181. Made in San Antonio: Oscar Perez on Building Tio Pelon’s Salsitas From Scratch

Welcome to Big City Small Town, the weekly podcast all about San Antonio and the people that make it go and grow. I'm your host, Bob Rivard, and this week's guest is Oscar Perez, the founder of Tio Pelon, and we are going to dive right into Tio Pelon and find out all about it. Oscar, welcome to Big City Small Town. Thank you, Bob. Thank you for having me. Your salsas are on every table in San Antonio. Congratulations. Appreciate it. You founded your company more than 10 years ago, 2015, and I think everyone in San Antonio that's been here for any length of time knows the story of Pace Picante Sauce, right? And Kik Goldsberry, now the developer of the Pearl and Silver Ventures, right, selling that to Campbell for more than $1 billion in 1994, right? Was that an inspiration for you? Yeah, no, totally. I mean, I learned about the story after actually starting my salsa journey, right? I didn't know about it and didn't know much about the history until I started learning about it. And when I went to architecture school, I remember having, like, conversations about Pace, and I was like, what's the development of the Pearl? And they're like, oh, it's from the Pace family. And the Ruby City that was getting constructed, part of the Linda Pace Foundation. I was like— but then I tied it all together once. I was like, oh, I mean, it's in the salsa industry. It's amazing, like, what just a condiment can do, right? Like, something that— Yeah. lands on everybody's table. Well, tell us a little bit more about yourself before we talk about your company. I know you're from the Rio Grande Valley and I know that you're a trained architect. So that's a little unusual to see someone pivot from that into a very entrepreneurial, high-risk endeavor to create a product out of nothing. Yeah, right. So a little bit about me. I was born actually on the south side of the border in Reynosa, Tamaulipas. I was born there to a Mexican dad and an American mom. We're back and forth, right? They met in the border too. And it's just kind of border life is always Classic border story. Right? Like, you live, you get, I mean, back in the day you could just cross over anytime and just go for tacos or go pick up. A lot of people would just come to the US even just to get gas, right? And just go back to Mexico. And so I grew up there, went to high school, uh, Memorial Mustangs, and then came to San Antonio to, to, uh, study architecture. UT San Antonio's School of Architecture. Right, right, right. First I started with medicine and I was like, oh, I can't deal with Biology, I don't know, it's not my thing, right? But I was always into the arts. And then growing up in the Valley, it's very cultural that you have, like, gatherings with family on the weekends and do barbecues. And so cooking was always part of it, you know? With my family, it was like, hey, go season the meat. And then all of a sudden, I was, like, in charge of, like, the whole grilling process. And I mean, that's how I, like, kind of— Yeah. geared from architecture into that, to like into the food. It was one of my passions and art. I was always in art schools, like classes and different, different types of arts, music and everything. And, uh, just came to San Antonio and decided biology wasn't for me. So I switched over to architecture and really enjoyed it. I mean, I really liked drawing, putting together like plans for buildings. It was almost like putting together like a Lego set for me, right? Like it's real fun. Did architecture, worked for a good amount of architects here in San Antonio, good ones and big firms where we— I actually designed several big buildings, project managed them, schools and banks and— Can you tell us about any of those or the firms that you worked with? My first job was with Saldaña Architects who actually designed the school of UTSA downtown, the downtown campus, yeah, back in Shoot, I can't remember what year he did that, but it was in the '90s, right? Was that Hector Saldaña? No, that was Humberto. Humberto. Hector was the writer for the Express News. Oh, okay. Yeah. Humberto Saldaña. Yeah. So he did that. I worked like right out of college. I went to work with him and he gave me like a lot of freedom, like a lot of just design freedom. And he put me as project manager as soon as I got into his firm and helped me lead a a full project. It was like right out of college, just leading a, like a big $20 million school design. And it was super, like, I guess life-changing in a way that it gives me a lot of experience hands-on. So I learned how to manage, put together a team of civil engineers and structural engineers and MEPs and everything, just kind of the whole puzzle and managing all of them. So just gave me a lot of hands-on experience with design as well. And then I moved to a little bit of a bigger firm and then I worked at Chesney Morales for a while off of Broadway, did some banks there, and then that's when I started, like, I had this— living in my apartment, I had, like, a backyard garden, so I started growing a bunch of stuff, pickles, cucumbers, and okras, and a bunch of stuff. Chiles? Chiles