Coconut Chips And Cashflow - My Interview With My Friend And Fellow Entrepreneur Vinny Kitirattragarn - Part 1
I’m sharing something really special with you, that isn’t totally about branding agencies, but I still think you’ll get lots of takeaways from it.
I recently hosted my 20 year high school reunion, and one of my classmates, and a good friend, is Vincent (Vinny) Kitirattragarn - founder and CEO of Dang Foods - one of the most successful Asian snack companies in the US.
You’ve probably seen their products in Whole Foods as well as being stocked in 10,000 grocery stores across the US. I’ve been watching him build his company over the past 10 years, hitting $10m in annual revenue and picking up the coveted Forbes 30 under 30 Award.
Vinny’s also an active member of the Asian American community, organising an annual Thai American Youth Camp, supporting local organisations advancing justice for under-represented ethnic communities and supporting Bay Area Food Banks.
It’s a big one, so I’ve broken it down into two parts - settle in for Part 1, where Vinny talks about how he started Dang Foods, and what he learnt along the way to building his business to $10 million.
Vinny (right) and his brother Andrew - founders of Dang Foods
[Pia Silva]: I can't wait to hear everything about this. I don't remember when you started this. All I remember is at some point I saw it on the shelves, and I was like ‘Vinny’s business!’
And then I think I saw it - I guess it must have been in Whole Foods when I saw it. And that was probably, I don't know how many years ago at this point, I was like, ‘Oh, that's so cool!’
That was the first time I think I'd ever seen something in the world where it’s like ‘Oh, I think I know the person who made that’ and it’s in a really important place in Whole Foods. It was just a trippy experience.
So tell me when you started it.
[Vinny]: I started working on the project in 2011. And it didn't look like a snack business at the time.
The initial concept was like, ‘I just want to do something with Thai food’ because I feel like the Thai food that we grew up with in the US is mostly pad thai and mango sticky rice and sweet things.
But I went to Thailand every year to see family. The food there is much better. It's more flavorful, it's spicy, it’s just riskier.
And so I started a pop up restaurant in San Francisco to serve those risky dishes. And it went great. I only did two pop ups. But yeah, I learned.
I learned I definitely don't want to run a restaurant, because it’s a lot of work! But at the same time, I also learned people really gravitated towards this one ingredient, which is toasted coconut. And I was like, ‘Alright, that works. Let's just go with that.’
[Pia Silva]: Okay, so 2011 - that's when we started our business, by the way. What did you do before that?
[Vinny]: Yeah, I was 27.
[Pia Silva]: Yeah, 27, so you're a couple of years out of college, you're not just a total baby, but you're still hungry and down to hustle your face off. So what did you do between college and that?
[Vinny]: We were posted in New York and the City of New York buys $4 billion of stuff every year - cars, lights, paper, and with my degree in Environmental Engineering, they hired me to help them do that stuff.
And it was really boring - I hated it, because city bureaucracy is terrible, and it was a really stagnant environment for a young, idealistic graduate with a ton of energy.
[Pia Silva]: Right? Yeah - especially in that space. You're trying to do good things for the world and instead, you're in bureaucracy. I get it.
I had a much shorter stint - similar idea - I worked at the Clinton Global Initiative and was like, ‘I'm gonna change the world with the Clinton Foundation!’ and it was three months, that was it. Like, ‘This is horrible. You're never doing this again.’
[Vinny]: I feel you got to get it out of your system as a young idealist, right? Like ‘I'll change the world!’ and then get your shit kicked and then ‘Well, I got to figure out what I want to do now.’
[Pia Silva]: You have to learn on the job that that's not the way you're gonna change the world, not with all your energy.
Okay, so you did that for a little bit, and then what?
[Vinny]: I went to DC, did that same thing for a nonprofit, which is cool, except the nonprofit ran out of money, so I had to quickly find another job.
There was a startup in San Francisco called ‘Good Guide’. It was an app where you can scan a barcode, and it'll tell you the rating, environmental, social and health rating based on science. And so I helped them create these ratings for these 1000s of consumer products.
That was a cooler experience, and I was like, ‘Oh, I’m in, like, a Silicon Valley Tech tech startup!’
It also ran out of money, and also laid off a ton of people, including me, so I’m like ‘Do I get a new job or just see how this goes?’ And I'm like ‘Roll the dice.’ So I ended up rolling the dice.
