Aaron Luo: Co-Founder & CEO of Mercado Famous

Episode 381

Aaron Luo, Co-Founder and CEO of Mercado Famous couldn’t forget the fond memories of ‘tapas hours’ growing up in Spain. It was through this fond memory that he saw a hole in the market for a product that he was fond of that he knew he could fill. Mercado Famous was born and we hear all about how Aaron's commitment to bringing the best charcuterie to consumers was what drove him and his Co-Founder to start his latest entrepreneurial adventure. A very interesting journey thus far plus how this serial entrepreneur is excited about the future for his business. You can’t help but be inspired by what Aaron has to say. This episode is exciting and filled with a ton of learnings and takeaways. You won’t want to miss it! On this episode of #TheKaraGoldinShow.

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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 Aaron Luo, who was the co founder and CEO of Mercado famous and you may not have heard of Mikado famous but Aaron is a serial entrepreneur. He also is a co founder of another brand that you may have heard of not in the food industry, but it’s called Cara, you can’t forget that name. For sure, actually, it’s called Cara. So it’s it’s a little bit different, but I’ll definitely remember it as well, since I have had some people who have called me my pronunciation of my name Cara over the years. But, again, Aaron is a serial entrepreneur, he grew up in Spain and remembering fond memories of the tapas hours that he and his co founder thoroughly enjoyed over the years. And every trip that he made back to Spain, he thought, why the heck isn’t somebody doing sharp cutlery and bringing it to the market in the US where he lives. So he decided, knowing everything that he knows about supply chain, that he would bring it to the US and create really the narrative around, bringing the category in general to be better. So that’s what great entrepreneurs do. And so I’m so excited to see Aaron here today and speak with him about his journey thus far. So welcome, Aaron.

Aaron Luo 2:16
Thank you, Kara. It’s super excited to be here. I know we’re going to be pulling the volume quite a bit on a number of different topics. So really looking forward to this conversation.

Kara Goldin 2:26
Definitely. So So before we get going, I’d love to hear a little bit. How would you describe Mercado famous? And why did you decide to actually build this company?

Aaron Luo 2:38
Yeah, great question. I think, you know, before jumping into the specific product itself, I think the goal is to introduce Spain to the world. I guess that’s the best way to describe it, starting with the US. But of course, we have a bigger ambitions to take a global and so on so forth. But yeah, I mean, you know, as you said before, I’m Chinese in terms of my nationality, but grew up in Madrid, my co founder, Carmen, she actually was born and raised in Bolivia, which is a coastal city, east of Spain, and in a charcuterie is something that’s very, very typical Spanish. For those of you who have been in Spain, probably as soon as you get off the plane in the airport, you see legs or Hummel hanging in the bars, you know, Chuck could be everywhere, tapas everywhere. And that’s something we just kind of grew up with. And we just kind of missed that in the states and could never find that. So to answer your question, as far as like, what we’re trying to do with Mercado A is to bring a little bit of that Spanish lifestyle that we loved and cherish so much growing up, but also just to introduce the world to Spain through food, and Hmong charcuterie, it’s something that we’re starting with just being that kind of our hero product. You know, we then looked at the charcuterie space a little bit more deep, more a little deeper, and I’m sure we’re gonna talk more about that. We also felt that the overall industry was a little bit stale. You know, again, you know, I’m not gonna mention any names or brands, but everything’s fell very heritage and focus more on the product and the actual lifestyle, the products trying to impose to certain extent. So in our goal is to sure always leave with product. That’s because at the end of the day, that’s what really customers buying, but really convey the story of our Spain, the Spanish lifestyle, and the sense of friendship and family and the togetherness. So that’s a little bit of I know, it’s a long way of answering the question, but that that was the you know, if we said what does success look like that was? That was kind of the one one thing we’ll try to cut.

Kara Goldin 4:46
Well, I think it’s fascinating to that you didn’t come from this industry. You came from you built another company called Cara as I mentioned, that is in the leather goods and definitely I have a long understanding of global supply chain, which as you and I were talking about, I think is a bit of a black box for many who want to jump in and grow an idea in any in any industry with physical goods. And it’s, it’s really hard, right? It’s hard to figure out, it’s probably even harder since the pandemic, but I think your confidence and actually going into the food industry and recognizing that it really kind of boils down, especially when you’re getting product from Spain, your ability to figure out the global supply chain is is so key. Can you talk a little bit more about that?