too, but that's not how I started with the Tio Pelón. I actually started learning how to pickle okra. Okay. I learned about okra from a friend, uh, from Longview, Texas. I've never heard of okra before, and then I went to his wedding once and it was like fried okras. I was like, what is this? That's very Southern. Yeah, super. I was like, uh, I don't know. And I liked it, so I started growing it, and it was just abundance. Like, I had 3 plants and just growing every day. It's like 10 okras or 13 okras, 20 okras. I was like, I'm going to be throwing all this away. So I learned how to pickle. So you were always comfortable in the kitchen. Yeah. That's an important role of grillmaster for the Rio Grande Valley pachangas that are so famously staged by families down there. But it's a big leap to say, I'm going to leave my day job. So give me the transition story of where you decided to, as I understand it, talk to your abuelita, your grandmother, and get her salsa recipe. and decide to replicate it and commercialize it? Yeah, so it wasn't like a, oh, you know what, I'm going to start a salsa company and that's what I did. To be an architect, an actual licensed architect, there's a, like, a long process, right? I mean, I don't know if you're aware with how long it is. I have a son that's one. Okay, there you go. So, so yeah, it's pretty long. It's exams and like 3 years or 4 years of internship hours and then a master's degree. So I was in a transition period where I was in architecture. I've always been very, I guess you would say, business inclined. I mean, my first gig was when I was in kindergarten, and I would sell— I would draw out Ninja Turtle masks, put a string on it, cut it, and make it into little masks for my classmates, and I would sell it for like 25, 50 cents, right? And so I was always kind of, in a way, wanting to make something and find an opportunity, I would say. When I was growing up, and pickling the okras, it was just another hobby that I learned. And I was in a transition period where I was, I need to go back to school, right, to either become an actual architect and get my licensing and everything, or start a business or go to grad school. And I wanted to go to grad school, so I decided for grad school and MBA, do an MBA in business. In the meantime, I had left my full-time at Chesney Morales, Not because, like, I was going to go to grad school and start a business, but it was just not working for me. And I decided to start just selling those okras. And then I started selling the salsas. I asked my grandmother for her recipe one day after I learned how to pickle. I asked her for her recipe and said, hey, Grandma, like, give me your— can I have your recipe? Because I want to have it, like, sell it to friends and stuff. And she told me her recipe over the phone, just throw the spices here and there. And I got her approval and just very kind of like slowly started selling it. Not like, oh, I'm gonna start an actual business out of this, right? And I was in the transition. It's like, okay, so I got accepted into UTSA College of Alvarez, Business School Alvarez. On the side, I was like, okay, well, it's a master's degree focused on entrepreneurship. Let me see what I can, how far I can get with this like side project of salsas and stuff, right? So— Were you going to farmers markets or using social media or how were you doing it? Yeah, that time it was social media. First several months was just social media, just through Facebook. A lot of my friends here in town would just message me through Facebook and, hey, come to my house and bring me a 6-pack of salsas, or meet me at the Cracker Barrel. I almost felt like a dealer of some sort, just, you know, getting to— it's like getting there. And so it was fun. And then eventually I got into— I started doing the brick market at the Blue Star. Got there every Sunday, First Fridays. Okay. And eventually landed my first store at the Larder at Hotel Emma. Ooh, that's high-end. Yeah, yeah. Started at the top. Yeah, yeah. It's all about connections, I guess, at that point. I had a friend that worked there who was a culinary manager. And since my salsa, the original one I started, I didn't tell you, but it's called Emma, right? It's after my grandma. It's her salsa. And he's like— That's a great coincidence. Yeah, it's a great coincidence. He's like, there's no reason why a salsa named Emma from San Antonio shouldn't be at Hotel Emma, who just— that just literally opened. It had just opened, I mean, 11 years ago or something like that. Hotel Emma was just starting out, and he helped me get into there. It was no fancy label. I went to the Office Depot, got some Avery template labels, the 2x4s, and I had a friend that sketched me out and we put it on there, right? That just— I used my architecture school. Where did the name come from? I mean, I can see you're wearing a ball cap today and, and you're made look casual. Uh, so Tío, for our non-Spanish-speaking audience, it means Uncle Baldy? Yeah, yeah. No, it's a playful name, right? Everybody knows a pelón in their family, uh, which is a— it's just a playful name for, for a bald person. Everybody is just like— when I was— even when I was