Episode 341 I Didn't Make the Decision. I Still Paid for It.

There is one decision that changed almost everything for me and it is why helping mission based brands thrive is so personal to me. Let me explain.

I didn't make it.
I fought against it.
And I still paid for it, dearly.

Have you every been in a car accident where everything moves in slow motion and you are completely at the mercy of gravity and circumstance? That nightmare had become my reality.

I lost the company I had bootstrapped and helped build.

I lost the role I thought I would have building it, from CEO to locked out.

My ownership went from 47% to less than 8% in the blink of an eye.

Another financing round was planned that would have taken me down to less than 2% despite the promises and assurances that there would be no dilution or changes made to leadership or our mission. And by then, I had already put my savings, my retirement savings and eventually a lot of credit-card debt behind the business.

I knew CPG.

I had worked as a grocery manager and I had worked for big brands who spared no expense to send me though some of the best training programs available. I understood retailers, sales, category management, brands, shoppers, data and execution.

What I did not understand yet was this part of being a founder.
I learned it in one of the most expensive ways imaginable.
And it is the primary reason Retail Solved exists today.

Are you ready to hear more? My name is Dan Lohman and I am the host of the bulletproof your cpg brand podcast. At the end of each episode is a free guide to help you put into practice what we talk about. Now, lets roll up our sleeves and get started.

Years ago, I helped build a sweetener company with a cofounder who had developed an innovative proprietary process.

The basic idea was easy to understand.

We had patented a process for dramatically reducing the calories from organic cane sugar while maintaining the same flavor profile and sweetness. Imagine the taste of real sugar with about a fifth of the unwanted calories and without any of the side effects or downsides found in some alternative sweetness. We were on a mission to transform the industry - or at least so we had hoped so.

I believed deeply in what we were trying to build. We had a solid mission that we were deeply committed to.

I had a successful consulting practice at the time that I placed on hold.

With the support of my then-wife, I started putting my own money behind the business.
Savings.
Retirement money.
Later, credit cards.

I built the website.
The graphics.
The sales materials.
The pitch decks.

I even paid for both pilot runs, product samples, patent work and travel.

I owned domains and trademarks.
I sourced equipment.
I had identified a potential production location in Colorado.
I traveled to pitch competitions.
I shared samples with potential investors and retailers.
People, investors, and retailers were interested.

This was not something I was playing around with on the weekends.

I had bet on it and I had gone all in.

And I did what the founder ecosystem tells founders to do.

I learned how to pitch.
I learned how to tell the story.
I learned how to raise money.
I went through several respected founder programs.

I listened.
I learned.
I became a sponge.

How do you get the investor interested?
How do you get the retailer meeting?
How do you get somebody to say yes?

A lot of that education was useful.

But there was a huge part of the conversation that I wasn't hearing enough.

Nothing I had learned was going to give my brand an edge or help differentiate my brand.

What happens after the retailer says yes?
What happens after the check arrives?
What happens after the retailer gives you the stores?
What happens after the distributor and broker signs on?
What happens when your interests and somebody else's interests stop being aligned?
What does the next round of financing do to your ownership?
What happens if the assumption you built the decision around is wrong?
What happens when the mission you were on is scrapped for something unrecognizable?

Those questions aren't nearly as exciting as winning the pitch competition.

They may be a lot more important.

At one point, with help from a friend, I had another funding path lined up.

Then another group became interested.

At first, they sounded great.

But I started digging.
Some things didn't add up.
What I found did not completely match the story I had been told.
Some of their promises started sounding too good to be true.

I kept saying no.

I repeatedly told my cofounder that I did not think we should do the deal.

They kept working on him applying a lot of pressure.

I would talk him back down.

Then they would come back with something else.

Eventually, he decided to move forward behind my back.

I did not sign the deal.
I would not have signed the deal.
By the time I learned it had moved forward, new corporate paperwork had already been filed.

That was the moment everything changed.

I spoke to an attorney.
I was told I may have had legal options to try to stop what had happened.
But there's something important buried inside that sentence.

Legal options require money.
And I had already put everything I had into the company.
I did not have another pile of money sitting around to fund a protracted legal fight in another state a thousand miles away.

That taught me something founder success stories rarely talk about.

Having the right to fight is not the same thing as having the resources to fight.

The promises and the original arrangement initially appeared to protect much of what mattered to me, our mission, and all I had worked night and day to built.

I expected to be reimbursed for what I had put into the business.
I expected to continue driving the company.

But there was language around future financing that became incredibly important.

