August 29, 2023 • 19 mins
The Month End provides emerging inventory-based brands real life knowledge in the accounting, finance, and operational world. Our guests are not only similar brand founders and owners, but key stakeholders and contributors to the industry. Each episode provides a glimpse into the vast experience and insight from its guest’s unique backgrounds in a casual, conversational tone.
• • •
In episode thirty-three, Accountfully's CEO and Partner, Brad Ebenhoeh, talks with Caleb Wang, CEO and Co Founder of MiLa. Caleb takes us into the intricate world of performance metrics and KPIs that drive the strategic growth of his authentic Chinese food brand. Learn how he stays hyper-focused on customer experience without neglecting classic financial planning to expand from classic D2C channels into the retail world. MiLa is a great example of how the two worlds of marketing and finance come together to support a successful business.
For more small business and CPG- focused resources, visit Accountfully's resources page, where you will find helpful articles, guides, eBooks and more.
• • •
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Brad Ebenhoeh (00:01):
Welcome to The Month End CPG community chat,
The Month End will provideemergent CPG brands real life
knowledge into the accounting,finance and operational world.
Our guests will be keystakeholders from those same
brands as well as other keycontributors in the industry.
Welcome to Episode 33 of TheMonth End podcast today we have
(00:21):
Caleb Wang from Mila. How're youdoing today, Caleb?
Caleb Wang (00:23):
Doing great. Thanks for having me, Brad. Glad to be
here.
Brad Ebenhoeh (00:27):
I'm looking forward to learning more about
Mila, your brand and then kindof your role there and how you
handle kind of some of theFinance, Accounting operations
of the business. So let's getstarted on MiLa. What is it?
What are you selling? How longhave you been in business? And
then also kind of what's yourrole? And what do you do on a
day to day standpoint?
Caleb Wang (00:45):
Yeah, good question.
So MiLa is modern Chinese foodcompany, we actually got started
on the DTC side during COVID,where we started shipping our
frozen soup dumplingsnationwide. And that's been the
big driver of the business todate. But this year, very
excitingly, we're expanding toretail as well, which is much
bigger market for foodspecifically. And then kind of
(01:05):
the other leg of growth otherthan channel is just products.
So starting with soup dumplings,we launched noodles last year,
and there's a lot more productsto, to launch in Chinese food.
For my role. I'm the CEO, and Icover a lot of the finance and
operation pieces supply chain aswell as kind of the revenue
(01:26):
sources.
Brad Ebenhoeh (01:30):
Awesome. Awesome.
So basically, then from aproduct standpoint, I guess
what, what stands out about yourproduct? And what makes it
unique? And what's your, Iguess, proposition to your
clients or your customers?
Caleb Wang (01:40):
Yeah, totally. So the Chinese food market, there's
just not that much innovationand making authentic, high
quality Chinese food. And sothat's the gap that we're
filling. And we actually gotstarted as a restaurant. And so
our kind of ethos was always tomake everything in-house, make a
high quality, restaurantquality, and compete against
(02:01):
like a restaurant experience. Sothen when we started the D2C
side that was still there. Andwe're doing things like making
everything in house, we're fullyvertically integrated with a big
R&D team that makes sure therecipes are authentic and high
quality. And then that teamcommunicates with our in house
production team to do all thecomplex steps needed to make the
the product, high quality aswell. And then outside of the
(02:24):
product, we're just verycustomer obsessed on kind of
everything that could possiblygo wrong. In the experience, as
you can imagine, like shippingfrozen soup dumplings, it can
melt, there could be a carrierdelay, someone could just not
bring it up from the porch, theycould cook it wrong. So we're
doing all the work on the backend to make sure as many people
are having a good experience aspossible.
Brad Ebenhoeh (02:43):
So you still have a restaurant open?
Caleb Wang (02:46):
Yes, the restaurant.
So we have restaurant open andthen the DTC business as well.
And then a growing retailbusiness.
Brad Ebenhoeh (02:54):
And from a retail standpoint, are you talking
about like distribution throughsome of the big natural food
providers or direct to bigretailers or, what does that
look like?
Caleb Wang (03:03):
Yeah, so to date, we've launched in a couple of
retailers in the PacificNorthwest, which is our home
base out of town and country metmarket QFC. We've also launched
in Costco in the Bay Area andPacific Northwest. And then by
the end of this year, and nextyear, there'll the logos will
keep growing.
Brad Ebenhoeh (03:22):
Awesome. Awesome.
All right. So let's start onkind of, I think on the sales
side, because this is kind ofinteresting. So you you coming
from, I think the world offinance as well, and looking at
a restaurant accounting of whatit takes to succeed in that
business to then direct consumersuccess from, you know, unit
economics, and now moving overretail, every one of them, it's
got his own little businessmodel within the business model.
