Proper Good Inc. is doing things a bit differently as a consumer packaged goods company, but the formula is working.
The two-year-old, Austin-based company just launched its products in 2,000 locations of Walmart and received $3.5 million in seed funding.
Proper Good sells shelf-stable prepared meals, from soups to oatmeal, that are made with clean ingredients and can be heated in their pouch in less than two minutes. The idea has taken off with many types of customers in many places, according to co-founder and CEO Christopher Jane.
"We have such a broad spectrum of customers," he said. "We have so many nurses using it for a quick, 90-second meal in the break room. We have so many teachers and students using it for a quick meal at work or the library. We have just as many stay at home moms using it for an easy meal."
Instead of slowly building a retail presence and starting with small, regional chains, Jane and his sibling co-founder, Jennifer Jane, went directly for Walmart (NYSE: WMT). Their meals appeared last week on the shelves of the country's largest retailer. Previously, Proper Good had been strictly direct to consumer.
Proper Good in February began preparing for its Walmart debut. A presence in 2,000 stores is an enormous lift for such a young company, Christopher Jane said. The retail giant has provided Proper Good with data and expected projections to fill orders. Walmart found Proper Good to be one of the few companies doing anything innovative in the ready-to-eat category, Jane said.
A Walmart rollout means Proper Good will have to grow its production by 20 times, Jane said. The company will put 10 of its top-selling products in stores: six soups and four oatmeals. Even with the increased production, Proper Good will continue working with the same co-packer.
The Jane siblings homed in on Walmart as a starting point in retail because it’s a mass market that is accessible to a wide range of customers, a place where its healthy meals can be found for for $5 to $7, Jane explained. With persistent inflation, Walmart is reporting increased sales and wealthier shoppers turning to it for groceries, CNN reported.
Another unconventional aspect of their strategy is how often they release new products. While many CPG companies may spend a year or more between new product lines, Proper Good quickly churns them out. Some items fail, some don’t. So far, the company has come up with 35 products and counting.
When making new products, the company sends the item to 500 of its best customers to test.
"You don't need thousands of points of feedback if you get 50 reviews from real customers," Jane said. "You're soon going to know whether it's too salty or too chunky or whatever it is like — that feedback is very, very quick."
Proper Good keeps products simple with the same boxes and weights, making it easy to add new recipes. The company can be nimble and quick due to its simple and linear supply chain, Jane added.
These methods are paying off. The business has grown 400% year over year. Christopher Jane expects revenue in the eight figures next year and predicts the company will become profitable by the first quarter.
Proper Good's $3.5 million seed round, announced Nov. 8, was led by Yeti Capital and The Artisan Group. Yeti Capital was founded by Roy Seiders and Ryan Seiders but is not affiliated with the other company started by the brothers, Yeti Coolers.
Doug Bouton, founder and CEO of ice cream maker Halo Top and Gatsby Chocolate, also invested. Bouton is joining the Proper Good board along with Drew Zang, managing partner at The Artisan Group, and Maxx Karr, managing director at Yeti Capital.
Getting to these investors took a bit of serendipity. Jane met the founder of Halo Top when he spoke at Jane’s school and has been involved with the company since pre-launch.
Yeti Capital jumped into the picture through an introduction by a friend of a friend, meeting after a yoga class, Jane said. He took the pitch to Yeti Capital and a few conversations later, the company moved quickly and wrote a sizable check for the seed round.
At least half of the new money will go toward brand awareness, Jane said, as the founders are happy with the product but need to grow awareness of Proper Good. Perhaps one out of 100 people on the street would know Proper Good if randomly asked, Jane said to explain the marketing push.
The funding will also be used for working capital, operations, inventory and increasing employment by a few positions. So far, the company has six employees, including the co-founders, and Jane expects to stay under 10 for the foreseeable future.
The Janes have already undergone a learning curve in a previous condiments company they co-founded along with several others, Montana Mex, and continue to use that experience in their new company.
