Co-founder of RxBar on 'Real Biz with Rebecca Jarvis'

ABC News' Rebecca Jarvis interviews Peter Rahal to discuss the success of RxBar.
28:04 | 12/08/17

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Transcript for Co-founder of RxBar on 'Real Biz with Rebecca Jarvis'
Hey everyone I'm Rebecca Jarvis welcome to real as an ABC's chief business technology and economics correspondent coming she'll live from my office on this Friday with a very special guest. Peter ray hall he's the co-founder and CEO our expire you guys know the RX bar of course by this packaging business the brand new limited edition gingerbread optioned him. Peter as the co-founder recently sold the business to Kellogg's for 600 million dollars crude. At your 31 year results cracked OK so this business started what four years ago at this point you have. Your parents' kitchen hill for half years ago in my parents'. Kitchen in. We launched an out of their basement. Syria as part of the year ago April march 2013. This is a dream come true open I mean this is like night dreaming if you are under her nor that you figure out something that people are talking about that a company like catalogs. Would be interested in. For 600 million dollars. By the way guys you can put questions in the comment section Taylor Dunn is monitoring it will start asking Peter your questions but I just didn't you. How this business came to be you and your co-founder you read an article. That's what prompted everything. Yes. Background like we always loved to like bars they save time there nutritious sort. Functionally real of them rate a good part of our lives and these types of are totally. Meant just kind of were seeking a better product. And in yet at what kind of stimulated dike. Stimulating as some it was an article it start approaching our star bar company for 101000 dollars. You know doing told you how to start approaching our company for 101000 dollars is no this is more like. It was easy to do it essentially like you didn't take much Capital University we're 25 win him any resources so. You know viewers had his economy and on from real bug and everything needed it and investment in Russia needs a bar anything needs a lot of money in so. It was like a white ball replica way we can. To a bar. First thing you've ever grocery shopping after this like Hugo Mercury shot totally we were to look at the market rate hikes what's out there YA. What growers are GAAP where's there a hole in the kind of you know brick by brick shirt piecing things together. And you're you are. And are still went across Bette whose that was part of it to you are thinking about that whole community and what kind of food they might want and what kind of product they would want. Yet within cross that we saw I'd distribution. Channel McGregor distribution strategy right Mike our distribution. Strategy. Like has the finer entire business. The brand name. Our cap table at the tie game. Our path to market obviously. Our DNA so much of that they're lot of patterns between like the type of people who do cross that in the type of people carper and a little that's like a human. So you go to Hershey story you see what the competition is. And then what you come home with a bunch of ingredients and start throwing them together in your parents' kitchen. Yeah quite literally and the whole foods and we known Noah everywhere into like. And start your. In Chicago and when you area earlier McClellan went out clothes using GAAP. Glen Allen as a Chicago and I have to get that's right senator Glenn Allen Chicago suburb. New see you come home your parents' kitchen with a bunch of ingredients you start putting them together and what was the first thing that you came up with pounded it taste. It's actually pretty decent from the Gekko you know he had over there some officially set certain language Billick. You've been cutting move that direction and wasn't bad your efforts like all men's cash used states. Can nags like get a taste bad. So you turn together and it wasn't you know from the get go we didn't really have Blake. Really offensive. Earlier earlier renderings essentially started you feel right off the bat he might be on to something yes really. Yes because there frost there is a bigger hole like an out there wasn't a natural protein bar. From there wasn't a minimal ingredient for a team bars there was a ones with using egg whites which is a guy I really valuable protein source so. You know we can best questions why aren't they there aren't there we later learn what they're more expense. Co manufacturers won't put them in there on their line does that its new allergy and so returners discovering this stuff and those were rule -- schools. But we just you know just stuck stuck. Stoker Corson just did it. How long between that first grocery check grocery trip and playing around in your parents' kitchen. And then actually going up and selling the product to people. Hear your question August select first Kirsch is reflection August 2012. And then. From there to Mike first revenue collected was that same march end of march 2013. So that's why L I mean that's not an overnight thing. And and you had a job for some of this time also you were still keeping that job you hats in this was you were doing the nights and weekends that you like so many entrepreneurs. Totally to Jerry and I both for head jobs and listening as it on the weekends reading my go out and have fun and we Ehrlich. In my parents' basement like you know I'm PowerPoint figure in and like with their hands pressing bars. Design packaging and all that. Do you think everybody who ate those first bars it a