While training as a competitive fencer, Nona Lim saw firsthand what whole, clean foods can do for your body. Since 2006 she has been ahead of the curve in creating organic, clean label food products, including one of the first ever meal delivery programs.Her eponymous brand, Nona Lim, centers itself around authentic Asian comfort foods including broths and noodles made with fresh, clean ingredients. Listen as she describes the process of building her business from hand packaging soups in her kitchen to occupying grocery shelves nationwide.Every business has to start somewhere and the question of scaling can make or break a company’s future. Luckily Nona gives some great advice on how to test your product before you go all in and what to do when it’s time to level up.
Nona Lim: [00:00:01] I think that with all the successes, there are always peaks and valleys. And so I think sometimes it can’t be easy when you’re going through kind of the valley. And feel really alone and sad and stressed, but know that, you know, it happens to all of us.
Sam: [00:00:20] Our guest today has a unique and wonderful journey all her own. Nona Lim is the founder of her eponymous brand of prepared foods. Growing up in Singapore, her foodie-DNA emerged early. Nona worked as a consultant in London before moving to California, where she became a competitive – wait for it – fencer. As an athlete, she realized the importance of whole clean foods. So she then became a certified nutrition consultant. She started Nona Lim in 2014 to share her favorite dishes from her childhood, made with the fresh ingredients available in Northern California. I’m totally addicted to her slow simmered bone broths with healing herbs and perfect fresh noodles. Nona: It’s such a pleasure to have you with us on the show today.
Nona Lim: [00:01:32] Thank you so much for having me. I’m excited to be here.
Sam: [00:01:36] So, Nona tell us, what was the motivation that started you down an entrepreneurial path?
Nona Lim: [00:01:43] My entrepreneurial path actually started much earlier than2014. So when I first moved to the U.S., as you mentioned earlier, I was fencing competitively. At the same time I thought, maybe I’ll try something out as well. And I didn’t really want to go back into consulting and I thought it’d be a good time to experiment. And so in the Bay Area, I was just so blown away by the farmer’s markets. You can get such amazing ingredients. And it’s just awesome. But I then realized that a lot of people don’t have time to cook from scratch. I certainly didn’t as I was, you know, training pretty much every day and competing on weekends. And so my first venture was to launch a meal delivery program back in 2006. So technically, you can say that I created that category because it was started before, you know, HelloFresh and Blue Apron and all the other incumbents. And it came from just a personal need to solve a problem that I was facing.
Sam: [00:02:48] That’s so interesting. Nona. So what was your meal delivery company called?
Nona Lim: [00:02:52] At that time it was called Cook! SF. I don’t think it was the best name. But that’s what happens when you’re kind of like scrappy on a shoestring budget. Just came up with something and just did an experiment, back then, just to see whether it will work.
Sam: [00:03:08] Yeah, absolutely. And how long did the company last? How long did you keep it going for?
Nona Lim: [00:03:15] Actually it ran for a few years. And when I first started it, literally, you know, I took some of my management consulting background, ran a focus group, or rather, I recruited about eight to 10 couples and delivered meal kits to them once a week, and in the end of about a month, we would have a focus group and I’ll get feedback on what they liked and didn’t like about it. And that’s how I started the business. So that kept going for actually quite some time; for about, you know, four or five years while I was still fencing competitively. So we’re just trying to do two things at once, which is probably not the best if you’re trying to start the business. And then we created the first food based detox program that was delivered. And that was when I started everything, that was, as you know, gluten free, dairy free, organic, clean label, sustainable seafood, grass fed beef, all of that in back, I would say, more than a decade ago, before it was trendy. Until I pivoted again and then took some of the soups, which were snacks on the program, and decided to go into retail, into grocery stores. And it was at that time that I decided to shut down all the online mealkit delivery business, because having done it for many years, I just felt that the customer acquisition cost was really high. There was a lot of packaging and the cost was really high and it doesn’t feel like it was something that could be eventually a truly profitable business. And so then I decided to focus on retail. So it was really kind of idea number three, which is where we are today.
