Yasso: Amanda Klane and Drew Harrington

27:41You can spread out with friends, share meals around a table, or just relax in the living room instead of a lobby. And it's not just about the homes. Airbnb experiences have been some of the most memorable things I've done while traveling. In fact, I've had so much fun that I decided to host my own original Airbnb experience in San Francisco this month. It's designed to help you think about your next big move in your career or in your life. If you want to check it out, head to Airbnb.com slash guy. Ever had one of those afternoons where your brain just quits on you? You're sluggish, hangry, maybe even a little foggy.

28:22What if it's your glucose? See, glucose is an energy currency for your mind and body. When it's stable, you're on point. When it crashes, so can you. That's why Lingo is so interesting. Lingo is a glucose wearable designed to help you connect the dots between your glucose and what you eat, how you move, and how you feel. It shows your glucose data in real time. Instead of guessing, you see the impact of your choices. Maybe that healthy snack is actually sending your glucose on a roller coaster. Or that afternoon walk is the perfect stabilizer. It's about unlocking your consistent best all day long by truly understanding your body's unique responses.

29:02Get to know your glucose and learn about how to build healthy habits that work for you with Lingo, designed for you by Abbott. Through November 30th, use code GUY10 on HelloLingo.com to get 10 % off a Lingo plan purchase, one use per customer. This offer cannot be combined with other offers, U.S., Puerto Rico, and U.K. only. The LingoGlucosystem is for users 18 years and older, not on insulin. It is not intended for diagnosis of diseases, including diabetes. Individual responses may vary. This episode of How I Built This was brought to you by Square. In Square's new series, The Way Up, I sit down with six local businesses.

29:43I chart the entrepreneur's journey, the hurdles and the highs, and how Square played a part in helping the business grow. Think about a thriving local business you admire. Maybe it's a great boutique with the softest towels or a local cafe that has the best scones. Many of these businesses trust Square to help manage their operations and grow. For instance, I absolutely love talking to the father-daughter duo behind Vala's Pumpkin Patch. They started with a tiny plot of land growing pumpkins, and now they make pies and ciders and welcome up to 20 ,000 people in a single day. And that growth, it was made seamless by Square.

30:23Hear the journeys of six rising American businesses. Visit square.com slash go slash built to learn more. That's S-Q-U-A-R-E dot com slash go slash built. Learn how Square can help your business on the way up. As a business-to-business marketer, your needs are unique. B2B buying cycles are long, and your customers face incredibly complex decisions. Isn't it time you had a marketing platform built specifically for you? LinkedIn Ads empowers marketers with solutions for you and your customers. With LinkedIn Ads, you can build the right relationships, drive results, and reach your customers in a respectful environment.

31:07You'll have direct access to decision makers, 950 million members, 180 million senior-level executives, and 10 million C-level executives. and you'll be able to drive results with targeting and measurement tools built specifically for B2B. 79 % of B2B content marketers said LinkedIn produces the best results for paid media. And for How I Built This, LinkedIn has been a great resource when researching and contacting prospective guests for the show. Make B2B marketing everything it can be and get a$100 credit on your next campaign. Go to linkedin.com slash built this to claim your credit. That's linkedin.com slash built this terms and conditions apply.

31:52One more thing before we get back to the show, please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And it's totally free.

32:06Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2009 and Drew and Amanda are working on a recipe for frozen Greek yogurt and their early results are actually pretty bad. So they decide to go to one of the most popular places for learning the trade, ice cream school at Penn State University. Yeah, we didn't actually have enough money to sign us both up for the class. So we signed up for one entry into it. And it's in the middle of Pennsylvania in the dead of winter, which is just cold and barren at that time of year. But we signed up under Drew's name because we figured it's a two-day course.

32:45You know, Drew is a name that could probably go both ways because you have Drew Barrymore. And so I went to the class the first day wearing a Drew name tag. And Drew went to the library and was just photocopying books on ice cream manufacturing. And then the second day, Drew went to the course and I went to the library. And then we did learn a ton, but we still came out of it after talking to some experts with a lot of questions about could this be done and will it taste good? And that was the feedback we had gotten from, you know, a lot of the experts in the space. So coming out of that course, you guys didn't like rush back to Boston and were like, let's do it.

