TOP CEO: CeCe's Veggie Co - 'The Founding' (With Mason Arnold)

Mason Arnold  00:02

So thought, you know, this entrepreneurship thing is easy, I can go be international businessman. And in the course of a year, I lost all the money that I had made from the first company, I can track to the parasite and lost my girlfriend.

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00:17

Imagine you're the CEO of an organic landscaping company, and then a restaurant chain. Next, a food delivery company. And finally, a vegetable noodle manufacturer. As a seasoned entrepreneur, you're no stranger to the power of ideas. Yet, it's crucial to remember, potent ideas pave the path for profound innovation. However, this innovation, as transformative as it can be, invariably brings with it an array of formidable challenges.

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Mason Arnold  00:52

I get a call a day before the board meeting two months later, and they said, We're shutting the company down. And I was just like, I mean, that was a shot to the heart.

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01:06

The journey of entrepreneurship is not just about sparking innovation, but also about adeptly navigating these complexities that arise. How would you handle the challenges of scaling a business from nothing? How do you go about finding funding? How would you go about confronting and understanding your own motivations? This is the story of Mason Arnold, serial entrepreneur. And this is ‘The Founding.’

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Ben Kaplan  01:35

One of the things I love about your background is that you're a serial entrepreneur in a way that a lot of people aspire to be, you've started a lot of companies, you've had successful exits, you've moved on to new ones, and why are you a serial entrepreneur? Why not just do just one and keep doing it? And what is the common thread that keeps you innovating in a series of companies?

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Mason Arnold  01:57

Yeah, you know, a couple of early my first company went really well. Second one went really poorly. Third one just kind of like dragged on. And when I finally got a chance to exit, that one, I really started to I had a real internal look at myself, like, am I going to keep doing this because it can be really painful. Even if everything goes right, there's still market forces and things can be painful at any turn. But when I look at, like, what really gives me joy, in work, one, it's I consider it as creating something that didn't exist before in the world. And to me that and and then people say, you know, exchanging their money for it and saying, This is worth something to me, and I'm willing to pay money for this thing that didn't exist before. And to me, that's one of the greatest feelings of being an entrepreneur. Now, as companies grow, you know, handbooks and legal policies, and all of those things just interests me dramatically less. And there are people who enjoy those stages of the company. And I don't I really enjoy the very early stage of like, how do we solve a problem here for people and create something in the world that both solves their problem and is economically viable? And then for me, the thread that has been in my entire career is sustainability. And so everything that I do, I hope that it is helping make the world a better place. Some things just it's hard to tell, like we won't know. And in retrospect, whether particular environmental movements or actions were good or bad for the planet, because it's such a complex system. But that's a whole different podcast. So I'm, you know, I'm trying to create companies that help make the world a better place. And you know, at some point I got comfortable with, I'm just going to be doing it for the rest of my career and just keep doing it. So what I work on now, as I dig into new projects, I try to tighten up the cycle sum and make sure that we're not wasting time on particular parts of the business and that we're able to get out and iterate faster and understand Product Market Fit faster and try to validate assumptions quicker to build stronger businesses.

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Ben Kaplan  04:13

So take me through you mentioned three different companies one went great one did not go so great, and one dragged on what are those three so we get a lay of the land of the types of companies you're building. So I

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Mason Arnold  04:23

was trained as a chemical engineer went to work filerun Chemical and oil permits for chemical and oil companies saw these reports come across my desk started to learn about sustainability and what was happening to the environment and it was making me sick. In Texas where I live, the number one pollutant to Texas waterways is actually residential fertilizer. And another report came across that organic fertilizers are better than synthetic in every way shape or form. And so I immediately put in notice and went to start my first company which was an organic landscaping company. It was It wasn't rocket science, you know, is There's fundamentals of business involved there. But it's not a very complex business. And so that was a great first business. For me. I learned a lot, very early days of Google and Google ads. And so I was the only landscaper doing any kind of Google ads. And so that company went very well. I grew up for a couple years. But as I learned more about sustainability, I wanted to get closer to either energy, water or food, which I think are major challenges from a sustainability perspective. So I sold that company. I was 24 years old, more money in the bank than I had ever thought, I actually moved to Spain to start a chain of restaurants. I thought, you know, this entrepreneurship thing is easy. I can go be international businessman. And in the course of a year, I lost all the money that I had made from the first company, I contracted a parasite and lost my girlfriend. And so I ended up moving back and landed on my mom's couch broke sick and alone, and had you know, proverbial walk with Jesus. I'm not very religious, but really had to be like, What the fuck is going on. And that's when I decided to make sure that sustainability was at the core of everything that I do. Because I want if I get hit by a bus tomorrow, I want to be able to feel like what I was doing up to today was making a difference. And so that next company that kind of dragged on, it was called Greenland, we were early in the grocery delivery space, we worked with local and organic products and produce and farms and ran that for 10 years. And that was just a really tough and very complex business.

