Origins: A tainted yellow jersey, bird poop, and the unlikely beginnings of Skratch Labs
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It wasn’t long ago that exercise nutrition more closely resembled science than food, and the more complex and elaborate the ingredients were inside the box or bag, the more profound the effect on your performance — or so went the marketing at the time. Today, alphanumeric buzzwords have given way to more recognizable ingredients, and the concept that your hydration needs on the bike should be separated from your caloric needs. None of those ideas are new, but it wasn’t until Skratch Labs came along in 2011 that the concept blossomed in the mainstream and profoundly changed the exercise nutrition industry. And yet if it weren’t for some funky plumbing, Lance Armstrong, and a bird with impeccable aim, the story may well have been very different.
Hitting the reset button
Major changes rarely come without some level of discomfort, and around the end of 2010 and beginning of 2011, Ian MacGregor and Allen Lim were, without question, very uncomfortable.
In MacGregor’s case, the discomfort was literal.
A promising American road racer with a U23 national title under his belt and a freshly signed contract with the Kelly Benefit Strategies team, in the summer of 201 MacGregor was diagnosed with exterior and common iliac endofibrosis — essentially a kinking of the arteries that fed his left leg. It was no big deal in day-to-day activities, but on the bike, it restricted blood flow to the point where a career racing bikes was impossible without highly invasive surgery.
Iliac endofibrosis is surprisingly common among pro riders, affecting such notables as Stuart O’Grady and Theo Bos. But while many riders have gone under the knife to correct it and come out unscathed, the procedure isn’t without risk — and it wasn’t long before MacGregor’s diagnosis that complications from that same surgery took the life of Barloworld rider Ryan Cox.
At just 26 years of age, a mechanical engineering degree almost in his grasp, and a lifetime ahead of him, MacGregor made the painful decision to retire.
“It was surgery, or that’s it,” he said. “Not to judge anyone that’s done it, but for me, it wasn’t the right decision. Only in hindsight can I say that. At the time, it’s what I wanted to do. It was how you paid the mortgage, It was all the rest of your life.”
Seven years earlier, MacGregor was a test subject in a study conducted by Allen Lim, an exercise physiologist who, at the time, was completing his Ph.D. at the University of Colorado in Boulder, Colorado. The two became fast friends, and worked together at Slipstream Sports during the 2007 season. It was Lim who counseled MacGregor through his exit from professional racing. Lim recognized that MacGregor was not only young but also smart and educated. In his view, the diagnosis was anything but an endpoint; rather, it was the opportunity for a fresh start and, potentially, something much bigger.
“It was really Allen that walked me off the cliff of having vascular surgery,” MacGregor recounted. “It was interesting, because that was sort of the catalyst that allowed us to start working together.”
MacGregor wasn’t the only one going through a change. Lim had worked as team physiologist for Garmin-Transitions in 2010, but was about to make the move over to RadioShack — where he would work to help Lance Armstrong return to the top of the Tour de France podium. Along with that move came mounting pressure, but also a much bigger budget.
“The idea at that point was, ‘I’m about to make this big transition in my life and go from Garmin to RadioShack. I’m going to have enough of a budget to do a little more sports-science work, and I’m going to need some help,'” Lim said. “The plan for Ian at that point was to go back to school, finish his degree in mechanical engineering, and then help me on the side with all of these little projects.”
One of those projects was a custom sports drink.
Pooping in the drink mix
When Lim was working with Slipstream Sports in 2007 — when it was Pro Continental, before the team was sponsored by Garmin, and Macgregor was still racing — riders would complain that the sports drinks they used would make them feel sick. Lim took it upon himself to alleviate the situation.
“Some guys could not stand it at all, some guys had no problems with it,” Lim said. “There was definitely a spectrum of complaint, and it really depended upon how long [they drank it] and how concentrated this stuff was. I started as most teams do, by diluting their sports drinks. But as you dilute your sports drinks, you also dilute out the electrolytes with the sodium in it. I started adding back Alka-Seltzer Gold tabs to the sports drink — basically sodium citrate — and things improved. That started this whole process of slowly iterating and slowly experimenting to make things better.”
