Andrew Vrbas 8:32
as far as my mind went that time, like, I wanted to move to Peru and set up a sub company. That’s what I wanted to do. But I was a sophomore in college, and my mom said, You gotta finish school. So I’m like, okay, so I finished school. And while I was going to school, I’m like, Okay, well, I better learn how to make soap because I’ve never made so I better learn how to do that. And I don’t know anything about business. So I guess I need to learn about that. And so I spent the next two years just making soap in my apartment, and, you know, trout. And then, you know, Abby, I met my friend Abby, before I went to Peru. But then she, I, she was a designer. And so she helped me like design a soap label. And she made paper. So she made paper and wrapped, we wrapped myself in her paper and stamped it and we take it to farmers markets and things like that and tell our story, our aspiration of what this is what I see, this is the vision that I see like I want I want to create a company that would that would mean this in the world. And then it just it caught on. We started selling in like a local farmers market and then, you know, local health food stores and places like that. And that’s that’s how I grew kind of organically. But my initial initial idea was just set up a small scale soap shop in Peru and 2013 was the year where, you know, I’m in school, like graduate school. We have the opportunity to go to Africa. and actually set up through, you know, various connections or whatever set up this first working model of a soap shop in East Africa. And that was kind of the first, I remember is actually 2014, the first moment where I was like, Yeah, this is exactly what I envisioned this is this is a community that needs to create value, with their work and needs a way of earning money, a little bit of money, and using local ingredients with a product that’s needed. And I remember that group that that first made, soap and Burundi, Africa. And I remember that, when I watched them, make this up one day and and cut it the next day, the first Mark said that they cut. And this is a primitive, like dirt floor room. I remember a little kid came up, this is one of the poorest communities in the world. I mean, if you were to look at their income, a little kid came up with some money, and bought a bar, the first bar soap that they cut, and I thought that was such a cool, you know, it was neat, it was the pinnacle of what I had thought through in terms of yeah, this is the system this is I think this is really neat, because this is showing businesses a way of providing, you know, a means for integrity, like, hey, I can do something, I’m not just worthless, like I could potentially make something, sell something and create value in my own community versus just purely receiving something of aid. And there’s a need for charity, of course, but I remember when that happened. I hadn’t thought really beyond that. Like, to me, that was the pinnacle of yeah, this is the exact vision that I’ve that I’ve had. And meanwhile, we had our consumer goods business in the United States Pacha was actually like growing. And so I almost fell into consumer products. I wouldn’t say accidentally, because that’s being too laissez faire, but it was I had this vision. And then the consumer business took off. I’m like, oh, yeah, I’m a consumer goods founder. I, I better learn about that. Well, where
Steve Gaither 12:06
did that jump take place from farmers market to your first retail store? Right? What what happened? And were you producing literally out of a bathtub at that point? Or when did you start thinking about production and retail? Or did it just sort of happen?
Andrew Vrbas 12:21
I mean, it just organically happened. Like I was in my college apartment, went to a college garage, like a house I rented in the garage, renovated, renovated or for space in Hastings. So I think we just naturally progressed and a chili pot went to a bigger chili pot went to a bigger pot, you know, wouldn’t mold this big went to wouldn’t mold this big win to win. So we just kind of naturally organically grew. And honestly, I didn’t come from any money. So I needed a way to fund I needed a way to spread good in the world. And then, you know, it took me it took me a while to realize that impact is my phenolic impact isn’t just in countries that are economically poor. I mean, Hastings, Nebraska, where we’re based is an economically poor town, in the middle in the Midwest with that history. We’re, I’m sitting right now in an old bread factory that one of the world’s largest bakeries, bimbo bakery, basically abandoned Reno, we kind of came in and, and renovated and made active again. So yeah, like impact me used to be something to help. It’s easy to get in that mindset to help others. But I think impact is every single day. And it’s with our consumers. And it’s with, you know, our country here in our town here, also internationally. So I think it just happened very organically. And I think it really came down to as I think about it. I always appreciated good products like for myself. And so we always tried to focus on making the best quality product. And then it just caught on, people loved our product. And to this day, most people probably don’t know this origin story I just told you, they just love our product. And they used to bother me. But now it’s like, I’m glad we make good products that people like, that’s great.
