Nick Hamburger: Co-founder & CEO of Quevos

Episode 270

Listen to Co-founder and CEO Nick Hamburger of Quevos share the story of building the world’s first “crisp” out of egg whites. Quevos was born when two budding entrepreneurs dropped out of college to pursue their dream of creating a delicious low glycemic snack, but it really took off when they were invited on the show Shark Tank and secured an investment from Shark Danel Lubetzky. This Chicago based startup’s story will not only leave you hungry, but also wanting more great Founder’s stories and lessons for sure! On this episode of #TheKaraGoldinShow.

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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 down knocked out. 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. It’s Kara Goldin from the Kara Goldin show. And I’m so excited to have my next guest here we have Nick hamburger, who is the co founder and CEO of Quevos and if you don’t know about Quevos, you need to know about Quevos. It’s an amazing, amazing, amazing product that Nick co founded with Zach and such a great story. So Quevos was lucky enough to get to try it. I had actually seen it on an episode of Shark Tank many not too long ago, but a little little while back, and it’s a low carb snack that actually uses egg whites as sort of a base. So really, really incredible. Nickel. Tell us a little bit more about this. But as co founders, Zach was a type one diabetic, and was always looking for more than anything low carb snacks that were good, right and tasted great. So he just decided to go ahead and start a company around it while they were in college. So incredible, incredible story. Together, they experimented and tirelessly decided to just go ahead and build out this product of their dreams, which as I said, is amazing. So the company started in 2018. And it’s based out of Chicago. And as I mentioned, you may have seen it on Shark Tank. If you haven’t, you should go back and YouTube, the episode. It’s a lot of fun. And Daniel Lubetzky who’s the founder of kind bar and also one of the sharks had made an investment. And also the Kraft Heinz Springboard incubator is also where they incubated this product too. So I’m excited to hear I always love hearing about different incubators that are out there. So super excited to hear more. So thanks, Nick, for joining us.

Nick Hamburger 2:38
Yeah, thanks, Kara. Great to be here. And thanks for that lovely introduction, doing some of my sales pitch and, and product background for me. So you did a great job and really happy to be here with you.

Kara Goldin 2:50
Oh, that’s awesome. Well, okay, so let’s start at the beginning. I’d love to try and get a picture of who Nick was as it as a kid. And Where’d you grow up? And who did you think you wanted to be when you grew up?

Nick Hamburger 3:04
Yeah. So I grew up in the northern suburbs of Chicago. And I’m still actually about to move out of my parents house, finally. But I’ve been in this house for almost all my life here. And yeah, you know, growing up, I think I had a couple different things I thought I might want being an entrepreneur was was really present in my mind. And for Zach too. We had a business in middle school, selling imported sodas, kind of like, sneakily under the cafeteria tables, because it wasn’t allowed to sell any products in school. But so we did that. And entrepreneurship was on the table. But I also, you know, was a little bit, I guess, ambitious with my tennis game and thought maybe I could be a professional tennis player, which really never was possible. But But I wanted that, and then, you know, also kind of drawn towards different, like leadership opportunities. So I thought, I’m Jewish, I thought maybe I’d be a rabbi. Maybe I go into politics. So those are all the different things kind of swimming in my head growing up.

Kara Goldin 4:07
I love it. So what inspired you to obviously we heard the story about Zack. I mean, he had a personal kind of problem that he was trying to help more than anything. But how did you to connect and how did you get involved in this?

Nick Hamburger 4:24
Well, is that Ken I had been close friends since we were nine years old. He’s lives like two minutes away from me in the suburbs here. So we had that business in middle school together and we kind of always had dreamed about doing a business together. And so basically, he loved to cook eggs is a low carb snack and love the specially kind of the crispy edges of an omelet, or a sunny side up egg that are left in the pan when you’ve cooked eggs. And so he was like, hey, if eggs can be, you know, thin and salty and crunchy, why couldn’t we make a chip out of them? And he told me this idea for like an egg based chip. And we’re both like, that’d be kind of the healthiest snack in the snack aisle if we could make that into a product. So he told me about it. And we kind of immediately started working on prototypes, and got, you know, pretty interested in launching it. So it was really just him telling me the idea. And then we slowly worked on it and kind of got more and more serious.