33:28Let's make Greek yogurt ice cream. We got it. We know how to do this now. No, we were like, Google, how do we find ice cream food scientists? Right, right. You need to find somebody who could help you figure this out. But before I ask you about that, how did you, did you guys already have a name for your brand? How did you come up with a name? I was still working at the construction company and a good friend of mine there was of Greek origin. And she was walking by me in the hallway one day, just very casually said, hey, if you and your friends are still working on that yogurt company, you should think of Yasu.

34:01It means hello in Greek. and I went back to my office. I BlackBerry messengered Amanda and I said, Hey, what do you think of Yasu? And she's like, I like it. And we sent it over to the designer who we had already contracted at that point. And we said, Hey, can you play around on front of packaging with the name Yasu spelled Y-A-S-S-O-U. And she actually iterated a concept back to us a week later that just, she had dropped the U and she said, what do you think about this? It's just Yasu. And she did it in two-tone. YAS was in green. SO was in brown. And we immediately loved it. We felt that it had energy and it was easily trademarkable because it was frankly a new word.

34:42And that was it. Yeah. And Google was our best friend back then. We asked Google everything. And so we started researching food science labs, food scientists, and we just started reaching out to places. But But the biggest issue for us back then was a lot of these bigger food science labs are extremely expensive to get prototyping done. And we didn't have any money at this point. We had a little bit of our own money from working day to day, but not any amount that would get us very far. You hadn't raised money from friends to family quite yet. No, at this point, it was just me and Drew were still working full-time jobs.

35:21But what we found was that the University of Nebraska had a food science program. And as part of that, they would do product development. And it ended up being an extremely affordable way to develop products because they would lean on students to help the development process. And so we found these two women who worked out at the University of Nebraska named Laurie and Julie. And they kind of believed in, hey, this is unique and different. And so they brought us on as clients. And we didn't have money for market research. So initially our brains went to like, OK, well, we know what the best selling yogurt flavors are.

35:56Here's the three flavors we want to create. And they were all fruit based because that is what sold in yogurt. And we thought that that would translate. And what are the top three flavors again? Blueberry, strawberry and raspberry. Got it. OK. Yeah. Yeah. These are the top three selling yogurt flavors. We want to create these flavors, but we want to create it in an ice cream bar. Right. So how so they started to work on this. And what did they – tell me how that relationship sort of began to unfold. Would they send you, like ship you samples of frozen Greek yogurt on a stick? Yeah, they were molding bars in little like molds and they would ship them out to us.

36:35We would try them with friends and family and we would give them feedback and we would tweak it from there. And it was part of our challenge being a first mover in this category was we didn't really know like nutritionally was this going to be 50, 70, 100 calories. So we kind of landed on this number of 70. I don't even fully remember why. You wanted each bar to be no more than 70 calories. Yep. And so we kind of gave them these guidelines of here's where we want our protein, here's where we want the calories. We don't want fat and we want to be less sugar than your indulgent brands and more in line with healthier ice cream.

37:15And so they would develop around that until we finally got to a place that we're like, okay, these taste pretty good or what we thought back then was pretty good. And once you landed on – I mean essentially once you landed on that, what you thought was pretty good, you had a recipe. You had a formulation. Essentially, it was a version of Drew of what you had with the Poolside Pond. You had the plans. Yeah, we had the prototype. Poolside, that endeavor was actually easier to find a manufacturing partner in China, although it felt half a world away. Here in the United States, once we had our prototype in hand on Yasso, finding a manufacturer partner became extremely difficult.

37:57Yeah. You know, Greek yogurt was still fairly new to the U.S. market. and there weren't a ton of people that could actually manufacture Greek yogurt. Because it has to be strained to make it thick or spun, right, in like a big spinner to get the water out. Yep, exactly. It was kind of new technology to yogurt making. And so there weren't a lot of people that were creating Greek yogurt at all. And then from a frozen side, it's thicker. There are challenges with higher protein as you mix it and pump it that plants were concerned about and that we, in fact, had as issues when we were first getting going.

