A wing and a plan: Monument man's hot sauce takes off

When total strangers bang on your door asking for your product, maybe you’re on to something.

The knock would come. Mike Schultz would answer the door of his Monument home.

Could we get a gallon of your spicy sauce?

“It was like moonshine,” said Schultz, whose years of perfecting his personal recipe had become local legend.
 “They were bringing plastic buckets over: ‘Would you please make us a gallon or a half gallon? We’re going out of town for a banquet or a barbecue for a family reunion.’ It got to the point where we were doing small batches, but we made maybe a total of 70 to 80 gallons.”

Finally, with the curtains reeking of garlic and the family dog in a state, Schultz’s wife put her foot down. That’s when the tech business-development manager began to develop a business of his own: Sedulous Foods LLC, maker of Schultz’s Gourmet Hot Sauce and a growing variety of spices and rubs derived from his original recipe.

On the market for just a few years, Schultz’s today can be found on prime shelf space in 84 Whole Foods stores in 17 states, high-end butcher shops, Borriello Brothers pizza shops in Colorado Springs, and other outlets. With the help of the Colorado Department of Agriculture’s “Colorado Proud” program, which promotes Colorado-made products to consumers inside and outside the state, the hot sauce is getting some tastes across the country and some international markets. Schultz plans a  West Coast rollout this year, and national distribution and $50 million in sales by 2014.

At more than $7 a bottle, the sauce won’t have to fly off the shelves as quickly as $2 Tabasco and other hot-sauce leaders. Besides, with more tang than heat in his recipes, Schultz isn’t going for hot so much as he’s going for flavor and for a “super-premium” niche he’s trademarked as “Health Helpful.”

While it would be a stretch to claim Schultz’s Gourmet Hot Sauce will lower your cholesterol, Schultz says his products are loaded with fresh natural ingredients, lower in sodium than alternatives, free of trans-fats and “expensive as hell to make.” And in the long run, he said, he’s less interested in selling jugs of the stuff than in getting restaurants and delis to include it in their recipes — something Whole Foods does with its potato salad and chicken wings.

“If you want to be successful, make it part of a recipe,” he said. “That’s what we’ve built our business plan, out of the gate, on.”

So how does a budding sauce superstar start along the road from the kitchen to the boardroom, making a multimillion-dollar pitch in November to a Colorado Springs-based venture-capital group?

By feeding the local football team.

With three sons playing for the Lewis-Palmer High School Rangers, it was only a matter of time before the elder Schultz drew the duty of cooking for the team on their traditional Thursday night barbecues. He served up chicken wings with the sauce he had been tinkering with, and a nine-year addiction was born.

“They were a knockout,” said LPHS football coach Tony Ramunno. The team, he said, “would eat those things like there was no tomorrow.”

“Other parents were worried about holding up to his wings.”

Maybe so, but they’d put aside their pride to show up on the Schultz doorstep, offering to buy a tub after the youngest Schultz boy had graduated and Mike no longer was hosting pregame cookouts. Opportunity was, literally, knocking.

Having cashed out of the Springs-based data-storage company Optika Inc. and after raising $7.2 million to start a cyber-security company called Innnerwall Inc., Schultz in 2005 turned his sales and marketing expertise to his own concoction full time.

“I went from one startup to starting this company” he said.

The first batches of sauce were sold in gift baskets and through an online consignment shop. Then a Monument cafe, the Coffee Cup, started serving it. Then a high-end meat shop in Denver. Whole Foods invited Schultz to a vendor conference, where he handed out bottles. Two weeks later, Whole Foods placed an order to stock Schultz’s Gourmet Hot Sauce in six Colorado stores.

Like a rock band touring to support a new CD, Schultz and his family hit the summer Whole Foods demo circuit, dishing it out across four states in the summer of 2007.

That’s where Simone Cormier, research and development chef for Whole Foods’ Rocky Mountain region, got her first taste. She was incognito, a worker bee, dumping ice into the vendors’ coolers. She grabbed a chicken wing. A few weeks later, Schultz’s sauce was bound for more than 30 Whole Foods stores throughout the mountain region.

In 2007, Schultz’s Gourmet Hot Sauce earned a “Best of the Springs” citation from the Gazette.

Two ingredients make success in this business, Schultz said. One is the secret recipe. The other is the equally guarded distribution relationships that get the product to stores and restaurants.

He said he’s “bootstrapped” the company about as far as it can go. “We’re in the expansion phase now,” he said.

“I’m looking to take on a handful of executives.” Specifically, he said, he needs someone with strategic relationships with restaurants. And another with distribution savvy. Another with exporting expertise. And cash.

“Now it’s people and money,” he said. That’s what brought him in front of Peak Venture Group in November. In early December, he was meeting with potential investors.

Expansion, if it comes, would mean wider national distribution and, eventually, purchase of a production kitchen to shift manufacturing away from third-party kitchens hired during their slack times to produce the sauce.

Even as the business shifts to a new trajectory, Schultz says he will continue to enjoy the newfound company of foodies.

“The people in the food industry are here because they love what they’re doing,” he said. “There’s a passion associated with what they’re doing, all the way up to the executive level.” The example that sticks in his mind, he said, is how a bigwig like Cormier was schlepping ice for vendors, helping them get their first big break.

“Twenty-three years in tech, I thought I loved what I was doing,” Schultz said. “But until I started this, I didn’t realize it wasn’t a passion like this is.”