How Two Students Made $100K Bringing Korean Hot Sauce To America
Note: This business is no longer running. It was started in 2017 and ended in 2021. Reason for closure: Acquired.
Hello! Who are you and what are you working on?
Hi, my name is Theo Lee and I’m the co-founder and CEO of KPOP Foods.
Today, the brand and story behind a company is critical for success and sustainability as consumers are driven towards companies and products making an impact.
KPOP Foods is a Korean food company inviting people to discover and enjoy Korean flavors through its food products. Our approach is to become the Red Bull of Korean food by bringing together mainstream culture, art, music, and food.
My co-founder, Mike Kim, and I are both Korean Americans and launched KPOP Foods because we wanted to build a Korean food brand that people could resonate with and embrace.
Our mission was and continues to be about bringing people together and uplifting spirits through Korean food and flavors. When we looked at the Korean food companies in the market, we couldn’t find one that represented this spirit, so we decided to do it ourselves.
Our first product is KPOP Sauce, a Korean chili sauce based on my grandma’s 70-year old recipe using Korean chili paste (aka gochujang). We debuted KPOP Sauce through a successful Kickstarter campaign last year in April that funded within the first eight hours of our campaign.
We received Kickstarter’s stamp of approval as "A Project we Love" and were featured as “A Project of the Day” and ended the Kickstarter campaign with nearly $40,000 from over 1,200 backers.
In April of this year, we launched our second product, KPOP Sea Snacks, a premium roasted and all-natural seaweed snack made here in the US.
While still fairly new, KPOP Sea Snacks is already an Amazon’s Choice product and was featured in FabFitFun (a women’s quarterly subscription box) and Pinterest’s limited-edition, specially co-branded box called the P100.
Most recently, we announced our new Head of Product and Product Development, celebrity chef, Chris Oh.
Chris is developing several new sauces that we intend to launch in November and is also opening his network for opportunities in marketing, content, and partnerships. We’re really excited to have Chris onboard and to be working with him!
Since September of last year, we’ve generated nearly $100,000 in revenue, primarily all online through our website and Amazon. Our products have earned the coveted Amazon’s Choice badge because they are unique and well -reviewed.
We’ve entered over 90 specialty stores throughout the west coast and are currently raising an investment round to expand our distribution into major retailers.
What's your backstory and how did you come up with the idea?
Growing up in Korean American families, we were fortunate to be surrounded by Korean food all the time. However, along with the food, an important principle that was instilled in us was the connection between Korean food and family, friends, and fun.
Mike and I met at business school at UCLA Anderson where we would take large groups of friends to Koreatown in Los Angeles to enjoy Korean food. Along with enjoying the food, our friends embraced the Korean culture and the energetic atmosphere.
This is what sparked the idea for KPOP Foods. We wanted to replicate the sensory and social experience our friends had at Korean BBQ and share it with the world!
I think a really important concept, especially for when just starting out, is being comfortable with launching things quickly.
The UCLA Anderson community played, and continues to play, a major role in KPOP Foods. We took the concept and business plan for KPOP Foods through UCLA Anderson’s entrepreneurial classes and startup program called Business Creation Option, a field study option required for graduation.
Prior to business school, Mike served in the U.S. Army and I came from a finance and banking background so neither of us had any real experience in food nor marketing.
Mike on patrol in Afghanistan
Our classmates, professors, and other members of faculty were instrumental in advising and helping us during our Kickstarter campaign, which launched during our final quarter at business school, and connecting us to potential investors, advisors, and food industry professionals.
If you’d like to learn more, I’ve actually written a LinkedIn post about UCLA Anderson’s role in KPOP Foods.
The Kickstarter campaign was key in validating our idea and giving us the confidence to pursue KPOP Foods full-time.
But even before Kickstarter, we did hours of research, talking to CEOs and founders of other successful Kickstarter campaigns, running focus groups to test our brand story and variations of KPOP Sauce, and picking people’s brains on ideas for our Kickstarter video.
We also found a way to create samples by buying little bento box soy sauce containers shaped like pigs and filling them up with KPOP Sauce to send to our friends and people interested across the nation.
The samples were great as we were able to send them in the mail, keeping costs low as we paid for everything ourselves with our savings and credit cards. This was also helpful in getting the awareness of our Kickstarter campaign out to people.
Our sample KPOP piglets...
