2024 Business Update With Newks Hot Sauce

Three years ago, Merchant Maverick talked with Jake Newcomb and discussed his brand-new business Newks Hot Sauce.

In the time since we chatted with Jake, the Portland, Oregon-based business has been thriving, winning awards, and expanding into stores. We were able to get an update from Jake to find all about his small business adventures.

Q&A With Jake Newcomb About Newks Hot Sauce

Remind our readers about your general background. What did you do before Newks?

I’m originally from Maine. I moved to Portland 11 years ago for an internship to finish my degree in audio engineering. I worked in the theater and event industry as a sound designer for years until the pandemic left me unemployed.

I’ve always had a deep interest in food, music, and traveling. I had zero intentions of starting a business, especially a hot sauce business, yet here we are, five years in, still going strong.

When did you first want to open Newks? How did you get started in this business?

I was visiting a friend in Boston (I used to live there). He’s a bit of an eccentric! He was studying astrophysics at Harvard, played in a country music band, and made hot sauce in his downtime.

He was telling me about the hot sauce cooking process. He was making small-batch sauces in his apartment using blackberries and habaneros. He told me he would wear big rubber gloves and a respirator at times because of how intense the peppers would get when cooking. The process of cooking hot sauce intrigued me. When I got back to Portland, I went to a grocery store, bought bananas and habaneros, and began to experiment.

There was no intention to start a company at all, but those first batches would lead to our first flavor, The Kinda Mild.

My friend Jo Moyer Battick, a super creative artist, was posting daily psychedelic drawings on her Instagram.  I told her that I was thinking of making a hot sauce label to put on my bottles. I asked her if she’d draw me something spicy. The next morning, she sent over the Newks logo, which has become pretty iconic for the brand. I printed it out on my home printer and taped it to a bottle. 

The more I worked on the label, the more I realized it could possibly be something.  

I decided to start a Kickstarter campaign to launch the company. It was funded within 24 hours.  This is when I realized I had to follow through with what I promised the Kickstarter pledgers. This included getting my acidified food processor’s license, making a ‘legit’ batch of sauce, applying to my local farmers market, making our first run of t-shirts, and shipping bottles to everyone.

That was the initiation of the company, and to be honest, it all took me by surprise.

What specifically drew you to this type of small business?

I’ve always loved food, and at the time of starting Newks, I was eating a lot of spicy food.

I had been backpacking in Central America multiple times a year. I’d stay in hostels and hop on buses to random cities and towns. I traveled on a bootstrap budget, which meant I was eating a lot of street food. It sounds clichè, but it’s true: I feel like the best way to connect to a location when traveling is by eating the food. I fell in love with the flavor profiles of all the sauces and spices of Mexico. This was the beginning of my interest in spicy food.

Hot sauce felt similar to the craft beer world to me. Every brewery has different twists on the classic IPA or whatever, and all these hot sauce brands I was discovering had their own versions of a classic verde or mango habanero sauce. It was fun to find unique flavor profiles that no one had thought of and bring them into reality. A lot of our customers have told us that what they enjoy about Newks is that we are making flavors they had never had before. That is great to hear because that is essentially our job.  Why make something that already exists?

Hot sauce is one of those foods that can completely shift an entire dish. I found the endless culinary possibilities and potential flavors to be a whole world to fall into, and I did.

What’s the best part about being a small business owner?

Freedom from a societal structure that wasn’t working for me (9-5). Escaping a mundane and toxic society.

My first job was at a Wendy’s. I worked fast food. I was flipping burgers and washing dishes. I then got a job as a dishwasher at a diner in small-town Maine. The same diner my mom once worked as a waitress 45 years ago. 

For most of my life, I worked menial dead-end jobs. The majority of the managers I worked for were burnt out, bitter, and depressed. There is something that occurs when you are young and in those environments. There is an intense urge to escape everyone’s bullshit. You make a promise to yourself to not become just another bitter and broken middle-aged person. It sparks a flame. You begin to plot an escape. I felt that in me, but didn’t know how to forge a path out of the structure that I felt trapped in.

