We recently connected with Madeleine Hamann and have shared our conversation below.

Maddie, thanks for taking the time to share your stories with us today One of our favorite things to brainstorm about with friends who’ve built something entrepreneurial is what they would do differently if they were to start over today. Surely, there are things you’ve learned that would allow you to do it over faster, more efficiently. We’d love to hear how you would go about setting things up if you were starting over today, knowing everything that you already know.

We started PACHA with the idea of pursuing a traditional CPG route, selling our product to distributors and into grocery chain accounts. In the first year, we were approached by a friend with experience in e-commerce who thought that PACHA bread might have success with direct-to-consumer sales. I shared his hunch, but was also the least experienced in our founding crew in terms of creating startup success. So, we put the project off as it was deemed a moonshot and would have required some capital injection to test.

In retrospect, I really should have followed my intuition. A year later, we circled back to the DTC idea as grocery accounts were too elusive to enable us to grow. We met with incredible success. We have some of the lowest customer acquisition costs and the highest website conversion rates our DTC consultant has seen. We scaled up to a 1.9M run rate in about 6 months. Most importantly, PACHA would probably be dead in the water if it weren’t for the revenue coming in from a successful Direct-to-Consumer campaign.

But there are other great reasons why DTC makes a ton of sense. We have a direct line to our customers, which makes conducting consumer research that much easier. We also get to tell our brand story directly to our biggest supporters, which helps us builds customer loyalty to the brand. We actually get to talk about our mission, which is pretty hard to do when people are shopping grocery shelves and looking for the right combination of product attributes and price.

We have also gotten so much feedback. Without doing any market research, we get an idea of how minor shifts in packaging and product consistency land with the people who eat our bread. Of course, market research would be better… but insights from our customer service team are FREE.

It takes a while to scale a business. Testing the product in the early days before the brand is on nationwide grocery shelves is crucial. I wish I had jumped on the opportunity and gotten an extra year of trial in before launching into Whole Foods.

One other thing I’d say… if you can avoid working with foreign suppliers for ingredients and product components… by god, save yourself the trouble. The reliability and quality of domestic goods has proven to be consistently superior to foreign suppliers’ wares. We have simplified our supply chain so much in the last year and cut out all of the squeaky-wheel, imported supplies, and the ship is running SO much more smoothly now.

Maddie, before we move on to more of these sorts of questions, can you take some time to bring our readers up to speed on you and what you do?

I grew up in a small town in Ohio, where my Dad did his best to get us into the garden, into nature, and into the farmer’s field behind our house as much as possible. After high school, I left Ohio to study civil engineering at Notre Dame. Along the way in studies and travels I realized that our culture is doing a bunch of stuff to muck up the environment that I had grown up enjoying. So, I came to Southern California to get a doctorate degree in Oceanography. I figured that we must need to know more about the problem of climate change in order to implement solutions… but I quickly realized that we know PLENTY, but the knowledge is not motivating us to take action. A year after I finished my doctorate, I jumped ship (pun not intended) to start working on a project that seemed much more likely to start grounding theoretical solutions into reality.

At PACHA, we make gluten-free, organic bread from regeneratively grown Buckwheat. We founded PACHA so that we could share an amazing, nutritious, and unlike-any-other bread with people. But, more importantly for me, we founded PACHA to be a vehicle for change. We founded the company on values of doing the most sustainable thing possible in every aspect of the business. All of our packaging is home-compostable. We are a member of 1% For the Planet and the One Step Closer Packaging Collaborative. Most importantly, we are in the process of achieving a regenerative certification from the Soil Carbon Initiative: more the 70% of our ingredients come from farmers who grow food “regeneratively”.

Regenerative Farmers focus on soil health, which actually enables them to draw carbon out of the atmosphere and store it in the soil. Healthy soils are also able to absorb and hold much-needed water when it comes. They promote biodiversity and ecosystem health so that our landscapes are resilient.

At PACHA our mission is “to nourish the health of people and planet with regeneratively grown food.” By creating a business that uses the products regnerative farmers grow, we create an incentive for more and more farmers to work their land in a way that will ensure healthy soil for generations to come.

Okay – so how did you figure out the manufacturing part? Did you have prior experience?

Because PACHA is not really like any other kind of bread, we make it in house. We would have LOVED to find a dedicated gluten-free facility with the equipment needed to make PACHA… but, that just simply doesn’t exist. Dedicated gluten-free co-packers are hard enough to find; add in the need for specialized equipment to rinse and blend whole buckwheat groats, and you have a nearly impossible ask.

At first, we operated out of a teeny 300-square-foot test kitchen in Chula Vista as we refined the process and product, and sold the bread locally to contacts and farmer’s market goers. Making 150 loaves per week with a highly manual process is a totally different ballgame than the 9k units we make these days.

When we started thinking about the process of expansion, we actually hired an engineering firm to help us think through the equipment that would be needed. I can say without a question that this was $30k almost entirely wasted. Although we did learn a little bit about the kinds of equipment that are in the market, we were NOT ready for an engineering team to lay out a facility in a theoretical space for which we hadn’t secured the lease. We ended up finding an old bakery facility that we retrofitted, and we used maybe two of the 17 machines that team had picked out for us.

Lesson learned? When no one else can make your product, YOU are the best person for the job of figuring out how it will be made. No one else really had an understanding of the process, what needed to happen, what the contraints of the space are, how much capital is on hand as the facility is being built out.

For us, cash-on-hand was a major factor in the manufacturing expansion. We needed to put in the most crucial, bottleneck relieving elements as funds came in. So, even if someone could have made us a perfect plan, they wouldn’t have been able to implement it.

In the end, my partner and PACHA CEO Adam Hiner got his hands dirty with research on every single facet of our first buildout. We are hoping to hire an ops specialist so that he doesn’t have to do that again… but I just don’t believe anyone could have done a better job with this first iteration.

Can you open up about a time when you had a really close call with the business?

At the beginning of 2023, we were in a pretty dire cash position. We were operating at a burn rate of about $50k per month, and at one point had 10-$20k net cash. In desperation to finish our capital raise, we offered shares at half off for any investor that could come in with at least $1 million dollars. Such an investor would have owned over 30% of the company — a HUGE amount to give away at this stage.

Even so, no one bit. Folks who were interested didn’t have that cash on hand. VCs wanted to see at least 6 months trailing revenue with a $1M+ Run Rate. We just didn’t have the right cards in our hand.

What we did have? An amazing product and a dedicated fanbase.

We put together a crowdfunding campaign with WeFunder in February of 2023, and within a month we had raised more than $300,000. The timing could not have been more divine. It had really only been in the 3 months leading up to the WeFunder launch that we started meaningfully and successfully scaling our DTC efforts. We finally had a compelling story, and a large email list to boot. Most of the $700k crowdfunding investment came from our customer base. Now, we are almost 50% community owned, which I personally think is amazing. I love that our friends, families, and biggest fans are going to benefit from our growing success. And I love that our “savior” wasn’t some big fish VC or investor, but a surge of community support. Now we have 700 dedicated team members with a stake in the game of PACHA’s future! What an awesome thing!

Contact Info:

• Website: https://livepacha.com
• Instagram: @livepacha @maddie.hamann
• Facebook: facebook.com/livepachaofficial/
• Linkedin: https://www.linkedin.com/in/madeleine-hamann-06b95347
• Youtube: https://www.youtube.com/@live_pacha