For Starters is the essential weekly briefing for the next generation of small business owners. Inspiration and ideas, every Friday – for free. It’s curated by Danny Giacopelli, formerly of Monocle and Courier magazines. Enjoy!

Hey starter! Read on for…

• Inspiration ➠ Grandpa’s notebooks

• Advice ➠ Going from zero to one

• Ideas ➠ Secondhand shopping malls

• Tools ➠ This is how you’re using AI

• Town Hall ➠ From Apple to Oh Yeah

➠ Get inspired

1. Grandpa’s goods. In Tokyo, 82-year-old “Grandpa Nakamura” invented a fun notebook that opens 180-degrees, completely flat. They went viral, and now Grandpa and the team at stationery shop Rainbowholic have launched a crowdfunding campaign to take the biz to the next level. Check it out, watch the fun videos, and support if you can! 🙏 

2. Charcoal chicken. It’s really hard to beat the logo for Yang Thai, a new Thai chicken shop in Melbourne, which opens this Sunday. Chef Narit Kimsat based the decor of the place — which has CDs, vintage Thai cookbooks and WWE magazines — on his “dream childhood bedroom.” 🐔 

3. Let there be light. Meet Vermont-based starters Rory Shamlian and Clay Mohrman, who think anything can become a lamp. 💡 

4. New perspectives. A group of high-profile writers are starting a new magazine called Equator “to challenge the reigning assumption that global events should be narrated by and for the West.” ✍️ 

5. The bookseller. Loved reading this profile on Austen Baack, the Nebraska-based owner of Revolving Books, which has found book-market-fit (ahem) across the US by selling obscure, secondhand titles. 📚️

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➠ Starter wisdom

“I really, really f*cking love hot sauce,” says George Milton, CEO of Austin, Texas-based hot sauce company Yellowbird. That passion helped George and his co-founder Erin Link to turn the brand, which they launched in 2012, into a cult favorite sold in supermarkets and specialty shops across the US.

Below, George tells For Starters…

• why every biz needs a “farmer’s market phase”

• why you should start vibe-coding

• and how to find your niche

Hey George! Starting a hot sauce brand is a dream for many starters. Has the category reached saturation? Are there still gaps for new brands?

I don’t think it will ever reach total saturation. We started this brand 13 years ago and that was the feedback we got back then: it’s too saturated. Not really! The market’s continued to grow. People are eating more hot sauce, more restaurants are opening up, we’re selling more stuff online. 

Hot sauce is a really easy business to start. It’s not hard to learn preservation techniques. How to safely bottle hot sauce isn’t rocket science. You can do a class and get certified. You can take a food manager course. You can take pickling and jarring and canning classes. 

If I wanted to learn how to be a really amazing software developer, it would take me years, but almost anybody can make a hot sauce recipe. You can ask ChatGPT to give you 10 recipes and start that way.

I feel like there’s a big but… 

But there are things that are really, really difficult to do. One is to find your niche. This is the same for every industry. If I want to develop SaaS, it needs a niche, right? I can’t just rebuild Salesforce in the same way that if I’m starting a hot sauce company, I can’t just say, “Here’s my version of Tabasco.” Tabasco's really really good at what they do – if that’s the product I want to rip off, they’re going to be able to make it for 1/50th of the price, because they’re making like 2 million pounds of hot sauce a day.

So you need to find something that is yours. And that’s hard because, in our category, you have a really passionate user base and even more passionate base of producers. There are thousands of people who are passionate about eating it, making it, growing their own peppers.

Food is never going to be a saturated market. Even if investors or analysts say it is, I guarantee you that if you come out with a better version of something that’s out there that people enjoy, you can sell it. But you have to commercialize it, and it has to be good, and it has to have a lane.

How can you create a brand that’s unique?
 
If I was starting a hot sauce company today, I would think: What is unique today that people actually care about? Once you have something unique, then you need the business acumen to scale that and deliver on what you’re promising. Your brand’s unique part can be 1) the actual product, 2) the packaging, or 3) the brand positioning. Yellowbird took a unique angle on all three of those things when we launched.

