. And we're still  learning as we go, especially the online piece of things.

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Chase Clymer  

When you decided to exit your previous job. Were you thinking about building this brand while you were still working there? Or was it like, "You know what, this part of my life is behind me and I'm gonna move on and just dive all into a new business."

Madhu Sharoff 

Great question. It was not a hard set in stone. I had a thought about... "Okay, I want to leave this job. What am I going to do next? And what are my resources? What are my contacts? 

And what can I do that I can use the last decade and a half of my experience into building something new." Which is also something I was very passionate about, as far as the beverage industry is concerned. I launched certain brands and labels with my previous company. 

And when I would go to the stores and I would see it on the shelf, they would give me a great deal of joy thinking, "Oh wow, that was created by myself and my team." And that level of satisfaction is more than a million dollars in the bank account, I would say. 

Although that would be nice to the idea of getting that satisfaction of when someone tries something that you have created and appreciates it and enjoys it and passes it on to someone else. 

I was looking for that satisfaction once again, and just tied that into the chai piece of things. And then here's where we are.

Chase Clymer  

Absolutely. I think there's nothing more satisfying than seeing something you create come to life. I definitely have a lot of fun with that, working with our clients over the agency, doing things like a big website redesign or some cool feature. 

That stuff's really fun to create something out into the world. And it works.

Madhu Sharoff 

Yeah, yeah. Completely agree it gives such a nice high. So yeah.

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Chase Clymer  

So with your phase one of this project. What I'm trying to put it out there for everyone is [if] you're thinking about leaving your job and you're brainstorming stuff and you're doing research before you choose a product or choose the direction you're going to go with your brand. 

How important do you think that initial groundwork, that initial research was to the overall success of the launch and of the brand?

Madhu Sharoff

It was huge. I think it was 1,000% necessary to do those things. It's easy to get distracted from seeing things definitely on social media and online, which is where our eyeballs are attached to lately. 

And it's very easy to think like, "Oh, you know, here's how you go on Fiverr and buy a logo for $5 and make websites for another $20 and boom, you're in business. You have a brand." If it's not that easy. 

And especially having the background before for several years to look into how do I set up the foundation? How do I set up the fundamentals on making things easier for myself to be doing this at a minimal cost? 

Ultimately, it all comes down to how much money you have to launch this brand. And the more homework you do, the cheaper it gets, and the better it gets. 

So it was a phenomenal amount of research put into all of this and talking to people and even, as far as thinking of a brand name, and whether it will stick or not, and creating the icons and logos and every little piece counts. 

So it's a great question that you asked, because the perception out there is "Oh yeah, 5 minutes and you can launch a brand." It's not true, especially if you're wanting to build something that is bigger than yourself and/or long term.

Chase Clymer  

No, absolutely. And so there's one key piece of that puzzle that you mentioned that I want to bring up. And you don't have to get super granular with your answer. 

But I'm assuming that there are options out there in your space where you could have cut some corners, maybe in white labeled someone's other product to get your launch [to] happen faster. 

But you went the extra mile: You flew halfway around the world. you met with manufacturers. you met with fulfillment houses, you met with everyone and each piece of the puzzle. 

Do you know off the top of your head, what the difference of costs would be by going the first route, which may technically be the lazy route. And then like the second route, which was when you put in the hard work, and you figure it out how much each piece of this puzzle is going to cost to get done?

Madhu Sharoff  

Yeah, absolutely. So it's funny. Again, it goes back into the dollars that you have. 

And these are the companies that I started at bootstrap. It's pouring all the life savings into it to begin with. 

And what happens in this scenario is you're if you're careful with your dollars, you're going to do that homework. And there are shortcuts. 

There are temptations that I can just go to a co-packer and I don't need a warehouse and they'll just do everything for me. But then you understand, "Okay. There are minimums, there are contracts, [an] NDA has to be made and are these people [trustworthy]..." And so many things. 

And ultimately, when it's your baby, you want to keep it under your own control, which becomes the key part of the success of the launch of the brand. So it is important to do those little things to make sure that you have everything under control and the way you want it to be and you differentiate... 

I had worked on several big brands, or big box retailers, where we did private labels and white labels for people and understanding that level of business. When it comes so easily, it can also go away very easily. 

And when you build a brand with a solid foundation and the fundamentals are in place, you have more fun with it, and giving that ultimate level of quality to your customers without research. 

And without doing all of that due diligence, you're not going to achieve quality. It's easy. Fine, you can.... If you want to get into the business of making shopping bags, you will be able to find a supplier in China and do dropshipping and those kinds of things. 

But that's not what we were set to do. Creating a signature tie-in United States is what we wanted to do. And yeah, that's the trigger. That's the chosen path for us.

Chase Clymer  

Absolutely.

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Chase Clymer

Is there anything you can put a number behind? Either a percentage more or even even dollars or margins... 