growing up, Uh, in Houston, I had a cousin we called Pelón, and he was a kid, right? But they called him Pelón because they shaved his head, and that's how his nickname started, right? So everybody knows a Pelón, and that's what my friends call me. And then in 2015, uh, my sister had just gotten married and was gonna have a baby, so I was going to become an uncle. So just kind of like everything just kind of fell into place, and the name sounded like fun, like Tío Pelón's Salsita, just kind of very— Yeah. Very authentic. Yeah, authentic name. It's just connecting with people, you know? It's a name that resonates and connects with people. Did your family, beyond giving you the recipe, Oscar, support this, or did they think you were crazy to leave your professional job? Oh, no. Yeah, they thought I was crazy about it. My grandma too. My mom was like, what are you doing? Like, you have your architecture career, and you went to live in Spain and study architecture over there too. What are you doing? And I'm like, well, right now I'm making like $5,000,$10,000 a year. That's all I'm doing. This is like— and, but I, I mean, I always found a way, right? Like since I was a kid, I was always hustling, make like selling things, candies and stuff. And I did architecture gigs on the side. My last actual architecture gig, like where I did floor plans and everything, was probably like 3 years ago now. You sound like a natural-born entrepreneur to me. So how did you go from you know, Facebook and, and whipping things up in your small apartment kitchen to going, this has potential, but I need to get— I need to professionalize my, my operation. So in the architecture, in this industry, there's certain laws called cottage laws, right, where you can cook stuff, package it and stuff, and sell it in farmers markets, but you can't sell retail. So I mean, I did things backwards. I got into retail, and then the state came and shut me down and several things like that happened and I had to learn, right? Like, okay, so what are the legal ways that I have to do it? So eventually I found out I had to get a commercial kitchen. I started renting a kitchen space through friends also because I had a friend that was a chef. Back then there was a restaurant called Alchemy on North Flores. Mmhmm. And they're closed on Mondays and Tuesdays. So I would go on Mondays or Tuesdays and cook a batch there. Right. And Eventually, that company, they started another branch of their business making kombucha, Element Kombucha. So they were doing already the farmers markets and they got picked up by H-E-B. So they closed down the restaurant and they had the rest, like the kitchen area, completely full. So I was like, let me just take it. It was just like a leap, right? I was like, man, I'm not making the $700 a month right now to pay the rent, but Like, let me do it. I'm going to have to do it, right? If I want to move forward, then I'm going to have to take that risk. Did you have any investors providing you with capital? Not at that time. Yeah, not at that time. At that time, it was just like, let me wing it and see what happens. And I started just pushing it, going to one store, then I got into another store and another store and another store until I got up to like maybe 70, 80 small accounts. around San Antonio and Austin. Probably family-owned stores, though. You weren't in H-E-B or Central Market even. No, not at the time. No, it was all just mom-and-pop bodegas and stuff like that. It was interesting. I was around driving back and forth all the time. And from there, I eventually started learning all the hoops, all the legal things that I had to do, getting my manufacturing license, and then take a college course, and then all these things, right? And then it got approved by the state and the FDA. And so just started building all that. And eventually in 2018, not too many years after I had started, I had a friend that told me, you should join H-E-B's Quest for Texas's Best. Which is an annual competition among— Right, for Texas entrepreneurs. Food makers, producers. Yeah. Yeah. And not even just food, but— Products. Any product. Texas CPG, which is consumer packaged goods products. Like it could be a shampoo, it could be whatever you want, right? Obviously it's geared towards food a lot of times. It's a fierce competition because H-E-B is the gold standard. And if you get on their shelf, you've arrived. Right, right. It's part of the arrival. It's like going to a party. You have arrived, but you haven't made a good impression yet, right? Like you have to like get in there and then sell, right? And how are you gonna move it off the shelf? So it's still things that I'm still to date learning. I didn't have any training on that. So I'm learning the whole, hoops and how to get to things and what I need to do to get the product moving. So I got it into that competition and I made it to the finals. Out of 706 or something competitors, I made it to the top 25. I was the only salsa on the finalists, which was pretty cool. So after that, just kind of, I grabbed the attention of several like local other small retailers like like United Supermarkets and got into their shelves first. Did