Steve Gaither 14:08
Well, one thing too, when you when I came to Hastings for the first time, when we were sort of going through the shot, by the way, it was a it was an old wars right at that point. Yeah, yeah. Yeah. And one of the things that amazed me was when you told me you had bar soap and packaging, but then you had bulk soap and you basically pointed out the bulk soap was sort of the secret weapon. I mean, if you’re on the shelf, you might get a couple of turns per week per store. But something happened when you were doing this bulk display. Right. Can you talk to me about that and the relationship with whole foods?
Andrew Vrbas 14:46
Yeah, I remember so I actually was on on my way to Omaha to drop off a friend that came in visited me from Peru, and I stopped in a Whole Foods and I dropped off a paper bag of soap at a hole Foods in Omaha that was just my contact information and said, Hey, I’d like to like to sell here. And I’d love to tell you our story. And we got some. So they took a while. But we got the Omaha Whole Foods said, Yeah, let’s bring you in. So it’s really exciting. And we got to be on the shelf at that one store and it didn’t do well at all, you know, it just as you said, it’s in a sea of all the other products and so wasn’t a wasn’t a good wasn’t a good thing didn’t didn’t turn out very well. And so I went back up one day, and I got talking with him. And I walked by this big table. So what could we put our stuff on that? And I said, Well, that’s really premium real estate, like, I don’t think you could get that. And I said, well, that that’d be a perfect place to build, build a program builder experience, you know, and so I just stayed relentless on getting just wanted to say, well, just give me one swipe, please. And I begged and pleaded and so we got one store and and worked really closely with with a team leader to get that one store. And we outperformed what they had there by a huge margin when we finally got that one store. And that was really the breakout of understanding real estate in retail as being the most important thing and messaging and experience. And so then that’s how we started to build our strategy from from the failure of not having it essentially.
Steve Gaither 16:27
So you were outperforming let’s say stuff in a clamshell or or something else at that point. And you said, hey, I can give you it came down to a higher velocity or sales per square foot, right?
Andrew Vrbas 16:39
Yeah, yep, just came down to this could be a better, a better opportunity to sell more.
Steve Gaither 16:45
So that seemed like a game changer. How hard was that for you then to take that concept from one store across the board or with whole foods at the time when it was more obviously regional and local based it were just spread amongst the foragers or buyers.
Andrew Vrbas 17:00
I mean, it was hard. But I had a great a great group of people that were supporting and believed in why we were doing what we’re doing, not just what we’re doing. And I think that really helped to just believe in the overall purpose and vision and mission of the business. And also, it wasn’t a hard sell, because the numbers supported, you know, the numbers, support and everything. And that’s probably my first lesson in you know, we, we’ve never taken a stance or believed in, hey, we’re an athlete, we’re an ethical business, we want to do good in the world, you should support us. That’s never been my MO or thought going into relationship. It’s, hey, this is we’re this is what we believe in that we’re going to do this, we need to support you as a business. And we want to make sure that we’re providing products that people love that are good for them good for your market, etc. So I think I mean, of course, it’s challenging, but I think if you have a model that works, it’s easier to then spread it. And because it’s it just makes sense.
Steve Gaither 18:07
And you had a unique partnership with Whole Foods sort of at the beginning. One, I think one of the original founders sort of investment from the Rand, and you to some extent almost became a store and store concept for them as they grew. I was that both a problem? And then later on in stage, how did that become a little bit of a hindrance?
Andrew Vrbas 18:32
Yeah, you know, it’s a great, it’s always been a great relationship with them. I think just lining in their culture of, they’re a company founded on healthy food for people that’s good for the planet, good for the people. And I think I’ve always had this idea that things were their products are more oriented towards people are wanting to do good in the world. So it’s like a natural fit for us. So it really clicked and made sense. And about that time that we started there founder John Mackey wrote a book called Conscious Capitalism that was really influential on me too, which I, I loved and believed, you know, agreed with a lot that was in there. So I think the fact that that plus the fact that Whole Foods is always great at Merchandising, and focused on merchandising, was a huge it’s continues to be a huge partnership that we that’s what we’re about to is effective, beautiful merchandising that gets people to stop and focus on something and be present in that shopping experience. So I’d say overall, it’s been it’s been a really positive relationship, working with them and bringing newness bringing innovation and bringing impact, you know, focusing on what is the highest environmental and social impact that we can strive for. And that’s, that’s the continual process, you know, and that’s, that’s never ending, but, but fun when you can be in that really should show.