Not all of my early jobs were bad. I found work in record stores, which I did love. I did that for years, and I still love collecting and geeking out about records. I almost bought Mothership Music (a record store in Portland) right before I started Newks, but it was sold to someone else. I worked and lived on sailboats in Maine. I spent a summer in Alaska and worked as a garden hand at a James Beard award-winning restaurant. I was a sound designer for the Portland theater scene for years.

What I’m trying to say is: I’ve worn a lot of hats in this life, but none of them were able to give me what I felt I deserved: Basic financial stability. I could never support myself beyond ‘just getting by’. Most people can’t. It’s depressing. It’s super hard to escape this trap.

So, what has Newks been up to since we last chatted?

We have had a lot of growth.

We’ve launched new flavors, one of which was a collaboration with Grillos Pickles. That sauce has gone on to win an award and become our best seller in one year’s time. 

Right at the time of publishing this interview, we will have launched our new flavor THE BLAZIN RAISIN, which I’m really proud of. It is a blend of blackberries, raisins, cocoa powder, cinnamon, chocolate habaneros and more. I feel like we’ve made something super unique and delicious. We are releasing that recipe with our classic Newks label, but also a collaborative label with our friends at a very popular skateboard company. We can’t quite reveal that yet, but it will be out in mid-August.

We’ve also expanded our team and have 6 part-time employees. We’re participating in about seven farmers’ markets a week, averaging over one event a day. We are super active right now, and it feels great.

We’ve begun participating in more events on the East Coast as well. We had a successful tour across New England, where we did some pop-ups in NYC and expanded our wholesale relationships, getting Newks into stores in RI, CT, Boston, Maine, and more. We’ll be back in NYC this summer for the Hot Sauce Expo, which is one of the largest spicy food-oriented shows in the world.

We are blessed to keep growing. The list of upcoming things feels endless right now…

Has your business model changed since 2021?

I have zero business education background, and Newks has never had a formal business plan. I’m not even sure what a business model means, to be completely honest.

We just keep making hot sauce and selling it because people keep buying it. It’s really that simple for us. Make sauce. Sell it. Connect with customers. Make cool sh**. Rinse and repeat.

We just continue following intuitions and learning along the way. I suppose if ‘going with the flow’ or ‘following your instincts’ is a business model, then that is what we are doing.

What have been some of your biggest “Aha-s” as you have grown your business over the past three years? What advice do you have for others?

Delegating work to others has been major. I have hired a great team to sell Newks, and one of our staff now runs the web store. I no longer have to spend half of my day packing orders in the garage and trekking them to the post office. This frees up my schedule to take on more managerial work that I should be focused on. Trusting in my staff and letting go of FULL control has been a good practice for me to lean into.

Purchasing goods in BULK has been a big ‘aha’ moment as well. We are saving so much money, and our margins are way better. We now purchase an entire freight truck’s worth of empty bottles, caps, and shrink bands at a time. 

When Newks started out, I would purchase 1 case (12 bottles) at a time.

After a year or two, I would then order one pallet at a time (3,000 bottles). We now purchase full freight trucks at a time (35,000+ bottles). In doing so, the cost per goods drops significantly, and our margins are higher. The same translates to our label production. Everything drops when you buy in numbers. Thankfully, after four years of business, we are able to purchase at scale without going into debt.

What are the biggest issues running this type of business?

Keeping up with production. We still have not found a local co-packer to make our product. The facilities that are in Portland either don’t use our type of bottles, are not great communicators, or are too expensive for us. We travel 2-3 hours to our co-packer every time we cook the sauce, which is, on average, around once a month. It’s working for now, and we’ve come a long way from the one bedroom kitchen setup, but the longevity of this system is questionable. 

We plan to continue to grow and scale this company. In many ways, I view this as day one for the company. We are in the demo days. There’s a bigger vision for Newks that I would like to be realized. I’d like to create full-time jobs for my friends and have a wider distribution network. In order to do that, we need production facilities that can keep up with our demands. 