What are some lessons you learned doing that?

If you want to scale and you’re not planning on running your own manufacturing, then you need to use a co-manufacturer. You’ll go to them and say, “Here’s what’s special about my product.” And most co-manufacturers will say, “I'm not going to do your special thing because I’m not set up to do that.” They’re set up to make products for a bunch of different people, so they have a general process to follow. 

That’s the whole reason we run our own manufacturing and opened our own plant. We went out and said, “What you're going to do is start with fresh carrots and onions, here’s our produce buying plan,” and co-packers were like, “Let me stop you right there – we can use powdered onion and carrot oleoresin.” I’m like, artificial flavors are missing the point. We have a point of differentiation and that can easily get knocked out along the way.
 
So you might start with something unique – it’s easy to make 20 bottles of something unique. It’s harder to make 200 bottles of something unique. But if I have to make two million bottles of something unique, that's when it becomes difficult. The cost becomes more important, the process becomes more important.

Is the zero to one phase of a business the most difficult? 

I’ve done a lot of podcasts where they ask, “How did you start this business?” And the answer is, if you make a thing at home, almost anyone can go to their local farmer’s market. At that point, you’re not thinking about scaling or efficiency, because if you go to the market with homemade jam and it’s $25 for a 6 oz jar, somebody will buy that.

I talk about our first year as our “farmer’s market year.” I wasn’t really thinking about what the product costs, or how much labor it took, or the shipping, but as soon as you decide that you want to pursue it as a business, you have to flip that to a certain degree.

You don’t necessarily have to go from being at a farmer’s market one day to the next deciding this will be a billion dollar enterprise. For me at least, and for people that have been successful in building something, going from zero to one is maybe the hardest thing, because you’re learning how to slowly level up. You don’t go from zero to $100 million. You go from zero to one, one to two, two to three. Selling at the farmer’s market is kind of zero. It’s not that it's nothing – it’s that you’re out there getting proof of concept. You’re proving that people like it.

What did you learn during your farmer’s market year?

We have a lot of great, award-winning, industry-leading products now, but our first versions sucked. Not only were they not better than what was on the market, they were considerably worse. 

One of my most vivid product feedback memories was when I entered the Austin Hot Sauce Festival in like 2012. People would go down to the tasting tables and try all the different stuff, and I saw three different people spit mine out on the ground. I was like, “Okay, alright, got it, I hear you.”

So that’s not the version we showed to Whole Foods! That one still needed some tweaking. I wasn’t yet worried about what it cost to produce. Who cares what it cost if people were spitting it on the ground? It didn’t matter if it was $1 or $10. For the sauce that people are spitting on the ground, the return on investment will always be zero.

At that point you’re still in the ‘do things that don’t scale’ phase of the journey, right?

Yeah. The original idea for Yellowbird was that hot sauces are mostly water and vinegar, and sometimes sugar. And we were like, “Hey, what if you used food instead?” Instead of water and sugar, it was carrots, garlic, tangerines, stuff like that.
 
So the cost was going to be higher, because a carrot costs more than a similar weight of water. But also figuring out how to process that in a way that made sense at scale. I used to cut limes and tangerines by hand. I would sit down and peel 500 limes. And figuring out how to wash, peel and stem peppers and carrots and onions at scale – figuring out the equipment that you need and the exact process, without shortcutting the quality or wasting time or energy – that was probably the hardest thing I’ve ever done. But we found a way that worked. It used to take me 3 weeks to make a pallet of hot sauce, working 14-hour days, every single day. Now we make a pallet every hour.

What’s the biggest mistake you’ve made? 

In the earliest accounting of our products, I didn’t build in the cost of my own labor. My labor is free, I thought, so let’s not worry about that. But it’s certainly not going to be free once you have to hire people to do that. That was a misstep, and I’ve made plenty.

How are you feeling about all the new AI tools getting released lately?

