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Jake Karls, BA’16, exudes the enthusiasm that one would expect of an entrepreneur. But the co-founder of Mid-Day Squares is not playing a part. He is a true believer that their chocolate bar will become the modern-day Hershey’s bar.
After the failure of his clothing brand, Karls was invited to join Mid-Day Squares by his sister and brother-in-law, Lezlie Karls and Nick Saltarelli; to bring his enthusiasm to the fore of a brand with a big vision. From instituting weekly therapy sessions to showcasing their entire journey (the good, the bad and the ugly) on social media, Karls and his co-founders took a unique approach to build a brand that has sold $8 million in chocolate bars.
In this episode, Jake Karls joins Ivey Faculty Larry Plummer to discuss the rise of Mid-Day Squares, covering a range of topics including the importance of authenticity, various funding sources, the complicated world of retail and how he balances family and business while forging a chocolate empire.
The Entrepreneur Podcast is sponsored by Connie Clerici, QS ’08, and Closing the Gap Healthcare Group, Inc.
Transcript
The Entrepreneur Podcast with Jake Karls
Your listening to the Entrepreneur Podcast by the Western Morrissette Institute for Entrepreneurship Powered by Ivey.
Jake Karls, BA’16, exudes the enthusiasm that one would expect of an entrepreneur. But the co-founder of Mid-Day Squares is not playing a part. He is a true believer that their chocolate bar will become the modern-day Hershey’s bar.
After the failure of his clothing brand, Karls was invited to join Mid-Day Squares by his sister and brother-in-law, Lezlie Karls and Nick Saltarelli; to bring his enthusiasm to the fore of a brand with a big vision. From instituting weekly therapy sessions to showcasing their entire journey (the good, the bad and the ugly) on social media, Karls and his co-founders took a unique approach to build a brand that has sold $8 million in chocolate bars.
In this episode, Jake Karls joins Ivey Faculty Larry Plummer to discuss the rise of Mid-Day Squares, covering a range of topics including the importance of authenticity, various funding sources, the complicated world of retail and how he balances family and business while forging a chocolate empire.
Larry Plummer
Let's start off with your company. Let's talk about the origin story. Where did the idea come from?
Jake Karls
Yeah, I love that. So I'm actually the third founder in so I actually didn't create the product. I joined right before launching and we'll get into the story. But it all started with my sister. She's the creator of the Mid-Day Square, and she was making a chocolate snack for her husband, Nick, my brother in law, who is addicted to chocolate every day, you know, midday, you'd have like a Lindt bar, you'd have like another chocolate bar, chocolate protein bar, and he had an addiction. The problem was is he would have these snacks, and you get this crash. You'd have this like weird crash right after it. And he was still hungry. So one day he complained he came home he complained and she's like, I can make you something that's just better for you that tastes delicious, but uses like clean ingredients, you know, plant based proteins, all this stuff because she's a foodie. And she made this concoction which is now the Mid-Day Square today. And he brought it to his office and everyone freaked out. Everyone was like this is incredible. He wasn't a software company at the time. And she had a fashion business at the time. This was in 2017. And long story short, he ended up selling out of his company and she ended up closing her fashion brands. And she was still making this snack for him just as a snack to have every single day. And they wanted to do business together. But they didn't know what that business was going to look like they loved food but they were not looking at this chocolate snack. As the business they were looking at the morning oat category. They were looking at doing some online things in the dollar store for food. It was all this other stuff. But this and one day out of the shower, my brother Nick came out of the shower, and he read a report that showed that real chocolate was growing at 44% year over year so darker chocolate above 55% Cocoa mass made with cocoa butter as the base was on a tear like the Lindt bars, the dark chocolate Lindt bars, and then the vegan protein space - so any plant based proteins was growing at 36% year over year. So it clicked in his head. He's like, Oh my god! Leslie's making a baby of these two categories with that chocolate snack. So they went to reach out to McGill. McGill University has a great food science program. And they helped us commercialize the product. Then they approached me six months later, literally six months later, they're like we need a third partner. We need you to come in and we need you to take this product and blow it up; build community around it build excitement, build community hype people up. And I was like, "hell no, I ain't joining this food and beverage world. It is the most boring world, in the entire industry... in any industry." And I was like, if you go to the grocery store, there's 40,000 products, mostly dominated by seven conglomerates. And most importantly, none of them have emotional connection to the product, you just eat it, you buy it, or you drink the products, and you have no connection, you don't want to talk about it, you don't want to share it with people, all you care about is just consuming it. So I said, it's not gonna be fun for me to do that marketing or that hype community building, because it's a boring industry. And they spent two months Larry trying to convince me to join. Finally, I caved because I was just in a weird phase in my life, I didn't know what I wanted to do. I knew I wanted something. And they were going to allow me to just be Jake, like, be me and do what I love doing. And they were going to take care of the operations, the business because that's my weakness is the ops, organization, the management, they said, go out there and just build noise and build the brand and be the face. So I joined August 1st, 2018. And that moment, I said to my partners, I said, it's very simple. We're going to make this industry fun, we are going to show the good, the bad, the ugly of entrepreneurship, we're going to share everything and I mean therapy sessions, breakdowns, moments of successes, getting into a retail delivering product, things that people don't see on a typical business. I said we're gonna do and I showed them a slide, I'll never forget this slide, August 4 2018. It was keeping up with the Kardashians TV ratings on it. It was shark tanks, TV ratings, and then it was Elon Musk's following on social media growing. And I said if we can make a baby of all these three categories, where we take the drama from Keeping Up With The Kardashians, but in an authentic way, if we take the idea of entrepreneurship, being celebritized from Shark Tank in a deeper way, less than surface, but more go into the depth. And then if we're loud and vocal like a founder like Richard Branson, or Elon Musk, in terms of just being out there and being bold, we're going to create this relatability that these consumers will now feel like they're part of the journey and become fans. And that was the moment we launched Mid-Day squares, August 4, 2018. And the strategy was 'show everything.'
Larry Plummer
So So let me ask this question, though. So you were telling me that the that the food industry was boring? Tell me more about what was going on in your mind. What would it what would have been an industry sector at that time that you didn't think was boring, for example.
Jake Karls
So I felt that food and beverage is boring, because it was it seemed like you know, you go to the grocery store, you pick up your product, you take it home, you eat it, you cook it or whatever you do with it. And there that was it, it was nothing else. There was no like emotional connection to the brands. I feel like a brand like Lululemon you wear the pants, but you feel the community, you know, you feel the energy from it, or it's something like Sephora, when my girlfriend goes into Sephora, she feels like this moment that this emotionality, which she's so pumped and excited, I felt that the food industry was lacking that and I felt like the reason why it was is because everyone was doing the same type of marketing. All they were doing Larry was putting a picture or a billboard or a magazine photo of the product and talking about the benefits just the cost and benefits. Nothing about the actual humanization the front facing of the humans behind it or nothing deep storytelling wise and you have like Netflix coming up and you have all these things that are just hounding storytelling on you. And I yet the food and beverage world was just so behind the cosmetics was so advanced in it, they had these deep connections, you know, you had the entertainment world, you know, colliding with all these other industries, but not with the food and beverage industry.
Larry Plummer
Yeah, so Yeah, cuz that's sort of that's an interesting point. So you were sort of already going in with a preconceived bias. But But let me now ask the follow up question. How's your attitude of the industry changed?