(03:43):
So I guess, from your aspect,how do you manage different like
I guess, are going to managewhat you did retail like success
of the different channels? Likehow would you like what KPIs or
how do you view that?
Caleb Wang (03:55):
Yeah, good question.
And I'll just spend time talkingabout at D2C and retail, because
that's really the main business.
So I think, taking a step backphilosophically, it's super
important to just underunderstand benchmarking, and
what average looks like whatbest in class look like, and
what from a first principlesperspective, unit economics
should be and be hyper focusedon the unit economics and every
(04:17):
single driver of unit economics.
So for DTC, it's really kind of
Brad Ebenhoeh (04:18):
Definitely. And I think the biggest one of the
AOB, product cost, shippingcosts to get you to contribution
margin before marketing, thenyour CAC and then are you making
money on the first order, andour philosophy is we should
always be making money on thefirst order. We're not trying to
play the LTV payback game of"lose money, and then hopefully
make money over time". It justdoesn't create a sustainable
(04:41):
business. And you're too relianton one algo change or just
things that are out of yourcontrol. So we always make sure
we're making money on the firstorder. And then because our
product is high quality, we havehigh repeat rates and then the
LTV is quite strong as well. Sothat's like philosophically and
the D2C side but in order tomake the math work, especially
(05:01):
for for us in food, which hashigh shipping costs, we hyper
obsess on the product, so thatwe can charge a reasonable
price. And people are willing topay for it such that the CACs
are low. And then we're alsovertically integrating. So we're
taking a lot of costs out of theequation, and then passing that
benefit into back over to thecustomer. So that's on the DTC
(05:22):
side. And then we model it downall the way down to contribution
margin. And then we have ourfixed overhead, right. And then
so historically, our DTCbusiness has had has to cover
the overhead. But increasingly,retail can become a contributor
to that as well. And retail, youknow, it's relatively similar
product costs are the same, butyour revenues are lower because
biggest factors of them clearly,like outside of the p&l
(05:42):
you record net revenues insteadof gross. And the difference is,
it's you sell it for a cheaperamount to the distributor, who
then marks it up to the retailerwho then marks it up to the
consumer. So retail revenues areroughly 50%, lower, but you also
see a ton of benefits becauseyour, your shipping costs are
lower than D2C, and there's nomarketing cost associated. So
(06:03):
it's just a different kind ofunit economics. But we're hyper
focused on every single lineitem that can make a difference.
structures, basically, that youjust mentioned, is the cash
cycle, right? How do you get tomanage like the retail or
distribution cash cycle? Becauseit's much longer you have AR
(06:26):
versus pure, D2C? Where you'regetting that money, you know,
via credit card deposits?
Caleb Wang (06:31):
Yeah. Good. Good question. So for us, because
we're vertically integrated, wewon't see that much of a
difference. And I'll explainwhy. So DTC, we get the money up
front. However, we have toproduce the product well in
advance, and we're holding manyweeks of inventory at our
fulfillment centers to be ableto deliver next day. On the
retail side, we're almostproducing to Pio. And so though
(06:52):
we're not, we're not gettingpaid yet. And the best scenario
seven days, in the worstscenario, 60 days, that's still
eight weeks of inventory that wewere holding on GTC as well. So
I don't think it will impact ourcash conversion cycle that much
net net, but inventory,especially as we're growing so
quickly, managing inventory, andjust making sure you're not
(07:13):
putting too much cash. Or atleast variable to fund it
somehow. That is something thatwe're focused on, and it's
challenging.
Brad Ebenhoeh (07:21):
So then from a guy was actually gonna bring up
inventory. So perfect timinghere. So you you in house
manufacture all your products?
Caleb Wang (07:28):
Yep.
Brad Ebenhoeh (07:30):
Did you I know you started the restaurant, like
you always started in that realmwhen you went over to the DTC
game, or that?
Caleb Wang (07:37):
Yeah, so never what Jen and I are both from outside
the industry. I was in finance,she was in health tech, it never
occurred to us that you can usea co Packer or like the like we
didn't understand. So we'relike, oh, we want to make a good
product. Like, let's just do it.
And then once we startedscaling, we're like, "oh, like
we can, there's co packers thatexists, let's go reach out to
them and see, like, why don't wejust use them seems great", like
(07:58):
way more efficient. And then aswe started talking to them, we
realized that at least forChinese food, that Co-packing
ecosystem is pretty is notmature. And so they're just not
able to produce the the specthat we want, whether it's like
dough thickness, or the amountof filling or just the cost
structure. And so if ourNorthstar is to produce a really
high quality product, we had todo it in house.