Kara Goldin 5:22
That’s awesome. So you started it when you were in college? Like, talk to me a little bit more about that, like, do you remember when you thought, Okay, now it’s time let’s go do this. Are you taking a class? Or how did you sort of really start to build out the business?

Nick Hamburger 5:37
Yeah, so our first prototype patches were actually right after senior year of high school. So really early, and then we kind of had these prototypes that we were sitting on. And then I heard about a business contest at University of Chicago, which is where I was in college. And I told Zach about it. And we’re like, we should really apply to this. There’s like funding, you can win and some mentorship opportunities through that program. And so we applied to the business contests we got in, and then it was a 10 week, kind of like a crash course incubator counted as a course in college. And then it ended with a pitch competition at the last kind of that was the final part of the class. So we did that course, we won the pitch competition at the end, got $15,000, which, as I’m sure you know, is not nearly enough to launch a brand in this space. But but it was exciting for us and gave us a ton of motivation. So that’s where it went from this idea that we were sitting on, we thought maybe when we graduated college, we would go like full time. But that our second year of college, we won this contest, and we were like, full steam ahead from there.

Kara Goldin 6:45
That’s awesome. So how did you come up with the name Quevos?

Nick Hamburger 6:49
Yeah, you know, we spent a lot of time thinking about the name. And at first, we wanted to do something kind of more basic, just describing the product. So we call them power chips, because of the protein aspect. And people thought like, Oh, is that like a faster computer processing chip? Like it was just like, too vague, I guess. Yeah. And so then we were just trying to think of something snacky we like to read those Fritos Cheetos, like, just just like really catchy names. And so we thought of wave O’s, which is the word for X and Spanish. And then I don’t know if it was me, or our friend Ben, who was working on the company with set the time. Someone was like, well, they’re quick huevos, you know, their eggs on the go. So it’s Spanglish. We just come by quick and wave us into a really catchy name.

Kara Goldin 7:35
Oh, I love it. It’s great. So let’s talk about shark tank or, you know, obviously, maybe even before Shark Tank, so when you’re getting it funded, I mean, you mentioned that contest. So do you want to share a little bit more about that? And sort of, maybe even the Kraft Heinz incubator program, how that played into everything? What was I don’t know what came first? And in terms of order?

Nick Hamburger 7:58
Yeah, what came first, the chicken or the egg is? often ask it our company. Yeah, lots of lots of ag who were involved in our branding. But so we did the business contest. And we won that in March 2018. And then pretty much right away, we applied for the Kraft Heinz incubator, and it was a moonshot. Like we had no revenue, we barely had a prototype product. Our branding was just on a PDF file, like we didn’t have any packaging, like actually printed. And we somehow got into that, that was May 2018. And we were like, over the moon, because it’s a really legitimate program. Every other company in there was 234 years into business. Some, I think, wow, that’s company, the farthest along company, there was maybe two to 3 million in sales. And so we’re like, wow. And got it from there, too. Right? Yeah, we’re still in college. Okay. And like finishing class, and then like going downtown to the craft offices and doing like, the incubator program, and, but they gave us 50k. So that helped a little more, but still not a ton of funding. So we ended up raising around like, later in 2018. And at that point, Zach, and I also left school to pursue the business full time.

Kara Goldin 9:17
That’s amazing. And so and then when did the whole Shark Tank experience come into play?

Nick Hamburger 9:24
Yeah, that was later on. So we film that in summer 2020, which was a crazy time to film because the pandemic so they had a really intense protocol. You know, that we were in our hotel room for eight days prior to filming couldn’t leave the room, which was kind of crazy. But yeah, so that was summer 2020, then the episode aired January 2021.