Sam: [00:04:55] So interesting. So I definitely want to come back to this later in our conversation, because you’ve said so much in there, that’s really worth talking about some more. But I want to reference something: a natural products industry veteran and chef Moriah Abraham said recently, “the reason that health in general is getting so prominent is people are finally starting to connect the importance of what you consume to longevity and to health overall. There’s almost nothing off limits now”, he said. You make a line of really healthy but perishable prepared foods. Did you see this change in consumer behavior? You know, kind of before it happened, because you started your company in 2014, you know, you had your previous company as well. So talk a little bit about perceiving that change before it became mainstream.
Nona Lim: [00:05:50] Oh, yeah, absolutely. You know, as I mentioned, I started the detox program, which is based on an elimination diet. So I was working with a lot of functional medicine doctors, nutritionists and dieticians then. So, you know, the whole concept around food as medicine was something that was very popular in a much smaller circle. So that was something that I was doing. But the concept of clean label didn’t exist. Now, if you talk to somebody about clean, clean label or clean food in 2010, they will laugh at you. Is it? Oh, you mean that using dirty ingredients, of course, all ingredients should be clean. So that concept honestly didn’t even become mainstream until around 2014. So, I definitely when I first launched the business, I struggled a little bit as well because, you know, I launched the very first refrigerated bone broth, and that was before the Proteau article in New York Times was published. And so people didn’t understand what bone broth was, didn’t understand the health benefits or that you can drink it and not just use it to make gravy and other things. And so, you know, it definitely affected me even when trying to sell to consumers because I think I was way too ahead. And by 2016, I think that trend started becoming more mainstream and became much easier to speak to even retail buyers and grocery stores. They understood what I was talking about, you know, we started seeing a lot more traction as well with consumers. And so I definitely saw the evolution of that just even in the last six years.
Sam: [00:07:32] Yeah, super interesting. So let me take you back to the moment where you decide to start Nona Lim. You’ve sort of had these learnings about bone broths and sort of this concept of soups as meals coming out of your first company. What were the first few things that you did to then take your idea from that concept to an executable business?
Nona Lim: [00:08:06] You know, I think literally when I first started it, when I thought that, you know, there might be some opportunity in bringing this product and making it more mainstream in grocery stores. It was very much still done as a, I would say, you know, very quick prototyping, you know. Try it, if it fails, it’s okay, but try it quickly. So that was kind of the approach that I took to it. And so then when we first launched the very first soups. We would be filling it by hand with a I don’t know, like a chemistry lab funnel. Filling it and weighing each one. And then buying like a heat sealer for like $100 on Amazon and sealing it by hand just to get the product out there. And I was going into the local grocery stores in San Francisco, giving them actual products to try, letting them taste it – in other words, driving products and doing our own delivery. And so I think that was a lot of it, just trying it out. Which is not spending a lot of money, putting a lot of money behind it with, you know, co-packing and committing to hundreds of thousands of products. But just literally just doing it in a little facility, you know, with a 20 gallon pot and filling it. I then managed to apply for a loan with a nonprofit called Working Solutions and, you know, to buy some equipment to actually make it more scalable. So I would say that, you know, the big thing is that if you have an idea, try to test it, try to get results and see whether it works and try to test it in a way that would be very quick. So you can learn from your mistakes and you can get to it and not spend too much money behind it because it takes time to figure things out. I always like to try and do A B testing or to have an hypothesis and then test it, if it doesn’t work, we tweak and redefine. So that was pretty much kind of the push I took to make an executable opus.