Steve Gaither 20:00
And well, that seems like an awesome launchpad for growth. I mean, because he got through global, you are part of a tribe, you really became a part of the family. Was there any negatives either internally having that sort of as a a stop gap with your team? With other retailers, right, and moving beyond Whole Foods into into other retail partners? Was that an issue or something? How hard was that, for you to overcome? Or the customers or other retailers to overcome?
Andrew Vrbas 20:37
I think it was more of a function of us growing so much at whole foods that we could only afford so much growth, you know, there’s not you, you can’t grow overnight, especially we self manufacture. So we, you know, it’s a little bit of a slower build. And I wouldn’t say it was a barrier to getting into the retail. In fact, I think it opened up a lot of other retail, because Whole Foods gave us the opportunity to show what our brand was about how it could look, you know, innovation in terms of product. So it opened up a lot, but it was more of a function of how much prints can be can we afford every single year?
Steve Gaither 21:17
Well, I mean, that’s a pragmatic line of thinking, too, that a lot of companies see distribution as king. Now think about velocity. Are you gonna, you’ve been pretty much with even a positive mindset from day one. How is that, in hindsight, looking back and looking at especially the capital crunch with folks right now, between that working capital gap debt being so expensive and investors sitting on their wallets right now? What advantage is that for for a brand coming out on thinking about even a positivity they won’t?
Andrew Vrbas 21:54
Yeah, I mean, yeah, that’s, and we’ve had our hiccups. I mean, I’ve made so many mistakes. I, I’ve made so many mistakes, and it just is, you know, comes with the territory, but tried to orient it that way. And yeah, I guess not all growth is good growth, I’ve learned and we’ve made a lot of mistakes because of that. But I mean, I think there’s, it could make sense to not be even a positive early on in the business, if you feel like you’re investing in competitive advantages that overall will bring you something really strong in the future. So you’re just placing bets on the fact that you’re investing into a capability that will pay off eventually. But I think, you know, at least is the way I think about it. And this could contribute to EBIT, done, but focusing on product margin, and product velocity is probably the number one thing to focus on. Because, like, if those two things are right, then you have a you have something working you have a consumer that’s paying for the value that you’re bringing. Now, is that easily, easily replicatable? Maybe I mean, that takes further analysis. But those two things, product margin and product velocity, give you something that’s credibly defensible and scalable theoretically, and then, you know, even to can come in to say maybe you could do it more efficiently, you know, in terms of your SGMA or, or what have you. But there’s been times that we’ve built our team beyond where we are today in order such that we can scale to tomorrow and made those investments. Some of them that paid off. Some of them haven’t. But yeah, I think I’d say if if product margin contribution margin isn’t right. And velocities aren’t right, like that’s, you have to backup there. You can’t advance on that.
Steve Gaither 23:48
Well, and sort of talking about this, I love the idea of two wrongs don’t make a right. But sometimes three less do you make enough mistakes, you find the right path? There was I always consider you one of the going back to the Jim Collins approach. What are the humble CEOs, right? Are the humble founders, right? Get the right people on the bus and figure out where to drive it. Along the way, there’s always a line of thinking where companies when they get to a certain level of growth, they think they need that big company thinking to come into the next level and it’s always the quandary between do you bring somebody that understands nuclear warfare to fight or guerrilla warfare game or can you talk to me about your experience at that?