[Pia Silva]: Okay, and then you did your pop up restaurants.
Did you know anything about cooking? Besides, like cooking at home?
[Vinny]: Yeah, so the nonprofit in DC was four days a week - nonprofits are made to work four days a week.
So on the side, on the weekends, I'd go to this, like, funky little Thai restaurant and this dude's house has five tables, with tents and was not the cleanest restaurant, but it’s delicious.
[Pia Silva]: Like, not an official restaurant or…?
[Vinny]: It was an official restaurant, but I don’t think it would pass all the health codes!
But yeah, I basically worked for free there. It was a cool experience, but, you know, something you want to do in your mid-20s, not in your 30s.
[Pia Silva]: Okay, so you worked there for free, but it didn't scare you off. You had two pop up restaurants because of that.
[Vinny]: Yeah. So the idea of ‘I want to do something with Thai food’, it took me multiple iterations.
So first was ‘restaurant’ - scratch that off.
Then, ‘Maybe I'll do a food truck, maybe I'll do a farmers market stand.’
I tried doing a couple of those things and then scratched those off.
‘Maybe I'll do a pop up’ - scratch that off.
And then, that turned into a snack business - so it was a fifth iteration.
It wasn't like ‘OK, I'm gonna go ahead and write a business plan. You know, sell coconut chips to Whole Foods…’ - that doesn't happen.
I was like, ‘Alright, let me just test this out. Alright, test didn't work out, change it up, see what happens again.’
I didn't know that's how people make products, right? So that's how we came up with the business plan.
[Pia Silva]: And you were just set on doing something with Thai food.
[Vinny]: Yeah.
[Pia Silva]: And you knew you wanted to start your own business?
[Vinny]: Yes.
[Pia Silva]: So it's like Thai food and business. But let's try different things until we figure out what the best thing is.
So then everybody liked the coconut chips, and they kept being like, ‘Dang, Vinny is good!’ And you were like, ‘I should call it that!’
Does dang mean something in Thai?
[Vinny]: Yeah, it means ‘red’. It's also my Mom's name.
My Mom’s English name is Diane, but then everyone finally gets a nickname, and I was like ‘Why not just name it after her?’
In English, it’s what you say when you're surprised. Or you're like, ‘Dang, this is good!’
And then I would give it to people and their reactions are, ‘Dang, this is really good!’ And then they laugh! It's more memorable that way.
Just like when you create a brand, you need multiple levels and you also need a reason for people to remember you, right? So that was one of our claims to fame.
[Pia Silva]: I love that. There's a background story, it's authentic and real for you. And like you said, it's got layers. That's so fun. And you run it with your brother. Is that true?
[Vinny]: Yeah. I was working in 2011 on the project. I went to my first food show in 2012, so he came with me to that because I was like, ‘Hey, I need help.’ But he was still working as an accountant - he was at KPMG.
And then I first started getting orders later that year, but he was still kind of like, ‘You know, I don't really know if this is a thing yet. And, you know, I still have a career.’ So he didn't join.
And then in February 2013, that's when I got a big purchase order from Safeway. Safeway brought us into 1000 stores.
And I was like, ‘Well, I really need help now! Because this is becoming a thing. We're not just noodling around. You have an opportunity here, and join in.’
Yeah, we started working together and it's been 10 years.
[Pia Silva]: Wow. OK, so what's it like to scale up a snack company?
Everything I know about snack companies is from Shark Tank. So forgive me, but it seems like a really high cost business to start. It seems like it just eats cash. It seems like you just always have to feed the beast.
[Vinny]: Yeah, I mean, bringing a snack product to market has totally changed today, because now you can sell stuff online. And when I started, that wasn't the game, right? You weren't selling stuff online.
It was all about getting into grocery stores, just grocery stores. So that's what we did.
So we had this thing - these coconut chips. And we're like, ‘Alright, somebody else is gonna make this and we need to kind of rush and just grab the market.’
We basically said yes to everyone - it wasn't very strategic. We said yes to grocery stores, even discount stores like TJ Maxx, we're just like ‘Grab space!’
We grew really fast for the first three or four years doing that. But the hardest part of that was cash flow. I didn't pay myself for three years, because I was like ‘Oh, the business needs money.’
