S2 E1- A Conversation with Sandra Velasquez, Founder and CEO of Nopalera
In this episode, Daniella sits down with Sandra Velasquez, Founder and CEO of Nopalera. Sandra shares her entrepreneurial story and why she decided to disrupt the beauty industry and celebrate her Mexican heritage with the first high-end Latina beauty brand. Sandra also discusses her strategic approach to launching a mission-driven beauty brand, including identifying the target consumer, formulating products to meet clean beauty standards, and differentiating the brand through packaging, pricing, and unique value propositions. The conversation highlights the challenges of scaling consumer brands, managing cash flow, and navigating the entrepreneurial journey as an outsider to the industry. Sandra also provides insight into the challenges of entrepreneurship for founders with money wounds and underscores the importance of addressing these wounds to scale one's business and overcome systemic issues that hinder marginalized founders from accessing resources.
Where to connect with Sandra on the internet:
EPISODE KEY MOMENTS:
The story of how Sandra founded Nopalera
The importance of branding from the outset
Positioning Nopalera as a high-end Latina beauty brand
Having a clear mission and vision and building the brand and products from there
Getting your formulation, supply chain, and margins right from the beginning
Fundraising challenges and turning down Shark Tank offers
Overcoming money wounds and building confidence in entrepreneurship
Episode Transcript:
Daniella Allam: Hey, everyone, welcome back to the podcast. I am super excited and thrilled for our guests today our first Latina guest on the show, Sandra Velazquez, who's the CEO and founder of Nopalera. Welcome, Sandra.
Sandra: Thank you so much. Good to see you.
Daniella Allam: Great to have you on the show. So I'll introduce Sandra and then we'll start getting into our very juicy conversation, the Nopalera story. If you don't know it, is going to blow your mind. So stay tuned. So born and raised by Mexican immigrant parents near the US-Mexico border, Sandra Valesquez is a strong Latina role model that uses her platform to celebrate and elevate Latino culture while providing access and mentorship to her community. She launched Nopalera, a Mexican botanical bath and body brand during the pandemic. With no outside funding or savings. While working three jobs being a single mother at the age of 44. The brand is now sold in Nordstrom, Credo Beauty, Free People and over 400 independent retailers nationwide. In 2022, she raised $2.7 million in Series C funding, and one Latino Startup of the year at Latitude Conference. And in 2023, she appeared on Shark Tank, where she infamously turned down two offers rallying the Latino community to stand in their worth. Prior to Nopalera. She was the leader of Latin alternative band Pistolera, which toured internationally and had its music on hit TV shows like Breaking Bad. She's also the host of the Nopalera Podcast, which documents the journey of building her company in real time, while sharing stories of other courageous entrepreneurs. Sandra, it's an absolute pleasure to have you here to share your story.
Sandra: Thank you so much. Thank you.
Daniella Allam: So I wanted to kind of go back to that beginning early stages of Nopalera and and sort of that challenging situation that you were in with the jobs and then being unemployed. Can you can you tell folks a little bit of what that context was for you personally, and then what led to this inspiration and using the nopal cactus for for your brand?
Sandra: Yeah, I mean, the reality of that moment was panic, because, you know, here I am, I'm in my 40s I have no savings, I don't know how I'm gonna pay the rent next month, I literally had been living paycheck to paycheck my entire adult life, I didn't really know another way. And, and never been unemployed before, because I always had a very secure, you know, easy day job, I worked at Barnard College, Columbia University for 15 years as a college administrator before I entered into CPG, so I was in the union. So I literally couldn't even be fired, I just had like a stable secure job. And then I had the opportunity to kind of jump into CPG. And I took it because I was ready to, to kind of go and you know, grow and and you know, I was in the startup world, now all of a sudden, which is very insecure after being in the union. And so here I am finding myself unemployed. And you know, it's those, it's those moments where there are the valleys of our life where we're at a low point where we are literally feel like our back is up against a wall, we don't know what we're going to do, we can't even see the path forward, necessarily, but all we know is that we need to move forward. And you're either going to stay where you are, and keep doing the same things. Or you're going to literally like jump the quantum field and go into a new way of thinking a new way of imagining possibilities. And, and so I always say that Nopalera was born out of a place of discomfort, because when you're comfortable, you're not going to push yourself to grow or to do new things. Because listen, the bills are paid, there's food in the fridge, et cetera, et cetera. And so And there's nothing wrong with that, right? But entrepreneurship is not that right. And so that's in those moments. It's hard. But that's that's the reality of why I'm even here where I am today is because I was at that low point,
Daniella Allam: And so can you tell us about the story that you were you found yourself at I think it was summertime and you went to your parents house in San Diego. And how did you how did you kind of start this relationship with the nopal cactus that then would turn into this Nopalera brand?
Sandra: Yeah, well, you know, it's I think this is a lot of us can relate to this. Sometimes we have to go all the way around the world only to come back and see that the answer was staring us right in our face in the neighborhood in which we grew up. And so the nopal is somebody that I literally grew up with ignored it my whole life because it was, it's not special. It's it's like we eat it, you know
Daniella Allam: All the time everywhere.