Andrew Vrbas 24:33
Yeah. Yeah, I think it could send with everybody where you know
naturally think I have gaps. I don’t know everything as you as you learn more you realize you don’t know enough and so naturally fits that you you look for expertise outside of yourself, which is a good thing. And you know, the opposite. We tend to flip you know, and turn is our thinking it’s a it’s a fallacy and the way we think it’s like, okay, well, I didn’t come to any experience, I obviously need to find somebody who does have experience and bring them in. And, you know, I’m not that can work, everybody’s journey is different for my, my journey, like finding someone who has a lot of experience in an industry, for instance, can it can work, and sometimes it hasn’t worked. For me, it’s done both it’s been a mixed bag in terms of, you know, there is a way of doing things. And if you’re going to be successful, you kind of need to be flexible and nimble in order to find in order to find improvement. And so for me, you know, I’ve gone down that path of bringing in somebody that I thought was going to save everything, and it was pretty catastrophic. And wasn’t wasn’t great. So. And then I’ve also found people that have had good experience beyond what I would ever know. And, and that’s been really positive. So it’s a mixed bag. And I think it really depends on, you know, again, that the founders personality, and it’s being humble enough to know that you don’t know things. And it’s also being humble enough to know that you do know things like, you know, because saying, Oh, I don’t know, I don’t know anything. Well, that’s that’s also pride. I mean, that’s not real, like you obviously know, some things inside. That’s how you got here. And I think there’s a healthy level of confidence that founders need to have, you know, what, what do you know, what are the what are the core foundational things that you know that someone can’t come in disrupt that knowledge, because it’s true, right, like velocity and margin, like, those are really hard to argue with. Or, in our case, manufacturing principles, like, you know, there’s those things are pretty binary. And so knowing what you know, knowing and more importantly, knowing what you don’t know, helps you better determine who, who it is, I think, at least what I think is that, you know, early businesses shouldn’t look for that high level, big company CEO person initially like, you should probably find something a little bit more simple to help you because you’re in better diagnose the problems, because sometimes the problems are so much, you just want to hand them to somebody and say, Go fix them. But those are rare people that have been through all those issues, and can actually go through and fix those issues. And those are rare, there aren’t many. And most of them come from the fact that they’ve built stuff and made mistakes, those are probably the only people equipped to come in and clean everything up and get oriented. And there aren’t many of those. There’s a lot of people that have been in big companies and managed things. That’s not the same thing as building. There’s just very different skill set.
Steve Gaither 27:30
Yeah, and I think once again, third party looking in seeing some of the ways you got through some troubles, it seemed like that big company thinking of trade spat allocation to buy my way to shelf, and to really push things through versus I think once again, third party looking in one of the things that made you successful was your investment in Merchandising, and your support with your team there? What are your thoughts sort of on that, because a lot of these founders are stuck with this, I have to come in with slotting and free refills. And obviously that’s changing a little bit now like with with Kroger, you can you can invest in kroger.com Instead of slotting or free refills, I think I think Kroger is waiving slotting if you put 5% spend, so at least you’re getting some sales or commitment to it versus giving away product or paying for air. What’s been your experience with trade spend? And on the other end of it the investment merchandising, especially for a blog play like yours?
Andrew Vrbas 28:35
Yeah. Oh, yeah, I mean, our experiences to try to be strategically value add, add enough value to your retailers that you can find other ways to spend money that makes you and them a better business. And that’s not always easy to do. And there’s times that slotting is necessary. And I think when you do that, you just have to say, is this something that I’m gonna be in for the long term and grow, grow in? Well, so I think for us, it’s been Yeah, trying to try to not just start dollars away. I think that’s a good example with Kroger, like, you know, if you can spend to actually grow your brand. And then yeah, merchandising is huge, I think because I think just competition is hard, you know, and if we look at nature, nature does this really well, that species that really want to compete for our attention or for animals attention, they do something different, like, you can learn about marketing if you walk through the rain forest, because the a tree might, you know, develop a really, really be interested in beautiful fragrant flower at a certain time, because they want to attract some insect or some animal or, or what have you to to notice it. And that will help it propagate itself. And so I think it’s the same thing within CPG. Like if you’re gonna just compete against everything and or worse if you’re just gonna be on price Like, that’s a, that’s a, that’s a tough place unless you have some competitive price advantage that which is rare for startup companies because you don’t have scale. So I think merchandising is huge. And I think more than that, it’s it’s about people being interested in what you do and what you make. And if people are interested in that, then you create, you create a lot of evangelists, you’re not just the only one. evangelizing you’re creating something that inherently has value. And you look at it like, Wow, that’s pretty sweet.
Steve Gaither 30:28
That’s cool. Oh, well, and you started off sort of as a bulk. So play, right? And then your TDP sort of expanded into bath bombs, etc. What is Pacha? In two years? What is the mix that store store concept is what what is posh become in two years? Is it more than soap? Is it beyond soap? How wide does that does that TDP gamet go?
