Sammy Kestembaum: Co-Founder & CEO of PRETZELIZED

Episode 740

On this episode of The Kara Goldin Show, we’re joined by Sammy Kestenbaum, Co-Founder and CEO of PRETZELIZED — the snack brand pioneering a whole new category by combining pretzels with other classics to create two favorites in one. What started with the idea for a pretzel-meets-pita-chip hybrid has quickly grown into a national brand, now found in over 15,000 doors across the country with products like oven-baked Pretzel Crackers and twice-baked Pretzel Pita Chips.
In our conversation, Sammy shares the inspiration behind PRETZELIZED, how he and his team carved out white space in the brutally competitive snack aisle, and what it takes to convince retailers to back a brand-new snack format. We talk about scaling fast, standing out against industry giants, and the bold bets he’s making to grow PRETZELIZED into a household name. Sammy also opens up about the challenges of launching something new, the lessons he’s learned from building other iconic snack brands, and his vision for the future of snacking.
Whether you’re a lifelong snacker, a food industry insider, or a founder curious about breaking into CPG, this episode is full of insights and inspiration you won’t want to miss. Now on The Kara Goldin Show.

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Transcript

Kara Goldin 0:00
I am unwilling to give up, that I will start over from scratch as many times as it takes to get where I want to be. I want to be you. Just want to make sure you will get knocked down. But just make sure you don’t get knocked out, knocked out.

Kara Goldin 0:14
So your only choice should be go focus on what you can control. Control, control. Hi everyone, and welcome to the Kara Goldin show. Join me each week for inspiring conversations with some of the world’s greatest leaders. We’ll talk with founders, entrepreneurs, CEOs and really, some of the most interesting people of our time. Can’t wait to get started. Let’s go. Let’s go. Hi everyone, and welcome back to the Kara Goldin Show. Today, we’re crunching into the snack aisle with my guest, Sammy Kestenbaum, who is the co founder and CEO of an incredible brand that I was not aware of, fully admit, but boy, am I a big fan so PRETZELIZED and Sammy is no stranger to building incredible, winning brands, but with PRETZELIZED, he’s creating something completely new, a pretzel meets pita chip hybrid that’s already shaking up shelves in over 50% of shelves nationwide. So think oven baked pretzel crackers and twice baked pretzel pita chips, all designed to give snackers two favorite snacks in one. And I’m excited to dig into what has in what inspired pretzel eyes, how Sammy and his co founder, are carving out space in a crowded category and what it takes to pioneer an entirely new snack format, I think that that is even tougher than just being a founder. I can’t wait to hear Sammy response on that, but Sammy, welcome to the show. Super excited to meet you and have you here.

Sammy Kestenbaum 2:01
Yeah. Kara, awesome. Love being here. Great to meet you too. Been following hint for so many years. My kids favorite product is still the hint little water boxes that you did. We love those in my house, but you know, love to be here. Thank you so much for having me today on the show, and I want to welcome you and all of your guests into the pret solution. We’re excited to have you guys join.

Kara Goldin 2:22
I love it. So let’s start at the at the beginning, when someone opens a bag of pretzel eyes, what are they really buying into? When you think about this concept and this promise to consumers, to to buyers who are going to be putting your product on the shelf as well. What are they really buying into?