H-E-B give you any supportive advice after finishing in the top 25 of what you needed to do to get to the next level? Any feedback on your salsa or? No, they, I mean, they wanted to bring me in, right? They were, they were ready to bring me in, but at the time I wasn't ready both financially and kind of learning the, like the industry well, right? And I would either have to find a co-packer to make my products Or build my own factory. They have a lot of stores, and if they're gonna put you on the shelf, you need to have a lot of product and be able to reliably deliver it. Right, on time, like every time. You can't be late to an order, right? You just— they give you a— it's just like a report card, like at school. It's like, you're late, okay, you get a percentage demerit, right? And after certain demerits, it's like, okay, let's have a meeting and talk and see what's going on. And so, yeah. It's very important to like be able to fulfill their expectations if they're bringing you on board, right? Because like they didn't tell me this, but one retailer once told me like, I can't sell air, right? I'm like, eh, that was pretty harsh, but it's true, right? So, yeah, I mean, then I eventually, that's when I got investors on board and I raised a little bit of capital through family and friends. You're friends with Beto Altamirano, who many of our audience will know as a former mayor of El Campo. Right. A tech guy. And you're friends with him, and I think he played a role, did he not, in helping you capitalize your operation? So I know Beto from— because we're both from the Valley. Right. Right? And we grew up— I met him actually here in San Antonio, but we had a lot of acquaintances. He was really good friends with one of my first cousins, and so we had a lot of acquaintances, and then we met here. Before him, I already had someone that had put in a little bit of money into the company and kind of helped me a little bit more on the automation side, learn about machines and stuff like that. And then he came on board and he helped me put together some pitches and learn how to pitch actually on another level to bigger money or investors, right? What they were going to look for and how to talk and all that kind of prepare— getting prepared for all that kind of stuff. It's remarkable how far you got, Oscar, without any mentoring or without without any outside capital to even get to the point where you were a serious competitor for H-E-B's annual competition. But those are important elements to have, people that understand the parts of the business that you don't inherently know, whether it's automation or whether it's capital raising. Right, right. No, that's, I mean, that's a big part of just being an entrepreneur, right? And business owners, like, You can be an artist because being an entrepreneur is almost like an artist, right? Like you have an idea and you have to put it out, but then you have to set the artist aside and put the business hat on, right? And then in manufacturing, then you have to put the engineering hat on and you have to put like all these different hats on in that sense to be able to put together everything, right? It's a big, big, almost putting together a big puzzle where you need CFOs and people that are understanding of mechanical stuff and how to put automation together and just marketing and all these different components that very much play into— Now you know what you didn't know. Yeah, yeah, exactly. But you also got an MBA in entrepreneurship. I worked on it. I didn't finish though. I didn't get to that, but I didn't finish. I think I needed like 4 more classes. I ran out of money, so I was like, I'm not gonna go spend another $30 grand on my student loan and put student loans on there. And I was literally getting first hands-on experience on a lot of things that I would have learned in business school, right? And I think I took the most important courses that I needed to, which were Accounting 1 and 2 and statistics. And I took a really good class about ethics. So just took a bunch of classes that helped me to get to this point, and I just didn't finish the last ones. Oscar, when I was still at the Revard Report, I remember Sherry Biediger did a story on you, and this would probably be about 2019 or 2020. And we all kind of knew at that point about Tío Pelón. I don't think many of us knew that Tío Pelón was, was you, but it was, it was out there. And I remember seeing it in Central Market. But it wasn't in H-E-B. And those are 2 different companies, or at least they were then. I think they still are. So that was 6 years ago and you were 5 years into your journey by then. Yeah. When did you break through and get into H-E-B? And that's when Tio Pelón to me became ubiquitous and it was everywhere all of a sudden. I got into Central Market with 4 SKUs at the time or 5 SKUs. What does that mean? It's basically like your internal identification number for a product. So you got a single salsa? Into Central Market, I had 5. In the beginning, did you get all 5 in? Yeah, in Central Market, yeah. Wow, that's impressive. Yeah, I had the 3 salsas, the Emma, cremosa, tomatillo, then I had especial, which is chipotle, and a sweet