38:36That it would like, I don't know, back up the pipes or get stuck in there? Yeah, we ruined a few pieces of equipment and plants over the last 10 years. But yeah, I mean, similar. Think about like if you shake up a protein shake to some degree, it gets kind of foamy. Yeah. And plant equipment doesn't like to pump foam. It's not something you want going through the pipe. So it tends to back them up and make them burst and all these other effects can happen. And so there was a big learning curve on how do you take out fat and sugar, add in protein and create a liquid that you can actually pump through the equipment to the freezer.

39:13All right. So it took you about, I mean, you started experimenting October of 2009. And I think it took almost a year for you to kind of get the right consistency, the right recipe from working with these food scientists at the University of Nebraska. Once you had – you kind of land on the recipe, then I'm assuming you just start looking for like a manufacturer, right? I mean there have to be at least a dozen, maybe more factories in America that make popsicles. So there's actually not a lot of people that make the product that we needed. That was part of the... So we didn't know that, obviously, when we chose the farm.

39:57The type of product we make is called an extruded novelty. So it's a little different than like a molded popsicle. It runs on a different piece of equipment. And so what we learned very quickly was outside of your big national food companies that have their own brands. In the co-packing world, there was maybe three to five people that actually make this. And so, you know, through people we knew in the industry and then Google, we found those and we started just reaching out to them. And just to clarify, I'm assuming the big companies are like the Magnum bars, right? Like Nestle's of the world, like who can just, who make their own products that they sell.

40:36They have their own factories. Exactly. Yeah. Nestle, Unilever, Wells Blue Bunny, kind of those big brands. And they would not, they're not co-packers. They're not going to make product for another brand. No, not usually. Right. Not two 23 year olds. Right. Okay. The pressure cooker of it all was we wanted to be the first ever frozen Greek yogurt ice cream brand to be able to sell in a grocery to be first to market and start producing revenue in 2011. We needed to meet the sell-in season where retailers, especially in the Northeast were taking their meetings. And those meetings for the ice cream category happened once a year, and they happened September through November or early December.

41:16And by early summer, we still didn't have a manufacturing partner. So we knew if we couldn't meet that fall 2010 meeting with retailers and then also scale up manufacturing to meet orders for 2011, we'd most likely miss our shot. Now, usually, right, like big stores will place an order and then the entrepreneurs have to find a manufacturer, right? And it could be a potato chip brand or a cookie brand. And usually, you know, they find somebody. But you guys felt that you had to find a manufacturer even before you had these meetings in the fall? Yeah, I think for us, we wanted it to feel complete and professional in the way our bars are made.

42:01Like we wanted to be able to walk in with a complete sell unit and be like, Like, here's the brand. Here's the product. Here's, you know, our strategy. And only three factories, roughly three factories in the U.S. were doing this for non, you know, for anyone who had the money. Yeah, there weren't many. And they weren't open to necessarily new brands. Like, one of them we had approached and they showed us a magazine. And they were like, see all these brands? 99 % of them fail. You guys should just not even try. Like, that was the attitude we were getting. And then some were just blatant like, no way am I taking a shot on you guys because it's also a machine that runs a fairly large amount of bars per flavor when you run it.

42:44So they were also, there was a financial commitment on their end to make sure that this new brand who they had never heard of was going to pay the bill at the end of the day. And so we had exhausted most of our searches on Google. We came across one in New Jersey and it was a facility called Mr. Cookie Face in New Jersey. So it literally sounded like a Sopranos episode. And we reached out to them asking for a meeting. They wrote back that this would be the date and time we could go down to see them to present our business plan. So you had to go down and present a business plan. And that was it.

43:19So that was great. You had a meeting. And it was the last one. This was the last one. Yes. The other two said, no, we're not going to work with you. Yeah, exactly. Exactly. No one else had either returned the calls or they were just plain out no's. Yeah. All right. So you guys head down there to New Jersey and tell me about what happened. You get to Mr. Cookie Face and. Yeah, we walked in. We drove down. I remember the days prior we were practicing our pitch to each other like flashcards. This is the brand. This is the market opportunity. So on and so forth. And we walk in. It's the biggest meeting moment of our lives in a way to that point.