Sandra: It's everywhere it is like, in fact, you can't even get rid of it. It just grows and grows and grows. And so there was in that summer because I was unemployed, I was like, Well, I have time to, like, learn new hobbies. And I had my daughter with me, and it was her summer vacation. So I was like, we're going to learn how to make stuff this summer we're going to make soap, we're going to make lotion bars, we're going to you know, we're going to make our own essential oils, whatever, it was just a crafty moment. And the soap recipes. You know, were calling for aloe vera, but didn't have any aloe vera. But we had plenty of nopal. So I was like, Well, let me just use this. It's very similar. So, I cut the nopal and put that into the soap. And that's really when the light bulb went off that. Here's this plant that I have known my whole life that is wildly abundant, incredibly regenerative, sustainable, you can eat it, you can use it for skincare, and why has no one built a brand like this and sort of started reading like that was actually the thought that I had, like, why has no one already done this. And, and so I do believe that when we have ideas, they're like divine downloads that we need to follow, they might not all manifest into winning ideas, but it is worth like, you have an idea for a reason. And so, in that moment, I almost felt like I was paying, paying and not paying but a pain of like responsibility and urgency with this idea that I was like, Wow, if I don't do this, someone else is gonna do this. And it might be like Johnson and Johnson. They're gonna do it poorly. It's not going to be authentic. So it needs to come from us and and from there that was it. Just the whole idea just literally came to me very quickly like that. And I went and bought the URL, I bought the I bought the trademark, you know, I was like, I'm going to start a beauty brand is going to be called Nopalera. It's going to be a high-end Latina beauty brand. So it really was not like a long decision-making process. It was really like a moment like lightning moments.
Daniella Allam: enlightening moment, an Ah-ha, an epiphany of like, Wait, this could be something. And then I think it takes also a lot of courage to say now I'm going to execute on this idea, right? Because so many entrepreneurs are like, I have this idea. I have this idea, this idea. And and I don't know if it'll be good or not. But what did you What do you think inside of you, like allowed you to kind of take the risk, right? Because you also took debt, I believe right to launch the brand, which is a, which is a risk in itself. So why did you feel like it was worth it?
Sandra: Yeah, so I think I remember at this point, I already have debt, I don't have assets, I have no, like, if someone was going to come and try to repossess my assets, they would come and get nothing because I didn't own anything. So we have nothing to lose, you have nothing to lose. And that's really where I was. And so what's another, you know, $2,000 on my credit card, I already have 30. You know, and I know that I can pay it off, I can pay anything off in a payment plan, what I don't have as large sums of cash upfront. So you know, even now to this day, Nopalera with all the success that we've had, I'm still what are the terms? Can we spread this payment out over five months, but I don't want large chunks of money leaving the bank if they don't have to, you know, and just for cash flow. And so for me it was again, it's either do this or stay where you are and where I was was not good.
Daniella Allam: Hmm. So about how long did it take from that moment? Until you started to see that that success or until you launched the brand, you know, in a wider way?
Sandra: Yeah. So I mean, I, I didn't know anything about beauty products or the beauty industry really have any context in the beauty industry. I've been working in food and Bev CPG, which is just different. And I enrolled in formulation school from the Botanica online with my credit card and studied for a year in stealth mode. So I studied for a year worked on the brand and worked on the products, didn't know what the products were going to be because to me, it wasn't really exactly the products on important the products obviously have to be good. But to me, it was very mission-driven. And, and so I just knew what the brand was going to be about what we were going to stand for why we needed to exist. And the products were just going to be a thing that needs to drive our economic engine, I had to make things that people wanted that people needed. Right, and the margins had to be good. That's all I knew, but I didn't know it wasn't gonna be a facial cleanser, was it gonna be a bar or soap. I didn't know, and all the things that I launched were because those are the things that I could personally make, because I, again, did not have access to manufacturing facilities, co-packers, you know, didn't have the ability to place a large purchase order. So I was like, I'm gonna have to make this myself in order to get it off the ground. And that's what I did. So from 2019 you know, all the way to now, you know, the end of 2020. So like a year and a half later, right is when I finally launched the brand. And that was November 2020. And
Daniella Allam: I love that story too of being a little bit in stealth mode and taking some time to really kind of get your other pieces together understand what product you're launching. Understand the branding, and really get into the nitty-gritty details of that instead of being like, I'm just gonna launch something, see what happens, see what what sticks, and having that that strategic foresight to think about how, how am I best gonna launch this right, which I think is a helpful thing for folks to think about that. Sometimes it feels like oh, like, there's a sense of urgency like it needs to go out like right now. But But it sounds like for you, it was really important to have that time to really finesse the offering that you were bringing to that market? And what about in terms of the branding? So I think so many of us can agree that the branding is just so gorgeous, it's so compelling. It's so rooted in tradition, and and you invested in that really early on, and really, were thoughtful about making that happen. Why did why was it important to spend that time and money? I think a lot of entrepreneurs sometimes think, well, I'll get to branding and marketing later, I'll put something out and and then we'll see and then we'll finesse. Why was it important for you to really have that best foot forward from jump?
Sandra: Yeah, I think one of the things I learned from working for other CPG brands, was the importance of brand. And I think that what I see a lot of it with the emerging founders, specifically in the beauty space, and sometimes in the food and bev space, too, is that they're the founders are very passionate about their ingredients.
Daniella Allam: Yep. And the product.