The average company is spending like $3,000 to $5,000 a year per employee on SaaS – but that multi-billion dollar industry is going to change drastically once people realize they can type in “Make me a CRM app” on Replit and deploy it organization-wide for like $200 a year worth of compute and storage, versus whatever they were paying for Salesforce. 

I think the builders will outnumber the non-builders at some point in the not too distant future. I think in the next 10 or 20 years there’s going to be a major reformulation of how we think about society. And I think it’s really scary right now to not be a builder or a starter! So building and creating tools is a big thing I'm thinking about right now.

You’re hoping to use these tools internally at Yellowbird?

We’re working on ways to embed these tools into the business. I will say that we’ve also got our own set of limitations. When I look at how our industry works – and there are plenty of industries like this, I don’t want to pretend it’s specific to food and bev – but if I wanted to come up with a better way to handle order-routing, for instance, we’re kind of at the mercy of what someone like Walmart or Kroger are doing. I can’t just vibecode my way to better systems within our industry.
 
But I’ll give you one example of what we’re doing. We’re looking at CMMS systems – computerized maintenance management systems. Think of a CRM that manages equipment, parts, vendors, and PM schedules. As we grow and have more people on the maintenance team and more shifts to cover, instead of spending $20,000 a year to get something that’s way overbuilt yet still doesn’t quite match what we want it to do – i.e. effortlessly hand off scheduling of PMs and parts management – we’ll spend just a little bit of money on deployment and maintenance to build an internal solution that does exactly what we want it to do. 

Do you think a lot of growing companies will start to create their own purpose-fit solutions and spin them into products, or will they remain internal tools?

Over the next decade or so there will be a switch that flips, where creating an app isn’t about building a billion dollar company. It just becomes something people do. It becomes a new way of interacting with the world, the same way writing an email is just something that you do. Every time I spend 10 minutes writing an email, I don’t expect to monetize that process. It’s just another tool that I use.

If you sold the business tomorrow, what would you be doing?

I’d probably be doing more of what we were just talking about – figuring out how to build new things in the space of entrepreneurs. The fractional world is also super interesting. I would also play more music. I used to be a professional musician – that was my career before Yellowbird. So I’d probably be one of those middle-aged guys in his 40s who plays with a band four or five times a month. I’m just aching to be that guy!

Check out George’s newsletter, where he writes thought pieces around business and business philosophy. You’ll enjoy this recent post: The Entrepreneur's Checklist.

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➠ Good idea!

1. A ‘secondhand only’ shopping mall → Meet ReTuna, a shopping centre in Sweden that only sells preloved products.

2. Yogurt drug deals → “Brown bags. Street corners. Calendar invites. Nope not drugs, just yogurt. Here’s why this model has been the smartest and scrappiest thing we’ve done.”

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➠ Toolbox

🛠️ Resources

OpenAI published how people are actually using ChatGPT and you should think of this as market gaps for your next biz. (Check out page 16 of the paper in particular)

📚️ Reads

Yes, I Texted the Number on the Sign. A conversation with Landon, the roof-cleaner and sign-painter behind Portland’s most charming DIY advertisements. KBBBLOG

How viral jewellery label Heaven Mayhem became a $10 million business. Vogue Business

Reddit is a magnet for the internet’s design dialogue. Should designers join in? Business of Home

🧠 Findings 

2.5 million people → The waitlist to access ‘premium’ dating app Raya

🙃 Fun

This animated illustration at the top of the website of Indonesian coffee company TUKU is super fun

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➠ Town Hall

For Starters subscriber Kat Wong recently left her job at Apple to start Oh Yeah, a new platform providing honest career-change advice with practical guides and toolkits. It launched this week — congrats! 🎉 

Kat explains why starters might find Oh Yeah valuable…

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See you next Friday 😎

🙏 “A big thank you for producing For Starters each week. It’s one of a handful of newsletters I really look forward to landing in my inbox.” —Keir Whitaker, subscriber

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