vinegar glaze that was in there as well. So you expanded well beyond Grandma Abuelita's concept over the years. Yeah, no, I did. Now we have 9 products. One of those products We were talking before off microphone and camera is your Sriracha, which surprised me when I first saw it. And I didn't even know what that was until my sons, who are also millennials, introduced me to it. And it's part of their daily fare. But that's a Thai base from Thailand. How did that make its way into the whole Mexican-American, South Texas, Norteño culture? There is a place in Vietnam, I believe, called— named Sriracha. Okay. It's a city, um, and that's where the owner from Vietnam, that region, that's where he's from. Um, but the, the main popularized Sriracha is named Huy Fong, right? And they're gigantic. They're a gigantic company. Um, and they started out of California. California has a lot of Hispanic population, right? And the— this company started using The main ingredient to the Sriracha sauce was jalapeños, red jalapeños. This is a very, I would say, a very known flavor to Mexican, to Hispanic people, right? Since jalapeño is native of Mexico. Is it grown in Asia as well, in places like Vietnam and Thailand? I mean, I'm sure now it might be, but it's native to Mexico. It came from Xalapa. In this case, they were probably sourcing jalapeños out of California. So it's funny, there's a big documentary and everything about Huy Fong on YouTube, and they grow once a year jalapeños on a piece of land that's about the size of Manhattan, and they've, like, just for one year, for 3 months, and that's the crop that they use for the whole year, right? So, they process it, put it into big 50-gallon drums, and then throughout the year, they're using those peppers that have been Preprocessed and put them into bottles and that's what they use. What kind of quantities are you producing in your company and where do you source the materials, including the chiles? For the Sriracha itself or for— For everything. For everything? Because you're all jalapeño-based, I assume, right? So, the majority of the sauces right now are jalapeño-based, yeah. We have one that now I use chile piquín and some of them are actually chipotle peppers, which is actually a jalapeño. But yeah, I mean, right now, it's depending on the month, depending on the time of the year, how things go. But I mean, last year, we produced, I'm going to say, close to 800,000 units or so, maybe more, getting close to the million units. Do you have guaranteed farmers that are are producing the quantities of chiles and tomatoes and other things that you need to guarantee your production without any fear of— So, as surprising as that sounds, I'm still small-scale. Like, I made all these units, but compared to, like, big companies, I'm still super small-scale, right? And to get to a farm where you contract a farm and say, hey, I'm gonna need these, amount of peppers, right, to them it's not that much at that point. It's like, they're— because we're competing with, I mean, not just with the farms, we're not competing just against other brands, but we're competing against people that are grocery stores that are buying peppers for like H-E-B, right? Like, they have to buy their jalapeños somewhere, so they probably go directly to the farmer and— Right. So right now I use suppliers pretty much straight out of— that come straight out of Mexico to the border, and that's where I pretty much procure all my stuff. So a lot of your product then is farmed in Mexico and brought over? Yeah, yeah. Some of the things like tomatoes, a lot of times they're from the US, actually, like California, and they make their way to Texas. Sometimes tomatoes do come from from the south. It just depends on the— it depends a lot of times on— I had to learn a lot about the agricultural thing too, like, because peppers, for example, jalapeños, they only grow for 3 months, right, in a certain area. And then, like, in Mexico, they'll grow for a certain amount of time in Sinaloa, and then for 3 months, and then they switch over to another region, Chihuahua. It just depends on the time of the year and the climate. Right. And they're all, they're all different spice levels. Could you source everything that you need more, let's say, locally or regionally? There's such a movement toward, you know, locavore food production and consumption. Would it cost a lot more to do that? Or is it simply not available if you say, went to Rio Grande Valley producers or other South Texas producers, the kind of people we see at the farmers markets here? For a small farmer, it's still a lot of product. Like, if I say like, hey, I need 3 tons of jalapeños, it's going to be too much for them, right? And for a local small farm. So, and then also it doesn't grow like year-round. So, that's kind of like another difficult part of it, where it's like sourcing it locally is sometimes not as efficient. Mm-hmm. And unfortunately, we do like, as a manufacturer, we have to stay under certain price range, right? Like our raw materials have to be at a certain price so that we're able to make money, right? Pennies really matter in this industry. Everything in the grocery world is small