The verbal promises did not align with the paperwork my co-founder signed.

I tried to get that promise in writing.

I couldn’t. I eventually just walked away from the deal all together. I had no more to give and what I worked so hard on was unceremoniously ripped out from under me.

Sadly, this the side of launching a brand you do not hear about. This is the first time I have shared my story publicly. So why now?

Simply put, I want to help you avoid the painful mistakes I and other have made. I want to help you steer clear of the blindspots and obstacles that derail brands and shorten your runway.

My mission is to help mission based brands doing good on our behalf grow and thrive so that they can do more good. That can be as simple as your commitment to quality ingredients, compostable packaging, the land and the people you serve.

I want to be careful about the lesson.

This is not a story to scare you away from launching a brand. On the contrary, helping you thrive is the focus of more that 341 podcast episodes, all of my articles across multiple industry publications, and everything I talk about.

This is not an anti-investor story.
Investment can be incredibly valuable.

It is not a story about never trusting anybody.
And it isn't me pretending I made no mistakes.
I did.

One of the biggest was allowing promises and an incomplete agreement to stand in for protections that should have been fully settled before the stakes became enormous.

I knew something felt wrong.
I had questions.
I pushed back.

But I had also invested so much into getting the business this far that I wanted the company to succeed desperately.

And that taught me another lesson that has stayed with me ever since:

The more badly you need the deal, the less leverage you may have.

That is why I am such a strong advocate today for extending runway with your available resources and helping you make better informed decisions.

Not because a brand should hoard cash forever.

Because runway gives you options.
A stronger business gives you options.
Preventing deductions gives you options.
Better margins give you options.
A shopper who actively looks for your product gives you options.
Retailers that value what you bring give you options.
Understanding your own business gives you options.

The stronger you make the company before you desperately need the investor, retailer, broker, distributor or next round of funding, the better position you may be in to negotiate what comes next.

You do not need a perfect company.

You need another month.
Another capability.
Another good retailer.
Another profitable promotion.
Another thing you understand better than you did yesterday.

Baby steps.

Learn to walk before you run.

I eventually went back to Category Management Solutions, the consulting practice I had put on hold. It took years to rebuild.

I wasn't completely starting from zero. I had written hundreds of articles for most every industry publication. I had frequently spoken at industry events. I had built the original SPINS Distribution Tracker and reporting tools for brands and retailers. I had spent years helping companies understand categories, shoppers, data and retail. I had ebooks, courses, and a huge email subscriber list for my weekly newsletter.

I had the resume before all of this happened.
What I did not have yet have was the scar tissue.
And that changed the way I looked at decisions.

When somebody showed me a report, I no longer saw just the report.

I started asking:
What isn't here?
What happens next?
What has to be true for this answer to work?
Who carries the risk if we're wrong?
And what would make me change my mind?

And over the years, retail kept teaching me the same lesson in different ways.

Here's a simple example.

Years ago I worked with a brand that sold an item that every assortment program recommended be deleted. Its sales were well below the minimum threshold used in the most trusted models. Competitors and retailers were all pushing to discontinue it. That was until we showed some key retailers that it was the entry point to the category.
On paper, removing it made sense.
But the model could not see everything the item was doing.
The model wasn't useless.

It was answering the question it had been designed to answer.

It just wasn't answering the whole business question.

That distinction has shaped my career and that is why I am sharing my uncomfortable founder story with you now.

Let me explain. We experimented by placing the item in the checkout lanes as well in the regular category. It delivered a high margin and when it was in the shopping basket it deliver a much higher total ring at checkout. What was interesting and unexpected is that it also drove trial in the category.

Shoppers would purchase it at the check stand and then shop the category on returning trips. By keeping it in the category assortment, we helped drive profitable sales in the category, boosted shopper traffic, and most of the time we did this in the absence of any promotions.

Let that sink in a moment. A strategy that was expected to fail, returned an outsized positive result.

I've spent decades working with syndicated retail data, shopper data, retailer portal data, assortment models and the tools built on top of them. I even built some of the models and many of the tools myself.

Those databases can be incredibly useful if you know what questions to ask and what there limitations are.

The problem is that everyone is looking for the preverbal easy button. Sometimes that is new software. Sometimes that is AI. Sometimes that is a new suite of reports.

The truth is that I have spent my career seeing where these tools help and where the standard answer misses something important. Sometimes it is because of better execution and sometimes its because I asked a different question. This podcast is dedicated to help you navigate through all of that.

I'm not against those tools.