You have this timeline of when you buy products, when you sell products and when you get paid for it. And the longer that is, the less you can actually flip, so you can't flip it anymore, right?
And for us, we were buying from overseas. So one huge advantage we had was my family in Thailand. They were like, ‘Hey, let's help you with this.’
So they set up a company to sell me the products and to help finance, so I didn't have to pay till after I received it here in the US, which is huge. Otherwise, I have to pay for the product in 90 days before I can actually get paid for it.
So yeah, those first three years, we're just pumping money back in and didn't pay ourselves.
My brother and I sat down one day and we're like, ‘You know, what, where are we going with this?’ We have this nice business, and at that time, I would probably look at selling the business because we're growing so fast and grew to like $10 million in like three or four years, because that growth is worth something to a private equity firm or a larger business.
I probably should have looked at selling then but I didn't know that was an option. I was like, ’Well, we haven't paid ourselves and you know, we should start a salary.’
So the only option we knew of was to raise money, and we did our first raise in 2016 where we raised $4 million.
[Pia Silva]: Okay, so you were at around $10 million revenue, and that's when you raised an extra $4 million. What was that $4 million for?
[Vinny]: Well, what we said it was for was new products, hiring a team, getting distribution, slotting fees, just like, bullshit, you know?
What did it really end up like? I think a lot of that money got wasted, because we tried to adopt a different sales team structure that was very ‘field heavy’.
So, big, big companies like Vitamin Water, Stacy's Pita Chips, they have field teams that go out into stores, and they create these big, beautiful displays that catch your eye, right?
And our funders were like, ‘Hey, you know, we did that with our brand that we sold to Hershey’s, and we think it could work for you.’ So we're like, ‘Alright, let's try it out.’
So we did it, but after like, six, seven months, and we're like, ‘This isn't really working, our sales aren't going up that much’ so we're forced to change the structure pretty quickly.
That first round of layoffs, I was crying more than people that I was letting go. But the lesson learned here is - you know your product and your senior sales team. it’s not just copying somebody else's playbook. Our items are more unique - they require a little more education.
It's a different category - there's so many little weird pieces and components to it. We tried to copy this ‘big players’ book, and it just didn't work for us.
[Pia Silva]: So the in store demonstrations, I totally see that. And that's an expensive, on the ground, thing to do.
And you're saying that's what the big guys do? Because I picture that as being perfect for you like that. That's what the smaller growing brands would be doing? Because they need visibility.
[Vinny]: No. So you're we're talking about different things.
I think you're talking about live demonstrations, which we did. I've done hundreds of these, where you stand in the store, you give people a sample, you tell people your story.
And the big guys actually don't do that. They hire field teams to just build these big displays. So when you walk into the foyer of Whole Foods, and you see Lacroix, it’s floor to ceiling. There's a team that went in there for them to build that.
[Pia Silva]: And you have to pay for the space sometimes.
[Vinny]: Yeah, if the teams are good, and they can negotiate and get the space. There's different ways to get the space.
I'm paying for space at Whole Foods and right now I'd like a national shelf. I don't have to do any execution - they are doing the execution, they’re building the stuff for us.
But at other points, you know, you have to do it yourself. There's many different ways to go to market, the game isn't getting any easier than it once was.
[Pia Silva]: I can imagine so. So you said that marketing got you to find your own way. What have you found really works for you?
[Vinny]: It took us a while to get to our brand positioning as it stands today. So as it stands today, we're a modern Asian snack brand, right? But when it started, we were just like 10 coconut chips.
And then we had to figure out what we stand for besides just having a coconut chip product. Then after a couple iterations again, we realised that we've looked around these trade shows, and we're one of the only non-white people here.
We're definitely one of the Southeast Asian people, so why don't we just own that, and then tell people that story?
So it’s 2018, and we’re designing new packaging, and we hired a Thai Chinese designer, who created this really nice packaging and then we created this brand. story around it.
‘Dang’ is my Mother's name and she comes from Asia. She gave me this recipe and it's really about telling the story as much as possible because that's what people remember.
There's no silver bullet when it comes to marketing for us. There's nothing that propelled us from like zero to a million.
We've done social media stuff with Kourtney Kardashian and Chrissy Tiegen and huge influencers, but all that stuff is just a blip.