Aaron Luo 5:40
Yeah, I always say, right, I think you know, when I think about a product company product, it’s king or queen, for sure. But if you don’t have in our supply chain, and when I say supply chain that encompasses the manufacturing side of things, you don’t have a business, right. So that’s something that we always feel very strongly about when we’re thinking about new venture, investing other brands or starting new ventures are on, we want to make sure that the supply chain is airtight and that the cost equation always make sense. So you know, taking a step back before Mercado famous, you know, just quickly talking about Cara for a minute, you know, the price started in 2014. You know, what we’re really known for in the market is high end, luxury handbags, that’s functional. That was kind of the thesis behind Kara. We know we come from to your point, leather, good manufacturing, supply chain background, my family has been in the industry for three decades. And you know, what we really fell was that the handbag space was really great when it comes to design, especially when we think about luxury handbags, but we felt they can be a little bit more, we feel like he can be a little bit more functional. And of course, you know, we along the way we feel the prices need to be a little less than what, you know what what we’re seeing in the luxury space. So, you know, we leveraged our supply chain background, and my co founders, the CFDA award of fashion designer will combine the two and then bra is already a collection of handbags that’s functional. That’s the TC to the customers that really at the end of the day was producing luxury handbag, or the fraction of the luxury handbag prices that’s more functional. The consumers that was the thesis worked really well I think in the last seven plus years. And the idea for starting Mercado was to kind of taking the learnings there right from the luxury handbag brand that I just mentioned before and then give it to the Mercado famous have started as a DTC brand. But then we started looking at wholesale distribution, so so forth. And you know, when it comes to supply chain, the thing that we always think about is first you have to find a solid manufacturing partner, you know, whether it is a manufacturing or whether it’s a producer, in our case, when it comes to Mercado is, you know a specific farm that we actually search for two plus years to make sure that we really can get behind the product itself. And then of course, from there, you need to think about exporting importing. And then of course, ultimately distribution was the product lands in the States, in terms of if you’re going to do EECOM, how you’re going to pick and pack and get the customer I think they if you’re going to do wholesale distribution, how you’re going to actually, you know, issue the product in the batch. Like I said, I think a lot of learnings along the way, we still I think figuring that out to your point, I don’t come from the industry. So a little bit nerve wracking, I think in the early days, especially in the food industry, but I think it really comes down to finding the right partner that can help us, you know, on the production side of things, and then of course, you know, finding the right partner on the supply chain and shipping and transportation. The last thing I would say it’s also just finding the right team. And I think that first five employees is critical, I think to help you, you know, a gaining expertise quickly but also scaling from there. So a lot of learnings there as well. But I think finding the right team in the early days is also critical.

Kara Goldin 9:05
So you grew up in Spain and as you mentioned, your family comes from years of supply chain and and so you were kind of wrapped around that industry for many, many years. But you actually went into the banking industry right prior to actually starting your own company. Yeah, corporate finance.

Aaron Luo 9:26
So corporate so you know, I’ve always been fascinated by Fortune 500 companies ever since, you know, my my journey is a little baby and I grew up in Spain and came to the states for college and business school, and was always fascinated by Fortune 500 Mainly because it was mind boggling to me how well functioned these organizations can be. So for the first 12 years of my career I spent, you know with General Electric with GE in a number of different divisions. operations that Technology and also finance. And really taught me about the rigor in how to operate businesses in our in terms of how you think about planning how you think about unit economics, how you think about growth, how you think about scale. And that was fascinating to me. And I knew that if eventually if I was going to leave, right, I started leading my own brands and businesses investing in others, like, I need to learn how to read the p&l, I need to learn how to understand the income statement, the balance sheet, I need to evaluate risk, you know, I need to basically understand what are the levers within the company from a financial standpoint, and that was the, that was a key theme that, you know, attracted me to join them. glommer like a GE in the early days, of course, you know, GE also taught me about the power of people. You know, you probably know that Jack founder, Jack Welch’s day Ray, it’s the, you know, it was a leadership factory. Right. So how do you grow your bench? How do you grow people? How do you challenge people? How do you, you know, push them and raise them along the way? So a lot of learnings there and from the early days, but yeah, it was, you know, I didn’t get into the entrepreneurship side of things right away, I wanted to really get the foundation down from operations and finance standpoint, which, in hindsight, you know, I wouldn’t trade it for anything. You know, a lot of the colleagues that I was friends with, were still friends today, and I still hit them up with about questions. So it was it was a fantastic experience.

Kara Goldin 11:36
That’s awesome. So what was the moment when you actually decided to become an entrepreneur? That Do you remember?