profits and mass production, am I right? Yeah, yeah, yeah. That's kind of like a big part of the game is like learn how to be as efficient as possible because it's about pennies. The more you make, the obviously you get to economies of scale and then you're able to buy, then I'll be able to buy like a full truckload of jalapeños, right? Or a full truckload or have a truckload of jalapeños and mix it in with tomatoes and da da da da. But yeah, I mean, it's all about pennies and being able to be as efficient as possible when you're producing your product. Give us an idea of what What, what scale is for 800,000 units? Are you growing year over year, every year? And do you have goals to, let's say, hit 1 million units next year or the year after? And are you— would you consider yourself commercially successful, financially successful at this point for you and your investors? Or where are you on that journey to, to sell to Campbell Soup for $1 billion someday? So we're still pretty early stage. I'm 10 years in, right? And I mean, a lot of the companies that you see, right, like Pace Picante, when they sold, they were probably at least like 20, 30 years old, right? Like, a lot of companies take a long time to grow that long. But yeah, I mean, we've definitely been growing year over year. Revenue-wise, we've been growing. Yeah. production-wise and systems, and the business has been maturing quite significantly in the last couple of years since we shifted to manufacturing and contract manufacturing, just learning the whole ballgame, right? So we've definitely been learning how to do all that. We're at a point where, yeah, like our goal is to get to a place where we're able to bring in big money so that we can like take it to the next level and hire— Hire more people. Higher-level executives, right, and build a good board of directors and everything like that. How many employees do you have now, Oscar? We're a small team still. We're just about— it grows right now from like 8 to 10 people depending on the time of the year or the month, our workload and everything. Because you can contract out the manufacturing and production side of it? No, we make all that. Your 10 people do? Yeah, our production right now, we can run it with like 4 people because we've learned how to automate a good deal of it. Well, if you do tours, I hope you'll invite me over to your factory. Oh, of course, anytime. You're definitely invited. You're on South Alamo Street, just south of Southtown. Yeah, yeah. Near the UTSA campus, so. Yeah, no, you guys are welcome to come anytime. Oh, we'd love to do that. Sure, my earliest investor is a good friend of mine from— We met each other in 2nd grade. Can you say who that is? Yeah, his name is Noe, Noe Molina, and he owns— so when I was starting Tio Pelón's, he was starting his business in automation. Or he had— he's a mechanical engineer. He worked in oil and gas. But we would sit— we were roommates for a little bit and we would sit outside and he would be like, yeah, man, I'm starting a— I'm trying to start a business in automation. At the time, I was like, I didn't even know what that meant. I was like, what do you mean? Like, so he started his business in oil and gas automation, helping like just the big companies just like move liquids from one place to the other, which is what I'm doing, is like moving salsa from one place to the other. And so he helped me kind of get that mindset right into like automating things and learn how— from there I learned how to put machines together and I mean, now I'm the one that's designed my whole kind of plant in a way, like put together like my automated line. And that's why with like 3, 4 of us, we can run the line. You know, we can cook, we can like, from my phone, I can turn on my kettles and tell it like, hey, by the time of, by 8 AM, we need to be at 200 degrees Fahrenheit with water boiling, right? Yeah. So, learning how to automate and make things easier, right? And eventually, I mean, the goal is, yeah, to keep— if I really want to be like a good efficient company, I'm going to be able to work with those, with 10 people and make a lot of product with the same amount of people, right? What are your ultimate goals? I wonder, for example, we can get Tio Pelón everywhere in San Antonio. Couldn't your grandmother in McAllen buy it down at the H-E-B there? Yeah, we're all around the state. all over Texas? Yeah. And will you contemplate saying, I want to take this beyond Texas? Oh, yeah. We'll use the Pace Picante model again. And they, they reached the point before they sold where their advertisements were very popular. Yeah. Yeah. No, I mean, I was already— I mean, Tio Pelón's up to several years ago, we were, I would say, in about 85% of the country. around the States. We were in Sprouts nationwide. We were in Safeway. We were Albertsons, Vons, Pavilions. We were up to Hawaii and Alaska. Oh, that's remarkable. I didn't realize that. Congratulations. Yeah, but I decided, I mean, that business was killing me at that point, right? I was underfunded, so I couldn't keep up with like the big chargebacks and the big like slotting fees. I mean, this business has a lot of like to grow a brand, You