Right now, things are working fine, but one mega big order (say Hot Ones or Whole Foods), could teeter us into a realm of almost being too much. If we continue to grow at this rate, we will need to expand production. Right now, there is no plan on how to do that, but we will figure it out when the time comes. We always have.

What people, books, or other factors have influenced the type of person you are and the type of business you own?

I tend to purposefully stay away from a lot of entrepreneurial types of podcasts or books because a lot of it feels very disconnected from the visions that I have and want to create with Newks.

For instance, when I watch an episode of Shark Tank, I’d say 9 out of 10 of the businesses make my skin crawl. Or the one time out of the year that I open TikTok and Gary Vaynerchuk is screaming through his phone and telling me to dedicate my life energy to ‘hustle’ and sell used sneakers on eBay, I feel like vomiting into my computer screen. 

A lot of people start businesses just to make money, and it’s so obvious. They want to manipulate people’s minds to buy products that don’t serve much of a purpose and will just wind up in a landfill one day. Businesses that inspire me are companies like Bob’s Red Mill, Dr. Bronner’s Soap, Vans, Dischord Records, etc.

Coming from a punk rock adolescence and years of working in record stores, I’m more motivated by the ethics of bands, such as Fugazi, Minor Threat, Elder, and Dischord Records, than I am by corporations, businesses, or ‘entrepreneurs’. These bands and record labels hold onto their integrity and don’t get mesmerized by fame or fortune, but instead, create their art and are able to be financially sustained because the product sells itself, not because they have an endless supply of money to dump into marketing or business strategy.

Tell us about a time when things didn’t go the way you planned.

Everyone loves a good FAILURE story, and we have plenty. On another podcast, I told the story of the time I scaled our sauce up for the first time, burned an entire batch, and wound up crying to myself in the parking lot of the kitchen. I’m going to have to choose a different story this time…

This one happened more recently! We were asked by the company Bespoke Post to be featured in their Grill Box, a subscription box that gets mailed to customers. This was a big opportunity for Newks because Bespoke Post is a nationally distributed company that has been featured in People Magazine, the New York Post, Men’s Health, etc. 

So they put in a beefy order, something like 6k bottles. We had just begun working with a co-packing facility in Portland. The order was due in Georgia in one month’s time. We booked all of the days at the kitchen we needed to fulfill the order. So we were all good, right? Wrong.

About two days before production, the co-packer unexpectedly shut down their entire operation and left us high and dry. We had a 6k bottle order to fulfill within a couple of weeks, due across the country, and no kitchen to cook in. 

I spent a day calling kitchens in Portland until we finally found a space that would rent us their kitchen on the weekends. 

I brought my farmers market staff into the kitchen to cook the sauce. They had never done anything like that before. My mom flew in from Maine to help. My cousin flew in from San Francisco. We put all hands on deck and cranked out the order ourselves. It was extremely difficult. I could rant endlessly on the difficulties we ran into. We did manage to finish the job though. 

The feeling that comes on the other side of that insane work push is very hard to describe. It’s almost spiritual. It’s a satisfaction that is hard to put into words. There was certainly no monetary reward, considering after all of the expenses of labor, kitchen hours and weird curveballs, Newks probably had a net profit of like $200. Thankfully, my family, friends and staff helped bring us to the finish line.  We look back and laugh…

Tell us about the moments that bring you joy!

Still, to this day, my favorite thing about doing this is hearing customers’ reactions to our sauces while they sample them for the first time. That is when a return customer comes to our stand and tells us how much they love our flavors and what they have done with them. Imagining our sauces on the dinner table at night… It means the world.

Vendor Round-Up

And which of our vendors and partners are assisting Newks on their small business journey?

What site does Newks use for eCommerce? Shopify.

What POS do you use at farmer’s markets or in-person events? Square.

Who is your credit card processor? Square and Quickbooks.

Who do you use for business banking?  OnPoint Credit Union

What do you use for accounting software? Quickbooks Self Employed and Quickbooks Online for payroll.

Any other vendors we are missing for your industry that deserve a shout-out?

Shout out to Grilka Press and Munchkin King for local screen printing, TQL Freight for shipping pallets, and Rose City Labels for labels.