Kara Goldin 9:47
That’s amazing. And when did you think that you? I mean, obviously, you hope that you stood a chance, but were you really like thinking I don’t know if this is going to happen or not. I mean, was there Obviously Daniel probably has the, you know, the most experience with food. Is that right? I mean, I think probably Yeah. And so he would be kind of the natural to jump on this if there was, you know, a possibility. But just tell me about, you know, going into that. I mean, how did you think about it, we’ve had a ton of people who have been on Shark Tank on this podcast. So it’s, it’s always really exciting to hear from, from people’s experience on it,

Nick Hamburger 10:29
you know, we were really excited to go on. And we were hoping Daniel would be our shark, the other shark from the panel that that was there on our day that we were interested in was Mark, because Mark has done a lot of healthy foods recently. Rohan Oza would have been great, too. But he’s a guest. So he wasn’t there. But he’s like a big CPG guy as well. So we were really excited, you know, we were also trying to manage the dilution aspect, because the sharks really want to, they love 20 30% of your company. And we were like, we’d already raised two funding rounds at that point and given up, you know, a decent amount of equity, through that fundraising. And so we were hoping to keep the dilution, minimal. So we came out with an offer of 200 kg of cash for 5%. And we were thinking if they counter, hopefully, they’ll counter at, you know, 10 15%. But at least we’re not sometimes if you come out with, I want a million bucks for 25%. You know, it’s like now they’re going to counter at 40%. And you’re like way too high in terms of dilution. So we tried to minimize that. But we really wanted a partnership with Daniel or mark. And so it worked out really well to team up with Daniel.

Kara Goldin 11:39
And so what was the final outcome of that? I guess, since the episode is has aired, you can share so what was the what were the logistics of have the deal?

Nick Hamburger 11:50
Yeah. So what we agreed to on screen was 200k of cash and also a $200,000 line of credit for 10%. So we got pushed up to from 5% to 10% on our dilution, but we got it. We snuck in that line of credit. We ended up working with Daniel for a few months afterwards and re negotiating the deal a little bit. And ended up at 300k of cash for 10%.

Kara Goldin 12:15
Oh, that’s awesome. Very, very cool. Yeah. The CFOs that, get it, get it and the CFOs that don’t doubt, let’s talk about the CFO, the Chief Financial Officer, today’s CFO is critical to the strategy and success of the business. And in growing companies. There are two kinds of CFOs. One who’s struggling to keep up spreadsheets everywhere, manual processes, errors and lack of visibility into the numbers. And it takes weeks to close those books. The other kind is on top of their game, automated reporting, inventory, ecommerce and HR flow into the financial model seamlessly, and insights coming in with the click of a button. NetSuite is the perfect program to help you manage your business better, whether it’s financial modeling or inventory management. NetSuite is the number one cloud financial system that provides everything you need to grow your business all in one place. With NetSuite, you can automate your processes and close your books on time, from HR to budgeting to Financials. NetSuite is the platform for scaling your business. Over 29,000 businesses already use NetSuite head to netsuite.com/kara for special one of a kind financing offer. That’s netsuite.com/kara netsuite.com/kara. Hey, Kara, here, we are thrilled you’re listening with us. And I hope you’re enjoying this episode. I’ve had the pleasure of interviewing so many amazing guests over the past few years, and there are so many more to come. I cannot wait. And my focus is on entrepreneurs and CEOs, real innovators and leaders who are making a difference. That’s what I’m looking forward to bringing you. One of the reasons I enjoy interviewing many of my guests is that I get to learn. We all need to hear stories that teach us to be better, inspire us and help us get through those challenging moments. I can’t remember the last time I had a guest that didn’t leave me feeling like a major hurdle had been overcome. We just don’t hear the stories enough. And when we do we learn to be smarter and stronger. Don’t you agree? Episodes are concise but packed with amazing info that you will surely be inspired by. Do me a favor and send me a DM and tell me what you think about each interview that you get a chance to be inspired by and if you are so inclined, please Leave one of those five star reviews for the Kara Goldin show on one of your favorite podcast platforms as well. Reviews really, really help. Now, let’s get back to this episode. Just going back to the incubator program, when would people want to join an incubator? I mean, what do you feel like is sort of the advantages of doing that? going that route?