Sammy Kestenbaum 2:47
Sure. Well, the concept of pretzel eyes that I came up with with Jason Cohen, who’s our co founder here, the concept of pretzel eyes is very simple, and one that everyone can understand. Everything tastes better as a pretzel, right so when you think about it, and I’ll tell you the story of how pretzel eyes was really conceived. We had just sold my partner and I, we had just sold our previous businesses, and we were out, you know, doing a little celebratory vacation with our families. And we love going on vacation together with good friends. But almost more importantly, my kids are younger than his. His kids babysit mine, and it makes it nice and easy for us to go on vacation together. So we go out, and we’re having dinner one night at a steakhouse there in the Cayman Islands off a Seven Mile Beach. And that’s the name part of why we named our company that seven mile branch. So we’re at Seven Mile Beach eating at a steakhouse, and the waiter comes over and puts out the bread basket. You guys could all you know, relate to that moment. And on top of the bread basket is one pretzel baguette. And Jason looks at me, and I look at him, and you could hear like the Okay, Kara, you know, standoff going on. And he looks at him, and I he looks at me, and I look at him, and I grabbed the pretzel, and he says, I’m paying for dinner. Why do you get the pretzel? And I said, Well, I’m hungry, and you’re too slow. And he looks at me, and he says, I don’t understand. Why can’t they just pretzelize the whole basket? And I look at him, and I go, wow, what else would you pretzelize? Well, Jason was originally the founder of veggie straws, and we’ll talk a little bit about parm. Chris was the was one of my first brands. But as as snack people, we just started naming all different types of snacks, and we came up with this concept because while we were not the first people to create a pretzel, pretzels are one of the oldest snacks, over 2000 years old. We are the first to make it available in multiple formats, specifically snacks, to everybody. So when we looked at that and we’re talking about what type of products, the pita chip was such a natural way to launch this brand. So we went to one of the largest retailers in the country, which was Kroger. We. Didn’t have initial I think some of your entrepreneurs that are listening will appreciate this. We didn’t have a sample, we didn’t have a we had a concept, we didn’t have a product, we didn’t have a price. And the concept was pita chips is the second largest category, next to pretzels in Deli. But nobody has changed the pita chip, you know, since, really, Stacy’s launched in the 90s. But I like to argue since, you know, Moses walked the desert 3000 years ago and created matzo, which is arguably the first pita chip, that was really the last piece of true innovation to what a pita chip is. So we took pita chip and we took pretzels as the two largest segments in the deli category, and we basically combined them. What if you know Stacy’s pita chip and pretzel Chris had a baby, and out came this awesome, wonderfully crunchy pretzel pita chip that has pretzel on the outside, Pita on the inside. One of the crazy decision points as entrepreneurs, you’re always it’s constant, right? Every day, all day long, you’re making decisions that could have wide ranging effects of your business. But the reason that we did this is we really make a pita chip at this company. Our custom, proprietary process is what turns it into a pretzel. But we have a no line of products that we launched, which is our cracker line, which is the first cracker, excuse me, the first pretzel designed for the cracker set that gives you the velocity of a salty snack, but the usage and versatility of a cracker or a snacking cracker, we went right into that as a secondary offering almost three months after we launched our pita chip. And the genius, if you will, the concept really behind that was there are no pretzels in the cracker aisle today. Pretzels are the number four salty snack category in the country. So we went down the cracker aisle and we said, how can we make crackers better? How can we provide something that no one else was doing today? And the answer we came up with was, combine this great cracker like a cheez, it like a goldfish that everyone knows and loves, like a wheat thin but turn that, transform it into a pretzel, and I’ll tell you Kara the reception that we have had. You know, in only we’ve been selling product for less than 18 months today, and like you said, before we’re in 50% of grocery stores nationwide, pretzel wise was the number one new snack launched last year according to spins. So the concept, the concept is great. The concept is being received phenomenally by both retailers and consumers alike.

Kara Goldin 7:39
I love it. So how long did it take you from that idea sitting, I love the visual of this on that Seven Mile Beach in the Cayman to actually so fun you have to go back there now as a as an anniversary celebration, if you haven’t already, but it’s how long did it take you to actually get that first bag on the shelf?