Sam: [00:10:15] That is such excellent advice. It really goes to the heart. I mean, it’s like, you know, I wish you could be an infomercial for ideamix because, you know, one of the things that we say is it’s really hard for a lot of people to find, you know, exactly what you’ve described, the sort of Band-Aid and toothpick version of their idea, because everyone sort of dreams, you know, this dream. And they think of this like a beautiful looking product, the way we encounter it, you know, in stores or service, if it’s not a product. And then the impediments to how do I take that perfect product and actually create it with the limited resources and time that I have. And it’s so important to get to that kind of Band-Aid and toothpick version and just get out there and start testing it as you did.
Nona Lim: [00:11:09] Absolutely. And that’s why, you know, a lot of other food entrepreneurs use the farmer’s market, which is the best place as well, because then you got to talk to consumers directly. So for me, what I did was I did a lot of installed demos myself. Right. When we first had those products so that we could be talking to consumers and understanding, you know, what they liked, what they didn’t like and just learn it that way. And so that was how I started in the early years.
Sam: [00:11:37] So did you Nona, when you– I’m sort of interested by this contrast between when you started your first business, which was this sort of ready made meal delivery, and you put together a test group of some 10 or 20 couples to try it with. When you started Nona Lim, you went straight to the food stores and wanted to sort of test it with them and really, you know, kind of distribute through them as opposed to direct-to-consumer. You talked a little bit about this because the customer acquisition costs were so high in your first business. And at the same time, did you worry about finding that dedicated group of sort of tester customers to really get you the feedback that you wanted when you were going out with Nona products?
Nona Lim: [00:12:29] You know, that is a really good question. I would say that the initial, early products that I launched with, like the carrot ginger soup for example, it is a product that I was serving when I was doing my first business meal kits. So I know that it is a product that is very well received and has a great flavor profile. And I think I probably am the first brand that put carrot ginger soup out on the market and now it’s a very common flavor. But the challenge is that going DTC back then, especially in 2014, is that there were not a lot of fulfillment partners that would fulfill your products nationwide. And given that it is refrigerated, just to ship that product nationwide, it’s not feasible from a single location because it takes five days ground to get from the West Coast to the East Coast. And the next thing you know, if you have to ship it by air, you’re now looking at two day air and it could cost you seventy dollars just for shipping, for a product that might cost you up to ten dollars. And that was why the DTC aspect of it didn’t work as well, for me.
Sam: [00:13:43] That totally makes sense. So you go out to these initial stores, they, you know, kind of love your product, agree to carry it. You talked about sort of doing this, you know, really kind of from your kitchen with a 20 gallon pot, initially. How did you then go about scaling the business?
Nona Lim: [00:14:11] You know, what we did was that– we did that for a while. And so I was kind of honestly, the online business was kind of subsidizing the retail business. And so then I shut down the online business after that, overlapped for about a year. And I decided that, you know, we need to get more than just a 20 gallon pot. So we got a second hand 40 gallon kettle. I think it was probably used by some big manufacturer, who now wanted to get rid of it. And so instead of paying forty thousand dollars or sixty thousand dollars for a brand new kettle, I think we paid like eight thousand dollars for it. Then we borrow a little bit of money. We actually got a loan from Wholefoods. They used to give out loans to small local food producers and we got a loan from them to help us with our filling equipment. And literally our labor cost improved by a factor of 10, instead of doing it by hand now the fill rate is about twelve per minute, fifteen per minute. As a way of getting equipment. We were able to then scale up. But it was still very much, I would say still very much, very small. But it was no longer manual…it was like semi automatic fill up. And the biggest challenge is that sometimes when you look at scaling the business, it is entirely non-linear because just so many different parts of the business you have to scale. How do you scale your growth, your revenues? You know, how do you scale the production – capacity is not linear. And sometimes equipment is not linear. And how do you scale your team and how do you scale your processes and your systems? So what I would say is that, you know, it was a little bit of stretching ourselves beyond what we can do and then getting some– putting more money into the business through angel investors and some early stage VCs that allow us to invest in the business, the scale it before the growth came. So there was a lot of back and forth with trying to scale the business. And I think that is the part that is really tricky because sometimes, you know, we get it wrong. And if you scale one too early before you get the revenues, you end up spending too much cash. And so it’s just something that I would say it takes a lot of tweaking.
