Swimming with Sharks
April 19, 2016
Daniel Fogelson (left), and Jordan Barrocas followed their Kickstarter campaign with an appearance on ABC's Shark Tank, where they received a $100,000 investment for their business, Three Jerks Jerky.
Jordan Barrocas and Daniel Fogelson could never have dreamed that a cooking experiment over a few beers would one day result in the entrepreneurs successfully courting investors on their idea – first online, and ultimately from a school of sharks. But that dream became a reality for their company, Three Jerks Jerky.
Barrocas and Fogelson, fellow foodies and friends from Emory Univ., while enjoying some beers and discussing how gourmet jerkies weren’t as good as they claimed to be, decided to do a little experimentation. They stocked up on premium meat cuts from Costco (including filet mignon), played around with some seasonings and threw the meat in a dehydrator.
“We got some tenderloins, strip steaks, ribeyes and filets, and turned them all into jerky,” Fogelson says. “The filet turned out to be the most delicious, so we started making filet jerky for ourselves.”
Friends and family who tasted the product quickly agreed the filet jerky was the way to go, and soon they were making jerky as gifts for everyone they knew. “Everyone we knew loved the jerky,” Fogelson explains. “That’s when we realized this thing had legs.” Soon after, Three Jerks Jerky was born.
In an effort to get some start-up capital, as well as some publicity, Three Jerks created a Kickstarter campaign in the summer of 2013 to raise $20,000. Less than a week later, that monetary goal was met.
“We went to Kickstarter not only for capital but as a way to leverage the business,” Barrocas explains. “Kickstarter was an ideal way to let people know who we are and what we’re doing. We used their platform for the exposure as much as we used it for capital.”
At the end of their 30-day campaign, they had raised $45,000 to start their new endeavor.
Months later, Three Jerks launched their website and started selling beef jerky – all made from 100 percent filet mignon. The original three flavors were Original, Memphis Barbecue and Chipotle Adobo, all of which are still sold today.
The Three Jerks website (www.threejerksjerky.com) describes the Original flavor: “Often imitated but never copied. Our traditional old school flavor brings you back to your granddaddy’s jerky – salty, sweet and tangy with just the right amount of black pepper – reminding you of the first time you tried beef jerky. But that memory turns on its head when you realize you have just met the new standard for deliciousness. Our tender filets are marinated to perfection, bringing you soft and iconic jerky. We may be jerks, but this traditional jerky is refined.”
Since the brand launched, they’ve added two additional flavors – Hamburger and Maple Bourbon Churro. “We’ve always approached product development in a highly scientific way,” Barrocas explains. “Basically, we throw stuff together while drinking beers and making jerky...we still use that highly scientific method today.”
The ‘Hard’ way
Three Jerks Jerky offers five flavors of filet mignon beef Jerky, including Chipotle Adobo, Original, Hamburger and Maple Bourbon Churro.
Barrocas, based in Miami, and Fogelson, based in Los Angeles, spent the first year growing their business the hard way – by doing most of the work themselves. They sourced the raw product themselves. Found two co-packer partners on the West Coast themselves and marketed their e-commerce business, themselves.
But soon all that would change.
Barrocas received a letter from the Univ. of Miami (where he got his MBA) informing him of an open casting call for students and alumni for the ABC reality show, Shark Tank. Hoping for the best and with nothing to lose, Barrocas attended the casting call, made his pitch and got past the first round of screening. The next step was to go in front of the sharks with cameras rolling and millions of viewers watching.
Contestants on Shark Tank pitch their business concepts to a celebrity panel of successful investors (the sharks) in hopes of winning financial backing for their oftentimes creative business ventures.
On the show, Barrocas and Fogelson shared their story with the sharks – how they made $350,000 in their first year of business selling bags of jerky for $11.99 in specialty retail stores and online. They shared that each package costs $3.20 to make.
They were asking the investors for $100,000 for a 15 percent stake in the business. They explained the primary purpose of the money was to help them increase their inventory so they could start distributing to national chains.