Sandra: Yeah. And they're really passionate about the ingredients. They're so there's so much better. They're higher quality, they're locally sourced, we're giving back and the whole passion and romance around the ingredient. But ultimately, what is going to compel someone to pick it up off the shelf, we are visual people, aesthetic intelligence is very important. And again, a brand is not a logo, right? A brand is not okay, I hired someone on Fiverr to go make me a logo. Now a brand is a feeling a brand is trust between people. You know, why do people choose Nike shoes over Fila shoes? Like they're both shoes, they both cover your feet? They're both high-quality shoes. But why do why do people want to wear one over the other? Like it's about it makes you feel like you're a part of something. And so that is your branding, right? How it looks is the first touch point of marketing. And that I'm I guess I'm just very grateful that I know that. And I, for me, it's all about brand. Because the reality, when you're talking about beauty products, and even a lot of food products is the formulas are not that different. We're talking you're buying into a story you're buying into, you know, something that that resonates with you that aligns with you, you know, so this whole notion that somehow people are shopping based off of ingredients, or somehow people are shopping because something is better for you or better for the environment is also not true. Otherwise, people would stop using plastic bottles, right?
Daniella Allam: Exactly
Sandra: If anybody cared about anything besides their own needs, they wouldn't be like our world would already be a better place.
Daniella Allam: Right? And I think what it also does, right is because especially when you're launching something so innovative, or maybe using a new ingredient like no bond or launching like, say, a new kind of beverage product, you're going to get copycats, as times go goes on, right, as time moves bigger companies are going to be like, Oh, hey, maybe I want to start using that. I don't know if that's happened to Nopalera already, but I'm probably sure it has. But I think that's the other function of branding is it starts to connect with consumers and they have sort of a more intangible relationship with you that another brand can't copy, they might be able to make the same exact formula as you're doing. But that feeling that you're talking about is unique to what that brand has created. So has that been something that you've seen? Have you seen more brands starting to use Nopal in their formulations as a result of Nopalera?
Sandra: Yes, I have, I'm seeing a few coming up, actually, that are launching. And it's fine. Because to your point, again, it's a lot of people make yogurt, right? A lot of people use shea butter. A lot of people use rosemary oil. Like, again, there's only so many ingredients in the world, you know, and there's only so many functions that people need, you know, and ultimately, it's your brand that sets you apart. It's why you choose one thing over the other thing, why you choose the Nikes over the Filas. Right, there's that doesn't mean that there shouldn't be other shoes in the world right there. We need options. So and I've also noticed that there are people that are starting to copy just my language as well, you know, because because I have been so vocal because I am such a forward-facing founder I have a lot of media attention. You know, I mean, I'm on the I'm on television, I'm on you know podcasts like this one I'm, I'm in the press. I'm very vocal on LinkedIn. And so I start to see that other founders also start to copy my language about our mission about, you know, this Eurocentric beauty and you know, And ultimately, you can only speak from something extensively if it really is coming from you.
Daniella Allam: Right, right. And consumers these days can really tell. Right? Also, I think, yeah, the consumers are getting smarter and sm,arter over time.Eurocentric and being more thoughtful about like, does this brand, really? Is it really about what it stands for? Or is that are they just using like points and, and trying to sell me a mission, but a mission that they don't actually care about? And also looking into Like, who? Who is behind this? Right? Like, is this a huge like multinational company trying to make something that's maybe cultural for, you know, or is it? Is it somebody who actually has that knowledge, that experience and that culture to really share with the marketplace? So in terms of consumers while we're there, I think something that was really compelling also about the Nopalera brand, and that was very intentional was making it a high end beauty brand, right, we're talking high end. So what why did you choose that? And and how did you go about identifying then who would be the Nopalera consumer?
Sandra: Yeah, so high end is part of our mission of building an aspiration Latina brand because that's literally at our core is why we exist is, is because we need there was no high end Latina brands, first of all, and beauty and second of all, to change this perception that everything Latino needs to be cheap.
Daniella Allam: Yep
Sandra: That's really what we're fighting against. And that's really why we exist, which is why the products I don't wanna say they don't matter, obviously, the products matter, but it's more about just permanently establishing like slotting, you know, Latina beauty in there with the other premium brands. Like that's it and like they're, we're still there in 100 years, that's the goal. You know, whatever products we've made, or categories we go into, like, I'm, you know, we've launched candles, we're launching solid haircare in June like we have different products, but again, it's about it's about positioning the brand, like Latina culture specifically as premium that's the goal. And so how I did that was I studied the premium space so I knew that I want Nopalera to sell into Credo Beauty so so I studied, you know, make a spreadsheet anytime I'm creating a new product, I make a spreadsheet of the competitor landscape, what is their packaging, price per ounce? You know, formulations, unique value propositions, etc? And study what's already out there anyone that's launching anything should be doing this? Yeah, yeah. The competitive landscape like don't don't create things in a silo, like we live, you don't live in a silo so and so just understanding okay, what are what's gonna, what's gonna be our differentiator, because Latina, by the way, is also not enough, there has to be something else, you know, just to say like, oh, you're gonna buy just because it's Latina? No, that's, that's not enough. So the product has to be great. Like, what are the functions? How are we going to differentiate? Is it scent is it packaging, you know, is it price per ounce is it value, whatever. And so that's, that's how I that's what I did, and also formulating to the Credo clean standard from the beginning, which is really challenging, which is why I you know, I really am grateful to formulation school, because it was organic skincare formulation school, and they're based in Europe. So they have different regulations and laws as to percentages of certain things that you can have in your products, like fragrances. One, for example. And this is why, you know, we're working on fragrance now. And this is why clean beauty fragrance doesn't last as long on your skin as like fragrance that you buy, like the Tom Ford, because, you know, when you take down those, those chemicals, and those allergens, you know, we take those percentages down to to really formulate to the clean limits, it means that your perfumes are just not gonna last as long. That's the trade-off. You know, but it's really important for us to be Credo Clean because that is the highest standard here. So closest to the European Union, and we do ultimately want to expand. So we we need to formulate with again, beginning with the end in mind.