Aaron Luo 11:44
I do I do. It was actually a funny story, Kara. So I think and I only if I ever told this anyone, never less than the podcast, but in all honesty, I think I left. No, because I felt like I was ready. You never know you ready or not? Right. Like I said, I went in there for the learning. But the question is always, like, when you’re ready, and you get I’m somewhat embarrassed for kind of acknowledging this, but but I think it was because I got passed by it by promotion. Um, it was, you know, it was it was, you know, again, I love I love GE for many, many reasons. But I think the instance where I realized that I think I can do this. And it wasn’t because of an idea, in a matter of fact, actually, the idea of Kara came after our love, and I started thinking really through, you know, what I need to build what I want to bill, what’s the whitespace in the space, I want to be in this role, so forth? The moment that really trigger and give me the actual encouragement was that I think I just wasn’t good enough for the role that I was going for. And I said, I’m sure there was a lot of different reasons why but that was the that was the trigger. I don’t think I’ve ever told anyone this or or never listened to podcast, but that was the that was the moment.

Kara Goldin 13:12
That’s so interesting. And was it and why handbags? Like what what was it about? handbags that sort of, you know, you thought that this would be your first venture?

Aaron Luo 13:24
Yeah, you know, it’s interesting. So, a couple of reasons. One, my co founder Carmen, she is a CFDA award of fashion designer. So and specifically always in the handbag space. So you know when with her and I connected and our families actually knew each other from Spain, which is actually an interesting story. We later found out that our grandfathers and cool her grandmother and my grandfather actually did business together in Spain when Spain had maybe like 10 Chinese people I mean, it was it was crazy with speed but she’s always been you know, in the handbag space as a designer and then for me, because my family has been in the supply chain in a global supply chain manufacturing for handbag brands for the last three decades. It was kind of a natural place for us to be in introvert dive in. So that was reason number one. I think a reason number two was primarily also we felt that that space or the category needed a little bit of you know, perhaps a fresh air I hate the word disruption. I think I mentioned this before, I think it’s overused in the startup space but you know, like I said before, we failed that a lot of that luxury handbags are really well made really well designed but a a little bit of a price but also not as functional as it should be. So we started a brand initially really with two bags in it was one tiny collection with two bags. You know still one of our best sellers is our studio bag. It’s one of the first bags that allow the customer to wear in the multiple different modes so you can wear it as a backpack as a crossbody or as a satchel. Okay, so the idea was that the back can transition with you throughout the day. And again, this was pre COVID. You know, we felt that there was a huge trend of customers going, we call from Jim, for office to Jim versus office to, you know, to drinks. So, you know, a lot of customers are becoming much more active, it was also the high of the athleisure movement. I’m sure you will remember that. So, yeah, so we tested the market with two Pro two bags, it hit it out right away. And, you know, here we go, you know, 100 plus skews. 70 years later, I think, you know, we prove that, that the thesis was right, that the customer are looking for something that is value driven, but also very functional and very well made from, you know, highly skilled, either technicians or craftsmen, it’s in its world top luxury factories.

Kara Goldin 15:57
So when you started Cara, that was primarily direct to consumer DTC, right. And then now you’re in all kinds of stores, as you mentioned, do you think that that will be the same model for Mercato? Famous? Yeah, it’ll primarily be DTC initially. And then in stores? Or where do you think? Do you think it’ll be different? Because it’s a food product? Or where we’re kind of headed?

Aaron Luo 16:26
Tough question. Really tough question. So when we started the brand for Mercado famous, that was the kind of the thesis right is that I’m going to prove that we can do this right, we can sell a full product like charcoal or in this case, through a DTC model. You know, the EO V is healthy enough that we think that it can actually withhold in all the expenses when it comes to performing advertising or a few other forms advertising, plus cost of goods sold, and few other things. So we feel very comfortable that that was that was the case. Reality is that it actually proving that it’s a lot more difficult than what we initially thought, for a number of different reasons. I think, you know, a, I would argue that consumers needs a little bit more education in terms of purchasing these kinds of products through DTC e commerce. So right, because we think about like, you know, where are you actually making those purchases? Are you really going online and making those purchases, so you buy in the from a grocery store or your local store? So that’s proving to be a little bit challenging, there are less I think we’re seeing some really healthy KPIs. That’s giving us a lot of encouragement that it’s definitely a platform that should be explore. But to your point, we start seeing a lot more inbound buzz or inbound requests from the wholesale standpoint, in terms of requesting us to partner with them. And I think we’ve talked about this before, I think, in our initial goal wasn’t to me eventually, we want to scale of course, but I think as we start thinking about distribution of wholesale and and larger partnerships, our initial goal actually for now is to look for those local stores that might not have 30,000 stores nationwide, but maybe even have one or two, but are really tastemakers right? They’re really kind of that influencers themself in the local market, whether it’s in San Francisco, LA, New York, Chicago, and so on, so forth. And we start seeing a lot of great results by partnering with those spores. A Of course, you know, we start seeing volume picking up but also we start seeing that in there, we’ll call the halo effect. But a lot of the customers in the surrounding zip codes are starting actually coming to us from a DTC standpoint, which is kind of interesting. We’ve seen something like that happening on the carrier side, on the fashion side, when we started working with a new store. We see the halo effect of actually customers in the surrounding ZIP Code coming to us directly versus going through the store no all the time, but we start seeing a pickup of the customers or movements from that zip code. And we start seeing something similar with with Mercado as well. So, you know, ultimately the Brian Yes, our goal is to have nationwide distribution with large department stores and so on so forth. But, you know, as we started opening ourselves up a little bit more for wholesale, I think that’s the immediate next step is to find those tastemakers in specific markets within the US.