Sammy Kestenbaum 8:05
Well, it’s funny that you say the first bag, because I was going to say that we are still working on it today, because we’re always improving our product, our packaging every day. But, um, it took about two years, year and a half, just to get the concept into the right spot where we can feel comfortable presenting it and and delivering the right product to the to the consumer, to our shopper. So we really scoured the Earth. We had this concept of a, you know, pretzel pita chip, and we we went worldwide to try to find this equipment, to try to find a co packer and a manufacturer. We failed miserably for a year and a half, we failed every time we tried so many different reasons, but we just, we just kept staying at bat. And that’s a constant theme here at PRETZELIZED and at our last companies, is just stay at bat. Sometimes the product, you know, sometimes the product, the first product you go in with, is not the product that winds up being the home run. You just have to sell enough different products and enough iterations to get that one that, you know, takes off and skyrockets. But anyway, so going back to question, we really just, we scoured the earth, couldn’t find it. We partnered with a co Packer that we had a 20 year relationship on they were out of capacity. We bought the equipment. This equipment is the size of a football field. It’s all customized for us and our products. We basically had to take three different manufacturing capabilities and kind of sandwich them all together to create the product that we have today. So a lot of painstaking effort. But I think something that’s underplayed in our world a little bit. And the guys at keychain, you know, Jordan and his team are doing a great job, but the thing that gets underplayed is the relationship of suppliers and how valuable that is to an entrepreneur. You know, everyone always wants to talk about and you could probably relate. I’m sure you have 10s of dozens. The stories, but everyone always wants to talk about the sale and the retail relationship. And while we certainly have best in class retail relationships, our power is our ability to execute, and what I call our excellence in the execution model. And that really centers around our team, our team members here in the office and brought and our suppliers without our film suppliers, that we have a 25 year relationship, our box suppliers, same thing, ingredient suppliers, our copac network that we’ve developed over the years. Without that, I can’t, we can’t execute on those key programs that allow those retailers to have so much faith in us that we could bring products to them without without a sample, without a price, and just have open conversations. Because if we feel it’s something worth chasing, and they feel it’s something worth chasing, they know that we’re the team that’s going to execute that to the Promised Land,

Kara Goldin 10:55
definitely. So I would imagine, when you were going into retailers, you had some relationships from your previous lives, but also you were developing a new category within a category snacks. So how difficult was that to get people that are doing the buying to to receive your product. So because there’s things called planograms that many listeners will know about, maybe some are not as familiar with, but it’s a big deal. I mean, sometimes I remember when we were first launching hint and we had an unsweetened flavored water I mean, we literally watched, did buyers at some stores say, so which category does it fit into? Because if it doesn’t fit into one of those categories, it’s above my pay grade. I cannot put your product in there. And I would imagine you probably heard some of that as well.