Jake Karls
I think this is revolution, Larry, I think you're starting to see content become a priority and storytelling become a priority for brands, I think the incumbent brands are just going to struggle with that because of the corporate ladder. And you know, the idea of, you know, just judgment and creativity kind of being limited on certain things. So I think the smaller brands are kind of showing that this is how you get to the consumers in today's world, this is how you're going to reach them. This is how you're going to turn them into fans, people that want to cheer you on that want to be part of it, when invest in your company want to buy the product because they love you. And I'm starting to see a lot more of it now. Three years ago, I didn't see any of it. So I think that I'm not trying to say us out of our ego. I think we are one of the pioneers in that space for food and beverage of showing everything you know, we have 37,500 videos, Larry of every moment that happened this business, and we show some uncomfortable things that, you know, some consumers say like, "wow, they're really vulnerable there." I show my therapy sessions with my therapist, because this is what's going on in my life. And that's what's relatable to the human. We don't talk about the chocolate bars at all, actually. And that's what's allowing us to get the fast growth that we're getting. And it's allowing us to connect deeply with the consumer.
Larry Plummer
Yeah, I'm so ... really interesting. There's It triggers a whole bunch of questions, but let's talk about you. So, um, you know, did you always want to be an entrepreneur? Did you grow up wanting to be an entrepreneur?
Jake Karls
Yeah. So I've always wanted to be an entrepreneur, I did try the route of not being the entrepreneur, you know, I went to Western proud I love that school, I love Western and I came out there think I was gonna be an investment banker. And I applied to every single investment bank you can imagine in Canada, and I didn't get any, any, any shots. I didn't get any interviews or anything like that, that's fine. But I started, like, you know, I was wasn't doing that for me. And that's what the important part of this is, is that I was doing it because I thought that people wanted to see me do that, you know, people around me, they wanted me to become a banker, they wanted me to, you know, get a stable job that was going to, you know, fulfill me in terms of financially and in terms of like, whatever I want to do in life. But the truth was, I wasn't doing it for Jake, I wasn't doing it for myself. And I finally realized that entrepreneurship allowed me to try things, these new freedoms with with risk, don't get me wrong, there's a ton of risk in entrepreneurship. And it's not all glorified flowers, and daisies and sunshine, it's actually a lot of highs and lows, deep lows and deep highs. But it allowed me to have this freedom of being me. And for me, that was something that allowed me to fall in love with entrepreneurship, even in the hard times when, you know, my previous business, I had a clothing business that failed, I lost $75,000, I had $0 to my name. And that was like a weird moment where people were like, 'Oh, is he going to do another business and fail.' So that doubt that that, that those moments of like your people around you, or in your corner in life, that love you are just like, I think it's time for you to get a job now, or I think it's time to not do anything, you don't have the resources or bandwidth or money. And it was like those things fueled me to actually want to do it and break the norm. And my goal in life is to build Monday squares up to be a massive conglomerate, a modern day Hershey's, but show people that you could do it by being yourself and being unapologetically yourself. And that's really my big picture in life.
Larry Plummer
Nice. Yeah. Nice to hear. So So here's a question that I would somebody asked me to ask you, which is, what impact did your time at Western have on your journey?
Jake Karls
I loved Western. So Western taught me the biggest lesson of my life. And it wasn't the academic part because I wasn't great at the academic and I wish I was, but it was how to network with people how to learn how to communicate and build relationships. You know, something funny about you know, when I came into western, I didn't know my superpower was you know, I'm a rainmaker and producer. So I bring in the relationships, the network of different things for the brand. And I didn't realize that that was what I was really great at till I got out of Western and my, my brother-in-law was my parents. They said, Dude, you're amazing with humans, you're amazing with community, you did that all your college life at Western, you built a whole network of friends, people that you call family, he's like, that's what you really took out of that experience. And I'm the I'm the first person in today's world to say all the time, go out there and meet people, because it's an opportunity to meet people in the next generation that's going to be doing magical things. And you could collaborate, right? And I think that's what I took away from my experience was the people and the environment of being outside of my home. I'm from Montreal, I live here in Montreal, and most people from Montreal, stay in the realm of going to school in Montreal, so they live at home, I think the experience from Western, they've done a tremendous job in creating that college experience for the individual. So I always promote it, I try, I think I've recruited at least 100 people to go to Western. So hopefully, I can keep doing that.
Larry Plummer
So by the way, we're where we support that. So we've been talking about you but now let's talk about your your, your mixing, you're mixing family and business. And for a lot of people that can be a real struggle. You know, some of the classic examples of families that have had so much struggles are the Bronfman family, for example. It's had it have had a reputation of being a family challenged by their business interactions. So I was wondering, how do you manage that aspect? How do you manage the mixing the family and the and the business together?
Jake Karls
So this is the greatest document I've ever signed was when we started day one. My brother-in-law said because his past business, he had partnerships where he had to, you know, work, the communication wasn't great. So what he said is we're going to see a business therapist, Dr. James Gavin, he's a professor at Concordia actually. And we were going to go together in good or bad times every week for two hours every Tuesday morning, two hours will sit there the three of us to work on deep conversation. So very hard, very hard conversations in a safe zone where we can get somewhere in the conversation and learn each other's ways. Because everyone sees things differently. You can interpret something as red and I can turn something as orange right? It could be both the same thing. It's just you need to learn how to communicate. So we didn't go into business, because we're family and we make this very clear a lot of the time with with a lot of the postings we do. We went into business together because we complement each other skill sets. When you pick a partner. Make sure that the person complements you, you For me, my brother in law is a software engineer. And he's a very organized analytical person, I'm the opposite of that. I'm a person that loves storytelling broadcasting, building community, he doesn't like that. And then my sister is a great executor. I'm not a great executor. So when you put all these, these skills together, you create a tripod, which is very foundationally strong. It's like a cement foundations that have a wood one. And us committing the three of us to therapy has been the greatest, the greatest investment the business has made to date, because without that, we wouldn't be siblings, or they wouldn't be married, I believe anymore. And we would have came out of this journey. Even if we became a billion dollar business, it wouldn't have been a success, because we would have disliked each other. And that type of tension. And the lack of communication is what poisons most businesses, whether it's family, or it's a real partnership in something else, you need to you need to grow your relationship, you need to understand how to work with people how to communicate, and I think there's a lack of that in every entrepreneur, not everyone, I think 80% of 87% of the reasons why companies fail, is because of the partnership, not because of financials, not because of other things. I think it's around the relationship, because tension eventually creates a rift and that rift can damage the entire company, because of vision. And like you said, there's there's countless amount of family businesses that have just failed, or have broken up tremendously from solely relationship.
Larry Plummer
Yeah, so a number of the number of the attendees, I think today are from the Western accelerator. And I would say that actually, a lot of times we spend with a lot of new entrepreneurial startups, we spend a lot of time on partner agreements and partner arrangements and workflow and how you exactly all this stuff. So it's interesting to hear you talk about the fact that even when it's a family connection, you still have to work through the communications and interactions. So I want to stay on this theme about working with family. Do you have any, do you have any rules? Do you have any rules about do so when you're hanging out and like you're going to another family members party, or you're celebrating some holiday, any rules about about interactions.