I think that the best way to do it is to be like, ‘OK, I think this huge category, say cereal, needs to be disrupted with low carb, high protein alternatives. And I'm going to build a brand based on that and continue telling people ‘OK, you eat cereal. Why don't you eat a healthy cereal?’’ That's the most effective way to do it in consumer products.
[Pia Silva]: So yours is a modern Asian snack. Is it snacks, specifically, or modern Asian food? How far does that go? How much outside of the coconut as a main ingredient does that go?
[Vinny]: We have products that don't have any coconut and then we have our Thai rice chips that don't have coconut in them. Have you tried it?
[Pia Silva]: I have had your Thai rice chips. I had them in Florida, and they're delicious!
[Vinny]: Yeah, dang good! There’s a Thai street food snack you can buy on the ground in Thailand called ‘cat ban’, which is crispy, almost like a rice cake. We found it at Bangkok airport, and so many Chinese tourists buy boxes and boxes of the stuff at $10 A box. And we tried it, and it’s great! Because I know they do 10,000 boxes a day, just through that airport alone, which is great. So we don't manufacture them, and said to them ‘Hey, we want to sell your stuff in the US under our name.’ And now he's one of our greatest partners, and came to my brother's wedding, which is pretty cool.
So to answer the question - we're not claiming just coconut - we're claiming Eastern and Southeast Asian snacks and snack culture too. There's a whole culture around eating small meals throughout the day, just like whenever you're having a beer you have some nuts to go with. There's different elements of this and we're going to pervade all that.
[Pia Silva]: Yeah, I mean, there's no brand that comes to mind in that category to me - nobody owns that space. So that's yours for the taking. Surprising now that you're saying that!
[Vinny]: Well, think about it. When you think of Asian snacks, what comes to your mind?
[Pia Silva]: Pocky?
[Vinny]: Yeah. And Pocky is what? Chocolate in a biscuit. But nothing inherently Asian about it. But a Japanese company put it out.
But when you look at all the ingredients that are in Asia, there's a lot of stuff to work with. There’s coconut rice, there's sesame, there's matcha. People don’t eat chocolate as much in Asia - they like green tea, green tea chocolate. That’s a huge thing.
[Pia Silva]: Right. I can think of lots of Asian flavoured snacks that I eat, but there's no brand that I think of. In fact, I think of those little ‘mixed’ Asian snacks, with the spicy things and the little crunchy things.
And the little peas - they don't have a brand, they're just in a plastic container, or like seaweed and things like that.
You go to an Asian supermarket to get those things, and then you just buy whatever brands they have there.
[Vinny]: Exactly, yeah. In the US, the big brands are the ones that invest in branding and marketing. And a lot of the brands that you're mentioning - Pocky you know, Koalas, Pandas, all these little snacks - there's tons of them, right?
They don't don't invest as much in marketing or in the US because, for whatever reason, they might not see a return on it, or they're like, ‘OK, with a niche market, you know, we're only selling in Asian markets.’
But who's to say that people won't buy Pocky at a Walmart, or a Whole Foods?
[Pia Silva]: Right? But you'd have to market it. I mean, maybe it's just not even in their radar, because it's a whole different marketing strategy to market your brand, to the greater, bigger population than just to..
[Vinny]: …to White Americans.
That's a different, different play than Asian Americans. Right?
You have to decide who you're targeting. Are you targeting Asian Americans, White Americans, Black and White?
You have to get really specific with your cohort, right? Say, I'm targeting women between 25 and 40, in the coastal cities with high incomes and higher education.
You have to get really specific with it and make up those things. The more specific you get, the more you can answer questions like, ‘Oh, should I put tight lettering on the packaging? Put my baby picture on the back?’
[Pia Silva]: Well, I do remember at one point seeing you have your signature on the back.
[Vinny]: Well, the big companies like Frito Lay - big, huge snack company - they can do what we do, they can sell our product, but what they can't do is sign the back, or put pictures of themselves and their families on the back.
If they were like, ‘OK, let's create an Asian snack brand.’ They would make it look great, and it'd be cheap, right? But it can’t be ‘Oh, this is my Mom's recipe.’ That's what we have that we can own.
[Pia Silva]: And when you were talking before about the kind of blips. You can do marketing things and they create these surges of sales that won't sustain.