Brad Ebenhoeh (08:22):
Super cool, super cool story there on that. So
from an inventory kind ofplanning standpoint, or
manufacturing, right, likeinitially, you had to buy
equipment to handle all this,again, from what you're saying
is, from this conversation forthose 10 minutes, I'm getting
like, Hey, we're going to buildup and get to win, like to
support the actual sales thatwe're doing. So how did you
(08:43):
finance that? How did you planthat initially? And now kind of
how are you, you know, thegrowth of the scale of your
manufacturing facility? Like howdo you handle all that?
Caleb Wang (08:52):
Yeah, so there's a couple of, I would say, phases.
The first thing is because we'refor sort of profitable that
helps, right? So we're not, youknow, that that definitely is a
key component. And then,however, now we're at a stage
where we basically just havethis massive Google Sheets. I
think, internally, we call itlike the beast, where it pulls
(09:12):
in all the demand from everysingle channel we run, because,
like DTC is like how muchmarketing spend, do you have
every single day or every singleweek over the last, you know,
years? What's the SKUdistribution, and then we plan
out over the next six months,and you have to factor in
seasonality. And then you haveto because we have our
(09:32):
fulfillment centers as well, youhave to split up to five or six
different fulfillment centers.
So that all kind of livessomewhere, and so the demand
side comes in for DTC. Theadvance side comes in for a
retail, which all has differentSKU counts and permutations. And
then that first feeds into aproduction plan of like, what
are we actually going toproduce? Then there's this whole
other like, calculus that goesinto Okay, here's a production
(09:54):
plan. What do we need to buy atwhat time but we don't want to
buy too much because too youdon't want to hold damaged
inventory, So that's anotherpiece of analysis. Another piece
of analysis is once you produceit, where do you ship it? And
then And then so that that'ssomething that we just do on a
weekly basis for super tacticalstuff. And then monthly analysis
(10:15):
in case demand changes, or weget another retailer or, or
velocities are higher than weexpected. So that's kind of our
process that we kind of gothrough.
Brad Ebenhoeh (10:28):
So it's a great process. And I I'm envisioning
this Google Sheets, I think Iunderstand why it's called the
beast after you just explainedthat.
Caleb Wang (10:36):
It wasn't. It was in Excel, and then it broke. So
liquid moving, I think we'removing to Google Sheets, it's
probably still in Excel. Yeah.
Brad Ebenhoeh (10:45):
Are you do you envision your where you want to
move? You're gonna move to like,maybe like more like a NetSuite
or something at some point inthe future? Are you thinking
about that? Or like, Do you haveany thoughts on that?
Caleb Wang (10:55):
Yeah, so we're moving to fulfill as our ERP,
and it's like, halfway done. Andthat will get at least a
historicals in place. Becauselike, right now, there's still a
lot of like, separate GoogleSheets to at least like get the
answer of like, what inventoryis and things like that.
However, I would imagine,there's still a lot of the
calculations still happens. Andlike the logic happens in
(11:16):
something flexible, like aGoogle sheet or Excel?
Brad Ebenhoeh (11:19):
Definitely. How do you want it? What are the
kind of key metrics that youguys are using and just pure,
like SKU? SKU success, you know,whether it's sales,
profitability? You know, how doyou how do you look at like,
when you launch a product, is itsuccessful or not?
Caleb Wang (11:36):
Yeah, I think the metrics are different. So like,
from a philosophicalperspective, on DTC, you can
test and learn much more quicklythan a retail. So we want to
launch more broad skews ontoetc. and just see if it sells,
right, just the velocity is themost important thing and see if
we can get it for sort ofprofitable by running ads. And
(11:58):
if that happens, then we'relike, "okay, like, this is
something that should work thatresonates with folks". Over the
long term, we look at retentionas well to see what people are
asking for and what the repeatbuyers look like. So those are
the metrics for success on DTC.
And then retail, we kind of pickthe best SKUs that we have on
DTC and then we're like, okay,these are the ones who brought
appeal, we will kind of sellthrough in in the, you know, the
(12:21):
Targets of the world, theCostcos of the world. And
there, it's really velocity. Solike, comparing how many units
per week we're selling, versuseverything else in the frozen
aisle, not just Chinese food,because we're competing against
the entire freezer. And thathelps, we're trying to drive
value to our retail partners andbuyers and driving incremental
sales. And we want to, we wantto show that our our products
(12:44):
are generating revenue and grossmargin dollars for them.
Brad Ebenhoeh (12:50):
Very cool. Um, as a, as a fellow business owner,
who is in business with my wife,as you are like, how has that
been? Like, what are the whatare the failures, the success is
just from a pure personalrelationship, business
relationship, what's workedwell, what's what's what's not
worked well on your guys's end?