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Ben Kaplan  06:41

You have this second act, the business, it's kind of dragging on, you're trying to find your way as part of this issues that serial entrepreneurs face or entrepreneurs by types, you actually get nudged out by investors, but then come back, is that correct? Your own Steve Jobs famous for getting kicked out? Apple comes back and of course becomes after that legendary Steve Jobs. You had your experience with this? Correct? Yeah,

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Mason Arnold  07:04

it was insane. And it at that company, it was called Green laying. And we're grocery delivery. And it was, you know, over time as a serial entrepreneur, I had to figure out how to separate my personal brand from the company brands. But at that time, it was one in the same and like, I was Greenland, Greenland was me,

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Ben Kaplan  07:23

if you get nudged out, this is like a personal assault on you at this point, if you're one in the same, like this is a you take offense at this.

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Mason Arnold  07:30

Yeah. And I was a personal guarantee on like, a half million of debt. And so these other people are running this company, but as the only way for the investors that the time to continue to fund the company was if I left and otherwise the company was going to shut down. So I made the tough decision said, Okay, I'm gonna hire someone to replace me and leave so that it can live on. Because at that point, you know, it living on was more important to me than, you know, my particular involvement in it. But it wasn't like, I got to go on vacation, I'm sitting there, you know, wondering what they're doing with this company that has my name all over it, and a ton of debt tied to me. And they were supposed to fund it for another year. And I get a call a day before the board meeting two months later, and they said, We're shutting the company down. And I was just like, I mean, that was a shot to the heart. And I was like, Guys, you you've got to give me an opportunity to find some other solution that just shutting down the company because we were working with farmers, we had orders for months in advance it in employed 90 people. It was, uh, you know, it was still doing good work and a good company. And they said, Okay, well, we can, we'll, we'll let you try to find some other option, but we're running out of cash. So there's a time limit. I'm like, Okay, I understand that, you know, how much time do I have? And they said, two weeks. So I had to two weeks to try to figure out how to find new investors leisurely two weeks. Yeah, yeah. And in that first week, I clocked it, I had 93 conversations to try to save the company. And as I was doing it, you know, in that two months, when I had left, they had contracted the business. And they had gotten it down to this point that when I was running the company prior at that size, it was profitable. And I was able to look at the p&l after they contracted it and was like, I know, I actually know how to make this size company and this size, headcount profitable because I've done it before. And I couldn't find and I found two vulture investors that were just going to decimate completely wipe out the cap table, get rid of everything, changed the change all kinds of things, and they were all just bad situations for the company. And but I'm telling this one investor, I'm like, you can make this profitable. Here's how you do it. Here's where you make cuts. And here's how you get the company back on its feet. And he's like, Well, why don't you just do it? And I'm like, that's the last thing on the planet I want to do and he's like, why don't they get No one else is going to do it. And so I tendered an offer to the investors to buy it back with the last cash advance on my last credit card is literally the last dollar. I could massage out of anything in my entire world

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Ben Kaplan  10:15

meeting if they reject this offer or try to hardball you are someone else, you can't do it, you need them to take this offer what happens

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Mason Arnold  10:21

it was the best offer for the company because I didn't it was just a equity crammed down as left investors and intact but just a smaller portion of the company. And I you know, I bought my company back for essentially nothing and invested money off my credit card into it to buy me another two months of runway and I said okay, I have 60 days to get this company to break even or better. And I did it 30 days in one month I got the company profitable, but then it was still as grocery delivery with Amazon and Instacart breathing down as it is a tough space. And so I was like I've got a I've got to find an exit for this home for this company and these customers and these farmers and everything and so, but once I you know once I had it profitable, it was easier to find an acquirer and I'd spent the next six months you know brokering deals and sold the company.

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11:18

Mason Arnold, who initially honed his skills as a chemical engineer, found himself inspired to contribute positively to the environment. This inspiration manifested into his very first venture, an organic landscaping company. However, the journey of entrepreneurship isn't always filled with triumphs. Arnold next pursued a restaurant venture in Spain, unfortunately, did not see the same success and ended in failure. Returning to us shores, Arnold found himself reigniting his passion for sustainability. This led to the creation of greenlink, an organic grocery delivery service. Despite its noble purpose, greenlink faced financial turbulence leading to Arnold's departure from the company at the hands of the investors. But Arnold, steadfast in his commitment to the business didn't back down. He negotiated a chance to salvage the struggling company, and boldly bought it back using his remaining credit. His resilience paid off, as he swiftly turned Grambling around into a profitable business within a month. Ultimately, finding a buyer for it. As one venture concluded, Arnold's entrepreneurial gaze shifted towards his next challenge, a vegetable based noodle company aptly named CeCe's Vegetable Co.