As MBA students, we had significant student loans and were presented with opportunities to work at great companies, but thanks to our Kickstarter campaign, we were able to raise an initial investment round, allowing us to pay ourselves a minimum salary to cover rent, loan payments, and basic living expenses.
This was our chance to build something on our own and work for something that we truly loved so we dove right in.
Describe the process of designing, prototyping, and manufacturing the product.
Getting the ingredients right
The reason we started with KPOP Sauce was because one of the key ingredients, gochujang (Korean chili paste), is a staple ingredient in Korean cuisine.
Additionally, my grandma used to send me bottles of her gochujang sauce and my friends absolutely loved it, putting it on their eggs, grilled chicken, burgers, hot dogs, noodles, rice, and more.
Given the versatility, we thought it was the right product to start with – a flavorful sauce that people could incorporate onto foods they already eat. Along with that, gochujang can be difficult to use given its thicker texture (think peanut butter), so the sauce made it much easier to use or cook with.
We used my grandma’s recipe as a base and began tweaking things based on feedback. The most controversial ingredient turned out to be sesame oil – some people really liked it, others didn’t. When we removed the sesame oil, people still liked the sauce, so we took it out.
Packaging & Design
We also had to figure out the packaging, namely the bottle, cap, and label. Based on research and our focus groups, we wanted to be in a plastic bottle, so we went online and looked for as many different bottles as possible and asked people for their thoughts.
We also used these bottles during the focus groups to test usability and to see which one people naturally gravitated towards.
*Our early prototype bottles. You can see, we posted this on social media to get feedback from our early supporters. *
For label design, we found a designer, who I previously worked with at a previous startup, to help mock up some label designs. We gave him our story, ideas, and mock images to use as a style reference.
We eventually narrowed the label designs down to two options and received feedback from friends and people. We also posted the designs to social media and received a ton of engagement and comments through that as well.
Next, we had to find a manufacturer, or co-packer, to make our sauce at scale. I remember calling 15 to 20 different manufacturers and not getting anywhere, especially since we didn’t know how much we wanted to produce (time is literally money for manufacturers and since we hadn’t started our Kickstarter campaign, we didn’t know how much we needed to make in our first run).
Finally, a co-packer we ended up working with, was nice enough to explain the process and offered to help.
We learned that the first step was to find a food scientist to scale our recipe as things can quickly change when going from making small batches to hundreds of gallons.
The food scientist would also help us with testing for shelf stability, analyzing the sauce for nutritional information, and submitting our application for the license to manufacture in California, otherwise known as a S-Letter.
The person who explained the process to us sent over a list of potential food scientists - we were fortunate to find a food scientist through a friend of my uncle’s.
I had several calls with the food scientist and met with him to make sure it was a good fit and he turned out to be great, explaining to us certain issues and basic concepts.
Finding suppliers
While the food scientist focused on the product, we shifted our focus towards finding suppliers, namely for packaging (bottles and caps) and key ingredients. We were fortunate to find a packaging supplier that was also able to assist with warehousing as the minimum order quantities for the bottles and caps were well above our first production run.
Furthermore, we were able to negotiate a structure such that we only paid for the bottles and caps delivered to our manufacturer. This saved us a ton of money as the minimum order quantities for our caps was 25,000, yet we only needed 6,000 for our first run.
Alongside packaging, we also sourced a quality ingredient supplier that turned out to be in the same area as our manufacturer, keeping the transportation costs low.
After several months, we received our S-Letter and were ready to do our first production run for approximately 6,000 bottles. We’ve since completed 4 more production runs for KPOP Sauce, each time making small tweaks to the recipe as we’re always looking to improve.
Chris is now working on developing several new sauces and we’ve already begun the development process and excited to launch the new products later this year.
Describe the process of launching the business.
Before launching our Kickstarter campaign, we made sure to have our website and social media accounts up and running.
We bought the domain for kpopfoods.com through godaddy.com for less than $20 a year and used Shopify to build our website.
In the beginning, we focused on building our social media accounts, mainly Instagram and Facebook. We used our website for credibility and a way to share our story while offering samples to promote our Kickstarter campaign.
After fulfilling all of our Kickstarter orders on-time in August, we were ready to begin selling nationally through our website in September. We picked up a number of re-orders from our Kickstarter campaign in the first couple of weeks and also began testing Facebook and Google ads.
In the beginning, we struggled to get conversions, leading to a higher customer acquisition cost than initially expected, however we learned a lot about our user flow and funnel. We’ve gone through countless iterations of our website to improve the UI/UX.