“The pros were the canaries, and they’re the first ones to drop,” he continued. “If something was slightly off about the food or the environment, they were the first ones to suffer. Even though we think of them as these amazingly gifted athletes, they’re also super sensitive because of the volume of shit that they were actually consuming. At that time, everybody was selling their sports nutrition based on the feature set. You had to have some weird name, or chemical, or compound, or latest research study that showed that this thing was actually better for you. It wasn’t generalizable to the field. It didn’t taste good, it wasn’t practical. There were so many issues, because people forgot about the human component.”
According to Lim, riders were also having gastrointestinal issues with the mountains of pre-packaged foods they were eating while training and racing. There, however, the revelation came about in a more accidental manner. At a European race that season, the team’s shipment of energy bars didn’t arrive in time, and Lim was left scrambling for a solution. Team rider Mike Friedman half-jokingly suggested that they all eat potatoes instead — and that’s exactly what they ended up doing.
“I was with this really young group of mostly U23 athletes who were just like, ‘Yeah!’ They were game for anything,” Lim said. “I started boiling these little New Hope potatoes at that race, and then cutting them in half. Daimo [team mechanic Daimeon Shanks] and I would dress them with olive oil and salt and parmesan cheese, and wrap them up in foil paper. We ended up tying for first at that race; we had great results.”
By the time MacGregor came aboard to help in the 2011 season with RadioShack, Lim was leaning increasingly further in the direction of “real food” for the riders, and the two started to hone in on the right formula for their custom modified drink mix. Eventually, they decided to try developing their own formula from the ground up, “iteration after iteration after iteration,” as MacGregor put it.
“We couldn’t figure out the chemistry behind this, so we were like, ‘Why don’t we just put freeze-dried fruit powder in here? Maybe that tastes good,’ Lim recounted. “It actually did taste good. It wasn’t like we had this grand architecture; we were constantly experimenting and evolving. It was this trial-and-error process.”
Word of what Lim and MacGregor were doing had spread to riders on other teams, and it wasn’t long before people suggested that their efforts expand beyond just a side project. News had gotten around to other players in the exercise nutrition space, too, and before Lim and MacGregor even had a chance to consider starting a business for themselves, they were receiving offers to buy the intellectual property.
One of those offers came in late 2010, from then-up-and-coming sports nutrition company FRS.
“Athletes were actually interested in seeing this become a business,” said Lim. “There were all these things that conspired for and against us, and there were all these learning lessons. We had this offer to sell all the intellectual property around this drink mix before it was anything, while I was still working with RadioShack. When I got the contract, I couldn’t understand it. I hired Jason Haislmaier, an IP attorney here in town, to look over it. When he was trying to explain it to me at Spruce Confections [a local coffee shop in Boulder], a bird flew overhead and shit on the contract.”
Lim took it as an omen. The deal was off.
The next week, Lim flew to California for a gran fondo event put on by Levi Leipheimer. There, he happened to meet the founder of Clif Bar, Gary Erickson, who encouraged Lim and MacGregor to go out on their own. The next day, on the ride, Lim ran into his old college roommate, Aaron Foster, who Lim knew had started a handful of his own businesses over the years. As luck would have it, Foster had a GoPro video camera mounted atop his helmet, and the conversation was forever recorded for posterity.
Lim asked Foster to join him and MacGregor in Boulder to start the business in earnest; Foster relocated from California to Colorado within a month. The three began mixing food-safe containers full of drink mix powder on paint shakers at a local hardware store, and they were selling it mostly to friends and family. A publicly viewable web site wasn’t even up until autumn 2011.
Putting a tainted yellow jersey to good use
Lim was under contract with RadioShack for the entirety of the 2010 season, but his testimony in the US federal grand jury case against team captain Lance Armstrong forever changed his career trajectory in the world of professional cycling. RadioShack essentially benched Lim for the remainder of his contract, and now both he and MacGregor had to figure out what to do with their lives outside of the pro peloton.
“Despite the fact that that lifestyle was super, super difficult, and not as romantic or interesting as people think it is, I was giving up a lifestyle that that I’d become really, really used to,” Lim said. “In some ways, I count myself as fortunate as having to be forced out of the sport, because most people in my position — especially staffers — never leave.”
Thankfully, demand for the drink mix continued to grow, to the point where the trio was no longer able to make enough of it themselves. It was time to crank up the volume, and they were looking to make 400 pounds in the next batch — far too much to do bucket-by-bucket at McGuckin Hardware.