The sharks’ offers ranged from a $125,000 investment with a 33 percent stake to a $100,000 investment with a 20 percent stake. After getting offers from all the sharks except Mark Cuban – he opted out saying the jerky market was too competitive – Barrocas and Fogelson settled on a deal from Daymond John for $100,000 with a 15 percent stake, with an option for an additional $100,000 with another 15 percent stake in the future.
The third ‘jerk’
Daniel Fogelson and Jordan Barrocas, Three Jerks Jerky
Thanks to his Shark Tank investment, John now takes on the title of “the third jerk” in the Three Jerks jerky business (the original “third jerk” was a different business partner Barrocas and Fogelson had when they first started the company; he is no longer a part of the business).
The Shark Tank episode aired Oct. 23, 2015, and immediately business soared.
After the show aired, John introduced Barrocas and Fogelson to another potential partner – Swedesboro, New Jersey-based Rastelli Foods Group. John had partnered with Rastelli Foods on a previous Shark Tank experience. Al “Bubba” Baker, a former linebacker with the National Football League’s Cleveland Browns, went on the show in December 2013 pitching Al Baker’s Boneless Baby Back Ribs. He had invented a machine that removes the bones from rib racks before they are sealed and sold frozen. John invested in Baker and his ribs and partnered with Rastelli to source the raw product.
When John agreed to invest in Three Jerks Jerky, he once again turned to Rastelli for a partnership. After hearing about the company, Ray Rastelli III, vice president, saw the benefits of a collaboration. The feeling was mutual after Barrocas and Fogelson went to New Jersey to see the Rastelli facility firsthand.
Feb. 1 marked the beginning of the business relationship between Rastelli and Three Jerks jerky, in which the New Jersey meat purveyor is sourcing all of the raw product for the brand. The product is then shipped to four co-packers the company is working with – two in California which Three Jerks has been working with since the start, and two more, in Michigan and Pennsylvania, that Rastelli helped connect them with.
“Rastelli has a lot of experience managing co-packer relationships, distributing and logistics. All things we’ve been doing on our own until now,” Barrocas says. “We’re hoping this partnership will help keep us growing at a steady pace in a more efficient way.”
The new arrangement provides three ways to distribute product around the country. First, it’s being shipped directly to larger retailers around the country from any of the four co-packers. On the independent supermarket side, Rastelli is warehousing the product in its dry storage facility and helping manage distribution to smaller retailers. In addition, Three Jerks does a large amount of e-commerce business direct from its website. Those purchases (around 15,000 a month) are handled through an e-commerce logistics company and shipped directly from the various co-packers.
Even though their business relationship is still in the early stages, Rastelli predicts success. “The two of them [Barrocas and Fogelson] have built a great business so far and I think we can help build on that,” he says. “Our arrangement has proven to be successful right out of the gate.”
Memphis Brand BBQ Recipe is one of five flavors of Three Jerks Jerky.
The primary reason the jerks decided to go on Shark Tank to get an investment partner, and the reason they joined forces with a veteran company like Rastelli Foods was to help them achieve their goal of expanding distribution.
“We’re maturing in our wholesale business,” Fogelson explains. “From here we want to start to move from just supplying premium gourmet stores to getting the product into national health food groceries like Sprouts.”
Currently Three Jerks doesn’t sell its jerky in specialty sports stores like REI, but they aren’t ruling out expanding into that niche, Fogelson says.
Each of the five jerky flavors is sold in 2-oz. packages, and for now the five SKUs are all the brand offers. “We like having a tight range of products,” Fogelson explains. “We don’t have any plans to ever have a lot of SKUs.” Though, new product flavors might rotate in and out of the product mix in the future, he says.
While diversifying the flavor profiles isn’t a priority currently, the jerks are considering different package sizes. “We’re looking at making smaller, single-serving packages,” Fogleson says. “We’ve had some of our distribution channels request that, so we hope to be able to offer it by summer.”
This summer will mark the three-year anniversary of the birth of Three Jerks. Looking back to the time when they were experimenting with jerky recipes over a couple of beers, neither Barrocas nor Fogelson could have predicted their company’s current success.
“We grew our business 750 percent in 2015,” Barrocas explains. After making $350,000 in the first year, they finished 2015 just shy of $2 million in revenue and hope to grow another 200 percent in 2016. “We’re growing really fast and it’s exciting.