In October, we entered Amazon through "Fulfillment By Amazon" (FBA) and this was when things really began to take off.
We were fortunate to pick up a number of five-star reviews immediately from customers and Kickstarter backers, allowing us to become an “Amazon’s Choice” product within the first week. We soon became the #1 new selling chili sauce on Amazon for the next three consecutive months.
Since launch, what has worked to attract and retain customers?
As we started to see high levels of conversions on Amazon, sometimes as high as 30%, we began changing our digital marketing strategy.
Retargeting
We were able to get clicks to our website at a very low cost per click, and thanks to some PR initiatives, SEO optimization, and content development (both video and blog articles), we were able to increase sessions to our website to 150 to 200 a day.
We would then retarget our website visitors with Facebook ads, driving them to Amazon and continued to see high conversions. As we began talking to other CEOs and CMOs of food startups selling online, they mentioned that they were using the same strategy.
The one downside to this strategy is that you can’t collect customers’ email addresses through Amazon - inhibiting your ability to retarget.
While we’ve grown our Instagram account to over 10,000 followers, we’ve been using Instagram as a tool to partner with Korean restaurants and reach out to influencers we’d like to work with.
We haven’t seen a significant amount of conversions from campaigns with Instagram influencers, however these partnerships have been successful in growing our following, driving traffic to our website, and providing creative assets for our e-mails, website, and ads.
YouTube
We’ve had success partnering with YouTube influencers, but it’s taken a lot of time, effort, and luck. When we first started cold e-mailing influencers, we didn’t get many responses.
If you’ve ever had experience selling anything, you know it’s a numbers game and that was true here, but we really lucked out when Greg Mrvich, of Ballistic BBQ (230K+ subscibers), got back to us.
He also resided in Southern California and was empathetic to our struggles as a newly minted startup. It also helped that Greg was a huge fan of Korean food. We sent him some samples of our sauce and the rest is history.
He creates these amazing, mouth-watering videos featuring culinary BBQ masterpieces and we can’t thank him enough for his help!
Partnerships
Along with YouTube influencers, we’ve been able to partner with other companies, such as subscription boxes leveraging our success on Kickstarter, online sales, earned media, and prior relationships.
We use past partnerships as credibility to fuel the next one giving other parties multiple reasons to collaborate with us. We are honest in our communications, prompt in our responses, and detailed in our work. We use every success as a stepping stone to reach up and find better opportunities.
We’ve partnered with subscription boxes such as Bespoke Post and BBQ Box, and each partnership has led to increased website traffic and new customers.
Our latest partnership for KPOP Sea Snacks was with women’s quarterly subscription box, FabFitFun, and Pinterest in their limited-edition, specially co-branded box called the P100, a box reflecting Pinterest’s top trends for 2018.
Partnerships like these can help in multiple ways from generating direct sales, increasing brand exposure, to acquiring a new group of potential customers. We see large influxes of website visitors at the onset of announcements and steady traffic for the duration of a partnership.
We are generally able to cater to these new audience by creating unique landing pages or offering special discounts only offered to them.
So how did we source these kickass deals? Apart from what I mentioned above about using accomplishments to get one deal, and then using that deal to source another, it comes down to goodwill and building relationships. Here’s an example:
Our Kickstarter success can be attributed to what we learned by reaching out to the founders of other successful campaigns. We paid that collaborative, sharing mentality forward by talking to anyone that reached out to us for Kickstarter advice or business advice in general.
Months after helping one such person, that individual connected us to one of her friends, working at an amazing brand that just so happened to be looking for amazing Korean-inspired products. And voila! Relationships matter and have led to some of our biggest achievements.
No matter how busy we are, I think we can all agree that we can spare 20 minutes out of a day to talk to someone or help someone out. Help other people out without expect anything in return
Lastly, a new initiative that we’ve been focused on is email marketing. Through a platform called Dojo Mojo, we’ve been able to partner with companies to run giveaway campaigns and through just three campaigns, we’ve been able to grow our e-mail list by over 500%.
While email marketing has always been great way to keep in touch with our initial customer groups to drive repeat purchases, gathering new emails is essential to widening our top sales funnel and increasing revenues.
There are so many different objectives a company can hit with e-mail marketing (e.g., web traffic, referrals, conversions, education, etc.). The greatest part of e-mail marketing is that it is extremely cost efficient and targeted – we don’t spend on advertising and we get prime placement in the mailbox of our would-be and existing customers.