Caleb Wang (13:07):
Yeah, very luckily, and we didn't plan for this, it
has worked out very well. And Ithink the reason it's worked out
well is because we're verycomplementary backgrounds and
skill sets. So I can do all thestuff that we just talked
through finance operations,she's really strong at product
marketing, high level companystrategy. And she's also worked
(13:30):
at a high growth startup in thepast, whereas I've only worked
at really small kind of boringfinance companies. So she can
help scale the business a lotmore. And then also, she has a
really good Northstar of like,what our customer value prop
should be, and she like, is theone who holds the company to a
really high standards. Soreally, really good kind of mix
(13:51):
of skill sets, which has allowedus to scale faster, because you
don't need to find other seniorleaders to put those roles. On
the negative side, it's justlike you're working 24/7 And
like, where do you draw theboundaries? And my definition of
quality time is we're talkingabout like, business strategy
and she's like, Nope, that's notquality time. Like we had to
like have phones out duringdinner. So like getting we
(14:13):
reached one there but like,there's there's growing pains,
especially with kid as well. Sojust just the balance, it was
point of friction at some point.
Brad Ebenhoeh (14:26):
Yeah, ya know, similar to us, it's like, you
know, we complement differentdepartments different you know,
stay away from each other, letthem be you know, each other's
things and and try to createsome personal boundaries at home
with the kids and just just havesome relationship standpoint.
So, a couple like finalquestions number one, like is
there a big kind of regret or abig mistake that you guys made
(14:46):
that you really learn from inthe operational right finance
cash standpoint that then you'llalways remember as you guys go
forward?
Caleb Wang (14:54):
Yeah, definitely a couple. I think the first thing
is just under estimating theinfrastructure and the resources
needed to like run the shipwell. And so before we had the
money base, we had nothing. Solike, then all of a sudden, I
remember a point last year whereI was like, hey, our inventories
like way too high for what ourplanning was. And I had thought
(15:16):
that had communicated toeveryone at the company,
everyone's on the same page. Andlike, as you grow, you just
realize that you need explicitlike a tool or a source of
truth, or some like cadence orsome process where it's not just
scrambling every single daylooking at ad hoc analyses. So
like, that's what helped uscreate this internal tool. So
that's one interesting learning.
And then the second interestinglearning is on the finance side,
(15:37):
it just takes a lot more workand systems and people and
process to get data to a pointwhere you can concretely make
decisions, I kind of came fromthe finance background. So I was
I didn't really fully appreciateaccounting or process and how to
resource that appropriately. Andso we're now stepping up the
team a lot more. A lot morethan we have in the past to get
(16:02):
the data in a place where wewhere we would like it.
Brad Ebenhoeh (16:06):
Awesome. Awesome.
All right, so the final twoquestions, we always end every
kind of episode with this. Andyou know, the the listeners out
there are kind of emerging CPGbrands. So taking these
learnings that you know, youwere talking about here, but I
guess so for the listeners outthere, what is one CPG industry
"do" for an emerging CPG brandfounder?
Caleb Wang (16:29):
I think, do try to figure out where you're adding
value to the customer. Becauseultimately, that's your mode.
And ultimately, that's how youscale. So if you you have the
real like it has to be you haveto try to be differentiated in
some way that's meaningful,where people like even two to
three years from now, it willstill be differentiated. And so
(16:49):
for us, it's no one's reallyfocused on authentic Chinese
food. And we've also built themode of vertical integration. So
in order for someone to do soupdumplings, it will just take a
lot of investment internally anda lot of complexity. So doesn't
mean it's not going to it'sgoing to be moved forever. But
that buys us some time. Simplykind of picking a different
flavor for you know, a chip,like may not do as well, because
(17:14):
it's easier for you to get intothe market. But it's also easier
for other folks to copy. And sothat's you have to you have to
know exactly what that that is.
So that's the bet, then youstart to have a plan of how
you're building that motivatedovertime.
Brad Ebenhoeh (17:29):
Gotcha. And then on the opposite side of that,
what is one "don't"?
Caleb Wang (17:33):
Don't price your product with low gross margins.
So I guess the opposite is totry to make money on every order
to be sustainable.
Brad Ebenhoeh (17:42):
Yeah, I know.
It's it's one thing that I tryto and I think the industry is
which the last kind of nine to12 months with what's happening
economically really, it'sgetting back to business basics,
right? Profitability, cashflowlike, you know, expense
management versus just pure, youknow, grow top line, raise
money, it district has changed.
I think getting more into thataspect now is is getting better
(18:06):
into the practice of the smallbusiness owner versus just grow
top line and will raise moneyand grow top line and raise
money. It's like noprofitability at some point.
That's what people are going tolook at free cash flow. So
awesome. Oh, Caleb, this wasgreat. Congrats on all the
success of MiLa to date. And Iguess while we're wrapping up,
where can people give me love?
What's new? What should they belooking at when they when they
go to your website? Or whereshould they buy your product?