Daniella Allam: I love that. And I think that that's something that I've actually had a few conversations with other founders about recently on this idea of like, folks that are like, oh, man, I wish I would have done that to like the Whole Foods standard, or I wish I would have like thought about this bigger vision when creating the formulations and maybe not I have launched like maybe 90 different products and variations and thought about my supply chain a little bit. Right. And so is that some advice you would give to folks really thinking about is like, What is the vision? Or where would you really want to be or what's the ideal scenario for you and kind of build backwards from there? Is that something you would recommend?
Sandra: 100% Like it's always begin with the end in mind, always, always thinking in mind, you do that in the rest of your life. This is why people have 401 K's right, because you're like when I get there. I want to have money when I'm 70. Right. Right. So it's the same thing when building a business and and it's a brand and it's you have to think big from the beginning. Otherwise you will either have to pivot or like change or rebrand or you know, iterate whatever because I see this all the time I used to work as a CPG consultant as well to teach brands about distribution specifically basically to warn them about what you're gonna find KeHE. And I just saw that so many like emerging food and Bev founders more than food because itit'severage i. It'sard to make small quantities like no one would like to just 1000 cans of something. But in food, you know, you're making your own salsa, you're making your own curries or whatever. Like, they're making it themselves, and they're like, Yeah, my cogs are good. Now I'm like, Yeah, but what are your cogs when you take this to a co-packer? You know, and feel like, what happens when you add in the distributor? The distributor margin, you know, so they don't even they're not thinking they're thinking about just right now, you know, and that's why so many don't make it and they or they can't, or they just stay small.
Daniella Allam: Kind of hinders your ability to scale. If you don't have these things figured out at least thought about thought about these variables as you grow.
Sandra: Yeah, if you don't have the margins now, you will not have them later. So when you're starting, you should have the highest highest highest margin possible. And I know in food and bev it's slightly lower than in beauty, but even still, like as high as possible. Like there's no such thing like people are worried about being being greedy. Or they're like there's no no, that does not exist, you will need that money to pay your your salaries, you have to hire people to pay your insurance, to pay your legal like everything you live and die by your margins. It's like that's where the money comes from. That's the only place that it comes from. It comes from your margin.
Daniella Allam: Yeah. Wow. Yeah. I think that needs to be underlined. Right? Because I think sometimes, I've also seen some startups and emerging brands, think about Whoa, we'll like grow into a bigger margin over time. Right? And it's like, how are you? Like, yeah, we'll get economies of scale and our supply chain. And it's like, yeah, but you already have such a little wiggle room in there. How are you going to make this work? Right. And, and we're seeing it a lot. I've worked a lot with a lot of plant-based brands. So we're seeing that, like across the board every day, a new plant based brand dies, right? I A lot of it because of the inability to really scale the business. So with that in mind, like what have been, would you say some of the biggest challenges that you've encountered as you've scaled your business over the last few years?
Sandra: Yeah. And it's the challenges that I'm still facing now, which is that we're in this phase of growth, where Yeah, we did 2 million in sales last year, which was triple what we did the previous year. So everyone's like, Yay, congratulations, great traction. But we no bank will give us a line of credit still, you know, and so when you're in the consumer space, the biggest challenge, once you've done all the other things, right? Right, you have a good brand, you have customers, you have, you know, pipeline, you have distribution, but the cash conversion cycle and consumer products is the biggest challenge, as opposed to let's say, a SAS corporation. So in consumer, you know, in beauty, specifically, it takes we have to pay a deposit for inventory five months before we get the product in our hand to start selling it and making the money back. And so half the money leaves today, right. And then in five months, we get the product in our hand, the balance is due, and we still haven't even started selling the product to make the money back. And that is the biggest challenge of a consumer brand. And that's why ultimately, in 2022, I had to go out and raise institutional capital because I could not I couldn't scale I couldn't I was like barely meeting the like the demand, right? I had all this inbound opportunity, and you know, with hundreds of boutiques, but I'm like, I can't afford to make the product. Right. And so and I can't, I'm barely just keeping up with making the product that we have, like, let alone trying to innovate new products and bring new products to market. Right was like off the table completely. You know, so that is continues to be the biggest challenge is at this stage finding. A now I'm talking to smaller banks, honestly, because you know, JP Morgan, they're too big. Like they they won't give us a line of credit till like years from now. And so I'm looking for banks that will. And so looking for that line of credit, you know, that will it's really just for to like to help with the cash conversion cycle of the product.
