Subscription Box Startup SnackNation Built a Second Business Selling Insights to Food Companies The delivery service is well positioned to be an arbiter of upcoming food trends.

For four years, SnackNation grew its business by delivering boxes of bars, chips, beverages and other foods to subscribers that now number tens of thousands of homes and more than half a million people working in about 5,000 offices, it said. All the while, the Culver City, Calif.-based company has built a secondary revenue stream: collecting insights on products and selling this data to the food companies that created them.

"We test over 100 brands per month through very discerning palates," said Sean Kelly, CEO and co-founder of SnackNation. "This is really important data and insights to get back to the brands. We, at the end of the day, are a brand builder. We want to help these emerging brands succeed and win."

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SnackNation, which said it grew more than 9,000 percent from 2014 to 2017, this year closed a $12 million series B round led by 3L capital, bringing its total venture funding to $23.75 million. The company also partnered with WeWork on its retail experiment, WeMRKT.

There are currently four full-time employees on SnackNation's Business Intelligence team, and it's looking to hire more people as the platform grows. The company collects data on every brand it features products from, and the Business Intelligence team specifically works with about 50 brands a month. The data is primarily used to help companies understand who their key customers are, and how strong their brand is among customers.

SnackNation matches up the data it generates on brands with self-reported demographic and psychographic information from more than 500,000 customers across the country. The company said it has almost 5 million data points -- including product ratings, brand awareness score and consumer purchase intent -- on more than 2,000 products.

Pricing for these insights, according to SnackNation, can change depending on the duration of partnerships with brands and how many boxes their products are included in. Kelly said that one avenue of paying for insights is by the company providing "significant" discounts on its product to SnackNation.

SnackNation also recently acquired another subscription snack company, Love With Food, to help it boost its growing data business, the company said. In a press release, Kelly said the acquisition led SnackNation's "consumer insight capabilities to skyrocket, allowing us to provide statistically significant, actionable data and insights so that emerging brands can iterate at the speed of the market," adding the company may reach a "point where we can even predict category winners."

That's significant, as more and more investors flock to startups in the food space. Since 2013, the number of investors betting on food and beverage companies has more than tripled, according to CB Insights. Giant food companies have also joined in the action, with many, including General Mills and Kraft Heinz, launching venture funds and incubator programs. Meanwhile, ecommerce has reached a point that many food brands could build their businesses selling directly to consumers, instead of through retailers.

If SnackNation's bet on insights pans out, it could be an invaluable, and highly sought after, service in the industry. It could be a platform when companies large and small test new products and/or use data to come up with new innovations.

"[Consumer packaged goods companies], just like most public companies, are short-sighted," Kelly said. "They're going to buy all these brands. What happens when you buy a portfolio of 10, 20, 50 or 100 emerging brands? Those brands also will die if you do not continually innovate and iterate them. We're building our platform in a way that says, how can we be most valuable to the future of this industry?"

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SnackNation said its internal testing is extensive. Once a product passes initial test tasters, who also ensure items have a clean ingredient list and an acceptable nutrient profile, it's then reviewed by five category managers. To make its way into one of SnackNation's boxes, a product has to receive passing scores of eight out of 10 on numerous categories from the testers, before it's judged by the company's more than 150 employees.

"Because we taste so many and see so much data, we're pretty darn good," Kelly said.

Only about 20 to 25 percent of the products SnackNation tests are shipped to customers.

But the company doesn't only rely on its internal testers. The next wave of data comes from home and office subscribers. The company asks customers to fill out surveys, but also relies on office managers to fill in the gaps. Some employees may skip surveys, but people will usually voice their opinions to office managers. Kelly said then they'll provide that feedback through SnackNation's member portal. If the company sees that a particular product is unpopular, it'll be removed from circulation.

This is the data that SnackNation provides to food brands, along with any feedback regarding taste or packaging. Food brands have changed products based on these insights, according to testimonials provided to Entrepreneur by SnackNation.

"We have used the insights to improve some flavors," said Robert Mock, co-founder and CEO of Ocean's Halo. "The feedback we received on one of our products helped us in the decision to discontinue that line of snacks. We share SnackNation insights with investors, board members and retailers like Whole Foods and Sprouts."

Tom Donigan, co-founder of Field Trip Jerky, said, "The data in the consumer insight report has been amazing. It's insightful, non-apologetic and really valuable for a brand that does not have the dollars for extensive panel testing. … We've even tweaked some of our flavors based on the feedback from our SnackNation consumer insight reports."

Lauren Brundage Mariel, CEO and founder of Live Love Pop, told Entrepreneur that she found SnackNation's insights and data useful.

"The one aspect I loved was that the brand manager who handles your box calls you a couple months after distribution and basically tells you how you ranked among other similar snacks and what their customers thought of the product," she said. "You can't pay for that kind of raw info. It was extremely helpful to know and understand where we stood as a brand both from a competitor standpoint and an actual consumer standpoint."

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All of this data is also useful for another goal of SnackNation: to create the Netflix of snacks, a platform that can recommend different products for specific occasions, Kelly said. Those can include "healthy movie night, healthy late night munchies, drank too much the night before and just want to eat snacks to make me feel good in the morning, skipping lunch, and after-school snacks for my kids that I can also eat as an adult."

To achieve that goal and continue growing, however, Kelly said his company always has to think ahead.

"As an entrepreneur you've got to be fucking nimble. You've got to be agile. You've got to realize that every day something is new and you've got to have plans and forecasts, but you've got to be ready to move away from them," he said. "Once you come to grips with that and you accept it and you realize that you're never just going to have made it -- it's pretty cool."