We had the opportunity to interview David Scharfman the founder of Just the Cheese which was featured on Shark Tank. He pitched to the sharks $500,000 for 5% of the company. The sharks counter offered him but David ended up turning down the offers. Here is our Q&A interview with David Scharfman. You can find his products on Amazon & Grocery stores near you!
So I always had jobs and was looking for ways to make money when I was younger. I would buy and sell baseball cards when I was in elementary school. Then I started caddying when I was 12. When I got a bit older, I started playing poker to pay my way through college. I started a little side hustle just setting up poker games. Then when I graduated from school in 2008, I couldn’t find a job because of the economic crisis. I was a political science major. So no one was hiring and I wasn’t qualified for anything. So I bought a one way ticket to China to learn Mandarin. I figured if I can learn Chinese, I’ll be able to get a job.
The first few days were terrible.
I got a tutor and was studying full-time Monday to Friday. I needed to support myself so I would either get on a bus and go into Hong Kong or get on a ferry and go to Macau and play poker. And that’s just how I supported myself. I started a consulting business for American businesses who wanted to do work in China and then tried to start a cheese manufacturing company in the Philippines, which didn’t work. Came back to the US and went to business school for two years. During business school, I started a daily fantasy sports website. It launched one week before the FBI shut down DraftKings and FanDuel. So that did not work out very well.
I really couldn’t have timed that any worse if I tried.We threw down all this marketing money to get awareness and people on the site. A week later the government shut things down.
So it worked out because I just graduated like a normal person and tried to have a real job. I worked in corporate consulting for a couple of years, which I didn’t like, but it was a massively helpful learning experience for me.
Then the opportunity arose to go back into small business, startup life. Even though it was with the family business, it was a no brainer. Jumped out of consulting and back into cheese. So here we are.
I think if I had to boil it down, it was act fast and act smart.
My experience in consulting really showed me that big businesses do not move or react quickly to anything. And rather than getting bogged down and making a perfect product I just wanted to get something online.
We have a good product. We have a good package. I did not want to waste time trying to make it perfect. Just get it and go. My wife was in charge of marketing and identified the Keto trend really early. So we jumped on it and that’s what we decided to do for keywords. I knew how to market to customers outside of Amazon and drive traffic to Amazon. Let’s just try it and see how it goes. And I think by taking that approach of being agile and quick really helped us.
Being in Keto before Keto was the thing is that got us really popular. And because it’s just a cheese snack that happens to be low carb, they are able to eat my product even when they are off the diet. Then when they are off the diet, they still eat it because it’s just cheese!
The first big trade show we did. We didn’t have any distribution. We only had Amazon sales. So we’re not in any retailers. And basically it’s just me standing in the aisle stopping everyone that comes in front of our booth and I’m like, hey, do you like cheese? And just bringing them back to our booth. Who’s going to say no to that?
Sure. I think a lot of people envision being like an owner or founder, being like, no, no, I do the cool stuff and do the strategic things, no, no, I’m not the demo monkey. Well, I do store demos. I did pretty much all the store demos for the first year. I did all the trade show sales. Every sales call. Every appointment. I just had to be a one person sales show. That was it. I don’t think it’s different for most successful entrepreneurs.
Look, if you’re not willing to hustle like that for your product, no one will.
It’s really just about getting people to try it. You know, it’s a snack product, and there are plenty of snacks floating around that are well funded. And we’re still a small family-owned cheese company. So trying to stay ahead of them and getting people to try us is always our biggest challenge. Finding new customers, finding ways to get our product in front of people. That’s a challenge for any business. But I think especially because our category is new. So when we first started it, people were just like, well, what is this? The entire concept of baked cheese is now becoming more normal so that is helping us now.
Also there were some issues with operational efficiency. How do you drive costs down? You know, we don’t have a team of engineers. If you work with General Mills, you have 30 MBA Operational Experts and McKinsey Consultants analyzing your operation. We have me, my wife, my dad, and our cheesemakers.
If I could start over, I would probably trim the number of SKUs that I have. When we first started, we had three flavors of bars and five flavors of minis, and then we added a bar flavor after some customer feedback. I should have stuck to my guns and kept it simple. The new flavor is our least successful product. Our top two SKUs account for 95% volume of sales.
We are in about 3000 retail locations nationwide. We just launched in 844 Targets recently. We are in Sprouts, Wegmans, HEB, Hy-Vee, Lowes Grocery, and more. Last year, we went from 0 to 2,000 stores.
So there’s sort of a two-pronged approach. One is that I went to pretty much every major trade show in 2019. By the time you fly yourself out there, bring your product, pay for a booth it will cost you around $10,000. I met the key account manager for Wegmans through one of the distributor reps at Expo East. So from that show, I got set up in Wegmans. Because I got into Wegmans and was doing well it was more of a snowball effect and I was able to get into more and more stores as I went to more trade shows.
I also have a good broker team. They set up meetings with different stores and I will go out and sell my product. It’s just a real grind. There’s no easy way to do it. There’s no fast way to do it. It’s just grinding, meeting by meeting, phone call by phone call, and trade show by trade show.
Amazon ads and keyword search. We would not be a successful business without it. You really want to target people as close to the point of purchase as possible.
I have tried spending Google ads, but it’s so far away from the point of purchase that there is no point. Whereas on Amazon, if you’re searching on Amazon, you have the highest possible purchase potential. They are clearly looking for something to buy, they just do not know what yet. It’s gotten more competitive and more challenging since we started, but we’ve sort of grown and adapted with it. It’s been the most important tool in our toolbox.
The only thing that I really prepared was that first 60 second pitch. It’s not like they can say cut and do it again. That’s going to be on the episode. So that was the only thing I really rehearsed. Everything else is just about my business. I know it inside and out, so I didn’t really prep.
The scariest part was definitely the pitch. But I think one other scary part was also, you know, at the very end saying no to everybody. It’s kind of scary because you don’t really know if you’re letting people on your team down. You question yourself if you are making the right decision. Did I really make the right decision? Should I have done this? Should I have done that?
Did I let everybody down? Should I just take a crappy valuation just so I could be on TV and work with Mark Cuban?
Those things go through your mind. In the aftermath, I am lucky to have such a good team. The team feels like we did the right thing.
So we sold 14,000 boxes of product in twenty four hours after airing. So that’s about $300,000 in revenue. We sold out of every single unit of every single SKU by the Sunday afternoon after airing.
I would love to be as well-known as kind bars. I could see us growing and driving down costs. I would love to be at a $1.49 retail. I want it to be a shelf staple. It’s a snack for people who love cheese.
The best advice I got from my dad is to run the business like you’re going to run it forever. I think a lot of people get into startups or start their own business with dreams of an exit. And I think that can lead you down paths that aren’t necessarily correct.
If you run your business like it’s going to be yours forever, it allows you to make long term strategic decisions.
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