Andrew Vrbas 30:53
Well, we don’t think that we know for us is that people love our scents. And we do sense differently than anyone else. Very heavily invested in, in natural, safe, rare scents that, that are hard to find that actually contribute to overall sustainability of the species. So it’s something that we’re known for, and we’re good at. And so where does scent stop, start and stop, I mean, lots of categories that scent could play in. But I think the thing that we’re the best at is this, you know, soap, personal care, bath space, that typically solid format minim, minimal packaging as little packaging as possible. And then really trying to build overall product experience that you’re delighted when you find our products in a store. And that it’s something that is never outside of somebody’s budget, we always want to be an affordable product, affordable luxury for someone. That and then and then to be available to be found where people can can support and buy it. But we see, you know, going back to Senate and going back to you know why we like soap, why we like things like candles is. And this goes back to our story site, you know, initially had this idea for local sub shops and clean water projects in countries like well drilling. Supply chain was always a part of that. And in East Africa, we helped to piece together a supply chain that would be made locally. And you know, it was a couple of years. And I just think in well, we always used good ingredients. But I was like, Well, what if we got closer to our supply chain? What if we knew our farmers. And so over the past Biet, four or five years, we’ve been building supply chains from scratch with people leveraging USA ID dollars and things like that, and piecing together the supply chain of base oils, vegetable oils that are sustainable, organic, wild, harvested, transparent. And then of essential oils, things like frankincense or Rosewood Palo Santo, these things that are endangered, some of them, some of them are even illegal to export from certain countries, because they’ve been, you know, wrecked in terms of the population. But we look at that as a really cool opportunity to build some of these supply chains back and to incorporate them in every single product that we sell. So that impact is inherently built in every single time you buy a product. And it’s I guess so that’s a long winded way of saying that, we look at supply chain a lot as a way of driving, impact and driving what we can do as a company and as a brand. And as the overall holding company, you know, because there’s a lot of disparate brands that don’t haven’t built their supply chains and don’t understand supply chains are just a brand, you know, they’ve had this idea and their story. And we think true impact comes at least this mid my experience from supply chain, that’s where most of the money is spent. That’s where most of the logistics come from. Most people are involved. So as we think about the future, you know, it’s come to us that we could have a huge impact as a, as a holding company. That’s building brands around supply chains that have high impact, that the brands might approach different categories and might approach different consumer types. But all add value in, in, in those categories that they’re in, and they compete well. But there’s an underlying impact that people are looking for. Because I think at the end of the day, people want to they want a good impact. They want to be doing good and in the world. And I think that’s a and I think doing good in the world and having a good product or not at odds and it’s it’s interesting I think about like Procter and Gamble is highly focused on innovation product innovation, product experience. They’re just so good at it. There’s so they’re so good at that. They solve real problems for consumer And then on the opposite end of the spectrum we have well, not opposite, but you have a unilevel that’s focused on. You know, at one point, they came out and said, every one of our brands needs to have an impact and a mission. And then I read this one article is like this Hellman’s mayonnaise really need a mission. I mean, that seems inauthentic. But you know, it’s interesting. How do you bridge those two things? Because at the end of the day, people are going to want the product that works for them, because we orient ourselves to ourselves and our families, you know, but I think wouldn’t be nice to not have to have people choose like, Wouldn’t it be nice if you can consider environmental sustainability and social responsibility? And what does that mean? I mean, that’s a big thing in and of itself. And also an amazing product experience, it’d be nice to be able to not not have those things at odds. And that’s a that’s a big thing. Like that’s a that’s, that’s a lifelong quest.
Steve Gaither 35:57
Well, I mean, proof is in the pudding. To me, when you talk about brandy and hearing your story of, for example, when you’re going in figuring out supply chain, you realize that that water was an issue, rather than pulling the Tom shoes approach of, hey, let’s go sit and in people with electronic diggers or whatever you call them for Wells, you created a different solution that really was conscious capitalism. Tell me how that came about.