little piece of you because you hate it here yes I hope you're wearing gloves no we were not. May. If there's footage regular. OK so you start selling it you're going door to door and when your sales that's how you really got out there at the beginning told we're taking it to cross it jams and selling it door to door. What was the most difficult thing about getting people in the first place to try the bar. I guess that. Most of the things is getting it to them rate a good distribution pacers who you actually have to like physically get them they're probably look LP it's a that was the most challenging thing in much scaling that. Tourists they like our first distributor is like fat acts you know me like it right this guy's got it people we shipped we would say hey just trying to put on your shelf. And we knew we are confident that the people would eat it. And like it our customers and so we know and today that this tactics of Reese Tuesday as his trial like keeping the bars out and we are confident in that's so that's really was the biggest barriers is getting it physically to people. And how many flavors did you want to get so into singer's three whose coconuts. Blueberry and then like a chocolate Kirk how version and then. Here we manufacturer sells for the first year and a half two years. And then right away reeked like the first week we caught. The chocolate one just from a blue period in coconut as people were not choosing. Didn't taste as good as we wanted and then production capacity. Patriotic you recognize that two flavors was enough for you guys to handle a total. I'm here. OK so you go from Europe to flavors that you are creating Q finding an outside vendor that can help you produce that stuff in how did you find that because I think there's a lot of people as they're thinking about scaling what ever is state they've created at their home. They're trying to find the right pardon and that's a really big choice. Yeah and now is honestly they're like the commercialization aren't going from our kitchen and two of our bigger kitchen and then like. Economic professionally getting it made. That was issues transition and it really took from. You know. Whole year like searching the for the right partner. You know you're to allergies here. Yeah a year and if the call it's a mixed use you trial yet to make sure that allergens working to make sure like. They're good people here I mean did you go through 33. Means that you tested it out basically you say here's what the product would be kicking sent me what you would create yeah a little bit not someone we we go there have a meeting you know a lot of it. The leadership of those companies is really important and and treated and that it does exist nudges of the transaction yeah getting in bed with somebody. It's a that's it's important to him. Evaluate to leadership there. Through that took a year and here's the thing how youth discover this stuff is. It's through the supply chain so it's through the people that ships and stuff and right so it's your. Packaging suppliers raw material suppliers. They know the entire network because these guys don't have what sites and Tina Nina and I like yeah marketing themselves are right under the under the underground essentially yet there. Consumer facing companies need to be working with companies like you. OK so want to show people these were some of the early packages with that split the first package via a pizza this is what it looks like early on this was the copycat cap so we did copycat cow does in the one that got cut known there's one before that graphic got a attic caught we're can count OK so you start out by the way RX by the name why the name are expire. Yes sort of mentioned earlier card distribution charities to find her business so like. We you. World bought a car mean distribution channels to cross that select our DNA was through tractor through that kind of that marketplace. And if you know crossed but when you when you do work out its relief. How are again like to do it as prescribed is it real achievement so economy and in the name in. Culture crossed that the languages are acts like doing an RX is a real. Problem. Precision you did its high standards it totally and and it's also shorthand for health and so. You know for us reason we made a lot of sense to kind of build a brand around that mindset. OK so this is that this is the original business under the original this is like packaging 2.0 two port area yes this is this to commercializing. So this is design on PowerPoint. We did you design that your Knight and we designed it I'm PowerPoint we make an excuse straight. And by the way I'm not an obviously we're not designers. Yeah. Oh. And this is like I actually don't like think it works it did the job bring you have your messaging I mean this is thing you essentially. Went with very similar this is the bar now mrs. what the packaging looks like now this is your limited edition. Gingerbread sleeper so you kind of had the idea of the packaging witches on this as well. Which is basically pointing out what is in the bar and what is not in the bar annually it very simple for people because so much of the time. You know a lot of bars and other foods there packaged. We need to flip that thing over you realize we call it like on the front it says it's good for me but that what about what happens on the back. It's M Herbert of right content like Steve the way we talked about the product concede here's that interesting so ray yeah we built the business in the field and and really. Talking to customers. And so is quickly like here's our treatment what is it home and Coca