Daniella Allam: Making product. Yeah, and being able to support the scaling of distribution. So and but you had raised a series seed funding, and now you're looking into line of credit. Can you talk a little bit about how you thought about fundraising, and how and how have you thought about like finding the right kind of money and the right kind of partner?
Sandra: Yeah. So really, at that stage when I went 2022, when I realized I'm going to have to go out and raise institutional capital is because though even the loans that were being offered to me, we're still not enough, you know, like, and I've won five pitch competitions and you know, five pitch grants like of $10,000 each. And, you know, they're always like, what are you going to do with the money, I'm like, I'm gonna pay my bills. And $10,000, when you're scaling a business does not help you get to from point A to point B, let's be real, you know, like, my legal bill last month was $7,000. You know, and so, it just the expense as you scale, everything does, too, right. So that's just important to call out again, going back to my point of like, any founders that are listening, have your highest margins possible from the beginning, right, because you need them. And so the working capital loans from Shopify capital, or from other lenders Wayflyer all of these, like MCA loans that, you know, 30,000 here, 50,000, here, they just weren't enough. And so I'm like, I have to go out and get real money, like, I need a million dollars. You know, to give us a runway, you know, and I set up to raise a million. A mentor of mine was like, you know, what, it's the same amount of work to raise 2 million, you should, you're gonna need the runway should raise two, and I'm like, You're right. And then it became 2 million, and then it closed out being oversubscribed, at like, 2.6. And that allowed me to number one, bring into the team, because up until that point, I had been doing everything. And I had some like part time contractors here and there, but I was drowning, like, I can't do everything. That's the other thing, right? So why do you need margin and money is because you needed to hire people to scale. And that allowed us to bring in a chemist to create like new products, right? And, and that's why we were able to triple our revenue, right? And you need people you need those sources and expertise to be able to scale you can't do it by yourself. And now I'm actually now in 2024. And now I'm actually raising the seed plus right now. So by the way, plug, if anyone wants to visit our Wefunder campaign, it's closing soon, because the time we're going to open it up to the community, because by the time we get to the Series A, will be all institutional investors who write like $3 million checks, and then that's it, there won't be another opportunity for the community. So right now I'm raising the seed extension, called Seed plus round to continue to fuel our growth because we again, we need to improve our assortment. Like we've gotten feedback from big retailers about we know what needs to happen. But again, it costs money, right to make products, and I don't want to use our equity dollars to fund inventory. You know what I mean? Right? So and so that's, that's the challenge is always You're always like, juggling cash.
Daniella Allam: Always juggling that cash. Yeah, it's, yeah, another founder, who's gonna be on the podcast as well. Was was mentioning that as well, like, got the opportunity of a lifetime going into Whole Foods. But how are how to pay for it? How to pay to make that product upfront, right. When, when, when you're cash strapped? And when yeah, sometimes the margins especially like in the supplement space, sometimes, you know, that could be variable, depending on what you're on what you're selling. So I wanted to talk about money in terms of also what happened at Shark Tank, because I think that is so inspirational. That story right of, of you actually turning down offers, right? Because yeah, so tell us why. Why did you turn down the Shark Tank offers? And, and what has been the learning from from that?
Sandra: Yeah, so a couple of things about Shark Tank, what people don't know, first of all, is that you go through this like month-long process of, you know, preparing for that moment with your producers, right, Zoom meetings, videos, you know, auditions, set design, all these things. And there's no guarantee that number when you will film. And then when you do finally get a film date, then there's no guarantee that it will air. And they're very clear. So just so you know, a lot of people film and their their episode never sees the light of days. And no one knows that ever happened. Wow. Because ultimately what they care about, they're very clear. Like, there's they're like, this is the television show.
Daniella Allam: We want good TV. Yeah.
Sandra: Is it entertaining? Yes or no? It's not, you know? And it's not about whether you say yes, or whether you say no, and the producers have gotten very clear. And I think maybe because in the past, so many people said yes, on TV, and then the deal fell through in the diligence process that they're trying to just, like clamp, like crank down on this. And so they're like, yes, if you don't really mean yes, you know, because if we hear that you said yes. And then afterwards, you're like yanking Mark Cuban's chain during diligence and we're not going to air your episode. Like it was almost like a threat like and so I was like, okay, cool. I'm going to be prepared to go either way then right. so and so. I had my ceiling in mind, right? Because what people don't understand right, normal Americans who are not entrepreneurs or have ever fundraise understand is that if you're currently in a fundraise, and someone gives you a certain valuation like it that that's the valuation for the whole round. So by them offering me $300,000 for 30% of the company, brings the valuation way down, and I was already starting to fundraise at a much higher valuation. So I'm like, I need you to come and meet me where we are. You either want in or you don't, I'm not here to, you know, for you to tell me like, oh, change my whole fundraising strategy and like bring down the valuation. And so I offered 5%, they want to 30 I'm like, wow, we are nowhere in the same building as each other. And so that's why I had to walk away, you know? And is it scary to say no to $300,000? Yes. But, you know, after the episode aired, we made $300,000 in sales from being on the tail, you know, from being on the show, and it continues to, it's kind of like waiting, or like being nominated for a Grammy, like, once you're on Shark Tank you forever, we'll say I was on Shark Tank.