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Ben Kaplan  12:48

That brings us to CeCe's, which is probably the best known of the brands. I'm a customer of CeCe's, so I'm familiar and it listeners if you're wondering if you're a customer or not, you might be if you're into you love pasta type dishes, but you don't love the carbs involved in pasta type dishes. So you're gonna get these very elegantly cut veggies, zucchini and butternut squash and other things. And you're gonna make your cut to a Pepe with veggies, and it's gonna be gray. That's CeCe's. Right? So tell me the journey of that as a phase and the whole sort of different scale of company.

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Mason Arnold  13:18

Yeah. And so in that those years of running green laying, and being an online retailer, had products come to me all the time, people launching new products, and I got really good at guessing which ones are going to make it based on the product attributes, price point, branding, marketing, all that. And so I was like, I think I think this CPG thing, I could be good at it, I think I could make a product. And at the same time, we had a value added kitchen where we were processing vegetables, chopping onions, and broccoli. And so I understood the cost structure. And but no one had I'd had a vegetable noodle on a cleanse one time. And I'm like, I'm surprised no one has commercialized this. And when I looked around for machines, no machines, the machines that existed just weren't, couldn't make it fast enough and higher quality enough. And I did a deep dive on the engineering. I invented a machine to make the product make vegetable noodles in a more efficient and higher quality way than what was available out there. And created a brand around this for the produce department. We created a you know, brand new category in produce and it was immediately just a rocket ship. I think people didn't we hit product market timing perfect because keto was just starting to gain and so many people were trying to drop the carbs of pasta. And so people I don't even think they knew they needed this product until they saw it and then they had to have it. And so that one was a lot of fun. We ended up number three on the Inc 5000 list of fastest growing companies in the country. We grew from nothing to 25 million In three years, and grew from five people to 250 people in those three years, and I was able to bootstrap a lot of it, because I knew what happens when you take on outside money and the timelines that start with that. But that's an interesting thing like we did I designed that product and the brand so well, that the challenges with that company were all operational is like, how do we make more of this product? How do we get it across the country? How do we keep it fresh? How do we keep it, you know, safe to eat, it's a fresh product that's been cut. And so listeria, there's bacteria issues. And so it was just a fascinating and wonderful journey, that coming out of Greenland, there was all this baggage and even emotional baggage as an entrepreneur that I should have taken time off, but I was not in a financial position to the greenlink sale, you know, wasn't a great sale, it landed as good home, but I didn't do well out of it. And so I had to jump back in right away. And so that was one of the hardest parts as as an entrepreneur, I think we need to take breaks between some of these projects. And and I didn't get to, but luckily, the CeCe's just took off on its own, it's

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Ben Kaplan  16:09

interesting to think about one thing to launch a new brand or a new product, particularly in a different sort of space, our marketing agency, we do ton of work, and CPG has its own kind of dynamics, and particularly produced within CPG. But when you actually are creating a category, what is the added challenge of that, and it seems like your timing really was impeccable, because when you create a category summons, you can be too early, or you can be too late. There's lots of timing issues there. So what is the added challenge for those people that are thinking about? Yeah, I'm gonna create something that hasn't been done before. That can be great. But that can also be incredibly challenging.

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Mason Arnold  16:43

I think the biggest challenge to that was, it's called the copycats. And not just people coming out with brands, but every retailer, we created a branded category, in a part of the grocery store that doesn't that brands and grocery stores feel like they own the produce department. And it's their pride and joy, and their name is on, you know, cut veg. And so most grocery stores have private label in that in that area of the store. So convincing them to carry a brand. And we were able to do it very well, because we were like this is brand new people don't know how to use this, people are boiling these zucchini noodles, and they immediately fall apart, like you need a brand, a national brand to help educate consumers on what this category is how to use it. And that's what we're going to do. And that's why we don't want to make a private label product for you. And then, when you have something with a very short shelf life, we're essentially making product on demand, we'd make it in the evening and ship it out the next morning to stores across the country. And there's a velocity where if stores let competitors come in, and then it splits how fast each of those products move. And then they start spoiling before spoil at the consumers home because you've got too many brands on the shelf, those ends up end up being real challenges that can kill the whole category, because then people have a bad experience with the product and stop ordering it even though it was because the copycat was a much worse version of it.