Caleb Wang (18:28):
Yeah, you can go to our website eatmila.com. And
then increasingly, you'llprobably start to see us popping
up in retail locations. Probablytowards the end of this year
nationwide, and then in largerscale next year.
Brad Ebenhoeh (18:42):
Awesome. All right, Caleb Wang from MiLa.
Really enjoyed the chat episode33 of The Month End podcast.
This was awesome. Take care.
Caleb Wang (18:49):
Awesome. Thanks so much.
Welcome to The Month End CPG community chat,
The Month End will provideemergent CPG brands real life
knowledge into the accounting,finance and operational world.
Our guests will be keystakeholders from those same
brands as well as other keycontributors in the industry.
Welcome to Episode 33 of TheMonth End podcast today we have
(00:21):
Caleb Wang from Mila. How're youdoing today, Caleb?
Caleb Wang (00:23):
Doing great. Thanks for having me, Brad. Glad to be
here.
Brad Ebenhoeh (00:27):
I'm looking forward to learning more about
Mila, your brand and then kindof your role there and how you
handle kind of some of theFinance, Accounting operations
of the business. So let's getstarted on MiLa. What is it?
What are you selling? How longhave you been in business? And
then also kind of what's yourrole? And what do you do on a
day to day standpoint?
Caleb Wang (00:45):
Yeah, good question.
So MiLa is modern Chinese foodcompany, we actually got started
on the DTC side during COVID,where we started shipping our
frozen soup dumplingsnationwide. And that's been the
big driver of the business todate. But this year, very
excitingly, we're expanding toretail as well, which is much
bigger market for foodspecifically. And then kind of
(01:05):
the other leg of growth otherthan channel is just products.
So starting with soup dumplings,we launched noodles last year,
and there's a lot more productsto, to launch in Chinese food.
For my role. I'm the CEO, and Icover a lot of the finance and
operation pieces supply chain aswell as kind of the revenue
(01:26):
sources.
Brad Ebenhoeh (01:30):
Awesome. Awesome.
So basically, then from aproduct standpoint, I guess
what, what stands out about yourproduct? And what makes it
unique? And what's your, Iguess, proposition to your
clients or your customers?
Caleb Wang (01:40):
Yeah, totally. So the Chinese food market, there's
just not that much innovationand making authentic, high
quality Chinese food. And sothat's the gap that we're
filling. And we actually gotstarted as a restaurant. And so
our kind of ethos was always tomake everything in-house, make a
high quality, restaurantquality, and compete against
(02:01):
like a restaurant experience. Sothen when we started the D2C
side that was still there. Andwe're doing things like making
everything in house, we're fullyvertically integrated with a big
R&D team that makes sure therecipes are authentic and high
quality. And then that teamcommunicates with our in house
production team to do all thecomplex steps needed to make the
the product, high quality aswell. And then outside of the
(02:24):
product, we're just verycustomer obsessed on kind of
everything that could possiblygo wrong. In the experience, as
you can imagine, like shippingfrozen soup dumplings, it can
melt, there could be a carrierdelay, someone could just not
bring it up from the porch, theycould cook it wrong. So we're
doing all the work on the backend to make sure as many people
are having a good experience aspossible.
Brad Ebenhoeh (02:43):
So you still have a restaurant open?
Caleb Wang (02:46):
Yes, the restaurant.
So we have restaurant open andthen the DTC business as well.
And then a growing retailbusiness.
Brad Ebenhoeh (02:54):
And from a retail standpoint, are you talking
about like distribution throughsome of the big natural food
providers or direct to bigretailers or, what does that
look like?
Caleb Wang (03:03):
Yeah, so to date, we've launched in a couple of
retailers in the PacificNorthwest, which is our home
base out of town and country metmarket QFC. We've also launched
in Costco in the Bay Area andPacific Northwest. And then by
the end of this year, and nextyear, there'll the logos will
keep growing.
Brad Ebenhoeh (03:22):
Awesome. Awesome.
All right. So let's start onkind of, I think on the sales
side, because this is kind ofinteresting. So you you coming
from, I think the world offinance as well, and looking at
a restaurant accounting of whatit takes to succeed in that
business to then direct consumersuccess from, you know, unit
economics, and now moving overretail, every one of them, it's
got his own little businessmodel within the business model.
(03:43):
So I guess, from your aspect,how do you manage different like
I guess, are going to managewhat you did retail like success
of the different channels? Likehow would you like what KPIs or
how do you view that?
Caleb Wang (03:55):
Yeah, good question.
And I'll just spend time talkingabout at D2C and retail, because
that's really the main business.
So I think, taking a step backphilosophically, it's super
important to just underunderstand benchmarking, and
what average looks like whatbest in class look like, and
what from a first principlesperspective, unit economics
should be and be hyper focusedon the unit economics and every
(04:17):
single driver of unit economics.