44:02And we get in the reception area and the receptionist said, oh, I'm so sorry, but we don't have you on the schedule for today. And we said, no, you do. Here's the email. And they said, no, we don't. And the receptionist went out back. We waited for 30 minutes. And finally, a lady came out, Tammy Shaw, and you could tell she was visibly upset that we weren't on the schedule. but she's like, I'll listen to what these folks have to say because they drove all this way. And thankfully, we went into a conference room. She heard us out. And I don't know if it's because she felt bad for us or she believed in us, but we pitched her on Yasso and we told her what we thought the opportunity could be.

44:37And she said, okay, this sounds good. Here's the financial arrangement. If you can pay for the runs, we'll do a trial run across all three of your flavors, which was enough for us to then use that product and show retailers in the fall. So with the trial run, how many did you need? Oh, man, I don't remember. It was like a couple hundred per flavor. Okay. So three different flavors. And how much, do you remember how much it cost? I don't remember the exact amount, but you kind of pay for like the day that the line is shut down, not producing something that's paying them full price. So like shy of$100 ,000, but enough where we needed to like figure out how do we raise a little seed capital.

45:19Yeah, that's a lot of money. I mean, that's scary because you're only going to get a few hundred bars for that. But obviously, if it works, it's an investment worth making. Correct. So how did you cobble the money together? Yeah. So, you know, at that time, you know, me and Drew and then my dad had been helping us out along the way. Like the three of us put our heads together and we're like called our family, close friends that we thought were rich and had some money to give us. Like we called anyone we knew that we thought had some money. And you got like gave them convertible debt and, you know, and all that stuff.

45:55Like you really, you know, everybody was essentially an investor. Exactly. Yeah. Got it. All right. So they agreed to do this trial run. And in the meantime, how are you contacting retailers to get in the door to pitch them? Like, is there is it is like an open casting call where anybody can like apply? And yes, so obviously with the brokerage background, we had a lot of good relationships here in the northeast. And so that was our first tactic was like, go to the people we know. Greek yogurt in this area is growing astronomically. So we don't have to necessarily explain what Greek yogurt is. They already know.

46:30And we hit it the road running in the northeast to start. So you're contacting these places. In the meantime, they're preparing for a trial run. And tell me how it went. Because the concern was that, like, as it extrudes this protein-heavy yogurt, like, it could back up the system. But presumably that didn't happen. Yeah, there were some glitches that we learned. I think the biggest thing we learned was, like, how do we feel about the flavors and do we have to tweak some of, like, is the strawberry strawberry flavored enough? thin, you know, is blueberry purple, it blew enough in color. So they were more like minor tweaks.

47:14Yeah. You could say we launched with an imperfect product, but at least we were first to market and we got into the marketplace in 2011. But even during those retail meetings in that fall of 2010, we knew strawberry was not up to the barrier. It should be in terms of what people expect of strawberry ice cream. So we would tell a few white lies where one of the hard things about frozen food is you're always handling dry ice. And early on, we realized that the TSA would confiscate our dry ice. And when we realized strawberry wasn't as great tasting, we'd kind of show them blueberry, show them raspberry.

47:51They would say, well, I want to try a strawberry. It's going to be the best seller. Be like, oh, I was so sorry. TSA confiscated it. But behind the scenes, we're actually trying to make strawberry better for the next production run. So we could It just launched with something that was better tasting. And I think that started to create a theme of the Yasso DNA. It was just continuous improvement even to this day. In trying to make like a better, like a low-calorie bar, presumably it restricted the amount of sugar you could use. Imagine that was the biggest restriction, right? Yeah, that was a big restriction.