Jake Karls
So something about us, because Mid-Day squares is has cameras all the time going and we film everything, it's hard to get it out of our lives. And right now with the least in the moment, for the last three and a half years, it's been almost consuming 95% of our time, all three of us. And like I said, without the therapy, we wouldn't be friends, the three of us because there's pressure that businesses or any type of thing you do puts on you is tremendous. And that pressure can create really, really hard times with each other. Right? And, yeah, it's it's difficult, it's difficult, we try to spend time outside of it. But because we're a manufacturer, and it's consistently manufactured, there's always a problem that comes. So we have to deal with it right. And something that we I could tell people that started in business that have a partnership that does work is is really let yourself stay in your own lane, you know, really build your lanes are what you guys are good at, because my sister, my brother in law, and I don't cross each other unless it's mandatory, and there's a danger in the company, we trust each other so much that we'll let them run with something. And we have this policy, where we a lot of the time of if we don't agree with each other, we will still agree to disagree, but commit 150% And that allows for things to be seen through all the way right. So I think we've worked a lot. And at the beginning, it was very difficult for me understand that I had an ego at the beginning of this business. And I had to work so hard to drop that wall and not take things personally, you know, constructive criticism isn't personal. Right? So... It took a long time it takes work, it takes personal growth and no partnerships going to be perfect. And I don't think you could strive for it to be perfect, I think, sorry. You can't be pretending you could strive. But it's it's almost impossible. Humans are human.
Larry Plummer
Yeah. So we got our first question, Jake. So anonymous attendee says, How did you structure the company with regard to the family relationship? Did you go through a lawyer to set up everything to attract VC funding? So how did you handle let's take that into two parts? How did you structure the company?
Jake Karls
So this company was actually structured before. So my past business was Hector. So as my sister is fashion brand, so she actually went at a loss. And we actually took Hector because Nick was already invested in Hector supporting my sister, the fashion brand. And then we turn that into the business today, which is Mid-Day Squares, it is just a name flip. Right. So the company was already created previous. But I think the most important part of that question is, is the VC. So when we first raised money in our first year we raised with Boulder Food Group, and they they were concerned about the family business, actually, at the moment. They were just like, their marriage. They they asked us an honest question and talking about the marriage and for us, they were so happy that we invested dollars into the therapy every single week to work on each other to protect that relationship. And we knew that we didn't want to be part of this journey, unless we came out stronger as a family. So when we started we were best friends. We're planning on coming out even stronger out of this, whether that be in four 40 years, 50 years, 60 years, and still be best friends. Otherwise, the whole journey wasn't worth it. But that question comes up. When we raise money all the time. They my sister, my brother in law worked on some other stuff on the side. But that's something very important to have if you're going to raise money and be a family business.
Larry Plummer
Yeah. And did you approach it? So the second half of the question is, did you approach it as a legal issue? Did you approach Did you talk to a lawyer to set this up?
Jake Karls
They did. Yes, they did. And it's important. You know, I don't like betting on the failure. But I think that sometimes there is a way you should protect yourself on certain things. You know, but so far, it's been good three and a half years later, we're still good.
Larry Plummer
Yeah, exactly. Yeah. Cool. Um, so I, this family thing is really important. Is there any other aspect of running a family business? You know, if somebody asked you look, I'm thinking about going into business with name a family member, like immediate family member, what's your advice? Overall,
Jake Karls
I can tell you that being in business with family is probably the most fun, you know, to celebrate these wins and go through these really difficult times with them, it feels really comforting. Because, again, entrepreneurship is a lonely road, right? I think people are missing being an entrepreneur, you're misunderstood for a very long time until you start winning at a high level, and then you're less misunderstood. So I think if you're gonna go into pick the right partner, don't don't do it. Because it's just family really don't do it. Because it's your brother, your sister, or your mom, or your dad or whatever, do it because they are there to help each other meaning, like, if you're good at this, and they're good at that, that's one way to look at it, that's a good thing. But make sure you have protections in place, from a standpoint of being able to build a relationship together. Because if you don't take this into consideration, what happens when you're doing a million dollars, already, you have VC money, and you have this time ticker in and you're starting to just hate each other, you're just starting to hate each other, it's gonna fall apart, it's naturally going to break down because you're not going to want to be there, you're not going to want to do what you did, you're not going to have the love and passion that you started with, you know, so be very careful.
Larry Plummer
That makes that makes a lot of sense. Alright, so let's pivot back to the company. Let's talk about Mid-Day Squares. So to get to the company, we've got this little bit of the story about how it started. But it's actually grown and evolved quite a bit talking about how you've got how the evolution of the company, you know, gets to the point where you are now selling your product in Canada and the US walk us through that evolution.
Jake Karls
Oh, it was crazy, Larry. So August 4 2018, we were making the bars in their condo kitchen. So we were hand making these bars literally rolling mixing, it'd be from 6am, we'd prep them, we'd go to about 5pm, making about 100 to 200 bars maximum a day like that was the max we could do. And then we would hand deliver from 5pm till 10pm around the Montreal region to because we want to save money on shipping because Canada Post is expensive to ship refrigerated product. And I remember we'd go meet our customers, we'd actually go get to sit down with them and meet them see who they are. But we had a sample program where people could buy the bar for 25 cents, all we wanted was their credit card so that they actually showed commitment. And it wasn't just someone that's at Costco just trying free stuff, right. And what happened was, things start to explode, they started to get this like vibe, where they're like, this brand is just so humanized. So they love the product, the product had a product market fit, it was a product that fit something that was needed in the market at the time. Still is. And we would do these crazy marketing initiatives where we were sharing, like I said, The Good, the Bad, the Ugly, so on media, you saw this behind the scenes aspect and then you love the product. So it had this wildfire spread. Next thing you know, you had a coffee shop opened up, you had a juice bar at a gym yet a natural grocery store, then a bigger grocery store and we went city by city. So we went Montreal, we built it up, we basically followed the consumer wherever they went. So if we found out that Larry was our consumer and his lifestyle was our consumer, we would say where does Larry go, he goes to Starbucks in the morning. And he goes to, you know, Farmboy in the afternoon, and then he goes to the at the end of the week goes to Loblaws we would picture your line and follow wherever you go so that when you see the product, you're seeing it everywhere, and then getting hit with it online, you are literally being reminded about it all the time. So that's what allowed us to do. It is kind of like the Facebook strategy that they did college by college, but we did city by city and once we had the awareness, the trial and the amount of distribution we'd go to the next city. The problem wasn't scaling this product, Larry was very difficult. So making them in the condos one thing doing it by hand, you know, doing it by mixing and all that stuff is very tiring. My sister got arthritis from it. It was very stressful. So we moved into a small kitchen and we had eight staff everyone was making the bars with a little bit of machinery here and there. And then most food and beverage brands go to a co-manufacturer to scale the product from you know, in your condo to you know, actual real business. And we went to 26 of the best bar manufacturers in North America and Europe. And each one of them said that we they cannot make this product the way it is. They have to change it for their machinery, so we use cocoa butter as a base and the machines couldn't solidify that, right? So 24 to 26 said absolutely not. And then to said that they could potentially make this product. But the idea was that we'd have to invest three to $5 million into their facility, so that their engineers can go figure out how to build these machines that are custom for this line. And I'll never forget my sister came home from the last co Packer she visited. I think it was in Germany, I'm not sure. And she came back and she said, Nick and Jake, we are going to build our own facility. And Nick and I just looked at each other and they go, we have no money in the bank account, we have $0, we can't go do this. Yes, we have, we have a bit of, you know, you know, we have a bit of traction, but to invest $3 million into a facility that, again, doesn't have a guarantee of working, she's like, Let me deal with this, I will take care of it. And next thing, you know, two and a half years later, we're in a facility fully automated here in Montreal, it's like the modern day Willy Wonka, the government find debt financed it called investment Quebec, which is, which is the agency, and it could produce 90,000 bars a day, Larry 90,000, with a way higher margin, with, with with with with almost 0% Waste were close to zero. And it was just crazy, you know, building this place, you know, again, when you build machinery, that's custom, you're not allowed to test drive it like going to test drive a car doesn't work like that, you have to put the downpayment down, they build it, it's all on theoretical. It's all on the engineers coming up with the theoretics and modeling through the computer, right? And then it had an 88% chance of working and we still took that risk. And that's what entrepreneurship is about. And it worked. Thank God, obviously, we had to fix certain things. And, you know, some things didn't work perfectly. But you know, today, you know, we were proud that we chose manufacturing, it's it's been probably one of our, you know, I don't understand how most brands don't use that as their core competency, because we can control supply chain everything through our own facility, not through not dependent on another facility.