Specialty Retail Stores
A specialty sauce distributor reached out to us after the completion of our Kickstarter campaign and we’ve been working with them to get our products into their network of specialty stores nationwide.
These stores we’re placed in are generally independent grocers (think mom-and-pop shops), but our experience has taught us much about selling in retail as we look towards expanding distribution. It’s one thing to get into a retailer and another to ensure your products are selling in that retailer.
Sell-thru in a store can depend on, but are not limited to the following: customer demographics, store location, product price points, promotions/discounts, and sampling. Our success in these stores have served as validation that we must expand our distribution in order to scale and take our company to the next level.
How are you doing today and what does the future look like?
Since September of last year, we’ve generated nearly $100,000 in revenue, primarily all online through our website and Amazon (about a 50/50 split in revenue by channel).
We are currently in the middle of fundraising to expand our distribution outlets, develop new products, and hire new talent. Since February of this year, we’ve entered over 90 specialty stores throughout the nation and are now receiving interest from distributors and larger retail chains.
We’re also partnering with restaurants and coffee shops, such as Everytable and The Hive in Los Angeles.
As mentioned previously, e-mail marketing has been showing promising signs. That’s the name of the game for startups. It’s a bunch of testing and finding out what’s working and what’s not.
We now have a list of over 10,000 subscribers. We’re constantly A/B testing variables such as day, time, content, subject line, and so on to improve our open and click rates.
In product development, Chris is focused on launching 3-4 new variations of KPOP Sauce in the 4th quarter of this year. We’re also looking into developing 2-3 new flavors of KPOP Sea Snacks to launch at the beginning of 2019. It’s been exciting getting sneak peaks at the recipes in development and we can’t wait to share them with everyone!
For e-commerce, we target a gross margin north of 33% - the higher the better. This is absolutely necessary if we plan on expanding distribution to physical stores. Online, we don’t get as many sales as we would if we were in multiple grocery stores, so an extra $0.75 per order, goes a long way.
Secondly, our margins include shipping expenses that we incur as we provide free shipping for all our products (shipping is quite costly especially if you have heavy or bulky product!). Our online price for our products minus shipping expenses will generally set the suggested retail price (SRP) for our physical retailers.
Traditionally, one could follow the 1/3 rule to expand distribution into physical retail stores. That is, 33% margin for you (the manufacturer), your distributor, and the end retailer.
Today’s retail landscape is rapidly changing, and many distributors and retailers are requiring higher margins as they’re facing competition at an unprecedented level.
While it’d be great to be able to do direct deals with retailers, until we have a suite of products or our own distribution network (hopefully one day), we must partner with distributors to scale.
With the increase in distribution and launch of new products, our revenues are projected to grow quickly in the coming months and we’re working on ensuring that we’re operationally prepared.
We also have a lot of plans for upcoming partnerships, content, and experiential marketing events. We’re not just talk. We’re out to prove we’re not your average food brand. We’re going to revolutionize the way people view and taste food in the consumer-packaged goods (CPG) space.
Our vision is to be the premier Korean food company for America – that KPOP products be in every pantry across the nation. To get there, KPOP Foods will need to be the Red Bull of Korean food by bringing together mainstream culture, art, music, and food.
Through starting the business, have you learned anything particularly helpful or advantageous?
Cultivate a great team
It’s tough to go about it alone. Find a partner and build a team. I think one thing that truly helps is finding a great co-founder to work with.
I’m incredibly lucky to have Mike as my co-founder and there is absolutely no way in possible I could imagine KPOP Foods being where it is today without him. While we are both very different in so many ways, the one thing that we share is a strong work ethic.
We push each other to continuing fighting and overcoming setbacks and obstacles and having someone there with you is a huge relief. There have been so many times where I was tied up and had to leave things off with Mike and knowing that he’ll take care of everything is paramount.
Launch quickly
Secondly, I think a really important concept, especially for when just starting out, is being comfortable with launching things quickly. Early on, it’s hard to get everything perfect and you have to become comfortable with things being launching that may not be 100% perfect or may not be what you had initially envisioned.
If you’re constantly waiting for your product or service to be perfect, odds are by the time you’re completely satisfied with it, you’ve exhausted your resources and missed out on the timing of your opportunity. Fail quick, learn quick.
Reflect
Lastly, I realize that at the early stages of building a company, this is very hard to do, but you should always try to find time to reflect on things to think of how you can improve or do something better.