have to have a lot of money in deep pockets, like deep pockets to be able to throw the marketing. Like, okay, I want to get into Vons, right? I don't know. Let's say a store that has 100 accounts, right? Or a grocery store that has 100 stores, right? And in this industry, you probably have to find a way to get the product to their stores. So you hire a distributor, right? The distributor is going to charge you slotting fees. to get into that store. Like, what slotting fee is, like, basically a payment that you give them to get onto the shelf. It's like, here's money. You're buying space. Yeah, exactly. And it's $50 per SKU per store, typically it's the cost, right? So 100 stores, uh, at $50, that's already $5,000, right? Um, so what if you have 3 SKUs? That's$15,000. What if it's like 300 stores? That's already$45,000, right? So, it starts growing incrementally. It's starting to get scary. Yeah, it is very scary. And I didn't know any of that, but I started growing. Like, I was in Central Market. I decided to get into a national distributor named Kehe, who's gigantic. It's a— I guess it was a double-edged sword. You know, because you can grow really exponentially, but you need to have deep pockets, right? Like to say, oh yeah, they're going to charge me $50 grand just to get into stores. Fine, I can handle that. And what happens is like you send them stuff, right? They send you an invoice or a purchase order and they send like, you invoice them. Here's like$10 grand invoice. Here's a $20 grand invoice. But you don't get any of that money back until you meet that $50,000. Right. So it's like, man, you're making all this product, paying all these people, having to pay suppliers, pay for promotions. And then it's like money's not coming in because you have to pay $50,000 in slotting. So it was just like a lot. So I decided to step back. We lost some accounts due to like we didn't have that financial backing. And then I told Keiki, you know what, like, I'm out for now. Like, we're— I got to step back. Restructure my business in a way that makes us money. So, that's when I shifted into co-packing and contract manufacturing. And my goal for the past couple of years has been ideally like finding more co-packing clients, basically more people that have their own brand and I can make the product for them, if they're at H-E-B or Walmart or whatever. And also restaurants, you know, restaurants that want to make their sauces for their restaurants. They don't want Tio Pelón. They want something that's Mi Tierra or whatever. Yeah, like, for example, say Mi Tierra or Panchitos came or something. It's like, hey, we want our enchilada sauce for the restaurants, not for like retail, but we want it for the restaurants. So what I do, we do have several clients that I do this for. We make their recipe. It goes through a research and development process. We make sure that It tastes the same as they do at the store, at the restaurant, and then we package it for them in bulk, in buckets, and it goes to their restaurants, right? It's not uncommon that people start with one business and the market redirects them and you become a slightly different business. Yeah. Well, it sounds like that's the case for you. That's exactly what happened. I started with my brand and started building my manufacturing, and then eventually I needed to fill space on the line. Right? And I started bringing in clients and co-packing clients that I've acquired until now, they've all been word of mouth. A lot of people, because of the quality of my brand, the products already, we don't really take shortcuts. Like, we do, like, we actually buy fresh jalapeños, make them, like, process them there. We don't use, like, preprocessed jalapeños and then add salt and pepper and blah, blah, blah. So, we got a good rep of using fresh ingredients and the flavor profile of our sauces are good. So, that's how we got contacted by several of our clients. It's just like, hey, we heard about you through this other company and we want to have a meeting to see if we can be— help us with making our products, right? And help us expand it. And yeah, that's taken a whole different the company to a different level of understanding what manufacturing is, sourcing, finding all the components, right, into this industry. Do you have a marketing campaign of any kind that popularizes your product with people? We just started. So I've— since I started, I never had money for marketing. So, I mean, again, we're super underfunded. But I started doing stuff right now. We started with an affiliate program. Explain that to our audience. Yeah, so a lot of companies have it, like Red Bull and many brands, right? You go into their website, you apply to be an affiliate, and basically you get your own reference link, your own coupon code. So when you, I guess, market the product on your own, My— Maylee, my social media— Maylee's with us in the studio. Yeah, she came on board. She was, she was like, oh, I want to, I do want to be an affiliate. And she started posting, like buying the product and posting with her link, right? And got involved into it. And just people like that like the product and want to like just push it out just