Madhu Sharoff  

Oh yeah.

Chase Clymer  

...talking about how much money you're saving by doing it the long way or the hard way?

 

Madhu Sharoff  

A great question. Yeah, you did ask for the dollar amount, which I would say roughly, we've saved anywhere from 40% to 60% of costs that would have been involved in going through other people and other sources. 

And in some cases, maybe we could have probably saved a lot more money by just going to a co-packer but you have to be able to absorb the scale of things that they have to offer. They want to do a 100,000-piece contract with you and are you able to absorb that? 

And then yeah, you're going to save, let's say 60% of their cost will be saved because everything is in their hands, but coming up with that initial investment to pay for the product. 

And then once they're ready to hand it over to you, where do you go? How do you go? Are you able to sell it all and then get your return? 

So some of those things have to be considered. And it's... I would say it's hard to put $1 amount or even a percentage, but doing things in-house sourcing the products from India directly, has definitely helped us save anywhere between 50% to 60% margins. 

Chase Clymer  

Absolutely. So I want to put that into like terms that people can understand. These aren't your numbers or anything. I'm just pulling these numbers out of thin air. Let's say you have a $10 product. 

Let's say you have a $10 product and you're doing some white label deal with somebody and you can buy that product for $5. You've got a 50% margin. That's great. But what Madhu was telling us right now is he is... 

Because he put in the work, he actually is got a $10 product. He's got the exact same product, but he's only getting it for $2.50. 

So he's got another $2.50 there in his margin, that he can now invest into paid advertising or buying more product and scaling up production

That's important money, that's an important margin. And honestly, it comes down to your numbers. And that's how you grow a business is owning your numbers.

Madhu Sharoff  

Absolutely. 

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Madhu Sharoff  

And thank you for putting it in those terms. It's truly very important for you to be under control of every dollar that you spend. 

And if you're not spending it, someone else's spending it for you, which reminds me of an initial part of homework that I had done. It's [to] call up... Living in Oakland, there is an area called Emeryville, which is right next to Oakland. And there are several companies, I mean, Clif Bar's head offices there, and so forth. 

So naturally in the last 20-30 years, a lot of companies that provide the services to the larger companies like Clif Bar, are located there. So I ended up calling one of the companies and saying, "Hey, I want to get into the coffee and chai business, what services can you offer me?" 

And it wasn't tens of thousands of dollars for just a basic level of service that they could have offered, provided they have bigger customers and big clients; the high-dollar fees that they have. 

But also that is something that they could fast forward you into launching your brand and cut down a whole year. So it's also that opportunity cost that you'll have to see to save that extra $2.50. 

Is that worth it for me to do it by myself or do it via a company like this who can accelerate me one year into this and I can focus more on putting the product into the market and sales and those things? So it would come down to what is the opportunity cost? 

And ultimately, for me, I wanted to have more control over exactly what it would taste like, what is the experience and we went through several different exercises, even as to measuring the circumference of the opening of the bottle. 

So when you're sipping chai or when you're sipping coffee that we prefer, how does it feel? How does it feel on your tongue? Is this too big? Is it too small? Should we go at it with a 16 ounce bottle? Should we go with an 8 ounce bottle, so many different things were tried out? 

These are things that a bigger company would already have information and data and so forth. So you're paying that premium amount of money for them to do your job. But ultimately, things are not in your control, even though it's your brand and someone else telling you what to do. 

So essentially, you lose the fun of building a brand. But also it's only halfway your brand, I would say. sSo to avoid all of those things, I did a lot of that homework and that nitty-gritty due diligence that needs to be done to be where we are today. 

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Chase Clymer  

Yeah, I mean, that's the really important part of it here is... You just mentioned like, hey, there's... You can either partner with someone and have them help launch your brand. And it'll fast forward. And you'll get ahead of this curve, per se, but it'd be more expensive. 

Or you can do it yourself and figure it out yourself and like rigorously own that process and still end up at the same place. [It'll just] take you longer to get there. 

And what that boils down to is what I've been preaching on this entire podcast forever, which is there's no one way to do this. There's no right way to do this. There are a lot of wrong ways to do it. You'll figure that out really fast and just pivot.

Madhu Sharoff  

Yeah, I'm glad you said that. Because that was a thought marinating in my brain. Exactly. That there's no right or wrong way. Either way is okay. It just depends on what your comfort level is, what you want to achieve, do you have that extra cash that you can spend... 

So ultimately, we have to decide that this is our way of doing and which is where we are. And the advantage of doing it your way is you're also in control of making those small adjustments as you learn your business [and] as you learn your customers you learn their needs. 

And if there's something that's working versus not... Let's say you go to one of these big companies or a co-packer and they have printed 50,000 cans for you. And if there's some small adjustment that needs to be made, you can't make it until you go through the 50,000 cans and then only then you will make the next adjustment. 