Sammy Kestenbaum 11:58
Yeah. Interestingly enough, I started my career at the Hanes celestial group back in 2006 and I was the brand manager for our Earth’s Best baby food. So believe it or not, 26 year old with no kids, never changed a diaper in my life, and all of a sudden I’m responsible for the formula business, the diaper business, some of our Sesame Street business. And it’s funny that you talk about the categories, one of my favorite stories is when we launched our pouches. And you know, Plum was was kicking our butt. We were late to the game on pouches, but we got it launched. Now, after we launched, we talk about our Sesame Street brand and how we try to trade up, uh, age up, excuse me, that consumer. So we won in consumers that were three and under. But like everybody else, we were trying to find out how to sell pouches of pureed fruits and veggies to older kids, five, seven years old. And every time I went into a retailer, I got the same piece of feedback. I don’t know where to put it. Does it go into my apple sauce set? Does it go into my baby set? Because if it does, you’re not going to age up that way. And what it took was really GO, GO squeeze, creating their category. They didn’t do it by themselves, by the way. They went out to three other pouch companies that were making pouch pureed food, and they said, We know that we need to there’s a category here, and we need to develop this category. It’s not going to happen if we go there by ourselves. So how do we as a vendor community come together to help build out what that category ultimately should be? So my first brand that that I was fortunate enough to create with a with a few a few partners, was a brand called parm crisps. So I was in Hain for about 10 years. Was doing very well there. I was the youngest director in Hain history. I had a pretty big job, and it was an honor, actually, to work with some of the people that I that I worked with there, and got to learn from, like Erwin, Simon and John Kara, and that’s actually where I had the opportunity to meet my current partner, Jason Cohen, who’s one of my mentors, and really someone that I’ve worked with for 15 years when we bought veggie straws from Jason, when Hayne had bought veggie straws from Jason, they needed somebody that understood the product portfolio, that can help take j help capitalize on what Jason was best at, which is club sales. He was the king of Costco at the time. Still is, but it was really a function of, how could Sammy help bring all these different products, right, and help Jason bring them into Club? Well, like any, like most, most entrepreneurs wound up, Jason wound up selling his business and eventually having an earn out and leaving the company to start his next thing. And I eventually left with him about a year later, and we launched a product, and the product was called dipping chips. And I don’t know if any of you or any of your fans or your guests or your senior fan base, know, dip and chips, but dipping chips was an absolute failure, and I love talking about my failures, you know. So Kara, and I’m sure you’re the same way as an entrepreneur, we are trained to find the failure in everything, to make our product, to make our offering, to make our pitches the best they can be. And the way you do that is you learn from your failures. So we we launched dip and chips. We built it out to about 30% of grocery stores nationwide, and within a year, we realized we had a great product and a cool looking brand, but nobody wanted it. There weren’t consumers for it. People wanted less premium chips to go with their deli dips and other items. So we had a problem. A great product, great distribution, nobody walked in. I realized that. We realized that pretty quickly, and we found this very small company called Kitchen Table bakers. It was a friend of a friend. I had met the founders in the past. We I love the product. We talked about doing a deal. It never happened. I’m going to tell you the palm Chris story, because I think it’s one that a lot of your, yeah, a lot of your fans here will resonate with so we had talked about this, and just we didn’t do a deal. Couldn’t make anything happen. We love the product. Stay in touch. Almost a year later, I had a gentleman sitting in my office that used to be a Sam’s Club buyer, and I’m telling him this kitchen table Baker story, and as I’m telling him the story, he gets a call from a buyer. Now we all know any, any of us who have sold a buyer. When, when a Walmart calls you, when a Sam’s Club call it, a Costco Whole Foods, when someone buyer calls you, I don’t care who they are, you pick up that phone and you talk to them, right? So he’s so he picks up the phone, and he starts hysterically laughing. And I said, Ben, what? What’s so funny? He says, Well, the Sam’s Club buyer that I’m talking to right now is looking for a parmesan crisp. Do you know anyone that can can make that item? And I said, Well, I know these guys that I was talking to the kitchen table. Bakers team was there yesterday. I spoke to them. They pitched Sam’s Club. Why won’t they buy the product from them? And very simply, it was, we don’t know them. We don’t know if they can make four pallets or six pallets, let alone the 600 pallets we would need to start the program. And I said, Well, what if we bought the company? Would you? Would you buy it from us? And she said, Absolutely, we know you guys. We’ve been doing business with you for years. So I called Seth, Seth and Barry. I called Seth and Barry. I said, I got good news and bad news for you. Bad news is, he didn’t get into Sam’s Club. The good news is, if we can do a deal, we have the purchase order in hand. Well, 30 days later, we closed. We took an operation that was running 30 hours a week. They had a very small, 4000 square foot facility. We took a production that was running about 30 hours a week, moved it to a 24/7 operation, and I like to say we literally rocked it to the wheels fell off. The wheels were falling off the racks. We were running this place so hard. And on September 19, 2016 we we were able to deliver 600 pallets of product to Sam’s Club, and that is literally what started the palm Chris brand. There is a there is a theme here, and that theme is we partner with our retailers. Our retailers know what’s going on in their stores better than any piece of research we can do. So whether it’s Kroger, whether it’s Whole Foods, whether it’s Costco or sample, we partner with them to launch our brands. It’s how pretzel eyes launched. It’s how palm Chris launched. They get invested in what they’re doing. You find the right buyer that supports you in that way, and really the sky’s the limit, and that’s how we build our relationships here. So we just go back to your question of category. So that’s all we do. We only build categories here. We don’t do anything. Me too, if you think about it, when Jason had veggie straws, there were no puff snacks, extrinsic pellet snacks, excuse me, at the time, being sold in the United States. But yet, there were billions of dollars of potato chip sales. Jason found a way to bring that snack format in change what everyone knows and loves, which is a potato chip. Make it crunchier, make it have less fat. Boom. New Category has been created. I did the same thing with parm, Chris, I did not create Parmesan cheese. I wish I did. I’d be living on a mountain somewhere, but, but I found, we found a way to make parm Parmesan cheese, shelf stable, snackable, high protein, no carb, no sugar. So again, created that cheese crisp category. That is exactly what we are doing here with pretzel eyes. We didn’t create a pretzel. We transformed a base product, a pita chip, a cracker, a you’ll find out in March what the next category is. But we transformed. These products into pretzels category, but, but, but the theme here is, it’s easy to understand. We’re not asking consumers to make a huge leap. You know, look Ali pop and poppy did such an a phenomenal job. Really impressive, changing that consumers understanding of what soda could be. I’m not that good. We have to do things that are easy to understand and easy for the consumers to latch on.