Larry Plummer
Yep. So I want to go back to this thing where you were making 100, maybe 200 bars a day, I would assume that that would be a particular challenge, because not only are you not making that many bars a day, but you're also not out doing sales, you're not doing strategy, you're not building materials, you're not building out the website, you're just basically making. So I would think that that was kind of a big hurdle. Are there was that your biggest hurdle in the early days? or were there other big hurdles? What were some of the big hurdles you faced,
Jake Karls
the biggest hurdle was building the facility. So you're right, doing 100 bars a day or 200 bars a day selling that 25 cents a bar is not a feasible business. You're you're losing a ton of money. And and what happened was I remember my sister saying, my sister and brother in law saying are your one goal is to hit $250,000 in revenue run rate. And I thought to myself, There's no way we're getting there. That's not even possible. I said, like that can't happen. We ended up blowing paths in the first three months. So that's when we knew we had a real business learning that it had to scale. And the scaling was the priority, not fast growth, we didn't care to grow faster than that. We cared to get the operation down, packed cement down and a team built. And that's where we're at right now is you know, now obviously, we've grown out to the US. And you know, that's we're having some great success there. And but at the end of the day, right now, we're focused on finally building out the foundational team to now operate the US because the US is a different, it's a different animal. It's, you know, I know you're from there. It's one of the greater consuming power places in the world. But yet, there's too much opportunity. And then you go and you spread yourself very thin. A lot of Canadian companies go spread thin and then have to retreat because they spent all their money. They didn't know what to do. They went all over the place. We're very narrow focus. We're building brick by brick in the US and it's working. And instead of taking on our national retailer, right off the bat, we took on regional players, regional players, regional, regional, regional, kept building the noise built our online game up to get it up to now it's at 65% of our D2C is coming from the US. And then once we see the region has a lot of like, noise from in terms of social media or from from online purchases, we then open a retailer up there. So we strategically do everything, it's not just madness. I think that a lot of people think it is because we show all this crazy fun dancing, all this crazy stuff. But it's everything's strategically done. And we do have venture money in here, but we don't want to sell our company so it's even more interesting.
Larry Plummer
Awesome. Let's turn to our next our next question. So test a Tessiana, hopefully, hopefully I got that that right. Hey, Jake, how would you recommend new brands entering the CPG space make the same amount of noise as MDS but remain authentic to themselves in their brand? In other words, do you think there are many ways to do what you guys have done in terms of drawing attention? Being revolutionary, and making it fun, intriguing, without just copying what you guys have already done?
Jake Karls
What a question. So yeah, There is a way to make noise. And all I can tell you in one sentence is: find out what's authentic to your brand and tell that authentic story. So for Mid-Day Squares, the authentic authenticity was to show the good, the bad, the ugly, and I mean, like really crazy stuff. That's not authentic to everyone, because it won't come off natural to everyone, because maybe they're not comfortable doing that they're not and it will come off cringe to the consumer. But if you're a sports product, let's say you are a brand that's doing a sports drink, and you're not telling the story about the sports or the athletes or stuff like that, and that's not right, find out what is your authentic part and go 150% all in. What I could tell you to do, though, is invest in a media team, I think that's an important factor going forward is we have our marketing team has built in a performance marketing team, which is focused on the paid ads and all that jazz, the e-comm side. And then a media team, which is just content creators, it's literally videographers, editors, photographers, creators focused on telling a story not focused on traditional marketing, and it's working. And I think most brands should adapt that strategy. Rather than take the traditional route of what's working for the last 40-50 years. And it's a new world, it's you know, we have media, with within a snap of a finger, you go on your phone, you have 1000s of pieces of content. So you need a strong media team. And I think when we first invested in that media team videographers stuff our investors, like, are you crazy to spend half a million dollars on salaries and creators? And we're like, No, this is this is our DNA. This is the blood this is the this is what's driving the awareness that this is what drove them to our brand new investors. And then they started to understand that yes, this is what's authentic to you guys. So I think that's the answer.
Larry Plummer
So So another question that we've gotten, this is a good one. Um, so it asks a question about how you financed your manufacturing plant. But let's I'd like to hear a little bit more about the financing aspect of your story. So before we answer how you did you finance the manufacturing, let's talk about how you got. So what are the rounds of funding you went through, I'm assuming you did a friends and family round, like most.
Jake Karls
So we actually didn't do a friends and family because my brother-in-law had a success in his previous business they sold, he sold his business he had a bit of capital to play with. And he actually took the risk on all of it and use it for him and my sister. And then I had a little bit saved up over the years of basically, I used to fitness train people every summer instead of get a job. And I made a lot of cash doing that. So I use all of that we put that initial into get it started just to get the product market fit out there. Then, after seven months, we started having like real traction, like I'm talking like that the numbers were flying. And that's when Boulder Food Group, that food venture fund reached out to us actually, they were very bold, they basically sent us their portfolio and sent us a handwritten letter saying, you know, we want to fly down and come meet you guys. And they did. And that was a whole process. And they were actually willing to take a risk on us. Even though we had no facility. We had not no scalability, they were like you guys are doing something different, your products innovative, we want to find you on this. Here's the problem. We had to build a facility out that money wasn't going to build the factory, our growth, capital doesn't go to the foundational core that that stuff. So we reached out to Investment Quebec, which is a great agency here in Quebec, that helps fund manufacturing processes are technology innovation, it's debt, it's a loan, but it's a very inexpensive loan. So for them, what they do is they put down the money for the machinery, and then you pay back, you know, ours was 10 year payback with a very low interest rate, which was extremely feasible for any business. It's almost like free money. And the idea is they want to stimulate business in Quebec, so they, you know, jobs, business and taxes, right. So we took that on to build the facility, we ended up getting that it was a whole gruesome project project, because you need to show at least a million dollars in revenue, at least our case was, so they need to see some sort of traction, which not every business has in their first year, right. And then number two was we had the growth capital to go invest in the media, the product innovation, and the storytelling, so that those two came alive at the same time we raised our first round of financing was a $2.5 million round we raised that allowed us to get to our basically into our next phase, which we then raised more money in in in January 2021. We raised four more million dollars from actually an alumni from Western named Kiva Dickinson, he took a chance on us from His fund called Silva ventures. And we added some other funds in there as well. Western alumni actually, and that was to purely go out there and win the US that was focused on getting it started and traction building there. So the food and beverage world is very expensive. Going into retail is extremely expensive, Larry, it costs money to sell product in there, you have to pay for the slotting fees, you have to pay for the promotions, you have to drive people to the store, you have to sometimes take product back, your distributors charge you an arm and a leg. There's a lot of hidden fees that people don't realize. So that's one thing but then we just closed the round. As of yesterday, our third round of financing. We just raised 10 million again venture fund It's been called City capital. And the idea is, that's out there to go build the next foundation to drive us from $10 million to $100 million in revenue over the next five years.