Sam: [00:16:32] Yeah, it’s a very inexact science. I totally agree with you, I think that’s one of the biggest challenges that every entrepreneur faces: how do you try to synchronize the growth in different elements of your business? Because if you do one and not do the others it immediately exposes the stresses and tensions in it.
Nona Lim: [00:16:58] Yeah, and I think that– it was funny, I was just speaking with another entrepreneur who has an amazing, amazing teriyaki sauce…definitely doing it cheap and scrappy has its benefits, especially the environment that we’re in right now. Right, because the challenge is that when you do have a lot of resources from, let’s say, your families, then you are expected to really, really accelerate that growth. And so that the mistakes that are being made become much more costly. And so a lot of it is about the balance of how much time do you have to grow the business, how much resources you have. And just balancing those two as well. Sometimes if you’re in a very competitive space, you don’t have the luxury of time and you have to accelerate those growth and you may have to invest a lot more resources. But if you have a little bit more time, then, you know, growing it a little bit more slowly to make the mistakes, to figure everything out before you kind of fire that rocket ship. I think it’s definitely a better approach, in my opinion.
Sam: [00:18:13] Totally makes sense. I’m going to have to get the name of that teriyaki sauce, by the way because I love that. You know, you talked about raising money from venture capitalists. And in a sense, you’re sort of in the thick of it or at the heart of it with your company based in the Bay Area. Tell us a little bit about your experience of fundraising. You’re a female founder. It’s so well-documented that female founders generally have a harder time raising money. At what stage did you feel like you needed external capital? You know, kind of what were some of– what made it very clear to you that now was the moment? And how did you find the right partners?
Nona Lim: [00:19:01] Right. Those are all such good questions. You know, I think that around 2017 or so 2016, you know, having started my first company on a part time basis and fencing competitively. And so it kind of dragged on a little bit. I decided that, you know, I gave up fencing in 2012. And so I decided to really have a real go at the business in 2014 with the CPG. With Nona Lim I thought, you know, let’s give it my all. Let’s go get some capital so that we can, you know, make sure that the business is not under funded. And so that was the intention. Which is, you know, I think that we should do that. At the same time, around that time as well, I think there was a lot, I would say five years ago. Four or five years ago, there was a lot of money flowing into food and beverage. And so we had a lot of investors actually reaching out to us saying, hey, your brand looks interesting. You look like you’re doing something pretty innovative and different in the marketplace. And, you know, are you looking to fundraise? And that was when I then looked at it and said, maybe it’s time. Having said that, I would say that fund raising or looking for investors, is a decision that is more important than getting married. They used to say that you know? It’s a bit like getting married, right? Like, you have to really find the right partner because, you know, there’s so many things. And so you need to make sure that you have aligned in your vision, you’re aligned in your values, and you are aligned in many different ways. I personally think that it is actually because I’m getting married because, you know, with getting married, you can still get a divorce typically, you know, whereas with an investor, if you get the wrong investor, you might not even be able to get divorced easily because they would be there for a very, very long time. Especially if there’s no– because there’s usually no..you don’t pre-negotiate exits, right? Unless you’re looking at selling the company. But if you find out, you know, maybe six months in, oh, that’s not really the investor I want. You might be stuck with them for a while. So I would say that you should definitely, definitely take your time and research the investors. I think that sometimes as well, you know we, as entrepreneurs, we spend a lot of time thinking about who our ideal consumer is. We look at market segmentation. We look at what the demographics and psychographics and you come up with the whole profile of who your consumer is. What they’re needs are and how we would fulfill those needs. But we don’t actually apply the same rigor when we think about investors. I certainly didn’t when I first did it. And actually I think that investors are all not the same. There are investors that– you have angel investors, you have VC’s and then you have gross people looking at gross equity. You have family offices and so on, so forth. And they focus on different industries or they focus on different stages of the business or they have different IRR , like rate of return requirements and they have different timelines that they work with as well. And they do have different playbooks that they believe in. So there’s so many differences and it actually makes a lot of sense to really try to understand them better, try to understand which segment you’re really going after. And so I think that it’s important to actually talk to investors and get to know investors, maybe even 12, 24 months, whatever, before you even fund raising so that you really have a good understanding about who they are. And both of you have built those relationships before you need to cash.