But growing small and having the control on what you are there to build is actually you can make these adjustments to better cater to what your customers actually need and what will stick.

Chase Clymer  

Yeah, I think that there's a few things from what you have said today that I want to just touch back up like one, I've interviewed almost 100 people probably more now by the time this podcast comes out. 

And you know, with all the brand founders that I've interviewed, they were just so focused on making the best product that they could make.

So I would argue that never outsource that your product is the one thing that's going to separate you From your competition, what's going to make you unique? What's the moat that someone has to cross to like, kind of encroach on what you're offering.

So one, just like, never outsource the product, but when you start talking about the other parts of the puzzle, you know, fulfillment, who's gonna build your website, who's gonna do your ads, who's gonna help with copywriting? All of those things, it comes down to essentially time or money?

Do you have enough time to do it all yourself? Or do you have enough money to have someone else help you do it, when you do have that money to invest? It is a shortcut, as you said, you're gonna get a better product a lot faster, but you definitely give up some of that control.

Madhu Sharoff  

Absolutely. I think, online, being such a beast of things to handle, whether writing copy or creating a theme or running instrument, whatever it is... There comes a point where all of this is sold dialed-in nowadays that you have to rely on professional help. 

And to get that level of quality, you can go and create your own website, logo and Instagram and run your own ads and all of these things, you can do it at a little bit of intermediate level. 

But when you get into that expert level, you have to have the dollars to spend. And it's better off doing it that way. 

Because you can then focus more on the strengths that you have in which is exactly how we are operating at the moment. We have started off several things as far as setting up our Ecommerce platform and bringing in social media and so forth.

And it's actually now we're looking at a place where "Okay, we are going to need maybe a small agency or maybe someone who can help us do these things and almost put it on autopilot if possible." 

And we can focus more on building our community and kind of going out there and educating people about what is Kimbala? 

Why is this chai different from other chais in the market, and those things are not outsourced. 

So I would definitely recommend things to come to a point where it's better off outsourcing it, even if it costs an extra couple of dollars, go and get the best quality rather than thinking, "Okay, I'm going to save my $2.50 here" And doing it yourself. And it's not it's only a 60% job, because that's not your check. So it's a fine balance.

Chase Clymer  

Yeah, I believe it might have been my grandpa. He'd always say "Buy once. You don't want to buy twice. Buy the right thing. The quality thing. Understand the value, buy it one time." Because if you buy something cheap...

Madhu Sharoff  

Yeah. 

Chase Clymer  

...you're gonna buy it again, if you buy something cheap, and you're gonna end up overspending, or it's gonna go back to that opportunity cost, you might have missed out on an opportunity for growth. And...

Madhu Sharoff  

Absolutely.

Chase Clymer  

...the way that you're doing things like rigorously owning the product and getting your cost down on the product is allowing you to have a beautiful margin that now you can invest that margin into working with these professional teams that are like essentially a cheat code to growth. 

They understand how it all works. You don't have to learn it all.... 

Madhu Sharoff  

Yeah.

Chase Clymer  

...and they can get you to that next level.

Madhu Sharoff  

Absolutely. And, you know, part of all of the doing homework and researching was listening to a ton of podcasts, especially from podcasts, interviews, YouTube, or what have you.

Everything, all the resources that are available out there, and learning from people who have created other beverages, and especially me focused on beverages. And that was the one thing that when the Masters that I took was --which I had further passed on-- is your own product. 

Once you get the quality out there, that's what's going to stick. That's what's going to speak for your brand. 

And when the product is good, you can dial back on the marketing on the dollar spent on ads and those kinds of things because people will genuinely come back. 

You're building a real community versus a one-time shopper. I always like to say that I'm in the business of repeat customers, not just a one-time deal.

Chase Clymer  

Yeah, I mean, you are in the business of repeat customer lifetime value. You've got a consumable, which is the hot stuff in Ecommerce right now. I cannot thank you enough for coming on the podcast today. 

This is a very, very amazing look into just the thought process behind starting a brand and just doing the work. Was there anything I forgot to ask you that you think will resonate, well, with our audience?

Madhu Sharoff  

I believe we covered a great deal of just starting off a brand and focusing more on the fundamentals of things that I think all the questions were great, and I enjoyed speaking with you as well.

Chase Clymer  

I enjoyed speaking with you as well. Thank you so much.

Madhu Sharoff  

Thanks, Chase.

Chase Clymer  

Hey everyone, a quick edit here. For delicious chai and coffee from India, make sure you visit Madhu's website ikimbala.com

I cannot thank our guests enough for coming on the show and sharing their journey and knowledge with us today. We've got a lot to think about and potentially add to our businesses. Links and more information will be available in the show notes as well. 

If anything in this podcast resonated with you and your business, feel free to reach out and learn more at electriceye.io/connect. Also, make sure you subscribe and leave an amazing review. Thank you!