Quite the opposite. Use them!
Use the consultant.
Use AI.
Use the best software you can afford.

Just don't outsource your judgment.

Because an answer can be mathematically correct and still be answering the wrong question.

And the easier it becomes to get an answer, the more important it becomes to know whether you asked the right question.

That's what I mean by Retail Judgment.

It is not rejecting the model.

It is knowing enough about the business, the shopper and the retailer to recognize when something important may be sitting outside it.

That is also why I started this podcast.

I wanted to sit down with people who had already paid some of the tuition.
Founders. CEOs. Retailers. Experts.

People who made mistakes.

People who almost lost businesses.

People who learned something the expensive way and wished somebody had told them sooner.

And if you have ever been a guest on this show, I want to say something directly to you.
Thank you.

You trusted me with part of your story, and you helped leave something behind that another founder can learn from.

But I would also ask something of you.

Don't let that contribution end when your episode ends.

Listen to another person's story.

Challenge something you hear.

Add your experience when you see something differently.

And when you hear an episode that could help a founder you know, send it to them.

I don't want Bulletproof Your CPG Brand to become a warehouse of 341 interviews.

I want it to become a living library of expensive lessons brands don't have to pay for twice.

And if you're coming on this show in the future, that is the standard I want us to hold together:

Leave behind something useful enough that the founder coming behind you can make one better decision.

So before your next important retail decision, run one simple stress test.

You do not need perfect information.
You do not need a hundred-slide presentation.
You need to pressure-test the decision in front of you.

First the DATA
What does the evidence actually measure?
And what can't it see?

Second, your SHOPPER
What shopper need, behavior or occasion could change the answer?
This is even more relevant with the unique shopper your brand attracts. Knowing this is your competitive advantage.

Next the RETAILER
How does this decision make the retailer's business better, not just ours?

Then the ECONOMICS
What happens to margin, cash, basket, inventory and capacity if we're right?
What happens if we're wrong?

And finally the EXECUTION
Who owns what happens next?
What has to happen after yes for the decision to actually work?

And then ask the most important question:

WHAT WOULD CHANGE MY DECISION?

What new information would make me stop?
Delay?
Say no?
Change direction?
Ask for different terms?

That question forces you to challenge the answer you already want to believe.
That is Retail Judgment. It is honed and fine tuned by building retail muscle.

This does not mean every decision needs every piece of information.

That is another trap.
A challenger brand cannot wait until it has perfect data, perfect systems and every resource a billion-dollar company has.

Sometimes the right move is simply to make the next controllable thing better.

Change the promotion timing.
Fix the shelf placement.
Get a better shopper question answered.
Stop repeating the same deduction.
Learn why one store works and another doesn't.

Make the next decision a little better.
Then learn from it.
Then do it again.
That is how you build Retail Muscle.

And sometimes the most important thing you can do is simply look again.

We all become blind to things that surround us every day.

I live in one of the most beautiful places in the country.
And there are days I can drive through it without really seeing it.

Businesses do the same thing.

The core item that built the company becomes background noise.
The shopper everyone thinks they understand stops being questioned.
The shelf problem becomes normal and is then overlooked.
The report gets trusted because it is familiar even though it does not answer the right question.
The process becomes “the way we do things.”

Retail Judgment sometimes begins with something much simpler:

Look again.

I knew CPG when I started that company.
I knew retailers.
I knew data.
I knew how to sell.

I just didn't know this part of being a founder yet.

I learned it the expensive way.

I have no regrets about where I ended up.

I just wish I didn't have to get so bloodied getting here.

But if something I learned keeps one founder from paying the same tuition, then losing all of that created something useful.

That's why I'm doing this.

Every week on the Bulletproof Your CPG Brand podcast, I share an expensive retail lesson so you can learn it before your brand has to pay for it.

If you're listening and you have already paid for one of those lessons, I want to hear it.

What do you wish somebody had told you sooner?

Put it in the comments. Send me a note. It may help the next founder, and it may become a future conversation on this show.

And if you know one founder who is dealing with something we have already covered, don't send them 341 episodes.

Send them the one they need.

That's why I built the new Start Here page. Start with the problem in front of you, and I will help you find the most relevant conversations and tools.

Go to RetailSolved.com/start.

I'm Dan Lohman. Thanks for listening.

And before you make your next big decision, ask yourself one question:

What would have to be true for me to change my mind?

That's Retail Judgment.

Learn the expensive lesson before your brand has to pay for it.

You can get the founder problem finder and the show notes at retailsolved.com/session341