Daniella Allam: Right. Right. It has its own benefits as well beyond getting the deal. But I think the importance also there and for me, something I take away from that story is, is sometimes you have to say no, like, not every opportunity that comes your way for your business is going to be the right opportunity. And to not be in this sort of necessarily, like lack mindset of like, Wait, is this the only money that I'm gonna be able to get, and I'm gonna have to give up so much of my company, especially with that equity piece, I see that happening with a lot of entrepreneurs, where sometimes certain investors are asking for so much. And then I, you know, usually advise folks like if it doesn't feel right, and it's not what you want, then it's okay to say no, it it doesn't it, this is not the make or break it like it's not the only option available on the table. But at the time, it feels like scary, I'm sure to be like, wait a minute, I'm just gonna say no to money. But why was it so important for you to, to not give up so much equity? Right, I think that that's something we were seeing also in the space and hearing a lot of stories in CPG of founders not being mindful or not having due diligence in terms of the funding rounds, and how much equity they're giving up, and all of a sudden finding themselves out of their own companies, right, and being booted out of the thing that they've created. So what was that something that early on, you knew like I do, there is a certain amount that I'm willing to give up of my company, but I would like to retain the majority ownership?
Sandra: Yeah, you have to. So there's two things when you're raising capital there is that you're that you're up against it. One is dilution, and the other is control. And what you just spoke about is founders losing control of the company, because ultimately, the board takes control. And this is how CEOs get fired of their own company, right? You see this with Hint Water you saw with, you know, Miyokos Yeah. And like, it's crazy, right? That like someone who built the brand, why everyone has a job is now the one getting fired, like, and so that is a huge thing, right. And that's why retaining control is so important. And then dilution is like you're getting so diluted so early on, when you lower it when you're if you're like, hey, my company's only valued at a million. So if you give me $300,000, now you own Oh, my God, like a third of the company, you know, you own so much of it. And also, it's not just investors and founder, there's also the employee stock option pool in there you have, you know, there's your advisory pool. So everyone is getting a piece of the same pie. And so you have to think about all of those things, right? And, and so again, normal America, my normal, like mass American doesn't understand what a cap table I didn't write until I became an entrepreneur, I didn't know what a cap table was, I've never seen a term sheet. You just hear, you know, $300,000, that sounds like a lot of money, right? You do so much with 300,000 hours, but they have no idea what it takes to run it, what it costs to run a business. You know, what it takes to buy a product, how much it takes to get things made, you know, people retaining good talent, you know, all these things. It just it takes millions.
Daniella Allam: It takes a lot more than you think. That's something else I've been talking about with with founders that are thinking about fundraising, and I'm like, just bump it up. Right? You think it's this, but actually, it's probably more than you think. And a lot of founders too think, well, if I get x distribution, then all my problems will be solved, right? Like once I get into these, whatever 400 300 stores, then it's like no, honey, that's when your problems start, right? Because now you have to pay for it, not just to just to get the product, but also to keep it on the shelf to get that velocity moving to invest in your marketing dollars in your trade spend. There's so much money that needs to go out to support that scaling. That it's certainly always more than what you initially forecast, especially for first-time entrepreneurs, especially first-time folks in CPG, right? Because there's all these and then sometimes chargebacks and things that happen that that you're not prepared for. If you don't have a good amount of money in the bank. I think what's really hard, though in terms of money, and especially for BIPOC founders that are, don't really have access is like, a lot of them don't even know where to look. Or don't really have that access to like, Where do I even learn about a cap table and a term sheet? Like, who do I even talk to about this? Do you have any advice or thought for folks that are like in the early stages of their business, and they know they need to fundraise, but they're completely lost? And they don't know where to start?
Sandra: Yeah, and listen, I'm gonna tell you, like, I'm still learning, you know, and I've been six accelerators. You know, and I'm still learning this. And this is why you need lawyers, because you're not, it's not your job to be a lawyer, it's not your job to know everything. And you could, you could spend the rest of your life trying to learn everything, and then you won't get anything done so I, for me, I joined I applied to accelerators. That's how I got access to people that had knowledge that could explain things to me. And then also finding other founder groups, you know, like for food and bev, you know, the Startup CPG Slack community, from so much people in there. I'm also like, now in like in a WhatsApp group with CPG founders I got pulled into I don't even know how, but you know, finding other founders who are already a couple steps ahead, or, and some of them are right where you are, because that's ultimately what you need is people like yourself to explain to you in plain English. Because I've had lawyers try to explain to me, I'm like, I don't know what you're saying, no one knows. Except for you. And then entrepreneurs just feel bad, because they feel like they should get it or they should understand. But it's really like learning a new sport. You know, like, I don't, I don't speak baseball, either. You try to explain to me what was happening in a baseball game. I'm like, I don't I don't even know what you're saying. Right. So it really is like learning a new sport. There's a whole lingo that goes with it. And, and so for me, it was more about learning, like, the game, you know, like, I want to know, what are investors? What are their biggest anxieties? You know, what are then what are the big red flags for them? So listening to other podcasts, you know, to the publications of, in your industry, like for us and beauty, we have Beauty Independent, which has a lot of webinars, which are super helpful, because you're hearing people from like, people that have made it successful, big, strategics, investors, founders, you're hearing their perspective. And that's ultimately what people want is the truth. They want to know like, well, how does it really work? Right, and this is why I'm so transparent about telling people about our retail partnerships. And because everyone thinks that getting into Whole Foods or getting into Nordstrom, it's like, we're you're making so much money. I'm like, we're making no money from Nordstrom like, we are making money from boutiques, you know, and so, just again, this is why it's so important. Otherwise, I feel like we're doing a disservice to each other by not telling each other that truths, and telling each other what you really should be going after, you know, and understanding the differences between a vanity account that's like for credibility, like Nordstrom or Bergdorf, or even Whole Foods, you know, versus where's the money really coming from?