So for DTC, it's really kind of
Brad Ebenhoeh (04:18):
Definitely. And I think the biggest one of the
AOB, product cost, shippingcosts to get you to contribution
margin before marketing, thenyour CAC and then are you making
money on the first order, andour philosophy is we should
always be making money on thefirst order. We're not trying to
play the LTV payback game of"lose money, and then hopefully
make money over time". It justdoesn't create a sustainable
(04:41):
business. And you're too relianton one algo change or just
things that are out of yourcontrol. So we always make sure
we're making money on the firstorder. And then because our
product is high quality, we havehigh repeat rates and then the
LTV is quite strong as well. Sothat's like philosophically and
the D2C side but in order tomake the math work, especially
(05:01):
for for us in food, which hashigh shipping costs, we hyper
obsess on the product, so thatwe can charge a reasonable
price. And people are willing topay for it such that the CACs
are low. And then we're alsovertically integrating. So we're
taking a lot of costs out of theequation, and then passing that
benefit into back over to thecustomer. So that's on the DTC
(05:22):
side. And then we model it downall the way down to contribution
margin. And then we have ourfixed overhead, right. And then
so historically, our DTCbusiness has had has to cover
the overhead. But increasingly,retail can become a contributor
to that as well. And retail, youknow, it's relatively similar
product costs are the same, butyour revenues are lower because
biggest factors of them clearly,like outside of the p&l
(05:42):
you record net revenues insteadof gross. And the difference is,
it's you sell it for a cheaperamount to the distributor, who
then marks it up to the retailerwho then marks it up to the
consumer. So retail revenues areroughly 50%, lower, but you also
see a ton of benefits becauseyour, your shipping costs are
lower than D2C, and there's nomarketing cost associated. So
(06:03):
it's just a different kind ofunit economics. But we're hyper
focused on every single lineitem that can make a difference.
structures, basically, that youjust mentioned, is the cash
cycle, right? How do you get tomanage like the retail or
distribution cash cycle? Becauseit's much longer you have AR
(06:26):
versus pure, D2C? Where you'regetting that money, you know,
via credit card deposits?
Caleb Wang (06:31):
Yeah. Good. Good question. So for us, because
we're vertically integrated, wewon't see that much of a
difference. And I'll explainwhy. So DTC, we get the money up
front. However, we have toproduce the product well in
advance, and we're holding manyweeks of inventory at our
fulfillment centers to be ableto deliver next day. On the
retail side, we're almostproducing to Pio. And so though
(06:52):
we're not, we're not gettingpaid yet. And the best scenario
seven days, in the worstscenario, 60 days, that's still
eight weeks of inventory that wewere holding on GTC as well. So
I don't think it will impact ourcash conversion cycle that much
net net, but inventory,especially as we're growing so
quickly, managing inventory, andjust making sure you're not
(07:13):
putting too much cash. Or atleast variable to fund it
somehow. That is something thatwe're focused on, and it's
challenging.
Brad Ebenhoeh (07:21):
So then from a guy was actually gonna bring up
inventory. So perfect timinghere. So you you in house
manufacture all your products?
Caleb Wang (07:28):
Yep.
Brad Ebenhoeh (07:30):
Did you I know you started the restaurant, like
you always started in that realmwhen you went over to the DTC
game, or that?
Caleb Wang (07:37):
Yeah, so never what Jen and I are both from outside
the industry. I was in finance,she was in health tech, it never
occurred to us that you can usea co Packer or like the like we
didn't understand. So we'relike, oh, we want to make a good
product. Like, let's just do it.
And then once we startedscaling, we're like, "oh, like
we can, there's co packers thatexists, let's go reach out to
them and see, like, why don't wejust use them seems great", like
(07:58):
way more efficient. And then aswe started talking to them, we
realized that at least forChinese food, that Co-packing
ecosystem is pretty is notmature. And so they're just not
able to produce the the specthat we want, whether it's like
dough thickness, or the amountof filling or just the cost
structure. And so if ourNorthstar is to produce a really
high quality product, we had todo it in house.
Brad Ebenhoeh (08:22):
Super cool, super cool story there on that. So
from an inventory kind ofplanning standpoint, or
manufacturing, right, likeinitially, you had to buy
equipment to handle all this,again, from what you're saying
is, from this conversation forthose 10 minutes, I'm getting
like, Hey, we're going to buildup and get to win, like to
support the actual sales thatwe're doing. So how did you
(08:43):
finance that? How did you planthat initially? And now kind of
how are you, you know, thegrowth of the scale of your
manufacturing facility? Like howdo you handle all that?
Caleb Wang (08:52):
Yeah, so there's a couple of, I would say, phases.