48:24I think we were always kind of looking at Skinny Cow and Weight Watchers having been the dominant diet brands. in the category. And from the early days, we refused to use the word diet because we thought to consumers that perceived like it lacked taste. Ironically, our first flavors did as well. And then as we evolve the flavor profile, something that we believe wholeheartedly now, and we didn't know when we launched is that to be an ice cream, you have to have some indulgence, you have to have some chocolate chips or cookie dough. And once we unlocked that, we unlocked tremendous flavor. And then our ability to evolve allowed us to lean into the fact that maybe 70 calories is too low.

49:08Maybe the benchmark's 100. Yeah, because I mean, the diet category or the diet sort of sector is a huge opportunity. I mean, people spend billions and billions of dollars on low calorie products, right every year because losing weight is a human obsession. So, I mean, I'm assuming that when you started to pitch this to potential buyers or buyers for some of these companies or retailers, that this is a question they asked. Like, so do you imagine this being next to other diet brands or low calorie brands in the frozen section? Is that what they were asking? Yeah, exactly. And that's kind of what we said.

49:47So you had Skinny Cow and Weight Watchers and some of these legacy diet brands. And from the beginning, like me and Drew were dead set on, we want to go mainstream grocery and we want to go up against these guys. Like, this is a product for the masses. Let's go after these guys. So even from our product pricing architecture to start, like we knew we had to be competitive on an absolute price point with those guys. Did you, and I mean, your strategy, as you say, wasn't to go to the small all-natural retailers or even like Whole Foods or like regional Whole Foods. You decided from the beginning to go to national retailers, right?

50:27Like you wanted this to be in big retailers from the beginning. You didn't want to sort of test this out at like individual natural food co-ops. Why? Why did you want to do that? I think because we truly felt that this was a product that everybody would enjoy. I don't know if it's our athletic background and the fact that we didn't think through the cost that it was going to take to go after these big national grocery chains, but we were go big or go home. I mean, we also had massive manufacturing runs just based on the equipment we were running, so we knew we needed enough scale to be able to run the manufacturing runs and not be sitting on inventory forever.

51:04We also had Chobani and Faye and those Greek yogurt brands in the dairy set truly having a generational moment. Greek yogurt was moving in big box retailers around the country. And that was our desire to be first to market with the first frozen form. So a lot of the enthusiasm we had to go big or go home was built because what was happening in the refrigerated set. So who was your first, who was the first buyer who pulled the trigger? Who was like, okay, I'll put in an order. So based on the selling season, we had a handful of our Northeast retailers who were willing to give it a shot. Like what stores?

51:44Like your Stop and Shops, Big Y, Hannaford Brothers, those types of accounts here in the Northeast. Yep. We also went to some of those big box stores like your BJ's and Costco's of the world because for us it was somewhat free marketing because the billboard effect in those stores is so insane that it gives you this kind of free marketing boost. When you're in Costco, it's a marketing boost just by being in there? Just because it's limited SKUs and just a massive display, you almost get this like billboard effect with your packaging that you don't necessarily get at regular grocer because you have potentially two to three SKUs on shelf in a way bigger category with more brands.

52:27And in Costco, you're not selling a four pack. You're selling a 12 or 24 pack. So it's a huge box. Yeah, it was a – I think we started out at a 10 pack and have since continued to increase. But yeah, it was 10 bars versus four at retail. All right. So you decided to pitch Costco. And when Costco put in an order, what did that mean? I mean, what was their order size? That was a sizable order. I remember the check was about$100 ,000, which for us at that moment, because they were first and the terms were so great, it actually came in much quicker than some of our retail customers. And we needed that cash to keep up with the demand.

53:05The Costco check came in fast enough that you could use it to finance the production? The next run. It wasn't, yeah, the next run. It wasn't fast enough. It was probably 30-day terms at that point, but we knew at least we'd have the cash in a month. But just being young entrepreneurs, we were already kind of committing to these manufacturing runs. We were depleting cash pretty rapidly, building up inventory and just kind of wasting a lot of raw materials in the manufacturing facility. And they were kind of getting impatient with how long it was taking us to pay, but we were pretty near depleted.