Kara Goldin 20:29
So what is the most unexpected way you’ve seen people enjoy PRETZELIZED?

Sammy Kestenbaum 20:38
If you saw my daughter’s covered in pretzels and marshmallows this weekend, we love pretzel s’mores. Actually, at my house, that seems to be that certainly seems to be a fan favorite with our kids. And we just launched for the for holiday this year, we launched a cinnamon roll version, so now they’re covered in cinnamon and marshmallow all over the place.

Kara Goldin 21:04
Was there, was there a flavor you talked about previous failures, but was there a flavor that you’ve launched that you maybe thought was going to be killer and it wasn’t or reverse? Maybe there’s one that you launched that you didn’t think was going to be so great, and it has just totally surpassed your expectations. For it

Sammy Kestenbaum 21:29
Sure. Well, we just launched our Mediterranean flavored pita chip. It has great inclusions. It’s not a seasoning. It is a is an you know, the spices and herbs are all baked into it, Mediterranean you would assume would sell. Well, I did not know, in three weeks, it would become our number two seller. It seems to be a fan favorite in the office. But you know what? It’s so funny, because flavor is so it has such personal preference. And what I mean by that is, when we launched buffalo, I actually hated our buffalo. I was not a fan. It was too vinegary for me, not enough spice. Took me about five months. It’s now my favorite product that we make, and the way that I eat it, or the way that actually, I got to credit my wife Lauren with this, the way that she eats it is with chicken salad. So the buffalo pita chip, pretzel pita chip with chicken salad is a go to favorite lunch at home and now in the office too.

Kara Goldin 22:27
So you have raised capital, and in building this business, and with raising capital a year, I would imagine that you have a board of directors as well. Entrepreneurs have come to me over the years. I’ve been an entrepreneur myself, and know firsthand that the board is so critical. And in any entrepreneurs business, you don’t necessarily, if you haven’t raised capital, you don’t necessarily need to build a board yet, but once you raise people definitely want to have a board. What lessons have you learned in building out your board that you could share with others?

Sammy Kestenbaum 23:11
So I think it might go without saying that you want complimentary skill sets on your board. If you’re an entrepreneur that has not had a successful exit or launched a successful product which look got, you know, everyone starts somewhere. It’s those advisors, those key people that you lean on. When we started, Jason, you know, was on my first board, somebody that I you got to trust these people to, right there is trust this. It gets thrown around a lot like the word partnership. Every retailer wants to use the word partnership with us, but, but you have to be secure in yourself enough to really listen to the people that you put in in those places. And I think when, when you look at it and we’re a little different, because, you know, both Jason and I have had a few successful exits at this point, I think it goes back to why PRETZELIZED has had the initial success that it has. And the number one thing I tell people, the number one reason for that straight up, simply is we’re proven operators. We’ve done this before, the faith that our suppliers, our retailers and our employees, quite frankly, have in us to go make sure that we are executing with excellence every single time that we only make, only sign up for what we can make, deliver at the price and quality that we’ve committed to. That is really what sets us apart from the average person that’s starting a business today. I think it’s, I think it’s defining success when you look at your board, no different than defining success with what you with how you look at your business, right? Are those skill sets complimentary when we look at PRETZELIZED Why? Why has this been successful? As I mentioned? From before. It’s very easy to understand everyone on this call, everyone on this podcast, you’ve had it, you’ve had a pretzel, you’ve had a pita chip, and somewhere in your mind you’re going, huh? I could kind of see what that experience would be like, right? So I think, and then I and then I think it’s where you’re going as a business. You know, when I started my first company, you know, over 10 years ago, at this point, the market space was very different than where where it is today, and especially where it was during covid. You could put, you know, 20 years ago, you could put the word organic on anything, and it all of a sudden became a better for you. And now you’re organic, and you’re part of the trend. 15 years ago, everyone started shopping in the perimeter of the store. That’s one of the reasons that we really focus on deli and perimeter, is because that’s where that new what I call the new shopper. It’s not that necessarily the organic shopper or the functional shopper. I put all we put all these people in one bucket, really, because they are the new shopper. They are where where retailers need to be headed. They’re where retailers and brands need to be going. We have talked about PRETZELIZED for half hour now, almost a half hour, and we haven’t talked about the fact that we’re oven baked and all natural and non GMO verified. Why? Because that’s tablespoon. We would never product that doesn’t meet those requirements for us. It’s how can we take those kind of niche, specialty terms and bring them to the masses? So when we talk about parentalized, we talk about it as a mass brand, like skinny pop, like veggie straws, I guess you’d argue even like a siete is moving more towards mass now, but that’s how we talk about it, aspirationally, not we make our product organic, because, you know what? At the end of the day, the conventional consumer, once they see some of those terms, get get scared, right? They they my brother, who’s a candy Holic, would never pick up smart sweets, even though smart sweets is an amazing product, he just won’t. It doesn’t fit where that mass consumer is is. But you know, what does the fact that every mass consumer has had pretzels, the fact that every mass consumers had pita chips. So with us, yes. Taste guys, gals on the call taste is king. Don’t want products that don’t have phenomenal taste, crunch, texture and something different. But remember that you eventually have to get enough scale, and you have to market this to enough consumers where you can go get that exit or that, whatever that end game you’re looking for to get into 20% of households nationwide. It all starts. It all starts and ends with the same thing. Offer a great tasting product in a package that consumers are looking