It’s very hard to find time to do this, but I think it’s very important for a number of reasons – you may realize that worrying about something wasn’t worth your time at all or didn’t have an impact on the business or you may find that if you had something slightly differently, there could have been a lot of new added value.
This is also something good to do with your team as they’re also likely in the middle of many different things and receiving their feedback and points of view may help you down the road as well.
What platform/tools do you use for your business?
After researching the various platforms businesses use for e-commerce, we found that Shopify was the best choice due to its convenience in website design, product setup/integration, and fulfillment.
We utilize the native shipping tools on Shopify that include discounted shipping labels. As a CPG company that deals with a lot of inventory, Shopify’s backend could adequately support. We’ve had no issues thus far.
Within Shopify, we use the app, Shogun, for frontend design. For example, we can use it to change the layout of our landing pages or products pages, and even affect how our pages look on mobile vs. desktop.
It took some time to master, but it’s pretty user-friendly and is much more affordable than hiring full-time web developers. I like their snippet function that allows us to save formatted designs that we can easily access and use at another time.
We use Sumo, another Shopify app, to generate our pop-ups for e-mail lead capture. I like the app because it’s intuitive to use and easily allows us to run A/B tests to see what kind of offers, content, or copy language performs the best.
We can run different pop-ups on specific pages, control when a visitor sees these forms, and what happens when a visitor submits his or her e-mail.
Google Analytics (GA) is a must for e-commerce store owners. It’s free to use and comprehensively tracks nearly everything we need to know about our website visitors and the actions they take on site. These visitors are all potential customers. By identifying and optimizing their pathways, we can increase sales and conversions.
For example, if our homepage has the highest bounce rate (percentage of visits in which a visitor leaves our website without browsing any other page) we know we can examine the source of the traffic or our homepage design/messaging to affect the bounce rate.
Lowering the bounce rate means that visitors are spending more time on our website, which increases the likelihood of conversion. This is just one example of the myriad of uses of GA. If you’re interested in learning more, Google provides a lot of free online classes on GA. It is truly a powerful tool worth investing in.
What have been the most influential books, podcasts, or other resources?
One book that I really enjoyed was "Power to People: The Inside Story of AES and the Globalization of Electricity". This book focused on several topics, but the founders’ focus on culture and empowering employees to make decisions is something I hope to drive forward at KPOP Foods.
I want to say that most of you reading this right now have already read "How to Win Friends & Influence People" by Dale Carnegie. But in the off chance, you haven’t, you should. It applies to every aspect of life, not just business.
I’m amazed at how, even 80+ years since it was first written, the principles still apply. If a person would try to adhere to any of the principles mentioned in this book, it would positively impact his or her relationships with friends, colleagues, and significant others.
Finally, we’d be remiss if we didn’t thank UCLA Anderson and the UCLA Anderson Venture Accelerator for all the support they’ve given us these past 18 months.
They provided us a beautiful, collaborative working space to build our company, access to industry professionals and investors, and a chance to work alongside some amazing companies like Alcatera, Habit Nest, and Textpert just to name a few. These relationships have been invaluable and have helped us move rapidly while avoiding costly mistakes.
Advice for other entrepreneurs who want to get started or are just starting out?
Entrepreneurship is not for the faint hearted. You’ll need grit and passion – and a whole lot of it. Creating a successful business requires massive amounts of action, perseverance, and conviction.
It’s not something you can build in one, two, or even three years. It’s a long-term battle filled with many sacrifices and tribulations.
Pursuing the path of entrepreneurship will most likely be the most difficult thing you’ve ever done in your life.
This isn’t to dissuade any of you. Because while starting your own business may be the most difficult feat you’ve ever attempted, stay true to your course, your dream, and it’ll also be your most rewarding accomplishment.
Are you looking to hire for certain positions right now?
Yes, we’re looking for a VP of Marketing or Marketing Associate to join our team full-time. The person would oversee paid marketing (Facebook, Amazon, and Google Ads), email marketing, social media, brand partnerships, website, and public relations.
Additionally, this person would also have an opportunity to get involved in product design and content development
We are also always looking for interns interested in finance, accounting, data analytics, and marketing. If you’re interested in working in a startup or becoming an entrepreneur, it’s a great opportunity to get experience.
It’s a fast-paced and challenging environment where you’ll learn tremendously and see the results of your actions on a daily basis.
Where can we go to learn more?
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Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