The first thing is because we'refor sort of profitable that
helps, right? So we're not, youknow, that that definitely is a
key component. And then,however, now we're at a stage
where we basically just havethis massive Google Sheets. I
think, internally, we call itlike the beast, where it pulls
(09:12):
in all the demand from everysingle channel we run, because,
like DTC is like how muchmarketing spend, do you have
every single day or every singleweek over the last, you know,
years? What's the SKUdistribution, and then we plan
out over the next six months,and you have to factor in
seasonality. And then you haveto because we have our
(09:32):
fulfillment centers as well, youhave to split up to five or six
different fulfillment centers.
So that all kind of livessomewhere, and so the demand
side comes in for DTC. Theadvance side comes in for a
retail, which all has differentSKU counts and permutations. And
then that first feeds into aproduction plan of like, what
are we actually going toproduce? Then there's this whole
other like, calculus that goesinto Okay, here's a production
(09:54):
plan. What do we need to buy atwhat time but we don't want to
buy too much because too youdon't want to hold damaged
inventory, So that's anotherpiece of analysis. Another piece
of analysis is once you produceit, where do you ship it? And
then And then so that that'ssomething that we just do on a
weekly basis for super tacticalstuff. And then monthly analysis
(10:15):
in case demand changes, or weget another retailer or, or
velocities are higher than weexpected. So that's kind of our
process that we kind of gothrough.
Brad Ebenhoeh (10:28):
So it's a great process. And I I'm envisioning
this Google Sheets, I think Iunderstand why it's called the
beast after you just explainedthat.
Caleb Wang (10:36):
It wasn't. It was in Excel, and then it broke. So
liquid moving, I think we'removing to Google Sheets, it's
probably still in Excel. Yeah.
Brad Ebenhoeh (10:45):
Are you do you envision your where you want to
move? You're gonna move to like,maybe like more like a NetSuite
or something at some point inthe future? Are you thinking
about that? Or like, Do you haveany thoughts on that?
Caleb Wang (10:55):
Yeah, so we're moving to fulfill as our ERP,
and it's like, halfway done. Andthat will get at least a
historicals in place. Becauselike, right now, there's still a
lot of like, separate GoogleSheets to at least like get the
answer of like, what inventoryis and things like that.
However, I would imagine,there's still a lot of the
calculations still happens. Andlike the logic happens in
(11:16):
something flexible, like aGoogle sheet or Excel?
Brad Ebenhoeh (11:19):
Definitely. How do you want it? What are the
kind of key metrics that youguys are using and just pure,
like SKU? SKU success, you know,whether it's sales,
profitability? You know, how doyou how do you look at like,
when you launch a product, is itsuccessful or not?
Caleb Wang (11:36):
Yeah, I think the metrics are different. So like,
from a philosophicalperspective, on DTC, you can
test and learn much more quicklythan a retail. So we want to
launch more broad skews ontoetc. and just see if it sells,
right, just the velocity is themost important thing and see if
we can get it for sort ofprofitable by running ads. And
(11:58):
if that happens, then we'relike, "okay, like, this is
something that should work thatresonates with folks". Over the
long term, we look at retentionas well to see what people are
asking for and what the repeatbuyers look like. So those are
the metrics for success on DTC.
And then retail, we kind of pickthe best SKUs that we have on
DTC and then we're like, okay,these are the ones who brought
appeal, we will kind of sellthrough in in the, you know, the
(12:21):
Targets of the world, theCostcos of the world. And
there, it's really velocity. Solike, comparing how many units
per week we're selling, versuseverything else in the frozen
aisle, not just Chinese food,because we're competing against
the entire freezer. And thathelps, we're trying to drive
value to our retail partners andbuyers and driving incremental
sales. And we want to, we wantto show that our our products
(12:44):
are generating revenue and grossmargin dollars for them.
Brad Ebenhoeh (12:50):
Very cool. Um, as a, as a fellow business owner,
who is in business with my wife,as you are like, how has that
been? Like, what are the whatare the failures, the success is
just from a pure personalrelationship, business
relationship, what's workedwell, what's what's what's not
worked well on your guys's end?
Caleb Wang (13:07):
Yeah, very luckily, and we didn't plan for this, it
has worked out very well. And Ithink the reason it's worked out
well is because we're verycomplementary backgrounds and
skill sets. So I can do all thestuff that we just talked
through finance operations,she's really strong at product
marketing, high level companystrategy. And she's also worked
(13:30):
at a high growth startup in thepast, whereas I've only worked
at really small kind of boringfinance companies. So she can
help scale the business a lotmore. And then also, she has a
really good Northstar of like,what our customer value prop
should be, and she like, is theone who holds the company to a
really high standards. Soreally, really good kind of mix
(13:51):
of skill sets, which has allowedus to scale faster, because you
don't need to find other seniorleaders to put those roles. On
the negative side, it's justlike you're working 24/7 And
like, where do you draw theboundaries? And my definition of
quality time is we're talkingabout like, business strategy
and she's like, Nope, that's notquality time. Like we had to
like have phones out duringdinner. So like getting we
(14:13):
reached one there but like,there's there's growing pains,
especially with kid as well. Sojust just the balance, it was
point of friction at some point.