Kara Goldin 19:25
Yeah, it’ll be interesting one of the podcasts that we had on I think it was a few weeks ago was Sam Busan. Are you familiar with that product? Yeah, yeah, definitely. It’s also a they basically were the first to bring us IE into the country and anyway, you should. Ryan Black is great and you should definitely listen to that because there’s a lot of similarities and ultimately I mean, he is the ice that most of the the stores today use for the ice bowl. So he also has a brand, but the majority of his business is actually in food service and sort of supplying, which is fascinating. But there’s something there around a model.

Aaron Luo 20:12
And that’s the goal. For sure, right? I mean, in that when I think about wholesale distribution, we think of our restaurants, we think of our chefs, we think of the bow. In our casinos, we think about, you know, like, larger, you know, even cruises and so on, so forth. There’s a lot of different platforms and channels, we can tap into, you know, once again, when it comes to Spanish charcuterie, we just feel that for now, at least, that market is I mean, there are all the players don’t get me wrong, and I don’t want to claim like, Oh, we’re the first ones or with a few, but I would just feel that they’re going about the branding, the very different way the product is, you know, they got, you know, I think this very subjective, I think we’re going about our product slightly different. Instead of going with a mass industrialized producer, you know, we actually working very closely with, you know, a farm that has 100 plus year old heritage with 100 plus year old recipe that uses pig, the free roam that can actually trace back the DNA from the you know, even the forefathers of, you know, like many, many generational eggs. So there’s a lot of things about supply chain that we’re actually pretty proud of, that I think this thing that makes make us very different than than other players in the market. But to your point, the idea is that, you know, we were looking at DTC first, then start looking to wholesale partners, but eventually, there’s other health services and platforms that we’re going to tap into.

Kara Goldin 21:35
Yeah, definitely. So being an entrepreneur is definitely brutal. You, you jumped in you were doing a whole different career. What is sort of, kind of the hardest thing about being an entrepreneur?