became McCain thinking through equates to date six elements for caches. Until exact pitch became like we're really resonated of their customers and select that's how to market researchers like in the field talking humans. Which genius yet so did you mark the editorial questions gimmick rather than you know one bought the product because that. This this beautiful coffee. I caught part way and no applauded because of the brand name ultimately they bought it because of the type of product right and so. That descriptions but we really about Griffin you know the bar market's competitive so many people in it and we had to be different we had a ticker risk. And we had to do with design. And so we have we of this some big risk. Going from justice who is from some people mistake. I drilled out into that let's take questions from the audience Taylor that's so. Many guys. That's a great question so much my co-founder and how we found each other it's a jeered and I. Childhood friends we met each other in first grade. And and you know who you get in bed with third from a partner this is everything and I learned a valuable lesson book and another business that like. He needs some compliments you you need someone who's an opposite yet it totally like. You know I'm an organized time. You know I can barely read like I'm not pragmatically felt like a wonderful partner yeah Cindy just brings all of the good idea of the cable can pay the bill I. I I couldn't manage it spreadsheet or anything like that you know and so he's had more to finance accounting background I'm more of create a commercial front and part. And you know I we say like we're totally different birds. Rate hike and you know we're building a house we were fighting over the color of the walls further shudders union those kind of details Regis move really fast and we had a copper magnate complementary skills and it's safe to say if we didn't have that relation we wouldn't. We wouldn't be here today and her percent and so we saw images in like you work with your friends because you have reported trust like you can't Qatar to higher co-founder yeah. Ehrlich Mino hey you when it hits it's really nice to have that history and and that relationship so. What did you guys have in place when you launched it I mean where there are legal documents saying. This is what each of us phones that this is how this whole thing is going to work yes who. We used legal zoom which is like pull our lawyer curlers like this is probably going to dig is delivered could started on the Eagles and and it is assists and simple operating agreement gray like we were partners in that truly means partners and. But I think that's good advice for people out there who are thinking about. Getting into business or they are in business with a friend. You know it is important to have a legal agreement in place right here but for a lot of people thinking about going out and finding a lawyer first of all who can you trust that's a big obstacle here and second of all the costs so patents for you I mean how much are we talking about nearly causing what known that it costs may not think. And you got to be careful though so as soon as you can afford get a real lower because there's some things. You gotta I wouldn't have in us but you can get in trouble and if it's on paper is that a contract depths like on a contract got. So so got to get the real lawyer students I would every mistake we did I would suggest that. More questions. The hearts are asking us. So the question is what's the hardest part about getting ministers to the hardest part of distribution. In the beginning so. Depends on the category great selling far in the in the bar business shall watts very and so differentiating yourself is everything in hand and and it's kind of a good things are spurs that it's a chicken before the act great so is it to distributors that. Is that decision maker will kind but it's really the retailer that Altman customers a decision maker select. Navigating enough critical mass to deal with it accepted MB Poulter is important. Like one story is not going to be able point answered like more traditional. Distribution and food at least. How did you handle it did you go out and build relationships with. Local grocery stores in Chicago or did you build the relationship with the distributor and say get me in this her. It's category specific which is important emphasized that for us there is doing and it to trade shows circuits greats like. Natural food east west fancy food here in Chicago Pittsburgh west. Really like being put up participant in the community and industry. We tried we are being her head against the wall against teachers like that didn't really work because you know like whole foods needs to decide. To take you and not their distributor raid like it's their show they care about you Jack not the district she can't like force it through reap we. Tried we chart everything right like. You have to be relentless. I'm sorts are we did and eventually like way. Through retailer needs to decide like dirt decision maker and so. And being in those trade shows us what the retailer interest yet wolf it whole. It helps though it helped get awareness and that's Byrd both distributors and retailers are. But like our story was you know we were born across its space so. We had all these distribution points that were very big independent one off that we had relationships through it. And funny thing is like lot of buyers select your buyers are humans and they lack of interest will they were working out. Great so virus like working out of the gym and aunts you know the category bars