53:40and we needed this check from Costco to come in. And it finally arrived on a Friday, and Cookie Face had been calling for probably two or three Fridays in a row, and I said, I promise you, you know, it's coming to us. We're going to pay next week. They were getting nervous. They were getting nervous, I think, just because, hey, we're 23. They had been hit hard before from entrepreneurs that had taken up blind time and tried to launch a product that didn't work, and they probably saw this movie playing out again. And unfortunately, when the check arrived, we were so excited to get it. It was the first receivable we'd ever gotten.

54:17This is a check from Costco. Yeah, for$100 ,000 that we owed all of it and some more to the manufacturing facility. And we said, OK, we're going to take this to the bank so we can put it in the account. And then the bank can pay Mr. Cookie Face. But on the way to the bank, it was around lunchtime and said, hey, we need to celebrate this. We should stop in and get a burger and a beer and celebrate this moment of the check. And so we go and we sit at the bar. The waitress comes over. She puts down our beers. She accidentally spills my beer all over the check. And it's just soaking wet. And she looks down and she says, I'm so sorry.

54:52And then she looks a little bit closer and sees the dollar amount. She goes, oh, I am so, so sorry. And I was like, immediately a man and I are freaking out. We're like, we need this. We really, really need this. And she's like, I have an idea. So she took the check and she went back into the kitchen and hung it over an industrial dryer. And it dried out enough that by like one o 'clock or two o 'clock, we were able to go to the bank and actually cleared. And we were able to get the money into the account and wire cookie face. I understand. Like from what I read, one of the first orders that you were supposed to deliver, maybe to Costco or another big box retailer, it was in a frozen truck and the truck got in an accident and like I guess yeah some of the product got strewn across eyewear got damaged what all of it what happened yeah yeah it was a full truck load of product and the truck jackknifed and crashed and we lost all of that product on that truck and I'll never forget it because it was marathon Monday in Boston and I had left the office to go watch a little of the race.

56:02And like the second I got there, I get the phone call from the trucking company and I was like, oh my God. Luckily Costco was super understanding, but it was, we had one of those, everything that could go wrong went wrong. We also like printed the packaging. So our designer who designed the packaging had flipped the back images so that we could look at them, but never flipped it back. So when the carton folded, the back graphics were actually upside down. And so we brought the packaging to a bar down the street and we folded it into the box and we were like, hey, do you guys notice anything wrong with this box?

56:42And we were just passing it around to people at the bar to look at. And a bunch of people were like, the back is upside down. And we're like, oh boy, we can't run this. And this is at a time when We didn't have a ton of money, so running upside-down packaging, having a truck crash where you don't get the insurance money right away, we were day-to-day trying to just make it by. When we come back in just a moment, yet another challenge for Yasso, competition from some pretty heavy hitters. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

57:28Signing your life away to a big wireless provider is kind of like being trapped on a roller coaster from hell. Sure, it looked fun at first. They probably threw in a free phone. But now you can't get off. Month after month of insane bills and unexpected thrills like overages and surprise fees. If that sounds like your current big wireless plan, it's time to get off the ride with Mint Mobile. For a limited time, wireless plans for Mint Mobile are just$15 a month. That's unlimited talk, text, and data for just$15 a month. When I signed up, I was blown away by how much money I was able to save each month by switching to Mint Mobile.

58:05That's money back that I'm able to put towards anything. And switching to Mint Mobile was really easy. I didn't have to change phones. I kept my same phone number. My contacts all ported over easily. It was all incredibly seamless. So to get your new unlimited wireless plan for just$15 a month and get the plan shipped to your door for free, go to mintmobile.com slash built. That's mintmobile.com slash built. Cut your wireless bill to$15 a month at mintmobile.com slash built. You know, recently I took a look at our family's credit card statement, and I was stunned by all of the monthly subscriptions that we've been paying for without even realizing it.

58:47Do you know that the average person has around 12 paid subscriptions and they might not even remember subscribing to half of those things? So if you're like me and you have no idea just how much you're spending each month, you need Rocket Money. Rocket Money is a personal finance app that finds and cancels your unwanted subscriptions, monitors your spending, and helps you lower your bills all in one place. With Rocket Money, you can easily cancel the subscriptions you don't want with just the press of a button. No more long hold times or annoying emails with customer service. Rocket Money does all of the work for you.

