Will Nitze - founder and CEO of IQBar shared his brand building strategy

on August 17, 2023

Will Nitze, founder and CEO of IQBar, shared his journey in building and scaling IQBar, the company behind the protein bars formulated with clean-label ingredients rich in compounds to benefit the brain and body. While studying psychology and neuroscience as a Harvard undergrad, Will became fascinated with the human brain and how it functions. IQBar’s brand building and operating strategy were also discussed.

Show Notes

[01:19] Where does Will get the inspiration to start IQBar

[03:28] Will explains the three main product lines of IQBar

[05:47] An overview of IQBar’s addressable market is discussed

[08:30] Discussion on the key competitors of IQBar

[11:07] Will shares with the audience his brand building philosophy and how IQBar is able to stand out from the crowd

[14:14] Discussion on the coffee product and its brand positioning

[16:25] Will shares with the audience his fund-raising journey (Kickstarter, Corporate Venture Capital etc.)

[20:06] Will discusses his experience with corporate venture capital and why/how get into raising money from CVC

[24:52] Will discusses his current plan with funding

[27:09] An overview of KPI used by the IQBar team is discussed

[29:49] Current plan on international expansion

[31:27] Discussion on the impact of inflation on the business and how the IQBar team is able to manage through the inflationary period

Books mentioned in the discussion

https://www.amazon.com/Mission-Bottle-Business-Differently-Succeeding/dp/0770437494

Mission in a Bottle: The Honest Guide to Doing Business Differently–and Succeeding

By Seth Goldman, Barry Nalebuff and Sungyoon Choi

IQBar’s addressable market

Yeah, I believe it’s globally an 8 billion dollar market now. So it’s a big market. Go to any grocery store in the US. There’s an entire aisle of bars. it’s almost comically competitive and big. So that’s always the first question that anyone asks: Why would you enter such a crowded, competitive category? And why do you think you’re gonna succeed in such a crowded category? But I don’t think about the category per se. I think, about subcategory. So that’s like saying, ready to drink products or a big category. Well, yes, they are. But maybe the ready to drink lemonade market. It’s not that big and is much less competitive. So same thing with bars. There’s a million bar brands and it’s a really big category. But how many you know plant protein bars that only have one gram of sugar are there? Well, that list of 1,000 bars is 3 bar brands. Let’s say. of course, that sub segment still has to be big right for it to be meaningful. But I really think of things in terms of sub categories. And then, in addition to that. you have a decision point as an entrepreneur at some point where you either tackle one of 2 problems. One would be. It’s really competitive, and you’ll never have to generate, demand or worry that worry about does demand exist for my product. Instead, you’re gonna have to worry about out competing people for existing obvious demand. Or I’m gonna go into a place that’s super not competitive, uncompetitive. But there might not be demand there, right? I might have to force myself into manufacturing demand. So that would be like the Airbnb example. You know. They were the only ones doing. It turned out there was a ton of demand for it, and they became a giant business. But then there’s a million other examples where there just wasn’t demand and so I’d always rather be in the first camp. I’d rather take the first path. And I never wanna have a demand problem. I always wanna have my problem be, how do I out compete?

IQBar’s Competitive Positioning

Yeah, I mean, we’re an interesting product, because we’re quite dynamic. So we are at the intersection of 5 different trends. I think about the product like a diversified stock portfolio. We want to have exposure to 4 or 5 different trends, such that as trends shift, we can still keep growing. So we sit at the intersection of brain health plant, protein, clean label, low sugar, low carb, keto, even for keto compliant. As things get more or less popular, maybe keto kind of plateaus and declines. But now low sugar goes up and brain health goes up and pampered. So by sitting at the intersection of all those things. It means you have a lot of competitors in different areas? So on the vector of brain health, maybe your competitor is this brand and on the vector of plant protein, your competitor is that brand. So we have endless competitors depending on what vector of our product you care about, but just at a high level, it’s like, you know, protein like clean label protein bars. There could be anything from our X bar to and then also unclean protein bars. Let’s say someone only cares about net carbohydrates, and they actually don’t care about clean label. Well, then, our competitor would be a quest bar in that instance. So it just really depends on what that consumer is looking for, and that will dictate what the competitive landscape is.

Fund-Raising and Corporate Venture Capital

The whole thing with consumer goods, its value is based on how much stuff you sell versus tech, for example, where you might be valued, based on a team and an idea, Powerpoint deck, etc. You can’t really do that in consumer goods. Can you sell a bunch? You know revenue and ebitda until early on what you know, I didn’t want to go out and raise a bunch of money at a super low valuation, dilute myself massively and so. I also didn’t have any money, so that’s where Kickstarter and crowdfunding is a nice mechanism. It allows you to sell a bunch of pre-orders, prove to the market you have a good idea. Prove your potential investors you have a good idea and then go raise money on a higher valuation than you otherwise would have, because you’ve kind of derisked it for those investors. So we did that and then we had a really successful Kickstarter Cross, and Indiegogo. We sold $90,000 of product, and then we went to angel investors, and said, hey, we’re worth 4 million dollars. I raised 625 grand on that still by far the most diluted money we ever raised. And then our whole sort of strategy has been raised less money more often. which is good and bad like. There’s no perfect answer to fundraising. It’s good because it’s less diluted. You’re raising less money, and then, as long as you keep growing. you know, your valuation goes up, and each incremental dollar you raise is less diluted. It’s bad in the sense that you’re raising money a lot, you know. You might be raising money every year, and that’s a lot of work. but I was always willing to put in that extra work to save the deletion. So her first full calendar year 2019, we raised a million dollars. and then 2020. We raised another 2.75 million. And then, 2 years later. just actually, this past December closed, we raised 5.5. So all told, of the over the course of our lifetime, we’ve raised roughly 10 million dollars. but I still own more than half the company, so we kept ownership kept control while also raising a pretty sizable chunk of money.

And then the 5.5 million came from Lotus, a corporate venture division. I had connected with Lotus couple of years prior and just kind of stayed in touch with the head of their investment group. He’s a great guy, incredibly smart guy. It’s an unbelievable business. It’s a 6 billion dollar market cap business that spins off, I don’t know what the exact number is, but call it 100 plus million dollars of ebitda every year. So they take, you know chunks of that ebitda, and they made a fund. and then they invest in startups. You know, European startups, American start ups, etc. And so I just stayed in touch with this guy for years, and then we reconnected last year. It’s interesting because I’ve raised from angels, an American venture capital group. So it’s 3 very different groups and very 3 very different experiences. what I will say is, is fun about talking to. You know, corporate Venture group is more strategic for obvious reasons. They’re operators. They make and sell products. They do what you do just at a much bigger scale. And so they think about things in terms of how does the smaller company like me fit into like potentially their vision as operators of what the consumer good space will look like in the future. which is very different than like a financial institution is like, okay. how do I get a return on this investment? Which is there for the venture wing, too? It’s just it’s just different. You have different, like flavors of conversation. But no, I mean they to. To their credit to Lotus’s credit. They never really slowed down in terms of cutting checks. Everyone else slowed down in 2022. It was an incredibly difficult year to raise money. but their business is doing unbelievably well, so they had the money, and they want to deploy it. And I quickly just sort of identified them as a great partner. There’s risks, of course, with taking corporate venture money right now. You’re sort of married to that company a little bit. I ‘d rather be married to a great company than not be able to raise money, you know, or do a deal on terrible terms with some financial institution, or whatever. So I had a really positive experience. I’m sure you know, maybe others have had negative experiences. It’s not perfect. There are certain downsides. I’d say to people, they should look at corporate venture wings more often than they do. Most people look straight to venture capital funds.

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