Larry Plummer
Yeah, so that's really good. By the way, I want to just interject here that I really liked the fact that you, you became aware of, of public sources of capital, where for manufacturing, because that's a that's a not an A lot of times when we work with with startups, they're sort of surprised a lot of folks are surprised to find out that there is actually sometimes public publicly available money for building plants. But remember, for the all the entrepreneurs on the call, is, if you're in the position of potentially creating jobs, check with your local economic development authority, the London Economic Development Corporation, for example, Hey, I'm gonna build a plant. That's where you go start, you got to talk to them? Yes, they're gonna be a little quick, you know, little on the edge because of your status as an early startup. But that doesn't necessarily mean they wouldn't be interested in providing you a loan, particularly if you can demonstrate like you guys, did Jake. Develop such traction in interest in the product?
Jake Karls
Well, you know, Larry, also, you know, I think it's very important to reach out to your local governments, you know, even for us in 2024, we're building a second plant. In the US, we're looking to build in the US. And I've already reached out to the Missouri government, state government, Ohio State, Texas State, you know, Indiana and Wisconsin, they have economic development arms, which they actually go help you with the entire process. Sometimes they can inject capital, sometimes they can help you with staffing, tax credits, but you got to reach out, it's a process, it takes time, it's not a month long, it's it could take a year could take a year and a half. But you have to ask, you have to find out and at the end of the day, if you're stimulating, like you said jobs, if you're stimulating business, and you're paying taxes in certain areas, they want that they really want that everyone every government is trying to help get more jobs in their places, right. So for us, we're choosing those states because they're in the middle of the US. So strategically, from a logistics standpoint, that's why we're doing it. But I think that any entrepreneur out there not just for factory manufacturing, but for if you have technology, innovation, use that if you have marketing, maybe they have a marketing at Canada export as a Canadian export thing. You know, there's different, there's different things you could look for, but don't shy away from the public side. It's a lot longer process. But if you get it, it's worth it.
Larry Plummer
Yeah. Yeah. You know, it's funny, because I was driving on a trip recently, and we were on an interstate in Ohio, and drove past a big sign that says free land to build a manufacturing plant. So some of these places are that hungry for work, and trying to diversify the local economy. Alright, so let's get on to the next question. Jenny asks, first of all, she says, Thanks, you so much for being here. What recommendations do you have for small businesses with regards to marketing? Specifically, what would you recommend as a great use of money and resources early on? In my case, my business is for an online wellness service.
Jake Karls
Well, thank you, Jenny, great question. I want to check out your online wellness service up right in the chat, that would be great. I could check it out. But I think marketing, when we first started, we had no budget, we had no budget to go spend. So what we did is we had three phones. And for us, we just use that and filmed it. And it was an uncomfortable thing at the beginning. Because, again, filming yourself selfie style. And doing those weird things at the beginning, when you don't do that often is strange. But we decided to commit to it. And we committed to it, we started just sharing and again, the rawness It was what was relatable is relatable to the new age consumers. They want to see raw stuff, they don't want the perfect edit stuff. They don't need the agency campaigns. Obviously, as you get bigger, you do bigger things and stuff like that. But start small, start very small. And what's true to your storytelling, so authenticity, find yours again, let me bring this up again, find what's authentic to your wellness service, and tell that story naturally. Nothing crazy. You don't need the picture perfect. People actually appreciate just the hard work and the effort. And I think a lot of businesses wait for that moment of perfection. And that's where the failure actually comes be bringing resources and capital.
Larry Plummer
Yeah, I would second that that would in coaching entrepreneurs, that would be a big one. The other thing too, is you just did something that I really love, which let's me ask one of my favourite questions. How many times have you been surprised at how open other entrepreneurs are in helping you in the early days?
Jake Karls
So surround yourself with people that are bold, in my opinion, is the greatest thing and you know, a guy named David Cynamon who's, who's one of our investors. I asked him for help early on and I didn't think he would give me the help. I didn't in my head. I was just like, he's a great entrepreneur. I don't know if he'll help me. I was nervous. I was insecure. I was weirded out by it. I knew his sons from Western actually. And I was friends with them. And I was like kind of shy about it. But then I started asking and that was the moment it was. It was a moment in time. because you're one where I realized, there's nothing wrong with asking, and you don't need to be embarrassed, and he gave us so much help, he helped us so much, Larry, and he wants to do it genuinely from the bottom of his heart. And then we wanted him so badly in the company that he ended up coming on our board. And it just goes to show that from that moment on, I am not shy at all and asking anyone for help, because a lot of entrepreneurs out there want to help other entrepreneurs, because they've been through the roller coaster, the roller coaster is lonely, it's hard, it's stressful. And all they want to do is actually really help people that are going through that right now. And I for me, even I go to colleges all the time to help students realize that I'm here as a resource. I whenever my phone is available, I get on the phone with anyone starting a business, Larry, because at the end of day, we need each other to keep growing.
Larry Plummer
Yeah, and that's, that's exactly why I knew that would be your answer, because that's exactly the pattern. You see, I think a lot of novice entrepreneurs are sort of like, I was amazed at how much information people will be willing to share with me. In fact, this person actually shared the things they think they're doing wrong, and they're where they're making mistakes. I mean, and I think it is because there is very strong sense of an entrepreneurship community that sometimes I jokingly refer to it as you've jumped off a cliff and you're trying to build the airplane on the way down, and you you respect the fact there are other people who are trying to do the same thing, you know. So there is that sense of community, right?-And I think let me share a quick story. You know Hershey's. We're big fans of Hershey's brand, you know, my whole, you know, my whole life, I eat Hershey's, I still eat it sometimes and shout out to her she's for creating, you know, product for such a long time that I've eaten. But, um, you know, we went through a little bit of a thing with them. And it's gonna be an interesting story here because we wanted to help entrepreneurs. That was the big vision of why we share this journey. So basically, it started as last year we were in talks with them, they wanted to actually acquire Mid-Day squares. Hershey's, Hershey's from Pennsylvania wanted to acquire Mid-Day squares. And we actually rejected politely, rejected the offer. We built a very strong relationship that relationship them, they love Mid-Day squares, they love the brand, they love the product, they have no problem with it. And then two months later, we start to receive seasons assist from them on packaging on color, they on the color orange, they said we cannot use that anymore for our peanut butter. And it was like it was all perfect and find that when we were talking to them. And then two months later, they were just they came at us. And what ended up happening was, they came at us also with 40 pages of like, or 32 pages of customers mixing up midday squares with with Reese's saying, like, Oh, our customers are going to the store thinking they're buying a Reese but taking home a midday square. And we're just like, this is like bogus at the end of the day. Like even our legal team was like this is bogus. But we because we document everything, Larry, we ended up showing the storyline of when everything happened to how we had to change our packaging, what we went through as an emotion, the roller coaster a feeling of have to change your packaging, because illegal and you can't afford the cost of going to court if you have to. And we shared that with 42 hours of footage, we put it down to six minute video. And we decided to share when even our legal team chose not to. Because there is moments in there that you know, are there's vulnerable states and stuff like that. And what the goal was, was to show people, this is what some businesses have to go through. You're not alone in there. Here's how we feel. And let me tell you, Larry, the amount of entrepreneurs that reached out to my brother-in-law, my sister and I was in the hundreds that have gone through this or are going through this, they needed help. And we start to become these coaches, even though we're not coaches. And I was just like, I can't tell you what to do. But I can tell you what we did. And they're like, it feels so good to see people doing things and wanting to help and I was like this is just an ecosystem if if my competitor needs help, I actually help them. At the end of the day. I have a friend in the US they're a competitor product bus him and I talked the CEO talk all the time. And it's not there's nothing negative about it. It's like we share ideas. And I think that that's a newer way of thinking rather than Okay, worried about your competitors stealing this, this this that I think it's just a different way and and entrepreneurs help entrepreneurs and people help people. Yeah, yeah, no, I would agree that's, that's a pretty common Senate sentiment, no matter which industry, you're starting the only industry I think that people get a little more concern is around artificial intelligence. But that's because your ability to protect your intellectual property is trickier. In that particular case, yeah. All right. Here's more of a fun question. What was your favorite chocolate before MDS? Was it Hershey's?