Daniella Allam: Mm hmm. And I think also, yeah, put it in a spreadsheet, like, look at the numbers. I think sometimes, folks also feel like, oh, maybe that's not my forte, or like, I'm just the formulator or I'm the I'm the person or I'm the marketing person. I don't I don't touch this right. But if you don't do it as a founder who's gonna do it right, who's gonna have have a hard look at the facts and the truth of what it takes and what how your business is actually functioning. There's a lot of folks that I think fear this for some reason. But it's so integral, I think, to to your businesses to see the reality of what really is happening, and try to find that if you don't know what it what it means to launch say, at a Whole Foods that are Nordstrom, then yeah, like you said, Talk to other folks that have done it, because they'll tell you the truth about what it takes to succeed.
Sandra: And I think it's gonna add something to that because I feel like a lot of founders are like this where they don't know where to look, where do I start? I'm like, are you listening to this podcast? Because if you are then they could be reaching out to you and be like, can you tell me like where the theSlack groups where where are the events happening? Like you need to go and ask you need to make the ask no one is going to come and give you the information at your house and what's going to come no one's coming to save you know what's coming to discover you like when you don't like we live in the age of the internet as Google first. That's what I did. That's how I found formulation school. Right? I didn't know either. And like if your people listen to this podcast, like they shouldn't be I would be literally reaching out to you if I was one of these founders that didn't know where to ask. It'd be like, Hey, you talk to a lot of founders. Can you can you put me in touch with somebody that knows somebody that knows somebody?
Daniella Allam: Exactly exactly. Like my grandma used to say like a as well as that but like the closed mouth doesn't get fed, right? You have to you have to speak and say what you're looking for. Ask for support as net network as human beings, right? Also, I think it's such a, it's something I've also noticed, like, it's such an intimidating industry to come in as an outsider. And there's a lot of like this imposter syndrome of, do I really belong here, I don't really know what I'm doing. But if you talk to people that are in that same wavelength, they'll kind of help you usher you through through these like peaks and valleys that you'll certainly experience. And it'll also help you realize if this is something that you're truly meant to do, because I also think and I'm curious what your thoughts are about this, but it's not the path for everyone. Also, right? It's, it's, it's not easy entrepreneurship, especially in CPG is not easy. What would you What's your perspective on that?
Sandra: It's the same, I agree. And I think it's, it's harsh, because people are very passionate, but you have to be in order to be successful, you have to be passionate about business. You can't just be passionate about giving back to farms, you can't just be passionate about your ingredients, you cannot just be passionate about how much you'd like to make something, you have to be passionate about the damn p&l, you'd have to be like, Oh, I'm so excited to look at the financial model today, and see how the business is growing and performing. Like you have to be passionate about business. You know, and especially if you're going to be someone who's gonna go try it and ask for investment, investors are not investing with in people that have small ideas, or that want to stay small, or that are just passionate about giving back. I think it just it crushes my heart, because I meet so like a lot of founders reach out to me for help. Right. And I'm very transparent. I have a podcast, as you know, I have a newsletter, right? So I'm always sharing information. So a lot of people reach out to me asking for advice or one on ones. And I'd see so many people, especially, like, founders of color, who are building their, because how do I say this? It's like, it's like this thing where the people that give the most are the people that have the least, you know, like you see this even with people donating money, it's like the people that are the poorest are the ones that are donating. Yeah. And it's why it's because they know what it's like to not have anything. And they know how much it means when someone helps them. And so I see this now in the founder community, like especially Latina founders, you know, they're like, I want to get back to artisans. In Mexico, I'm like, but you have to make money in order to survive, right?
Daniella Allam: Put out your first your oxygen mask first.
Sandra: Yes, like you have to like money. If you and this is where like, comfort your own money wounds. Like it's something that no one talks about, like an entrepreneurship because so many of us come from scarcity. So many, so many of us come to business with money wounds, and we like when I first started to raise, I started to raise $500,000, because to me, that was like an exorbitant amount of money. And I felt like almost, like nauseous trying to ask for more. Right? It feels like Well, who am I to ask for so much money to raise so much money? You know, I'm going to just ask for the smallest amount possible when I'm gonna get by right this like whole mentality of like scarcity and just like getting by living paycheck to paycheck, right, and suffering. And like, the reality is that there's so much money in the world, there's more money than there than anyone can even use, that's how much money there is in the world. But if you are trapped in your own mindset, that money is scarce, that money is hard to come by, that things are you know, then you're gonna stay there. And so and so tackling, I always tell this to my team, like in order to scale our business, we need to scale ourselves. So I need you to take if you think $10,000 a day on Shopify is a lot of money, I need you to take that from your ceiling, I need you to stand on it and making your new floor. Because there is more a beyond there's way more above that, you know, and and so anyway, that was just like a tangent.