sees a product that he's never seen before in the engine. In so Reid got awareness. And hole through those unique distribution points the strategic which should put itself. Every story's different you just have to get out idea to hustle like you just pitcher had tried failed try fail and that's really what we did. Failure is so much a part a lot that way as long you learn yeah bush yet what was what was the biggest failure of the biggest lesson learned along the way. To secret crush is just horrible I think the biggest failures as early early on from chaired and I. You know when you open your doors for business news. You have so much opportunity grades so many people are coming in requesting you can get stuck in her very reactionary mode. You're sitting there like oh we had a siesta say it's this next you know you're not like you're just in the weeds. For us we were just mineral reactionary mode and up. Only sleeper Y as power changed the ingredients are what what what the reactions no reactions of like opportunity hey I want a workfare hey Hoenig investment KO look at. Pick place in for by some product hey let me sell you this like. You didn't you just open like you said yes we miss you gotta say no to things and heavier than we're young and optimistic and to reduce kept saying yes next yours are reacting to all of us and on stuff. And we got distracted buyer like what we're we're going a little bit and then all the sun. We got kicked out of our office space. Our landlord sold his building. And that was it real like we had to get what we delete from and so we didn't leave on our terms. We left because of as a reaction to somebody else and if foreigners have ruled regular slurs like don't just sit there and react to licked it feels good and it's easy. Like pick your plan be disciplined and state to it yeah I think doubt because it's you feels good to say yes and help people write in might be you can't always do it's. It reminds me of a Lexus. Co-founder of read it. And and we talked about when he was starting we talked about some of the lessons that he learned along the way in one of the things he said was. Early on you say yes to everything and then you quickly learn to start saying a totally because if you don't make that transition to saying no. You're always going to be responding to what someone else thanks and you're the visionary in the nervousness you have to at least see through that vision and tested deceit can pots. We are yet exactly need to take actions to your plan yeah. Break right not like because you gonna sit there all day you get hundred emails a day just react yeah and the left so probably the biggest lesson we learned early. Thing is we I think about the we moved offices and move production. Based on some else bray like we and a reaction to somebody else not on our terms. And so is rush it was out of urgency and which have been planned thoughtful and like. Done with great. It said it was urgent and so. So we were talking about before we started taking questions will take more questions Taylor whenever they're coming in. See we're talking about how big of a decision was to move from this packaging to this package and so. Telly what went into the first of all why make the move it from this to vests. And second of all what went into that thinking and props Latin. So it's bird parts and context. This was working we are successful we have done. Six point five million dollars in a year which is really like our seconds or first year commercialized for his. Really good six and a half million us yeah I'm line. Paul on line. So the business of successful. The other rule influences it is that your an error Burgess really self aware that like hey we designed this. Union were not to say it's about these blueberries this thing in exactly what we bought those from I stock order something and I put those on there. And so Regis took a step back and this is part like we've we took a setback and Ehrlich. This can be better rate this it doesn't reflect us. It's time to actually like gated designer can do it properly and think about the brand and what's. What's her position right. And so on you know. That was a real to I mean is is are huge risk because you know our logo doesn't like there's no appetite appeal to your logo small electrified. Com and a design architecture. Race because what so people it's eighty that this chief small yellow looks private label or something people with said that like what flavors as it but it doesn't I don't know. Israel and yeah I did there's no appetite if you look where your claims rate and it's not claims are important right over all that's like. You know what had the other crisper and successful people were like whoa that's networks march doing it and we just knew that the categories competitive marketplace is competitive we had to do something different. Him he's a retook that you know as a vigorous and read there's obvious for us like our team Turner's Anemia no brainer. This is this is good this is goods and out like create. More questions. What's next for our expire. It's great question so what's next for us continued growth and continued to change the food business. Kind of define how guns raised expectations foods made in engineered and marketed and sold them. So more great products didn't. We have a new exciting product coming out in March. When. Annie uncanny life can shed I can once through a pet. So obvious trouble and her well now you work with Kellogg's that you really do you have to you adhered to you yeah we have to get. How did the Kellogg's deal come together tickets behind the scenes because that's the dream