INNOVATORS VS COVID 19
Bringing Back Dessert During Covid-19
We talked to David Downing of ChipMonk about the great tasting desserts and COVID-19.
First of all, how are you and your family doing in these COVID-19 times?
David Downing: These are difficult times all around, but I’m thankful that my family and I have our health and haven’t yet had any loved ones succumb to COVID-19. I know that countless folks haven’t been as lucky, and, in general, there seems to be a pall of depression and anxiety that has spread across the country. Chaotic politics, environmental disasters, and the ongoing threat of disease are all a part of our daily lives now, so it’s important to be grateful for the things we do have and invest in activities that can maintain our mental and physical health.
Tell us about you, your career, how you founded ChipMonk.
David Downing: I’m co-founder & CEO of ChipMonk, a specialty baking business based in Houston that creates low carb, gluten-free desserts. Our mission is to help people indulge mindfully, making better nutritional choices by cutting sugar out of their diets without sacrificing sweets. Prior to starting ChipMonk, I spent many years working in management consulting and the commercial aviation industry across various disciplines, including audit, financial planning, project management, and competitive research. Most recently, I was head of financial analysis and performance improvement for Work America Capital, a venture capital firm dedicated to investing in Houstonians and Houston-based businesses with high potential.
ChipMonk was born out of necessity. In 2019, I was rooming with Jose Hernandez, a health enthusiast who surprisingly had been diagnosed with type 2 diabetes 4 years prior. Jose maintained a strict diet to keep his blood sugar under control, but he always struggled with his sweet tooth. He and I were rooming together, and, one weekend after we had failed to come up with an inspiring business idea to launch together, he decided to do some alternative baking to create some desserts to make us feel better. To my surprise, he made some sugar free chocolate chip cookies using almond flour that tasted just as good as the real thing. At that moment, we both looked at each other and realized there was a big opportunity to bring back sweets for those struggling with diabetes or those simply trying to avoid processed carbs and sugar. We formed a corporate entity, started selling at farmers’ markets, and before we knew it, we had built up a base of repeat customers and a viable eCommerce business on our website.
How does ChipMonk innovate?
David Downing: We make great tasting desserts without sugar and processed carbs. The secret ingredient lies in our sweetener blend of monk fruit and allulose. Both are naturally occurring sweeteners that the human body cannot break down. Basically, you get the sweetness without the calories or the blood sugar spike. We also utilize nut and seed flours to cut down on carbs. The basic idea is that for every “bad-for-you” ingredient packed into the regular staples of our diets (soda, cookies, bread, cake, etc.), there is a “better-for-you” alternative you can use. We started with cookies because that was easiest, but there are limitless opportunities in this space as more and more folks prioritize their diet and health.
How the coronavirus pandemic affects your business, and how are you coping?
David Downing: Like many food companies, coronavirus effectively wiped out our retail-wholesale channel as well as our in-person farmers market sales. Luckily for us, we had decided early that we wanted e-commerce to be the foundation for our early-stage growth. We had a great website and a presence on Amazon when the pandemic really started to take its toll, and we saw a huge spike in our online sales as more folks sought to avoid trips to the grocery store. Since then, we’ve seen sales weaken as the overall economy has dived into a recession. Without government aid and unemployment at historic highs, many families live on stricter budgets, which often don’t have room for premium specialty food products like ours. To help cope, we’ve focused on our existing customer base via email marketing and special promotions to offer them more value and keep them coming back for more. We’ve also been working on redesigning our website to improve ease of use, and we’ve been testing out different shipping policies to potentially offer reduced prices to nearby customers. For example, we offer local pickup for customers who live in our hometown of Houston, allowing them to save significantly on shipping costs. Overall, we’ve had to tighten our budget to adjust our financial forecasts for a rough year ahead.
Did you have to make difficult choices, and what are the lessons learned?
David Downing: There are a lot of investments we haven’t been able to make (e.g., hiring marketing agencies, hiring additional help, purchasing equipment) as we’re determined to protect our cash holdings to see us through these economic difficulties. We’ve also had to analyze our marketing spend in great detail to identify channels that simply weren’t worth the money we were putting into them. This has helped us identify new channels with better returns and have also gotten us to experiment with other marketing ways (e.g., field marketing where we provide free samples to audiences that we think would be interested in our products). We’ve also had to make some financing deals to help pay for needed equipment without depleting our cash reserves. In general, we have to walk the tight rope between overspending on things we don’t really need while still making investments into things that could improve efficiency and profitability. It’s been tough, but we feel like we are learning every day and will come out of this stronger than ever.
How do you deal with stress and anxiety? How do you project yourself and ChipMonk in the future?
David Downing: I try to have times in my day where my phone (email, texts, social media) is completely out of sight and mind. I’ll use this time to talk with my wife, exercise, read books, or listen to podcasts. I listen to a lot of podcasts focused on strategy, motivation, and mindfulness. I also have recently started posting my daily thoughts onto LinkedIn as a way to engage my network, share my feelings, and get their opinions on the challenges we are facing.
I think the future is very bright for my company and the healthier food industry in general. There’s a large societal trend of people moving away from sugar and processed foods that will continue to be hereafter the pandemic. People are awakening to the fact that too much sugar in your diet can be destructive to your health, and I’m confident that our product quality is high enough that there will be plenty of demand for them as the trend continues to grow. Over time, I think there are some exciting opportunities to innovate in other areas of food and explore new, experimental sales channels such as having health insurance companies provide subsidies to their members for healthier snacks and meals. Nothing is guaranteed, though, but we’ll do our best to keep the company out there, ready to pounce on opportunities as they arise.
Who are your competitors? And how do you plan to stay in the game?
David Downing: There are quite a few keto dessert competitors in the space, several of whom are significantly larger than us. Companies like FatSnax, HighKey Snacks, Lenny & Larry’s, and many others. We plan to stay in the game by making our products and customer experience memorable. Using our direct-to-consumer e-commerce model, we are building direct relationships with our Customers. We listen to them, change based on their feedback, and remind them how much their business means to us. We’ll apply rigorous financial discipline as we seek to grow and try to leverage our local Customers as our greatest resource since none of our competitors are based in Houston. We’ll stick to where we’ve seen success so far (e-commerce) without overreaching, and we’ll continue to innovate in terms of product and processes to make sure we offer products that are unique and offer the best taste.
Your final thoughts?
David Downing: These are incredibly challenging times we are living in. Just know that you aren’t alone. Everyone is going through this, and you can make yourself available to others as a supporter and friend. Try to reframe the challenges of the day as opportunities for growth. Maybe a lost job is a chance to pursue a career you’re truly passionate about. Maybe a failed business model is your path to seeking a new way of doing things that no one else has done before. The human spirit is indomitable, and a storm today just means there will be a beautiful day tomorrow.
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