Jake Karls
No, I actually like Coffee Crisp. I think it's Nestle coffee Chris is one of my favorites. I eat it once a month now I just eat it like once every two days. How it's once a month but I just love the I love the yellow color i love i don't know I'm again. I don't care chocolate companies. I'm big fans of a lot of them and the nostalgie fires me up.
Larry Plummer
Do you ever have a day where you're like, if I see another chocolate bar, I'm just I'm not gonna be able to handle it like, did you suddenly like have to start eating strawberries?
Jake Karls
So yeah, you know, it's funny Larry, I'm actually allergic to two of our flavors. We have three flavors. I'm allergic to cheeks. I'm allergic to nuts and peanuts, like I'm anaphylactic. So I can't have the other flavors but we I get to taste tests all the time here I'll show you something on you know, these comment all the time. So it's under if you can see on the screen so I'm doing the different ones I'm gonna fudge the one I'm about to have. So I actually don't get sick of it, I get excited. And if there is a product that that we are working on that doesn't have nots, I get even more jacked up. But to me, I've actually learned to appreciate the taste of chocolate more I used to be a milk chocolate person. Now I've learned to appreciate darker chocolates. And you know, I really realized it's an art it's an actual art, chocolate the way things taste. It's so sensitive. The way that you have to have it conch it's a crazy thing that I learned a lot over this last three and a half years on it and and I appreciate other brands that are doing really great products now chocolate space as well.
Larry Plummer
What was the one thing you what's the one that you'd like to pass on to an aspiring entrepreneur? Yeah. Can you tell somebody in the midst of the journey?
Jake Karls
Yeah, be unapologetically yourself every single day, get comfortable with also being uncomfortable. That's really where greatness does come is when you're put in uncomfortable zones. I'll never forget. Someone told me my partner told me this thing about outliers. And he basically said a professor showed him once on a on a graph. He said, If you statistically put in inputs that are that are average, you're gonna get statistically an average outcome that comes from a line that will go straight, right. But if you put in outputs that are outliers, good or bad, you're either side, you're not going to get a straight line, right? So you'll at least see something on the outside, you will be at the top or you'll be at the bottom, but at least you're not in the middle. And I think that that's something that everyone should do. And I'm not saying don't balance your mental health and stuff like that. That's really important. You should, but I think from an outlier perspective, make decisions that will be outlier. Because when you're on the side of the majority, that's usually when you're on the wrong side. Because the end of the day, that's what everyone's doing, right? So for us, every decision we make, that's a greater decision. That's not just like, oh, what pencil am I going to use or anything like that? I actually look at the majority. I'm like, where's the majority? And I actually go the opposite way. Sometimes it's wrong, Larry, and it's the exact outlier opposite, but I'm okay with that. And I've accepted that. But when it's right, it's a home run.
Larry Plummer
Yeah. So you you've mentioned this idea of the the roller coaster up and down several times. Um, tell me about somebody. Tell me an example of one of your highest highs and one of your lowest lows.
Jake Karls
I travel every two weeks Larry for work. And because I'm a rainmaker I get to go meet with all the investors, journalists, you know, PR anything fun, consumers, and I get to experience all of those from every industry in the world, whether that be a you know, like, you know, a pension fund, for example, and you're in these experiences where I never thought I'd be in. So I feel this like a most amazing high. And then I come home. And sometimes I'm stuck in the ops side, which again, I've asked to not be part of it. Oh, actually, I've asked my partners to leave me out of the ops. But that hits my low because having a manufacturing business, there's a lot of problems with building the product, the manufacturing side, there's things that go wrong, it's not perfect, even though straight, perfect, automated lines, they don't go perfectly smooth everyday, it's not the case. So going through that is like these ups and downs. So I travel every two weeks, I have to adjust when I come back to my hometown and learn how to get back into it. But stay out of the ops not even though I'm at the office, stay out of all the noise around me because I'm not involved in that noise. I've no, no, no dependency on that noise. My idea is I need to consistently go make noise for the brand and bring the sunlight in.
Larry Plummer
You know, your answered just segues beautifully into Val's question. So we got a question from about if you if you had to completely start over from square one, knowing what you know now. What would your first step be in the business?
Jake Karls
In hindsight, it's actually tough. I think step day one, what I would do differently is, is probably go through... I actually would have probably tried to mentally want to work on communication first, with my partnership. So I had to do it. I had to sign a paper saying that I would go to therapy, but my brain didn't care to go. So I was in a state of mind where I was like, I don't need it. I'm perfectly fine. I'm happy. I'm all this stuff. I just did it for my partners, I trusted them right. This time around, I would go in and make it a priority for the entire team to have this communication worked on because if communication is strong in an organization that will allow you to succeed because you won't get bogged down in the who's who posts pointing this accountability etc. I think know what I mean, Larry, I think. (I totally do) Well, communication would be the priority number one.
Larry Plummer
Sasha asks, I've heard that when it comes to manufacturing, managing people is a big challenge and is as big of a challenge as managing the machinery technology. How have you Nick and less handled staffing, people management, etc, especially in the context of great the quote unquote great resignation?
Jake Karls
Very good question, Sasha. It's hard. It's hard. We just got our HR director of HR last week, she just started Lea, she's phenomenal. And it's been a big help. We're 60-67 people, I believe in the business. So manufacturing is very hard, because sometimes it turns really quickly, right, the the labor turns quickly, because it goes somewhere else. For us. Our goal is to focus on building a family, a unit here at midday squares, I don't mean it cheesy. I mean, like an actual culture where you come here, no matter what your position is, and you're having the time of your life, we try to make it as fun as possible here and as open as a family as possible. And, you know, I think that has created a great environment to keep labor stronger, and keep it in the pocket longer. You know, but with this great resignation, again, when the pandemic came in 2020, March 2020, I remember we lost 70% of our retail sales the first month, and that was a moment of where we had $10,000 in the bank account. And our team knew that we had $10,000, the bank had our transparency was really important we shared where we were and what the company is going through. And we did not want to layoff anyone. So what we promise to our team at that moment was that they could trust lezzy, Nick and I to go out and make sure that everyone's still working. And we don't have to lay anyone off, even though we lost 70%. That's a huge loss. And what I did was I got all the hospitals on board. And I basically worked with all the hospitals, and I fed all the staff, the admin, the security, that dirt, the doctors, the nurses, and I basically said, let me give it to you guys at cost. So I can keep my team employed. And you guys get to fill yourselves with an amazing product that's very high quality that will keep you going through this busy time. And guess what I think there was like 50,000 bars later, they were the hospitals were taking them like crazy. And it was a really cool partnership that ended up keeping our team in place. And we went on the offense and we promise and we never had to lay anyone off. So I think the trust, the communication, and the dedication to building this business has been a place where we don't have that great resignation here. But we have lost people and we have changed people in and out. But we don't have what other manufacturers mostly go through, which I think is something that we're blessed with.