Andrew Vrbas 36:25
Yeah, I mean, the fact that people don’t have access to clean water is a big deal. You know, and when you see it, you’re like, well, you’re drinking that the same water, that somebody’s washing their, their child’s diapers down downstream, and no one, you know, that’s serious. And when you see that, you can’t help but want a different solution for people. And ultimately, like, if, if people had a way of participating in a global economy, or even a local economy, is adding more value and exchange, like, that’s the way poverty is less than, you know, in truthfulness, we have fewer poor people today than we’ve ever had, like there are people with the people that have no access to clean water is shrinking. I mean, it’s still there, still huge part of population, but it’s, it’s shrinking. And that’s great. But people just need an opportunity to add value. And that’s, that’s what’s cool about the capitalist system, is that it gives people an opportunity to add value and to reap the rewards of the value that you’re that you’re at, you’re creating. And that’s, that’s it, the system’s working really well. And it’s just a system, it’s not like there is a virtuous system, it’s just, it’s a system. So it’s the players in it, that we that need to seek the virtue in the system, you know, but um, we, when we look at our supply chain, like we’re working on a project right now in Liberia, and it’s, it’s a waste product that we’re, we’re mobilizing. And trying to help get kick started, which is really cool that that will be an all of our, all of our soap. And it’s gonna provide a little bit of free cash flow for a lot of people. And a little bit of free cash flow for a lot of people is, is neat. Overall, like, Hey, I could go from a mat to a mattress, I could go from maybe a grassroots to a metal roof, I could go from, you know, dirt walls to maybe like, concrete finish on my walls. So my florist a little bit cleaner, like, those incremental improvements are, are pretty cool. And we see him every single day, except we’re so comfortable. You know, like, if you ever gone camping for a couple of weeks, and you haven’t had access to a bathroom, and then oh, wow, this is what about this very cool, you know, you start to see those those improvements, and they can help extend life, you know, they could help, they can help in a lot of ways. I just I think that that human progress is pretty cool. Because there’s there’s a lot of tragedy that’s unavoidable. You know, there’s a lot of hard things that are avoidable.
Steve Gaither 38:59
Well, it is almost hyperbole the the Think global act local, but I mean, you’re actually doing it right, you you’re engaging with supply chain. Really, anywhere you’re reaching out to making sure you have an impact. At the same time. Hastings is in a lot different spot and Pacha is actually a meaningful part of the economy of Hastings. So I think it’s brilliant. What, whether it’s in hindsight 2020, or the initial mission of let’s make some soap
Andrew Vrbas 39:33
wasn’t Yeah, it wasn’t, it wasn’t my I wish I was that smart to have planned my path. But it I mean, I’ve made so many mistakes along the way, but like I have met so many people that have helped, because really, I just cast the vision and there’s been people to come along and actually add structure in order and add to the vision of like, what what if we did this and what if we did that? And I think the times where it’s not thrived or times when I’ve gotten You’re tired and then thought, Oh, I can’t do this anymore. Those, those are the moments that you know, I still have to be the one that’s that’s helping us think about growth. But uh, you know, I’m a huge believer in faith like faith has been a huge part of my journey because if you don’t have faith and that you’re on a path for a good reason, and that it’s going to contribute to something positive overall for for the world then that’s a really hard you know, the My worst times are when I don’t have that faith. And my best times are when I do
Steve Gaither 40:35
they always say the opposite of fear is faith. You know, so, um, All right, last thing. Tell me about Nebraska Sauna Club.
Andrew Vrbas 40:45
Nebraska Sauna Society is pretty small. Yeah, it’s a pretty small group of people. We get together, I built a sauna on my horse trailer, and we get together every week, and we sauna. And it was really meant, you know, I’m a fin, which I just read that Finland, I think is the number one happiest country in the world. And the top things that Finns like to do are read drink coffee and sauna, which I’m like, Whoa, that I guess I need to go to Finland, but I’m kind of bringing Finland to Nebraska. But yeah, we love how we can get a sauna. It’s really good conversation and Assadi hard to be. It’s easy to be real. In a sauna. It’s hard to be false in a sauna. So you have some deep, good conversations in a sauna. I think the Finns actually they have business meetings in sauna because it’s a good council meeting. You know, it’s the truth comes out. So yeah, I love it. I love sauna forever in Nebraska you can join by yourself.
Steve Gaither 41:44
I will look forward to well thank you as always for the time. Obviously Pacha look for it. You can are actually smell for it. And you will find it at multiple retailers throughout the country and enter a great founder with a great team with a great company doing some good with some good product. Thank you for your time, my friend.
Andrew Vrbas 42:09
Yeah, thanks, Steve. Thanks for having me.
Steve Gaither 42:10
All right, take care.
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