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Ben Kaplan  18:24

So how do you tackle just the logistics the operational side of this, where I think it's also a little bit daunting, because one listeria outbreak, you know, can kill a brand or critical a tremendous amount of value. So you're on the cusp of that it can be your fault, it could also be not be your fault. It could be someone else in the supply chain doing something else that just affects the timing that does this. How did you manage that? And how did you learn the operational skills you needed? Because you didn't come from a big CPG company who's worked in the space where people learn that skill?

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Mason Arnold  18:55

Yeah, that's a great question. And I think one, you know, my engineering mindset was that I'm always solving problems. And some of them later on, I realized that solutions were really easy had I known the right people. And we'd spent a lot of time trying to solve problems. But I'm also a bit of a technophile. So I really love technology and new advancements in it. And I think the kind of sensor slash tracking of food through the supply chain was just hitting an inflection point where you could put temperature and GPS trackers on every single load for, you know, single dollars or a couple 10s of dollars, instead of 50 to $100 or $200 per sensor that gets you know, sent around and so being able to actually track the product as it moves through the supply chain all the way to the retail shelves, and we would sometimes hide them in the individual package when we retailers were saying that the product was going bad, and that it was all our fault. We'd said sensors that made it all the way to the shelf. And we're like, on, you know, the eighth of September, which is when it hit your shelf, the temperature spikes up to 55 degrees. And it's just that they're, you know, their cooler wasn't working as well, right. And so being able to track that I think was really key. And I was just constantly loving, like looking for technologies and ways to better operate and

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Ben Kaplan  20:28

you grow this brand, it's going great. Your timing really works. Well. You've got people like me who you know, we're like trying to cut things at home and all that way easier. Okay, that's great. We love pasta need a better way. And then you get to this moment where how are you going to scale this thing, it's one thing to be successful up to a certain point, it's another thing to be successful after that point. Amazing that you bootstrapped at this point. But you've got to decide if you're going to take outside money. I think that's something that a lot of entrepreneurs face, particularly because sometimes when you get into this type of work, because you want to work for yourself, you want to create something you sort of don't want to have a boss, and then you need money to get to the next phase money has some strings attached it sets some timetables, how did you think about that? What did you face? And what did you ultimately decide? Yeah,

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Mason Arnold  21:11

you know, we were so we were busting at the seams in our space, we had moved three times in the first three years to bigger spaces, and like, we really need a much bigger space. The fact that we didn't even yet have two years of tax returns, and like we're, you know, I talked to banks, and they're like, No way ever given you a loan that big. And so I'm looking at the customer list, and we're doing great, and we're profitable, and but we were there wasn't any way to grow quickly, we would have to slowly grow and piece by piece add on things to increase production capacity. And looking at staring at a national landscape where the first copycats were starting to enter the market already. And some of them were created by these large companies that I knew could ramp up production very quickly of what they were doing. And so the choice was either stay growing kind of slower, and end up losing out on the majority of the nation in terms of the volume and sales in those areas of the country and say a regional brand, or take outside money, build a brand new facility, and be able to launch nationally and and grow dramatically faster. And I just it was just going well enough, I was like I just don't want to look back in two years and be like, You know what, I still have a, you know, a few million dollar business is profitable and doing great when, you know, we could have we had the opportunity to create a massive brand and a massive company. And so I was like, Let's go for it and find the right partner. Now when you know the adage, don't raise money when you need to the you know, the only exception to that is if things are going extremely well. And you need money because you need to build out massive capacity to do even better. And so we were kind of the belle of the ball for fundraising at that moment. And we were able to choose a partner that we felt like brought the best strategic value to what we're doing. And they were wonderful operating partners and did a great job of helping us figure out how to operate better they ran produce companies on the west coast that we're doing, you know, helping them do billions of dollars of volume. And so they could put me in front of engineers that are that could say here's how you build a vegetable production facility here are the things to look out for. And so they they brought us a bunch of help to build a facility and a very quick timeline, we built a 60,000 square foot, you know, food safe vegetable production facility and under seven months, it was just as it was a crazy project. But we knew we needed a lot of capital to do that. So I took that capital and started that, you know those timelines and their first investment was minority investment but then as we needed capital to grow sales and marketing beyond that, you know, they ended up taking those board seats and majority share the company. Sporting

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24:28

a market gap for pasta lovers seeking healthier low carb options. Arnold developed an efficient machine to produce high quality veggie noodles. CeCe's quickly captured the market's attention bolstered by the rising popularity of the ketogenic diet and generating a staggering $25 million in revenue in just three years. However, carving out a new product category wasn't without challenges. Arnold navigated competition from imitators and the task of persuading retailers to stock this novel product. He positioned CeCe's as an educational resource for consumers to learn about and embrace this new food category. One significant operational challenge was maintaining the products freshness and safety due to its short shelf life, leveraging technology, Arnold tracked the product through the supply chain, enabling him to address potential handling issues and protect the CeCe's brand and product quality. But one question remains, what does the future hold?