for so many people that they would create something get somebody like Kellogg's interest in. And not only interested but willing to spend he. Hit us. Yes so jeered and I never. Planned to sell look like we never like starting to code there's an exit strategy and actuaries are like we never even exited really because there were still there are working out yet you're still the CEO of RS star finished the wannabe like. You know. Its own. Her Serb and rolls right my role is I was a shareholder. I was a co-founder. And also CEOs of those org three different distinct roles. As shareholders jeered and I came together like Haywood who want to if that's what. We're getting a ton attraction like what's next for this and so we thought of like really think there's two paths like keep it private can keep it like a family business and do this for. Cassettes or collect public enjoy a greater organization that ultimately it puts the brand and organization and a good spot so. January 2000 let's this year's 2017. We got together like we're going to. And is clearly we didn't want. To make it Fannie business and we decided like really let's explore this and it wasn't like paver and it's like let's solve this thing it was more like. Let's explore what this looks like and so we hired investment bank. Actor Jeffrey's which is amazing to help us navigate this and we're you know also were. The does is getting traction so we're getting some in about straits Metall. A funeral inbounds meaning you're getting offers PA are saying we'd we'd be interested in purchasing your company yes. Indirectly that they you know the elections are two company email Michael Mike. Basically like when you have a house in a neighborhood that somebody comes and knocks on the door and yet. Highly this or sell your habits. Yes totally. I've never happened. Nor have I ever on the somebody's house and asked them if I could buy it. I heard that happens disclaimer none of the. And so we're like her hits over in ago part of bank to help fuel these and it can go explore. And I remember a group. Our team we are looking. We're kind of this misconception Michael my god speaks scary companies like you know I was a they're gonna fire meter and change everything and like we get this is like him this is a big misconception. And so I'm Ehrlich the first touch selling your company's a lot like dating. And going in first half coffee. And then like. The getting to know you you have like me my interest day at a like maybe they're the one where we don't know like what they look like in person immunity Munich. And in the formal day candidates like a hometown date you meet your you can Hollywood solar bachelorette this of the good reference on ABC yeah that's ABC's. Her totally it's just like that mimic the cold air hometown date he gets another family really really truly and they get to know your your friend here yeah. And like where you come from ray in the car you what you like to do in the morning all that sudden. So it's really there's so many parallels. And sewn BC after our first date we're realistically these guys aren't. Bad or evil in the actually do great things. And there's of an. I sit something like. Hey you guys think I wanna leave her we want to leave her team and you really think you're gonna fire us. One thing you know I mean I guess that's real yeah like he's got real I have got a real fat and it totally. But just funny like we all want to stay we ruled were looking for muscle and you know we wanna take the business the next level. I like what is left of baby don't hurt me need. But yes total. And everybody at tables that were not hurt each other this is yeah this code of trust yes and so that it after that serious date you guys started going down the path and then you ended up. Coming to. The number and the fact that you were gonna stick on board sitting around and you know was there ever a part of you that then maybe had rather just go do something else on my house. Know yeah. Yeah and I like my you know the best part of working purpose for my job is like building with people and in solving problems of people so. Knowing. You know if I had I go insane about enhancement so. Great well I want to show our viewers before we go so. Because it's the blueberry bar and we didn't have any blueberry very far sitting out here but we do you have these blueberry iMac I want to show people. Just rob really literally like what it became so this was the original. Or that the second original Texas you have deterioration. And then this is what it is now. And this is Peter ray hollow the co-founder of our expire congratulations on a holiday to you some cash. They throw the great questions guys Leo a great weekend also don't forget to check out this week's no limits conversation it's live now on tune in and will be posted. Wherever you listen to your podcast coming up on Tuesday remember they alleys post on Tuesday and this week. He's with Tina Sharkey I don't know if you know Tina and she's the woman who created brand less power images in a bunch of target stores it's around the country now. Every single one of their options is three dollars everything across the board is three dollars and I talked to her how about how she created this company how she came up with that. And they're really taking the world by storm much like. Her sparks thanks so much Peter figure back from having any get everyone it will make sure to post that link to the no limits conversation here on FaceBook as well. I everyone.

This transcript has been automatically generated and may not be 100% accurate.

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