Nick Hamburger 15:21
Yeah, I mean, I think it’s really great early on, you know, first couple years, if your sales are maybe still a million or under, I think, like, it’s a great time to get a ton of mentorship, as well as meet other companies in your space and get to know them really well, and learn from them and get tips from them. And you can share your experience with them. So I think, honestly, for me, the four other companies there, they were all farther along than us, and they taught us a ton of outerspace. So that was my favorite part of it. But the validation is also great. So the earlier on you are, I think it’s, it’s only better and better to be in an incubator, because then when you go to raise money, or you go to retailers, to pitch your brand, it’s like you get that validation of having been in a very legitimate, you know, program run by a big food company. So I think there are times like where it’s just too late stage, if you’re four or five years in, you’re already you already have a bit of traction, I think it can be a big distraction, even though it seems exciting like it at that point doesn’t help that much anymore.

Kara Goldin 16:25
Yeah, definitely. So one of the things that I mentioned before you, you decided to leave college, why did you guys decide to do that? And not finish it off? And and I bet your parents were quite nervous about all of that.

Nick Hamburger 16:42
Yeah, yeah, it’s, um, it’s funny, because it is a big decision. But for me, and Zach, it felt incredibly natural to drop out, I think, because we had growing up always thought of ourselves as potential entrepreneurs. It was just very natural to kind of let the business take up eight to 10 hours a day, and sometimes more and, and let school kind of take a backseat. And so I was just starting to work too much on the business that I was distracted. I wasn’t focused on my studies. And so I was like, I, and I liked school, too. I’m a very curious person. So it felt bad to kind of be in class and not care and not pay attention and be doing emails in class. And so it was just a very easy decision and that our parents were surprisingly supportive, I think because both of our dads have been in business for most of their careers and have run their own businesses. So yeah, thankfully, they didn’t give us too much pushback on that.

Kara Goldin 17:36
That’s awesome. So I’d love to hear a story about maybe a funny mistake that you made. When you were, you know, first starting out, was there an accidental flavor or a, you know, accidental aspect to your product that you were like, God, this is actually a pretty good idea. Oh,

Nick Hamburger 17:56
okay. So mistake that that turned out well, yeah. Okay. Because I started to think about all the like, embarrassing mistakes.

Kara Goldin 18:02
Yeah, well, you can start, we can start there. And we can come back to this one, too.

Nick Hamburger 18:06
Okay. I’ll see if I can can think of any, like happy accidents, but

Kara Goldin 18:12
bad accidents.

Nick Hamburger 18:13
I’ve got more of those. I’ve gotten more of those.

Kara Goldin 18:17
I mean, did you have runny yolk or anything like in any of your products, like

Nick Hamburger 18:21
next year will actually wait? Well, here’s one positive story like we had. Like with our process. We’re trying to make it more standard now actually, but but at the beginning was very labor intensive and very unique. And so we had this one piece of equipment that we bought, I think for $5,000. I had done a ton of research, maybe like two weeks of research, like almost full time, like how do we get it was like the beginning stage before the product was cooked, to get it into the square shape. And as I bought this piece of equipment, and we came to our at first we were in a commercial kitchen space renting like 2000 square feet in downtown Chicago and came to our kitchen space. And tried out this machine that I put so much work into researching and $5,000 at that time was a lot for right. That’s immediately it didn’t work at all. And we were like Jesus Christ like this is this is horrible. Like we spent all this money machine you just knew from the beginning, it had no chance of actually working. And then one of the guys there row who’s still on our staff now, because we still manufacture ourselves. He’s been with us for almost four years since day one. He just like whips out a really basic piece of equipment that’s in everyone’s kitchen. And just starts like forming our product and squares. And I don’t want to go into too much detail to you know, kind of confidential but like he figured this out in five minutes, because he’s been around food and food manufacturing his whole career and he’s been in plants and so like it was like, here’s someone who actually knows how to make food and has been in a plant for 20 years versus us You know, like with no experience wasting $5,000. So it’s just funny that he figured it out, like right away. And he’s just got a much better mechanical problem solving mind than we do.

