Four years ago Peter Rahal was making protein bars in his parents’ kitchen in Glen Ellyn, Illinois. On October 6th, 2017 Peter sold his company RXBar for $600 million to Kellogg Co. He didn’t have a cooking background, he was self funded, and he had zero retail experience. How on earth did this happen then? $0 to $600 million in under four years…that’s impossible right? Nope. It just happened. This is a brief look at his story.
I was walking out of a meeting with Target when Pete first texted me back in 2013. He was looking for a bit of help and guidance on starting his new protein bar brand. He wanted to pick my brain and explore how to get into brick and mortar retail and how he could generate brand awareness marketing online. At that time, I was exiting one of my first companies a sports watch brand that I started with a couple friends here in San Diego back in 2010. We used social media to build the brand and gain traction. Fast forward 18 months later and we were doing seven figures in sales, on the wrist of every pro athlete, sold in all of the major U.S. retailers: Target, Best Buy, Dicks Sporting Goods etc, as well as full global distribution. From day one, we did everything in house. This meant I was very well versed in the life of a bootstrapped start-up and the scary monster that it is. I knew and understood the exciting, but helpless feeling that Pete was experiencing.
Pete and I have known each other since freshmen year in college. We both attended a small private school called Wittenberg University. He was my “grand-little” in my college fraternity, so this was an easy phone call for him to make and a no-brainer for me to take. It is one I still remember to this day.
Here he was on the phone excited about baking in his parents kitchen. The product category he wanted to dive into was insanely crowded. Selling at the retail level is incredibly tough and selling protein bars through ecommerce immediately with no established brand identity that people can recognize or identify with is even tougher. So how could he organically and successfully build a brand around his new company? It wasn’t impossible as I was a case study, but I told him if he wanted a chance, he would have to say goodbye to his old life.
“Just a heads up man…if you embark on this journey you will lose more friends then you’re going to make, and there is little to no guarantee this is going to work. If you’re ok with that scenario…you might have a shot. “
The one advantage we discussed on the phone was that he loved CrossFit and he knew the culture. He had been taking his bars to his local CrossFit gym and giving them out to other members. Soon members he didn’t even know would place orders on scrap paper and he would bring them a box the next week. Was he making a lot of money doing this? No. He wasn’t making any money, but what started as a hobby was slowly growing legs, maturing into something, and as he gathered feedback from people he was learning more about his customers desires and gaining valuable data points to build off of.
Instead of having the door continuously slammed in his face by every single mom and pop grocery store he approached, he decided to only focus on the market he knew. CrossFit. But there was a major problem. Most, if not all, CrossFit gyms don’t sell anything besides memberships. There is no shelf space. Just weights. His potential market didn’t exist. Would a CrossFit gym that doesn’t stock anything buy his bars? It is an insanely delicate and tough process to get into retail at any level, and Pete was literally going to bet the farm on convincing and selling to places that were not used to buying or stocking inventory of any kind.
There was a 100% chance of getting laughed at and then a quick “No” if he picked up the phone and called or emailed each gym he could find online. There was also no centralized distribution or sales rep team to go through to reach CrossFit gyms as they are all independently owned. If he was going to try to do this he literally would have to go one by one, state by state, all across the U.S. Going in he had to mentally prepare to spend a lot of time on the road and basically lose product and money to create his opportunity. This entire situation could not have had a smaller chance of succeeding. Pete didn’t care, and that’s what made all the difference.
What happened next is quite frankly nothing short or a miracle. You see, in each conversation he had to get the CrossFit gym owners excited and interested in his product (a brand that they have never heard about). Then he had to convince them of the opportunity, show them how to effortlessly become retail stores, and after that he also had to sell them something.
Even if he was able to get to his sales pitch, realistically each gym would only buy one maybe two boxes of bars making him about $40 per location. He could not have possibly of had more going against him. From the outside looking in, if you are in sales here is what you saw; Terrible margins, no gross volume opportunity, and zero hope of scaling. The secret was, he wasn’t concerned about selling…he knew he needed to build his tribe. From Pete’s perspective here is what he saw; The perfect brand building opportunity to get his products in the hands of his ideal customers.
He cooked for two weeks straight, used all of his friends and family’s kitchens to store product, rented a van packed it with bars and drove across the Midwest and East Coast. He went door to door with a gym bag of protein bars in his hand to each Cross Fit gym he could find on Google maps selling one box at a time.
If a gym didn’t buy, he gifted them a free box of bars just to get his product in the hands of his customers. Imagine that. Giving away thousands of dollars of your product because you unequivocally believe it’s the best thing out there and people would come back. He was on the road for about a month and wanted to quit 100’s of times. It f*&^% sucked. He didn’t make any money on the initial orders, but he now had his product in CrossFit gyms, and more importantly in the hands and mouths of his ideal customers.
And even though those gyms didn’t buy a lot of bars at once, they did became repeat customers which allowed him to keep his dream alive and his bars kept getting into the hands of the 20-38 year old affluent health conscious crowd. For more then two straight years, RxBars were not sold by any known traditional retailer. They were only available inside CrossFit gyms and his online store. Like I said, he was focusing on the most important part of building a brand by creating an underground movement.
RxBar’s breakthrough moment if you want to know was a packaging change that was made in late 2014 along with Instagram becoming more and more popular. One of RxBar’s brand pillars was that every single bar that was sold only had real ingredients inside. So a change was made and the ingredients were moved from the back of the packaging to the front showcased and championed in bold lettering.
Most of the gyms actually thought it was a different company, but his customers loved it, talked about it, and shared it on social media. Instagram absolutely exploded and his loyal following that he had spent years building started to eagerly showcase RxBars in their active and daily lives. Soon after a wave of RxBars started showing up all over Instagram feeds nationwide, Whole Foods called, and then came Trader Joes. And I guess you could say the rest is history.
The main point of this story is to show you a real life case study of a regular person that puts their pants on everyday just like you. As a new store owner and small business, the first thing you need (besides an ecommerce store and a product to sell ) is the drive to manufacture your own success. Opportunity does not and will not always come knocking. Sometimes you have to get out there and go kick in the door. In Pete’s case, he had to kick in a lot of them. So how can you take your ecommerce store or small business to the next level? Start by surrounding yourself, online and off, with better people.
A great product will never dictate whether you succeed or not. A fancy degree won’t either. The world is full over educated unsuccessful people. A huge bag of money won’t solve your problems. Money can quickly be misspent, miss appropriated, and mismanaged. The only thing that will truly help your chances of succeeding is you and the people who you choose to surround yourself with. At the end of the day it will always be about the people you interact with and your ability to “get it”. You see, execution is the only thing that matters. A rising tide lifts all boats. You can be the tide that lifts those around you.
“We couldn’t have dreamed of this opportunity. We didn’t go to investors. We just f—ing did it. Gym by gym was our focus. For 30 straight months we didn’t get any retail traction or sales. I had no background in sales, ecommerce, or anything like that.” – Peter Rahal, CEO RxBar