One might think that 400pounds of drink mix is a lot, but as far as the sports nutrition industry is concerned, it’s a non-starter. Lim, MacGregor, and Foster’s venture had indeed gotten bigger, but it still wasn’t big enough for them to get an industrial food processor to take their order.
In early 2011, Lim met Andy Rodriguez. Rodriguez was the president of All American Seasonings, a Denver-based industrial food ingredient blender with a long list of heavyweight clients. Like everyone else Lim spoke to on the subject, Rodriguez explained that it simply wasn’t financially worthwhile for his company to produce such a small run of product.
But Rodriguez was a cycling fan.
Five years earlier, Lim had another high-profile client — Floyd Landis — who had given him an autographed yellow jersey from the 2006 Tour de France. That glory was obviously short-lived, however, and once news broke of Landis’s doping violation shortly after the race concluded, Lim wasn’t exactly eager to hang that maillot jaune on the wall. So it sat in the back of his car. For five years.
That is, until that fateful meeting with Rodriguez.
Lim eventually struck a deal, upping the initial order from 400 to 1000 pounds, and offering that jersey as both goodwill and collateral in the event sales didn’t pan out as hoped. Rodriguez accepted.
“I happened to have this yellow jersey in the back of my car that had been actually in the trunk ever since it’d gotten framed,” Lim said. “I’d never hung it on my wall. It was crazy. I go out to my car, I bring it in, and his eyes get all big. I’m like, ‘We are on’, and he agrees to do it.”
From a $10,000 “X” to starting from scratch
With a thousand pounds of product soon to be delivered, there was one glaring problem: A fair number of people were buying this stuff, but it still didn’t have a name. To date, Lim, MacGregor, and Foster were simply packaging the powder in unlabeled Ziplock baggies, and shipping it all out of Foster’s garage.
“One of the dilemmas that we had at that point with starting the business was that all of our customers were essentially pro cyclists who were sponsored by other drink mix companies,” Lim said. “So it’s not like anybody could talk about us. You can’t have a business if you don’t have a marketing plan. You can’t have a business if everyone who’s using your product is using it as a substitute for something else. This was like back in the day, where one person made all the steel frames and you just put different manufacturers’ names on it.”
“We were sitting around — me, Ian, and Aaron — and as a lot of things start in this company, we got this idea of, ‘Wouldn’t it be funny if we called this Secret Drink Mix?'” Lim recalled. “We thought it was funny. We went to Todd Berger and Lucien Föhr [of design firm Berger&Föhr], and they’re all hip and cool and shit. They came back with this identity that was just, “X”, and we’re just like, ‘What? We paid you how much for this?’ They’re just like, ‘Trust us, it is cool.’ We’re like, ‘Okay, whatever.’ It was better than the ‘I Am Hydration’ logo that I came up with.”
Meanwhile, another investment offer — this time for half the company — would come in the summer of 2011 from fi’zi:k, which apparently was interested in getting into the sports nutrition business. Bird poop didn’t play a hand in the outcome of that deal; rather, it was scuttled by poor timing as the traditional Italian vacation in August arrived before the arrangement was finalized.
By the time the Italians got in touch in September 2011, Lim, MacGregor, and Foster were too far along and had made up their minds: things were going too well, they were starting to have a lot of fun, and they were in it for the long haul. Four days before the annual Interbike trade show in Las Vegas, the trio decided to introduce Secret Drink Mix.
“We bought all the trade booth items off of Craigslist in Las Vegas,” Lim said. “We went to a lot of sketchy places.”
The idea behind the Secret Drink Mix name seemed amusing and novel at the time — and the name served as great marketing — but Lim, MacGregor, and Foster knew that it wasn’t a brand they could use moving forward.
“Right after [Interbike] was when we started working on the branding identity,” said MacGregor, “knowing that it needed to be more than a drink mix, and that there was a lot more meaning behind it than just that, as cliché or silly or fluffy as that might sound.”
“Within all this forced transition,” Lim said, “the big epiphany I had was, ‘no matter where you find yourself in life, you can always start from scratch.'” I started identifying with my parents, and how much they had to change to be able to move their whole entire family [to the United States]. I started realizing that this was part of my own story, and I loved the idea of calling [the company] Skratch.”