Sam: [00:22:53] Nona, who do you view as your competition and how do you think about product and brand differentiation?
Nona Lim: [00:23:04] That is a great question. I think for a long time, it was hard for us to define a competition because we are trying to create a brand new category. And so we see ourselves as a fresh Asian platform. You know, having fresh rice noodles, ramen noodles, noodle bowls, bone broth, but with Asian slant. And so many times we would be in our own set in the store. And it was tough for us to say who’s our competition. Would it be the private label soups that you would get in the soup aisles and prepared foods? Would it be the shelf stable bone broth brands that you find in the center aisle? Or would it be the dry ramen noodles that you get in the center aisle? Sometimes we’re all alone in the vegan set with the tofu and with the vegan cheeses. And so I think for a long time it is one of the biggest challenges to think about who our competitors are. And in some ways, we almost think of our competition as possibly all of them. I think that what we try to do is to look at who the consumer is going to buy as an alternative to us. And that would be who our competition is.
Sam: [00:24:26] Well, I certainly know the answer to that because I started buying your soups at the beginning of the lockdown. I discovered them at Whole Foods. And then they ran out at Whole Foods. And I asked for a couple weeks: when are they coming back? And they said, well, we don’t know – eventually they’ll come back. And so it sent me to, you know, the sort of– I’m going to use the wrong term here because, you know, I’m not as literate in this as you are, but the sort of the aisle that has all of the tetra packed soups. And, you know, I went searching for some sort of, you know, bone broth type idea there and then tried some of those, of course, that were horrible in comparison. So it sent me straight to your website to actually buy direct.
Yeah, I think that question of competition is so interesting because it’s both, you know, how does your customer define your competition, but in the end, it is how does the consumer define your competition? So last question, Nona, as you think about this journey that you’ve been on, what’s a lesson that you feel you’ve learned over that time that other entrepreneurs should know?
Nona Lim: [00:25:43] You know, everything always takes longer and costs more. So whatever that you have planned, maybe multiply the time by three X and however much you have budgeted, multiply it by another three X. That would be kind of one lesson. I think the other one is that it’s easy to hear about all those great successes. When you read about it. Right and go and get blown away by the brands that have, you know, amazing exits, for example, or all like the HiHo top that went from zero to 400 million dollars, you know, within under three years or something like that or five years. But I think that with all successes, there are always peaks and valleys. And so I think sometimes it can’t be easy when you’re going through the valley and feel really alone and sad and stressed, but know that it happens to all of us. There are really, really good days and bad days. So it takes a lot of pain. It takes a lot of grit. But you know, there are highs as well. So for entrepreneurs, it’s just to hang in there and really enjoy the journey with all the highs and lows.
Sam: [00:26:58] That’s such great advice. I really love that. Here’s another fact you need to know. Once you’ve become mindful about the role that food plays in your life, it’s hard to go back. And there’s so many people coming out with different solutions in different ways to define better for you; that it’s no longer a one size fits all thing. That’s according to Mike Lee, the founder of The Future Market, a food lab working to understand the change in food systems. Thank you to Food Dive for the comments cited in today’s show and data. And Nona: we love your story and I’m a huge fan of your products, as you know. So we’re thrilled to have you here today. Thank you for being with us.
Nona Lim: [00:27:40] Thank you for having me.
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