Brad Ebenhoeh (14:26):
Yeah, ya know, similar to us, it's like, you
know, we complement differentdepartments different you know,
stay away from each other, letthem be you know, each other's
things and and try to createsome personal boundaries at home
with the kids and just just havesome relationship standpoint.
So, a couple like finalquestions number one, like is
there a big kind of regret or abig mistake that you guys made
(14:46):
that you really learn from inthe operational right finance
cash standpoint that then you'llalways remember as you guys go
forward?
Caleb Wang (14:54):
Yeah, definitely a couple. I think the first thing
is just under estimating theinfrastructure and the resources
needed to like run the shipwell. And so before we had the
money base, we had nothing. Solike, then all of a sudden, I
remember a point last year whereI was like, hey, our inventories
like way too high for what ourplanning was. And I had thought
(15:16):
that had communicated toeveryone at the company,
everyone's on the same page. Andlike, as you grow, you just
realize that you need explicitlike a tool or a source of
truth, or some like cadence orsome process where it's not just
scrambling every single daylooking at ad hoc analyses. So
like, that's what helped uscreate this internal tool. So
that's one interesting learning.
And then the second interestinglearning is on the finance side,
(15:37):
it just takes a lot more workand systems and people and
process to get data to a pointwhere you can concretely make
decisions, I kind of came fromthe finance background. So I was
I didn't really fully appreciateaccounting or process and how to
resource that appropriately. Andso we're now stepping up the
team a lot more. A lot morethan we have in the past to get
(16:02):
the data in a place where wewhere we would like it.
Brad Ebenhoeh (16:06):
Awesome. Awesome.
All right, so the final twoquestions, we always end every
kind of episode with this. Andyou know, the the listeners out
there are kind of emerging CPGbrands. So taking these
learnings that you know, youwere talking about here, but I
guess so for the listeners outthere, what is one CPG industry
"do" for an emerging CPG brandfounder?
Caleb Wang (16:29):
I think, do try to figure out where you're adding
value to the customer. Becauseultimately, that's your mode.
And ultimately, that's how youscale. So if you you have the
real like it has to be you haveto try to be differentiated in
some way that's meaningful,where people like even two to
three years from now, it willstill be differentiated. And so
(16:49):
for us, it's no one's reallyfocused on authentic Chinese
food. And we've also built themode of vertical integration. So
in order for someone to do soupdumplings, it will just take a
lot of investment internally anda lot of complexity. So doesn't
mean it's not going to it'sgoing to be moved forever. But
that buys us some time. Simplykind of picking a different
flavor for you know, a chip,like may not do as well, because
(17:14):
it's easier for you to get intothe market. But it's also easier
for other folks to copy. And sothat's you have to you have to
know exactly what that that is.
So that's the bet, then youstart to have a plan of how
you're building that motivatedovertime.
Brad Ebenhoeh (17:29):
Gotcha. And then on the opposite side of that,
what is one "don't"?
Caleb Wang (17:33):
Don't price your product with low gross margins.
So I guess the opposite is totry to make money on every order
to be sustainable.
Brad Ebenhoeh (17:42):
Yeah, I know.
It's it's one thing that I tryto and I think the industry is
which the last kind of nine to12 months with what's happening
economically really, it'sgetting back to business basics,
right? Profitability, cashflowlike, you know, expense
management versus just pure, youknow, grow top line, raise
money, it district has changed.
I think getting more into thataspect now is is getting better
(18:06):
into the practice of the smallbusiness owner versus just grow
top line and will raise moneyand grow top line and raise
money. It's like noprofitability at some point.
That's what people are going tolook at free cash flow. So
awesome. Oh, Caleb, this wasgreat. Congrats on all the
success of MiLa to date. And Iguess while we're wrapping up,
where can people give me love?
What's new? What should they belooking at when they when they
go to your website? Or whereshould they buy your product?
Caleb Wang (18:28):
Yeah, you can go to our website eatmila.com. And
then increasingly, you'llprobably start to see us popping
up in retail locations. Probablytowards the end of this year
nationwide, and then in largerscale next year.
Brad Ebenhoeh (18:42):
Awesome. All right, Caleb Wang from MiLa.
Really enjoyed the chat episode33 of The Month End podcast.
This was awesome. Take care.
Caleb Wang (18:49):
Awesome. Thanks so much.
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