The $500,000,000 meat stick company 🐄

Listen to our full conversation: Spotify – iTunes

You’re crushing it as a commercial real estate broker. Your biggest deal was for $62M!!

But then the housing market bottoms out and you’re forced to file for bankruptcy.

What then? How do you respond?

This was the dilemma Peter Maldonado (interestingly he has almost no social media) faced in March 2009.

15 years later, he’s the co-founder and CEO of Chomps, a meat stick company on pace to do $500M in revenue this year (!!)

I’d make a meat joke… but I’d probably butcher it 😂

Last week, I sat down with Peter to learn from his story.

My top 9 takeaways:

1- Focus on ONE thing

Before declaring bankruptcy, Peter was involved in many things.

He bought and flipped houses. He sold real estate. He also started a food company called Frozen Fitness. “Stretched thin” is an understatement.

After he lost it all, he spoke with a mentor who told him the best way to create real wealth was to pick ONE thing and focus on being the best at it.

After interviewing many billionaires, I’ve found that to be true:

Larry Janesky → Basements

John Paul DeJoria → Haircare

Michael Hudner → Shipping Containers

Diversification is for wealth preservation and protection, not wealth creation.

2- Make what you wish existed

In 2011, Peter met his future business partner Rashid Ali.

Peter told him about his favorite snack as a kid (meat sticks), and his desire to make a healthier version that was high in protein, low in calories, and tasted just as good.

Rashid, who was working as a business operations consultant at the time, loved the idea. Just a few weeks later, they started Chomps as a side hustle.

When in doubt, solve your own problems. If you are willing to pay for a solution, it’s likely others are too.

3- Reverse engineer greatness

While Peter and Rashid both had a background in business, they faced one big problem:

They didn’t know anything about the meat industry.

So what did they do?

They went to the store and bought all the meat sticks they could find. Then they looked at the USDA label, found the co-packer, and reached out to them (GENIUS!!)

They did the same thing when they were designing their branding. They dissected what their competitors were doing, took the best, put it together, and refined from there.

4- It doesn’t need to be perfect

When I asked Peter what advice he’d give to beginning entrepreneurs, he said, “You don’t have to have things perfect before you bring them to market. Get it out as fast as possible, get feedback, and iterate from there.”

When he started his first food company Frozen Fitness, he spent so much time on the website that he didn’t sell anything through it before shutting the company down.

Think NOW, not HOW!!

5- Don’t recklessly go “all in”

In Chomps’ first year, they made $35,000 in sales. The following year, they made $100k+.

But it was STILL just a side hustle.

It wasn’t until they made $400k and consistently brought in profits that they went full-time.

This is something I’ve written about before…

It’s sexy to say you “burned the boats” and went all in.

But it’s much simpler (and realistic) to build a side hustle alongside your day job, hit your freedom number, and then jump ship if you want.

6- Customer vs. User

“There’s a difference between who’s buying your product and who’s using your product,” Peter said.

Users are the people who USE your product. Customers are the people who BUY your product.

For example, kids are the ones eating Chomps, but it’s their parents that are the ones who are buying it.

“Make sure your messaging and branding are speaking to your core CUSTOMERS.”

7- Innovation through simplification

“Our biggest innovation recently wasn’t adding a new flavor,” Peter said. “It was putting 8 single sticks into a bag. Now instead of grabbing a handful (2-3) sticks, they’re buying a bag of 8.”

Chomps is intentional about keeping a limited product line. More flavor choices also mean more buyer indecision.

I LOVE this! In my own life, I’m selling most of my real estate, reducing the amount of projects I take on, and saying “no” a lot more. Do less, but better.

8- Key numbers

Everyone and their grandma will tell you to be “data-driven”.

But it IS super important. “ Data informs every other decision we make,” Peter said. “It tells us who’s buying our product, how often they’re buying, the intervals between each time they buy, what other brands are in their shopping cart, and which flavor they like best.”

Some key metrics they track:

Household Penetration – how many homes have our product? (10% of 160M homes)

Buy Rate – how much money people are spending on Chomps every year? (Chomps average cart order is ~$35)

Repeat Purchases – how many people buy again? (40% of Chomp’s customers return again)

From there, you can calculate your predicted revenue:

Ex: 16M x $35 = ~$560M

9- Partner strategically

In 2015, Chomps was doing $400k/year through e-commerce.

Then the daughter of a VP at Trader Joe’s tried it and loved it.

After closing Trader Joe’s by sending their product for free (“free-fills”) – they did $4.3M in revenue (!!)

Even when COVID happened, and many retail stores limited the number of customers in their stores – Chomps wasn’t fazed. It forced them to get creative about how to get new customers.

When the pandemic ended, Chomps was stronger than ever. They closed Whole Foods, Costco, and eventually Walmart.

This year, they’re on pace to pass $400M.

Even though Chomps is on a rocketship, Peter knew he’d need to bring in strategic partners to take it to the next level.

“We wanted to bring in a partner that we could learn from,” Peter said. “Anybody can cut a check, the real value they bring is the expertise and the things they’re teaching us.”

All the other PE firms they talked to only talked about their successes. What Peter loved about the PE firm they chose (Stride) is they also talked about their failures and mistakes.

“Anyone can be a good partner when it’s all rosy. We want a partner with scar tissue, who’s been there and is willing to roll their sleeves up when it’s not all good,” Peter said.

 

Rooting for you,

Noah 🌮

 

Ps. I love CHOMPS and am going to buy 3 people a year’s worth ($200 each) – Go follow Chomps on IG.