Daniella Allam: But I think that that is so hard. I, I really resonate with that, because I've also had a lot of entrepreneurs that are in that sense, especially Black and Brown founders who are like, but that's already so much like 200k is already a lot to ask for. And it's like no, it's not when Chad is asking for 5 million and and Chad has no problem asking.
Sandra: Yeah, and by the way, Chad already has his own money, but he's still gonna go out and raise money anyway. Yeah,
Daniella Allam: and probably for a non greatest product, but maybe not a great as an idea but because Chad has the confidence and as no qualms feeling like he's worth and his company and its idea is worth that much. So I'm like we have to be all more like Chad just like move through these feelings. Right. Which, which, like you said, I think it was so powerful what you said that this is like inherited feelings, right? Especially if you're immigrants, especially if you come from Black and Brown communities where you know, we've been told our whole lives and indirectly or directly, that we're not worth this right? We're not You're not worth that. And like we see it too in the way that people we get paid and salaries and, and things like that, though, you know, we're always conditioned to believe that that we have to live in this scarcity mindset. And I think that my entrepreneurial mindset is almost like that foundation of trying to build a good business.
Sandra: Yeah. And so like, like back to your actual question of like, if it's not for everybody, like, this is a question you need to be asking yourself, right. It's like, are you here? Because yeah, entrepreneurship is hard. We can always talk about how hard it is and how it's like it's not stable, and like, it's easier to go work for someone else. And yeah, we already know like, it's not for everybody. So the question is, you should be asking yourself, if you're going to start a business, right food and bev, beauty, whatever. It's like, are you passionate about business? Or are you a person that just likes to make stuff? Because I've met many founders who like, Oh, I just love especially like, because I made soap. The whole soap-making community is like a whole thing where people's
Daniella Allam: They're like I just want to be a soap-making fairy in the woods?
Sandra: Yeah, they just want to make stuff. And I'm like, that's called a hobby. Right. But are you passionate about KPIs? Are you passionate? Are you passionate about, like, your average order value, your long-term value? Like, you know, these are the things like, are you passionate about business, and ultimately, for me, being successful in business means having money to make an impact. You know, so it's not just about being passionate for business for the sake of it, but for, you know, maybe for others it is, but for me, it's like, I want to be successful so that I can be the one that writes the checks, because I had, you know, very few Latinos to choose from when it came to people that write checks, you know, and, and we need more of us to succeed, which means we need more of us to get over our money wounds will make it more of us need to like take the ceiling and make it our new floor and become wildly successful so that we can turn around and become the people with the economic power that fund the next generation.
Daniella Allam: Oh, mic drop, Mic drop. So yeah, I think everybody needs to hear this. I needed to hear that. Because I think yeah, there's this also, it's what, like you said, if you have a mission, and so many of the folks that are passionate are like I have this mission, I want to make herbs accessible, or I want to make this thing. But But money is what allows you to make that vision happen. And especially if you know, especially like in the herbal communities and the place where folks are more used to having sort of a hippie mindset and maybe like, like, have an aversion to thinking about business. I think what you said is really powerful, like, think about whether this is is this like just a block that you have? Or is this a true something that does not resonate with you, right? Is this a block you can get over? Another option would be if you're just the person who likes to make stuff, maybe you need to bring a co founder that wants to do business, right. But in a business, you're gonna need somebody who's going to know how to run that business, for sure. So as we wrap up, I wanted to ask you if what's coming down the pipeline for Nopalera? What exciting things I think you mentioned haircare. What can folks look forward to?
Sandra: Yeah, so haircare is launching in June, it's the number one most requested product by our customers. So we're doing it. The formulas are incredible. I'm super pumped. So that's dropping in mmid-June and then currently working on fragrance ,actually, because people really love the Dulce de Cuerpo scent in body lotion and shower gel that we launched at the end of last year. And so people are like, can we get this on a perfume? And we're like, yeah, we're working on that. So Oh, no fragrance. And so that's exciting, because it just, it just gives us another avenue to, to really bring the sensorial aspect of our brand and our brand story, because scent is just so visceral. And it takes people to a place and it makes people feel things and so everything's gonna be tied back to obviously Mexican heritage and places in Mexico. But so those are the things that are currently down the pike and then closing up this current race, which ,as I mentioned, you know, we allocated a portion of it to the community because we're a community-driven brand. So we have a Wefunder campaign live right now and it's it's closing soon. So really trying to focus on getting that wrapped up so that we can get back to work.
Daniella Allam: Awesome. So if folks are looking to invest a little bit of money, or a lot of money into Nopalera they can certainly do that. And I would I love also about you sharing these different product formats is really hearing to what your consumers are asking for and delivering what what what they're what they're looking for, which is exactly what I was thinking I was like there needs to be haircare from Nopalera. So I'm so excited to hear that. And yeah, it was such a joy and pleasure to have you on the podcast and have you share your incredible insights. I'm sure it's super-valuable to to anybody who's listening and anybody who's starting or thinking about starting their CPG business, so thank you so much, Sandra!
Sandra: Thank you.