Larry Plummer
Which is really good, because I do know that there's a lot of startups and smaller, growing businesses that are struggling with that. So another question that we got in how did you decide on where you wanted to be placed in stores?
Jake Karls
So we're refrigerated products. That's a great question. So we're refrigerated product. And that makes it very complex for where you're placed. Because a refrigerated bar is unheard of in Canada. In the US, there's a set built because of a great company called Perfect Bar, they've actually built the set over the last 15 years to have this section for refrigerated snacks. And you have a lot of American brands in there, which is great for when we enter that country, it helps us because it just goes there. In Canada, we had to work our sales, you have to work extremely hard to build a narrative on why it shouldn't be next to eggs and milk because that's where we're getting placed, unfortunately. And it should be next to cut up fruit in the produce section. The problem is with retail I think everyone in food and beverage, you know this is if you're going to enter into the store, don't just accept wherever to go to get in the store. Because once you're in, it's that department or category, they're all in competition with each other. So if you're doing okay, sales and that thing, and you want to be moved, because you know, you could do greatness in another section, the category manager might not give up your product to give it to the next section because they're doing well. So you have to do that internal politics, which is extremely difficult. So for us, you know, we we went into the eggs and milk because we were inexperienced with that and just took it because we want to get in there. Now we have to build these crazy narratives and data analysis is to get us out of there for the greater good of a store even though the store would do better with a product in another section, right? So I think that being a disruptive brand, I think in the US, you're seeing the innovation on retail and merchandising happening where they're prioritizing innovation and disruption of brands in the front of the stores in the right sections. In Canada, you know I love Canada, but they're behind on the merchandise and where they're still prioritizing unfortunately, the Hershey's stuff like that, and I think that's the complication we're having. But again, you hire a great sales team. They work hard and they get it done.
Larry Plummer
So to get into the grocery stores and to navigate some of these internal challenges. I'll put it that way. Do you use brokers? Do you use a consulting firms at all?
Jake Karls
So we have a great broker in Canada and by the way...
Larry Plummer
you might want to sorry to interrupt you might explain a little bit what a broker does because good brokers.
Jake Karls
brokers are necessary in at least the food and beverage space. Here's why at least when you're small because they basically work on all the paperwork for retail. They build your relationship with the retailers, they have a relationship with the buyers, and they basically bring a bunch of brands at once and present To the buyers, so they already are going there. So having that is really important. Sometimes you'll pay between three and six points (percent). So it's expensive, but they're focused on working with you and your promo planning. Because promo planning is very hard and grocery, you have to have months of promo, you have to have all the paperwork done. They do all the paperwork, and they also build the intros. So when you have your interest, then your sales team internally can then deal with them afterwards that you know, and it's a lot of management because you don't just have a broker and sales, you actually have a distributor as well, which is basically a glorified logistics company that picks up the product from your facility and then brings it to the store because stores don't want 150 trucks coming in at once they want from one solidified truck unless you're PepsiCo or Coca Cola, or Red Bull where they have their own trucks going in. So it's, I think, if you're gonna start a food and beverage brand, make sure to price in a distributor 20 to 25 points, and a broker already in your pricing for retail at six points, because if you don't have that, and then you go into it, and you have no choice but to choose a broker to get into Whole Foods or to get a Metro, you can't get in without it. So if you have to start losing money because your pricing was off, it's a whole complication, we were given luckily, information early on from other food entrepreneurs to price correctly. So that's, that's what I could share with people starting a food and beverage brand.
Larry Plummer
Yep. You know, and I think we've actually, so I'm going to ask the question, because but I think you've just answered it, in a way. But let's make sure there isn't another aspect of this. So an anonymous attendee asks, How did you approach buyers to get listed in in retail? Well, you've already given the broker answer. Are there other ways non broker ways that you were trying to approach retailers build a microphone,
Jake Karls
you know, I think a brand or an individual person should build a microphone, you know, I use social media to get messages across. So I used obviously connect with people, but they're all on a platform like LinkedIn, for example, let's, let's talk about LinkedIn, it's very corporate. But if you give a bit of lifestyle, it, the algorithm actually pushes your content up. So I ended up getting, you know, between 10 and 150,000, views organically, and my buyers are always watching or, or buyers in the space are watching. And then they know you. So it's like, it's not a cold reach out, or it's not a cold thing. So when I hit them up on LinkedIn, I say, Hey, I'd love to chat. That's where I get my initial phone call without even the broker just to have depth to get to know the person. So I think if you focus on building relationship, first, make sorry, make noise. First, if you're going to start a brand, make noise that people see. Because if you're not seeing or not heard, no one really cares at the end of the day, unless you have unbelievable numbers in terms of your data. That's the way to get their attention. And then and then build a relationship that's based on a friendship first, in my opinion, not transactional. Not every relationship could be that way. Larry, don't get people don't want that. But most of my buyers that I've become very close with are like best friends of mine, I go, I don't even talk to them about work anymore. It's just, it's just we go for dinner, we go for drinks, we have a great time. And guess what, I don't need to ask them to do things, they do it naturally, they naturally give us the display for you know, for free, they actually put us in six different spots in the store. They do them in our numbers fly. And they then be allowed to use further experiments for our data for the other stores. So I think that's the cycle, build a microphone, make noise and build a real relationship, not transactional.
Larry Plummer
Yeah, I would totally second that as a startup and working as an entrepreneur. Seeing everything as a potential relationships, so is crucial, because you're going to have, you know, I've seen so many entrepreneurs go through this phase. And I'm wondering if you've had this experience of, you know what, I need to raise my price for you, because I'm having a little trouble making ends meet. But I promise later down the road, I may make ends meet or your supplier may come to you and say, Look, I'm having an issue. I need you to buy less or more or at a higher price. Work with me on it, and you try to build those relationships so that it's not always well, I don't like the price. You're charging me therefore I'm outta here. So I'm wondering if you've had experiences like some of that.
Jake Karls
Yeah. So I think that at the end of the day, I think, you know, we've gone through many crisis's. We've had supply chain crisis where we couldn't ship product for two weeks. And those are the moments where your relationships come into handy because when you just aren't when you're just honest and transparent and a human doesn't want to a human doesn't want to take that that's a problem. But most humans will be human with you. And actually empathize. And when they do they, it makes things easier it what you don't have to lie, you don't have to make things up, you tell the truth, and it actually gets things done. So when we went through our crisis, we had a two week problem. They were okay with it. They didn't ask for discount. They didn't ask for things. He the buyers were just cool with it because they're like, Thanks for the transparency shitty, I get it. And you're not you're explaining what's going on. And I think that that comes back down to the relationship that was built originally. It was like we were friends and friends are usually there for each other and good or bad times. Right? And that's something that I prioritize As my job is to build relationships, even though I'm not in sales with all the buyers, or the, or the managers at the store, the cashiers, the people that are on the ground making the shit happen, I think the problem here is is that people are so focused on pushing, pushing, pushing. And then on the buying side, they're so focused on getting a deal, or it's like negotiation, it's like, that shouldn't be the case. Because if I don't have to negotiate with you, I'll invest more in the marketing and pushing people to your store. If I have to get cut margin by another six to 10%, I can invest that into the influencer is going to talk about going to, for example, your store and bringing people there. So it's like the game needs to be more. Let's start let's have a game more of a relationship. And things will get done better. And I think that old school way of negotiating to the pennies dime is not working.