because they really like it, right? And they get their code and they're able to make money off of that and they get a certain percentage of the sales that come through our web website. And then so we started doing that. I started launching email campaigns through MailChimp. Then I actually hired Maylee. She was incredible in her videos and doing things. And I was like, you know what, let's bring you on board. And she's now my social media manager. And really just we're pushing social media really hard right now because it's— I think it's like the new radio/newspaper of back in the day, you know, that's how people learn about it. Are we gonna see the day, Oscar, when Spurs players in the H-E-B ads are consuming Tío Pelón? I hope so. That's one of the goals, right? Like, when I go to the Spurs games, I see different brands all around. It's like, man, it would be awesome to have like a spicy quote just going around or something like that, you know, like something fun. And it's a playful brand. So, I mean, And maybe something like funny, like all the Pelones in the crowd stand up and like Tio Pelón's just on the, on screen. As we all love the Spurs, we, we wanna support San Antonio. Oh yeah. H-E-O-N San Antonio. Right, right, right. People, people take pride in something that's local and successful and, and, uh, and is unique and reflects the culture. Yeah. And people love to hear about that. You know, yesterday actually I went to visit one of the H-E-Bs that carries my product and I hadn't met the manager there and he was super curious to learn how I started and I just started telling the whole story just like I did. And he was super excited. People love to learn about that and learn that it's made in San Antonio. It's like, wow, it's here. And if even like, I think brands that are local to San Antonio, they like, we need to push ourselves to say like, hey, we're a local brand, right? We're from here, we make it here. Yeah. We represent the people, our culture here, and it's a big part of it. Like, there's a lot— San Antonio, it's a big food city. I mean, it's— was it designated like City of Gastronomy by the UNESCO? Yeah, UNESCO World Heritage City of Gastronomy. And so there's a lot of food that's come out of here that's nationwide, right? And like Fritos, uh, the Church's Chicken, the guy was from here, and, uh, Pase Picante, right? Like a lot of brands, Kielbasa Sausage, Twang, like there's a lot of Ricos, you know, there's a lot of companies that are from here that other people in the state and some people even from San Antonio don't even know about. Like, oh wow, they make it here on the West Side? And it's like, yeah. So we definitely have that pride that we make it here, right? And we're actually going through a full rebrand design of the labels and we put on there. I like your label. No, it's still gonna have this ugly face on there, but we're, we're, uh, putting like a made in San Antonio, proudly made in San Antonio kind of statement on there. So just to make it more— Well, that's terrific. We're a, we're a Tio Pelón household in Southtown. Thank you. And, uh, hope that many in our audience that didn't know about you know about you now and will give it a try. And congratulations, Oscar, on your success, and we'll watch you continue to build it and come back someday. And in the meantime, we want to come take a tour. Yeah, anytime. Like I mentioned, it'd be an honor to have you guys over and do a plant tour when we're bottling and stuff. And not everyone has the experience to ever go into a factory and see things like being made, like on a line. And so, a lot of times when people go, they're like, wow, I feel like Willy Wonka. This is like Charlie and the Chocolate Factory, right? Like all these bottles on a line and salsa getting filled. It's really a cool experience. Do you have school field trips yet? I remember as a young boy living in Kalamazoo that I went to Kellogg's and saw the cereals being made. I've never done that, but yeah, that would be something pretty cool. I'm sure children would love it and they'd learn at an early age about your, about your salsa. That's definitely something that's in the, in the books and needs to come do that. My mom's a teacher, so I'm gonna actually tell her like to propose it to her school. Well, congratulations. Oscar Perez, Tío Pelón. Bob, thank you for having me. It was a pleasure, and I really enjoyed it. All right, y'all, thanks for listening to this episode of Big City Small Town. If you enjoyed the conversation, please do share it with friends and colleagues who might find it interesting. You can also keep up with our newsletters, Bob Rivard's Midweek and my own San Antonio Something. You can find those linked up at bigcitysmalltown.com. Our show Big City Small Town is made possible by Weston Urban, building a city our children want to call home, Geekdom, where startups are born and smart ideas become businesses, and now SWBC, a San Antonio-based financial services company that has been putting clients first for decades, serving individuals, businesses, and financial institutions across insurance, investments, payments, and more. 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