But I would imagine, you get a bunch of people to try something and then some of those people stick and just over time you have like habitual re-buyers.
Is that what the growth looks like? That you kind of keep acquiring customers who will keep buying your product on a regular basis?
[Vinny]: So there's that, but we track repeat purchase rates and ours is about 28%.
But there's also churn, people dropping off or substituting for other things that's harder to calculate in our world.
Because, you know, if you're, if you're doing a DTC or an ecommerce product, it's easier to track that stuff.
It’s not as easy to track, especially when you're doing stuff in store. There's a huge black box that our product just goes into and we don't know,when the product gets bought, who bought it, what they use it for, when they consumed it, if they bought it again…
There's a lot of opportunity, I think, and there's now more online shopping. So you're getting at these questions, but it was like the dark ages, when we first started. Who's buying our stuff? We have no idea.
If you are sophisticated enough, and you have the data, you can look at repeat purchase rates. But as the churn is the amount of people that are leaving each month, my actual true growth rate is lower than the repeat purchase rate.
I think that's important to figure out that you can't just solve one problem and then hope for growth, you actually have to solve both, and there are different problems.
The first one is - how do you keep customers? How do you get good purchasers?
And the second one is - how do you prevent them from going? Competitors or substitutes? And that one's been a tougher question for us because we're not like a popcorn company where it's ‘OK, I'm just going to make Southern popcorn.’
So we had to ask ourselves ‘What is a substitute for a Coke?’
So, it's a sweet, crispy snack, isn’t it? But what are people eating with it? Yeah, I don't know if we’ll ever get an answer to that. But that’s the stuff that we've thought about and discussed over the years.
[Pia Silva]: Well, how do you get any of that information? Do you do surveys with people?
[Vinny]: Focus groups? Yeah.
[Pia Silva]: I mean, I don't know if you can trust focus groups. That's why I'm curious.
[Vinny]: Yeah, the only thing I really learned in a focus group was that on our old packaging, we weren't getting credit for telling our story. We had written a story on the back, but somebody said ‘They could be some tech bros that just visited Thailand.’
So we weren’t really telling our story effectively. We did learn something, but on the whole, I would say focus groups are not going to get a distilled view of what is actually going on.
For example, a product that was probably focus grouped to death - Mondelez, which is this huge company, and they own Oreos. They used to be part of Kraft Heinz, but they're a huge snack company, one of the biggest in the world.
They decided to make a ‘world inspired’ snack. So they did a bunch of focus groups, hired product developers, and they got this beautiful packaging, and it looks like it's South American mixed with Latin American and Central American, and then there's an Asian one, so they're going for the world here.
And then they launched it, and they can easily put it in 1000s of stores.
It totally failed.
What you got was the average of what everybody wants. That's what you get, unless you like, listen to a specific thing. Everyone's gonna be like, ‘OK, I kind of like this kind of like that.’
Generally, in big groups, you're not gonna get something really good. You have to, talk to the ‘OK, I fucking love your product, I'm going buy it 10 times a day!’ But how can you find more people like that?
[Pia Silva]: So who is your person that wants to buy your product 10 times a day?
[Vinny]: So at the very beginning, it was ‘OK, who understands what a coconut chip is?’
Because not everyone does, but it's probably somebody who's had coconut water, maybe coconut oil. Maybe someone who's travelled to a beach and drank a coconut and has that association.
And a coastal city - a young professional or young mom. Someone very busy, has a lot to do, but wants some energy and wants to feel good about their energy - not just, empty carbs and sugar.
So they care about ingredients, right? They care about how the product is sourced, right? It's ethically sourced. You would have a person in mind, someone who looks like you. And you try to find more of them.
[Pia Silva]: Right. So what does that mean about where you put your product? Do you not put it in certain states?
[Vinny]: Some people do that. We did like a regional rollout. Starting the West Coast, then went to the East Coast and kind of filled in the middle. But our target markets are still New York, LA and San Francisco.
[Pia Silva]: Sure. That makes sense.
And that’s where we’ll leave it for now…
Part 2 is coming next week, where Vinny and I dig deep into the not so pretty side of running a multi-million dollar business, and what branding has taught him about long-term business success.
P.S. You can always jump on a call with my team if you want to fast-track your way to using the best tools and strategies to scale up your agency - just go here to get started!