Larry Plummer
Yeah. Ironically, we got a question that it's for me, which is what's Larry, what is your favorite midday square flavor? And I'm going to turn the question to me and a question for you. My answer is that I actually am on a keto diet. So dark chocolate for me is is fair game. And if you're not familiar with the keto diet, you're trying to keep your carbon tick down low. So anything that involves chocolate and peanut butter I'm in because I peanut butter is like I could I'm literally the guy that can sit with us. You know, I know it's too much information to share it on a panel like this. I could do the spoon in the in the jar of peanut butter happily.The question is keto is a hot trend? Like? How do you keep track of those of those trends? How do you keep track of all that stuff and the changing tastes and preferences of the market.
Jake Karls
The good thing is the palettes are changing for the better. I think people are staying away from the sugary items at a younger age now and moving towards growing up to have better for you products. I think that's something really important. We're part of that revolution, because we're making a product that tastes delicious and indulgent. But it's very clean label. It's very clean, and it's it's healthy, it's better for you, but it tastes really good. And I think that helps us because what ends up happening is no matter what the trend is, it could be keto. It could be, you know, paleo, it could be all these things. We don't focus on each one of them. A lot of brands go launch a product, say, Okay, let's make a Keto product, or let's make a paleo product specific. For us being in the chocolate space. It's such a massive market, Larry, that at the end of the day, it doesn't make a difference. Chocolate is a love language worldwide, you don't even you could show someone a chocolate bar. And they'll smile if they don't even speak the same language as us. So for us, were focused on again, people want clean label ingredients. They want Fairtrade chocolate, they want stuff that's plant based, we stay on those things, we stay on things that don't trend, but stay longevity. And it allows us to touch the Keto consumer, they can have, you know, a portion of our bars, and they get their quick fix in the dark chocolate, but also the functionality of the bar. But we don't focus specific on it. I think that's something important. And peanut butter is our number one seller by double the amount. So, you know, kind of like a healthier peanut butter cup, right?
Larry Plummer
Let's take the last two questions, and I'm going to take them in a slightly different order. What's the future? The question actually is what's the future of manufacturing look like? But I'm just wondering, what's your sense of the future of your market, including manufacturing of your products.
Jake Karls
So from a manufacturing standpoint, we're going to open up a plant in the US in 2024, that we'll be able to supply all the product for the West Coast and the upper side of the US, southern part of the US sorry, and then we're going to every country, we really go to the next one after that will be the will be Mexico, and then we're gonna go to Europe after that. And Europe will have to build factories out there too. Because again, refrigerated product, shipping chocolate, it's very sensitive to temperature, right. And we believe on becoming a massive manufacturing company, we don't want to co-pack at least at the moment, we don't want to touch into any kind of a co-packing or anything like that. We love owning it. Because again, when you own your own manufacturing, Larry, you control supply, the vertical supply chain event, you control the if I want to reform the product, I could do it as of tomorrow, right away, the line can run, or I can test things on really cool things and learn different ways of utilizing when you're co-packing, you can't do that your book for a certain time. It's registered. And that's it. That's all. So that's that but for the future of the business. We want to be a modern day chocolate conglomerate. So right now you have Mars, you have Hershey's, you have Mondelez. You have all these companies. You have a lot of companies starting up that are getting to 50 million in revenue, 100 million in revenue or 30 million revenue in selling it to Mondelez, Hershey's Mars, General Mills or any of these companies. We want to see what it looks like to go past that acquisition era in the sense of what happens when you build this company, 100 million with the brand that it is and then the money that's being regenerated into this company to grow it even more. Can we become the next Hershey's or the next Mars and be a chocolate legacy? That's really what we're trying to do here and I think it disturbs a lot of people because no one's challenging those conglomerates. They're just being swamped in by them.
Larry Plummer
Perfect. Last question we'll take from the q&a. Who is the one entrepreneur, you would say is your greatest example and inspiration? And why? Great question. By the way, Kira,
Jake Karls
Kira, I am going to two part it in a very short format. Richard Branson, because of his he's built a brand about himself, being himself with many different products. So Virgin anything... Virgin Music, Virgin, Airline Virgin, this, but it's not that Richard Branson is that human driving it. And then look at Elon Musk and his boldness as a character. Some people love him, some people hate him. His Boldness has driven a community around him, which ended up going to Tesla, they go to support SpaceX, and it's because of who he is, yes, he has his flaws, and everyone has their flaws. But at the end of the day, he he's very bold, and he's unapologetically himself. So these two characters are truly unapologetic themselves. And that's what I try to strive for. Not to be them to be me. But I think that's the two entrepreneurs I would look to.
Larry Plummer
Yeah, if I can, if I want to interject here a little bit, Kira is is because I get this question a lot myself, is I actually recommend sometimes people have a pantheon of people that they respect for different reasons. You know, so for example, I think, let's pick on somebody who's who's since left the planet, Steve Jobs, would be a great person to emulate for innovation and for that boldness that you're talking about, but was notorious as a supervisor, very difficult to work with. In fact, it's if you've ever read the Walter Isaacson's biography of Steve Jobs. For years, there was an award given to the employee that survived the worst tongue lashing by Steve Jobs. And that's not so there's going to be aspects of every different different types of people that you're going to want to emulate. Yes, for example, Jake, you mentioned Elon Musk is clearly admired and he should be admired for his boldness. But he definitely has. I think the polite way of putting it is his detractors. But there's a lot of stronger language that if those people who are here that would be using, so you want to think in terms of emulating or thinking about people you admire, for different reasons, different aspects of what they do and how they do things. So...
Jake Karls
I think like, I don't know those two characters, like I don't know, you Richard Branson, or Elon Musk? I don't know, the personally, maybe one day I will. But I think they're my mentors still, because for certain reasons, they energize me to do different things, right. So I actually look at mentors, not as people I know, personally, as people I read about, or I learn about, and they're in my corner, because if I'm reading into their books, or what they've written, I'm learning in their brain. How they function, how they act in a certain scenario. I have a friend named Chris Mattman, and he's the CTO of NASA JPL labs. And this guy just fires me up energizes me. I know nothing about NASA. I know nothing about JPL labs. I know that, you know, he talks about sometimes to me, but just his energy fires me up. So I consider him someone in my corner. Right. And I don't I never met him personally, we just talk on social media. But that's what I mean by you. But you're right. You kind of I don't think it's one person. I think you take a lot from different individuals, and you combine it to be who you are, or you know who Larry is, or who Jake is, or who Kira is. And I think that, I don't know. I hope to be more more and more people out there that are going to keep inspiring
Larry Plummer
Yeah. All right. So um, closing thoughts. Jake, what's your mic drop?
Jake Karls
We're gonna be bigger than Hershey's. And that's, that's all.
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