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Ben Kaplan  25:35

What is the end game for you with CeCe's? What happened that proved to be the right decision to scale up? He wanted to build something that could last what happens at that point after that? And when did you decide that? You know what, like we started off his conversation with I'm a serial entrepreneur, it's time for me to go the next thing, what is kind of the end story of that? And how do you start back start climbing up that wall over again? Yeah,

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Mason Arnold  25:57

you know, building that facility. And then once our production capacity just took off, and we built these type processes around it, and we're creating profitable product, and it became the, it became a journey of maximization instead of like, revolution, or, you know, major stair step changes. And once it became a game of how do we squeeze two or three more pennies out of this particular product? And this particular production CPG? Is that game, right? Yes. So then, to me, it was like, Okay, now, now that we are maximizing, which is not like really what I love to do, my job is to build a good team for that, and then step aside and let them go do what they do best. And I became kind of the mad scientist in the corner, like inventing new products and inventing new things for the company and did that for a while, until it was like you can't invent any more things that are fit within the category. And so that's when I ended up ended up leaving the company. And what is

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Ben Kaplan  27:08

your advice for other entrepreneurs that are any phase that you had in your journey, the company that was the initial success almost seems easy, the company that is just dragging on, I can't get the result, a company that needs rocket fuel, but you're gonna lose control for all of those given all of your experiences? What is your recommendation to the founders that that you advise on how to navigate all this? What's the one thing they can do to give themselves a better chance of success? Yeah,

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Mason Arnold  27:36

you know, the may or may not give them the better chance of success, but I think it gives them the better chance of being happy and fulfilled is I try to advise them to really take stock of what they want out of it, what did they want themselves personally, because everyone gets caught up in all these external forces and what they should be doing and what their advisors are saying. And I'm, like, look, look inside. And, you know, if it's dragging out, but you love what you're doing, then you know, stay in the trenches. And you'll figure it out as if you keep tweaking, or if you know, this is going to be a rocket ship, but you're not the one to do it, then you know, find the right people to do it and watch your baby grow and be okay with it going away. But just just make sure that you know what you want out of it.

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Ben Kaplan  28:24

So many times when I talk to entrepreneurs, we have a lot of our clients, entrepreneur myself, you tend to get into like, Hey, this is a great market opportunity. This is a great I can see there's there's a room. And sometimes it's like in a field you don't care about you don't know, it's an opportunity. The problem with that is that at some point, it's probably likely to go and it's gonna get tough. And to your point, if you don't want to stick it out, because you really care about it's gonna be hard to stick it out. You probably shouldn't stick it out at that point. But unless this is that first case of this is super easy. What you have to navigate is just like your passion for it. And that's like an undervalued asset, when you say in your entrepreneurial journey.

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Mason Arnold  29:00

Yeah, absolutely. I learned for better or worse lesson right out of college when I was working as an engineer and I and I realized that I wasn't actually motivated by money. And so that ended up really realizing that early on in my career has helped me in my entrepreneurial journey, knowing that looking at something and saying, Oh, I can go make a lot of money at this never is what got me out of bed. It's like is what I'm doing is does it excite me? And am I passionate about it? So I always look to my passion first when deciding between things or even thinking about new ventures. And sometimes that can be hard because some sometimes things can be exciting for a little while, and then not anymore. And it's like well, yeah, I'm passionate about it, but I don't actually like the work about it. And so it's a complex issue that I think entrepreneurs should take some time with and sit with and be like the going is will get tough at some point. It will get tough and when it's tough, are you gonna want to still be in it or not?

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29:58

Trained as a chemical engineer Mason's entrepreneurial ventures started with an organic landscaping company, followed by a failed restaurant business in Spain. Back in the US, he launched an organic grocery delivery service that faced significant financial hurdles before ultimately being sold. His latest venture CeCe's Veggie Co. offered a novel low carb pasture alternative that quickly gained popularity despite competitive and operational challenges. Mason's journey showcases the essence of entrepreneurship, adaptability, resilience, and a knack for identifying market gaps. His story is a testament to turning failures into stepping stones towards success, teaching us valuable lessons on determination, strategic thinking and the power of innovation. And with that, it's case closed

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31:11

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