Kara Goldin 20:12
But you know that actually one of the things that I just gained out of that story, too, is having people on your team, whether it’s you or somebody on your team, I think either as a possibility, but somebody who will, who can say, what can we do? Right instead? And I think that that’s the thing that, you know, great entrepreneurs and entrepreneurial teams do. They don’t allow things to get in the way or stop them? Or instead, they figure out, okay, I mean, this stinks, this isn’t gonna work. But what can we do? Oh, maybe we can do this. So I love love that story for a lot of different reasons. And frankly, I think it’s a difference between entrepreneurs and entrepreneurial teams versus, you know, people have worked in large companies have lots of experience, they don’t come up with that they just accept, not always, but a lot of times, they just, they just accept that, oh, well, you don’t have the right piece of equipment, so therefore, it can’t happen. Right. So anyway, that’s, uh, I love that story. Totally. Totally. Yeah, that’s great. So marketing and getting your brand out there, especially when it isn’t known yet. The brand name isn’t, you know, a well known name is is tough. What do you think has been the most effective marketing strategy for Quevos?

Nick Hamburger 21:34
You know, Shark Tank was probably like the easiest and cheapest thing, because it just got us, you know, 10s of 1000s of orders in a couple of weeks. Outside of that, I think that influencer marketing for a while was very effective, especially during the like, first couple of months to pandemic, when everyone was on Instagram, we saw a lot of great response and pretty good ROI from especially low carb and keto influencers on Instagram. But I do feel like that space has gotten worse in the last couple of years. Like it’s just so saturated, and everyone’s trying to use influencers. At this point, Amazon ads are the best for us, we do a lot of our sales on Amazon. And just like the basic blocking and tackling of the right search terms. And you know, it’s not like the sexiest or most interesting form of marketing, but it’s just basic kind of search optimization. And that just works really well because people are in buying mode when they’re on Amazon. And so they’ll see your ad and they just convert pretty well, because they’re looking for a snack. The product seems interesting, and they go for it. So as boring as that is, that’s probably been the most effective now.

Kara Goldin 22:41
All right. I think that’s really great information. And so one of the things that I always ask guests is about challenges. So what’s one of the biggest challenges that you’ve overcome? I mean, you mentioned this, this piece of equipment, but I’d love to hear, you know, what are some of the big hairy, where are you thought we’re done? We’re going back to college, right? We’re not, this isn’t going to work anymore, what any of those out there where you’d love to share that really helps people know that, you know, it’s really about the determination and resilience. And also, there’s always lessons to be learned the chip

Nick Hamburger 23:19
itself and getting the right product quality for this new thing we’re making a chip made from egg whites like has been the big struggle. And that’s also the big innovation we have is we’re the first people that make a chip out of egg whites. So it’s like, you get a lot of kind of notoriety and word of mouth interest, because it’s so new, but also we’ve had to invent our own weird manufacturing process. And we’ve, there’s no comparison. You can’t google a recipe for like, if it was a cookie or a pretzel, you could just Google like, what’s the typical recipe for that? So sure, we’ve had to make our own recipes and do our own trial and error. And like, early on, the product was way too dry. And really an offensive texture, I would say like like for some people, it’s just like, Oh, my God, like this is really kind of getting stuck in my throat. And you could tell it was a health food too much. And so was that going I spent, you know, hundreds of hours, maybe 1000s of hours on refining the texture. And we had days I remember one time we were walking near my house here and just looked at each other, like, what are we doing? Like we’re trying to think of other ideas for r&d? And we’re like, Is this ever gonna work? Like, it tastes like crap. It’s just and we’re a snack, right? If we were a salad or a smoothie, maybe you can say the health benefits are so great, that people will still buy it. But as a chip in the snack aisle, it’s got to be delicious. Otherwise, no one’s going to replace their like potato chips with something that tastes like crap. Totally. So you know, but it’s just been that process of r&d and refining. The taste and texture has never stopped and it’s been almost five years now. And it’s like when still do it. Now we’ve settled on a really nice recipe that that is getting the best reception we’ve ever gotten. And we love the quality. So we might be more stable now. But even after Shark Tank, like, you know, we didn’t see quite the level of customer loyalty we wanted. And so we went back, and all of 2021, for probably eight months, the first eight months, I was refining the recipe again every day in the Test Kitchen. So that’s been just this constant struggle, and it’s hard, it gets harder, the farther along you are, to change your product, because you’ve got sales, you’ve got customers. And it’s just like, really painful to look in the mirror and say, Okay, we need to another overhaul and another new recipe. But, you know, you just have to make sure that the product market fit is there and that you’re like, really serving the needs of your customers and that they love your product. And so it sometimes takes another long round of r&d when you don’t want to to keep improving.