Kara Goldin 27:53
for, definitely. So last question, what’s the PRETZELIZED snack you crush on? If it’s a, you know, 11 midnight when no one’s no one’s there to enjoy a little snick snack with you. What is it that pretzel eyes? What would be your go to? I got to have that.

Sammy Kestenbaum 28:16
We could talk after this call. How you know my closet eating habits. We’ll figure that out eventually. But really, for me, I’ve been, I’ve been killing that buffalo. There’s something about the heat and look, it’s our least selling item. It’s a fan favorite. For me, it’s not my you know, I would sell sea salt all day long. 60% of our sales are going to be sea salt. But for me personally, that buffalo, just like I used to feel with Andy caps fret fries that you know when I used to eat those 100 years ago, just keeps coming right? That heat just feeds the next chip. Now I do regret it when I eat the whole bag and I feel dehydrated and salted out. But while I’m doing it, I certainly love it, but I will say I have a new favorite. I have a new guilty pleasure. I want to pull this out. Yeah, am I supposed to roll away during these things? Probably not. So we just launched our cinnamon roll. I showed this before for the holidays. This cinnamon roll with cream cheese, cottage cheese, or Haagen Dazs vanilla, that’s been lights out.

Kara Goldin 29:18
Spectacular. I love that well, it’s I cannot wait to try that one. So Sammy, thank you so much for joining us today and sharing your journey, the pretzel eyes journey, and everything that you’ve that you’ve done, that you’re doing, from the spark of an idea to a national launch in over 50% of the country. I mean, relentless execution can create an entirely new company, and that’s exactly what you’ve proven so congratulations for everyone listening. You can check out [email protected] and follow along on their social. Channels as well, and as always, if you love this episode, please share it. Tell everyone that they’ve got to try this product. PRETZELIZED. Sammy, you are awesome. So thank you again for joining us.

Sammy Kestenbaum 30:12
Thank you and everyone. Welcome to the PRETZELOUTION.

Kara Goldin 30:15
Love it. So thank you. Thank you. Thanks again for listening to the Kara Goldin show. If you would please give us a review and feel free to share this podcast with others who would benefit. And of course, feel free to subscribe so you don’t miss a single episode of our podcast. Just a reminder that I can be found on all platforms. At Kara Goldin, I would love to hear from you too. So feel free to DM me, and if you want to hear more about my journey, I hope you will have a listen or pick up a copy of my Wall Street Journal, best selling book, undaunted, where I share more about my journey, including founding and building. Hint, we are here every Monday, Wednesday and Friday, thanks for listening, and goodbye for now.

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