MacGregor registered the Skratch Labs name with the state of Colorado in November 2011.
Lim refers to those early days of Skratch as the “immigrant hustle.”
“To be able to dream and create possibility out of nothing — I’d always grown up seeing that as an example of what it is to be American,” he said. “It wasn’t complicated, and it wasn’t like there was all this business jargon. You make two pounds; you sell two pounds. Use that money to make six pounds. You put that money in the bank; you don’t spend more money than is in the bank.”
Part of that “hustle” included buying an old funnel-cake service trailer and repurposing it for catering. Rather than spend gobs of money on marketing efforts, Lim — along with his chef friend, Biju Thomas — would sell food at events such as the Sea Otter Classic, and also cater various team training camps, all while simultaneously handing out samples of Skratch. This system not only raised the visibility of the company along the way, but also covered expenses and raised visibility among pro and amateur athletes.
Lim even paid local transients to hand out free samples to riders as they made their way north out of Boulder on a popular training route (the police quickly shut that down). A constant struggle for cheap rent — no small feat in Boulder, Colorado — uprooted the company three times in almost as many years, including one location that was too good to be true.
“We were paying $1,000 a month in cash,” MacGregor remembered. “We didn’t notice at the time, but we were paying it to a gentleman who was currently in a divorce settlement with his wife, and he was just pocketing all the money. He didn’t even own the place.”
Skratch did take on some outside investment early on, but it was a modest amount and only from close confidants — including some pro riders, such as Taylor Phinney, who technically owned the company outright for the first two years due to a paperwork error, but was never able to publicly disclose his association with Skratch until his contract with BMC Racing ended on December 31, 2016.
“We opened up a very small percentage of the company to friends and family so that we could get a cash reserve, in case we didn’t sell anything,” said Lim. “The great thing was that we were able to manage our cashflow pretty well because our sales were really strong.”
In hindsight, Lim said, the company never actually needed the money.
“We were probably just the right amount of dumb and ignorant to not realize that’s not how things are done, or that it’s really rare for products — especially in a natural food space — to succeed without a lot of capital, because it is often a race to the shelves, and often, a big marketing push.”
“In some cases, it was that ignorance that allowed us to think of a different and new way to approach a problem and to solve it in a novel way that might not make sense to the outside,” MacGregor added. “But we didn’t know any better, so it felt totally normal to us.”
Secret no more
Six years later, Lim can look back on the early days and laugh. That wasn’t always the case.
“[Skratch] wasn’t one of these things where I was like, ‘Oh my gosh, this is going to be a great business one day’,” said Lim. “It was one of these things where it’s like, ‘I cannot believe I’m up at fucking 5 a.m. making goddamned rice cakes and mixing drink mix powder. This sucks.'”
MacGregor estimates that it took the company three months to go through that initial 1,000-pound production run; today, Skratch burns through that amount of drink mix powder in less than a day. Moreover, the lone drink mix formula that started the company has not only spawned a growing number of flavors, but also an “everyday” version with a lower calorie count, a high-sodium “Hyper Hydration” blend said to make you retain fluids before a hot ride, and a new post-ride recovery drink.
Skratch recently started getting into pre-packaged solid food, too, starting with a gumdrop-like chew designed to provide extra calories on longer training days, and later adding a pre-made cookie mix.
Skratch’s appeal has also expanded beyond cycling to climbing, running, motorsports, and even the restaurant business, and the company’s distribution network has expanded in concert, even including such mainstream heavyweights as Whole Foods and REI. Lim and Thomas have recently put out their third Feed Zone Cookbook, with many of the recipes expressly aimed at competitive athletes.
“If the company continues to scale, we continue to help people, then the sky’s the limit in terms of how big we can be,” said Lim. “I think that we can be a pretty large company and a highly profitable company — that we can not only take care of a lot of our customers, but that we can actually be one of the best places in the country to work. That’s also a big goal of ours. In many ways, we’re kind of riding the coattails of the slow-food movement. We’re just trying to bring that to sport nutrition.”
Skratch Labs is on solid footing now, but that old Landis jersey is still in limbo. According to Lim, it’s still sitting on the floor in Rodriguez’s office, right where he placed it when the two struck that initial deal in 2011. Rodriguez doesn’t know what to do with it, either.