Kara Goldin 25:59
That’s a great story. I think we definitely went through it at Hanta, it’s one of the stories I share in our book, where I mean, for us, it was not only wasn’t so much about making the product better, but we were looking for a longer shelf life. And so and that was like, that was the story that one of the stories that I share that almost shut us down that it was, you know, we had, I felt like every time I walked into Whole Foods, I was almost ducking the buyers in the individual stores, because they were like, did you guys get your shelf life extended? And I’m like, dude, like, we just had this conversation where this sales are there, we’re doing great. And like, you just keep upping the ante here. And I was feeling like I was running out of time, more than anything. And and, you know, we eventually totally changed the process for how we actually created the product. And so it was, you know, we ultimately didn’t think that we could actually do a product that used real fruit and get the same flavor with. We didn’t want preservatives, but we were afraid about using an any type of pasteurization process on it. And so we ultimately sort of played with the pasteurization process. So it’s not a straight shot of pasteurization in order to like ship that. And that allowed us to have almost a two year shelf life on the product, which was amazing. But again, it was like it was stressful. And you know, I think it’s just to your point, you always have to be figuring out how do you improve and maybe your baby is an ugly, but you know, it like definitely needs it. It needs new clothes, you know, on a frequent basis, right? Yeah. Anyway, well, this is absolutely great. I’m so excited that we had you on it’s been such a pleasure to get to know you a little bit and I wish you all the success and definitely everybody needs to get some Quevos. You could buy it, as you said on Amazon also in lots and lots of stores nationwide. And you were just doing, you know, incredible, incredible things. Where do people connect with you? By the way, Nick,

Nick Hamburger 28:18
I have funny reaction when people ask me that because I don’t really have social media. I don’t have Twitter or Instagram or anything. So I guess you can email me if you want, Nick, calm. But, ya know, it’s been great to be on the podcast, Kara. Appreciate you having me on.

Kara Goldin 28:33
Yeah, absolutely. So everybody definitely give this episode five stars that truly helps with the algorithm. And be sure to subscribe to the Kara Goldin show. So you’re not to miss incredible interviews like ours with Nick and other great founders, and sometimes authors as well along the way that are doing interesting stuff. And remember that I can be found on all platforms at Kara Goldin. And if you haven’t already picked up a copy of my book undaunted, to hear more about my lessons in the journey of building hint. Definitely do that. And we’re here every Monday, Wednesday, and now Friday, we just added another day, which is super, super exciting, because there’s lots of stories out there that I think everybody needs to know whether you’re an entrepreneur or you’re just really interested in the backstories of brands, which I really believe are so core to, to figuring out whether or not you want to support a brand as well. So, everyone, thank you so much for listening. Thanks again, Nick, and have a terrific rest of the week. Before we sign off, I want to talk to you about fear. People like to talk about fearless leaders. But achieving big goals isn’t about fearlessness. Successful leaders recognize their fears and decide to deal with them head on in order to move forward. This is where my new book undaunted comes in. This book is designed for anyone who wants to succeed in the face of fear, overcome doubts and live a little undaunted. Order your copy today at undaunted, the book.com and learn how to look your doubts and doubters in the eye and achieve your dreams. For a limited time, you’ll also receive a free case of hint water. Do you have a question for me or want to nominate an innovator to spotlight? Send me a tweet at Kara Goldin and let me know. And if you liked what you heard, please leave me a review on Apple podcasts. You can also follow along with me on Facebook, Instagram, Twitter and LinkedIn at Kara Goldin. Thanks for listening

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