Aaron Luo 21:49
Yeah, I think, you know, there’s a lot of, you probably know this well, yeah, you know, I think that there’s a couple of things, there’s the mental side of things, right, that really kind of unique to kind of remind yourself and keep yourself going. And there’s the financial and the few other things that come comes along the way. So I’m gonna start with the mental side of things, I think, you know, believing in yourself, I think, you know, 50% of the battle is mental, you know, it’s, I always say to others, I coach, or brands or whatever. So even just ourselves is that you have to believe that you can do this, you know, and I’m an athlete myself, you know, I I fence for many, many years, I still compete in the US, I start coaching my kids now defense, and you know, in sports, you know, really, you know, even more than 50%, but if you don’t believe in your head that you can actually win, you already lost the battle. So I think entrepreneurship is very, very similar. So I think that’s the that’s the first thing. The second thing I will say is, you know, you probably hear this from other intrapreneurs, too, is don’t take no, in either way. It’s easy. And another one guy asked me one time actually is like, Yeah, but how many nose? Can you really take before you will really throw in the towel, right? It’s like, is one No, it’s to know. And I tell them, I said, look for me, when people tell me No, I never hear the word. No, I hear the word maybe. Right? No, to me, it’s always, uh, maybe I just haven’t found the right way to actually tell you the story or find the right angle. So, you know, being relentless and have the grit to not give up and always just go after what you believe. I think that’s probably the hardest thing that I have to remind myself to throw in a towel. You know, I think being financially responsible, is it’s extremely important. Just because I think you know, a, you have to understand you in economics, going into a venture, if you don’t, don’t even start, and then have the discipline in I think we all get caught up in our own BS a little bit right, from time to time. And, you know, often we say, Hey, I have this idea, I just need a little bit more time, let me just dumping a little bit more money, or let me just buy more, one more investor, or let me just take down a loan that I think I think this is it, you know, like, feel more, give me a few more months, one more quarter, and I can make it happen. And I think sometimes you just have to have the discipline to say, you know, hey, this is not going well, how do I actually find other ways? Doesn’t mean you have to give up. But I think once you sit some kind of discipline for yourself, as far as like, what’s the limit, you can be a very creative in terms of finding funds or finding alternative ways to basically win without having to actually go the extra mile for finding the money because he’s always at the end of the day is like, oh, let’s chase more money. Right. And I think what we find ourselves is that, you know, there’s a lot of creative ways that you can actually buy and get things done without actually investing. So I mean, those are three things that I will say that that actually helped me quite a bit a And the toughest. Look, it’s a very lonely journey, you know, Kara, I think, you know, often you see yourself in the dark and kind of not really knowing what’s the end, I think the last thing I would say, is having a co founder that you can cry with. You know, it’s, it’s, it’s often very helpful. You know, I think that I give a lot of props to single co founder or single co founding entities, just because it’s very tough, it’s very tough, because, you know, you have to do everything, of course, hiring, it’s very important, like I mentioned before, but, you know, I think if you can, especially for those out there listening, who are aspiring intrapreneurs and looking to start your venture, I think finding the right, you know, person that can complement your skills, our say, Carmen’s my better half in many, many ways. It’s very, very important. So I think those are some of the few things that I learned along along the way, at the high level, you know, in terms of high think about framework of an intrapreneur.

Kara Goldin 26:00
Well, and I think just to add on to that, it sounds like you guys have really different skill sets to you and Carmen, is that right? Yeah. So I think that is also really important piece when people are looking for co founders, I’ve met many over the years, like two people that met at business school, and they’re going to start this company together. And I’m like, Ah, no, no, like, are you guys too much like, right? And you really have to kind of ask yourself that question, get somebody who really kind of, you got to find the the Yang and your Yang, I guess, write that balance.

Aaron Luo 26:35
It’s very important, because, you know, look, you probably spend more time with your co founder to any family members. And that’s the reality of especially as an entrepreneur, right, is that it? You know, unfortunately, you know, I tell my wife and kids, you know, during the week, I spent way much more time with my team and my co founder than anybody else. And you have to So ground rules, right, is that, you know, when I think about the way Carmen and I work, so she’s a lot more creative by actually 100% more creative, right? I mean, she is a creative, she’s the Creative Director for the brand, both for Kara and also for Mercado, she also lives production supply chain, a lot of different aspects of that. And then I help with supply chain production, but mainly the all the operational things on the commercial side of things. Of course, HR, IT, it was interesting, I think having the co founder, it’s very important to set the ground rules as far as who is the decision maker, as I think downfall of a lot of teams I’ve seen, you know, whether it’s too personal to be personal for person caught on the news. There’s too many chefs in the kitchen. And everybody has a perspective, and everybody has an opinion. And then you know, of course, especially in public or in a team setting, if one personal opinion, but then his or her opinion don’t take into account. It’s almost like a you know, giving base, right? It’s like, Well, I’m a co founder, I, you know, like, you know me like it’s so I think for us, it’s one of those things where we say, hey, look, we’ll have opinions I think we’re entitled to but at the end of the day, if somebody owns that role, whatever she says, Oh, I say goes to church, you know, in terms of that’s a decision maker at the end of the day. So I think that worked really well for the last seven years, you know, surprisingly and carb, it will tell you otherwise, in my mind will hardly ever fight, which is kind of surprising when they thought about other co founders. And I think that’s because we set ground rule.

Kara Goldin 28:31
No, I think that’s really, really smart. Well, thank you so much, Aaron, this has been amazing. And best of luck to you guys. And I know we’re gonna see a lot more of you. But thank you so much for sharing all about your brand and the journey and just sharing a lot of your wisdom and advice has been super valuable. 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. And if you want to hear more about my journey, I hope you will have a listen or pick up a copy of my book on daunted which I share my journey, including founding and building hint. We are here every Monday, Wednesday and Friday. And thanks everyone for listening. Have a great rest of the week, and 2023 and good bye for now. 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 And 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 Pentwater. 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