59:21Rocket Money can even negotiate to lower bills for you by up to 20%. All you have to do is take a picture of your bill and Rocket Money takes care of the rest. Stop wasting your money on things you don't use. Cancel your unwanted subscriptions and manage your money the easy way by going to rocketmoney.com slash built. That's rocketmoney.com slash built. And when you use that link, you're also supporting this show. Rocketmoney.com slash built.

59:53Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2011, and Yasso bars are already in Costco and a few other retailers, mainly in the Northeast. Drew and Amanda are sourcing the yogurt from Chobani. And though the brand is selling well, it's not yet turning a profit. No. No. No, far from it. Far from it. Yeah, it was in those years we learned the concept of how important gross margin and EBITDA are. Yeah, tell me some of the reasons why. What were some of the mistakes you were making at that time? We had a lot of inefficiencies just by nature of our scale. Like, we really went out to the big box retailers.

1:00:33And behind the scenes, we were a startup doing the first to do ever frozen Greek yogurt. So there was a lot of complexity, a lot of inefficiencies. We really were, we always joke, we were freshmen playing varsity. And in terms of building your team out, I mean, in those first sort of, you know, 2011 you debut, initially it was just the two of you, but tell me how you started to build out your team. I mean, by 2012, 13, I mean, was it five people, six people? It was a handful of people. We outsourced some of the functions early on, like finance. We were outsourcing a lot of the transactional pieces of finance, but we eventually started hiring against some of the weaknesses.

1:01:18So we brought in a finance guy to help us day to day run the finance side of the business. We brought in some people on the marketing team to help build out the grassroots marketing campaign. We brought in a salesperson to help on the sales side of the business. And then as we started expanding, obviously, like product was huge. So we brought the R &D function in-house and hired a food scientist. And so there was a handful of us. We had a little space. It started out as a one-bedroom apartment in Boston that we all worked out of. And then eventually we got a little bit larger space that housed about 10 of us.

1:01:56And do you remember, do either of you remember, I don't know, by like 2013, what your revenue was? Did it exceed a million dollars at that point? Oh, we did$5 million our first year in business. By 13, we were doing around 18. Wow. So you were growing really fast. Really fast. But still not profitable. No. No, with a gross margin in the teens. So we were super bare bones. We weren't paying ourselves much. Sometimes we just didn't pay ourselves at all for the sake of other employees. This is something I'm curious about. I mean, in the first – it sounds like in the first couple years of Yasso, you were more or less subsidizing the ice cream bars for people.

1:02:38Like you were essentially losing money on the sale because you needed to – you needed like velocity. You needed people to buy them. Is that kind of right? Yeah. I think, too, the other challenge in our space is just the slotting dollars that are required to get shelves. You have to pay the retailers essentially a kind of a – I shouldn't say a bribe, but kind of a bribe to get them to put on their shelves. Yeah, you pay for the space and, you know, Frozen and Dairy are two of the most expensive spaces in the store because they require electricity, you know, so that was contributing. And then Trade was our only marketing in store.

1:03:11So it's just something that is costly. And I don't think we've really thought about it up front in terms of the cash need that we were going to have. So a huge part of your revenue is going to pay for slotting fees, but also obviously for the product. It sounds like the product was selling. I mean, you hit$18 million in revenue in year three. Yeah, it was moving quite well. Like we did quickly outgrow Cookie Face to some degree. And we had to go out and find a new manufacturing facility in Utah. I remember the bank laughed at because that name was Fat Boy. So we had Mr. Cookie Face and Fat Boy as our two manufacturing facilities.

1:03:55And also just on the raw material side, we really had to scour for Greek yogurt as an ingredient. Like I remember Chobani was growing exponentially and also growing their footprint, which was putting pressure on dairy farmers in upstate New York and elsewhere around the country. And the first bottleneck we really experienced was they were legitimately shipping in 32-ounce containers. And there was a laborer on the line that would spatula out the Greek yogurt out of a 32-ounce container, which is what a family probably consumes over three days of breakfast. And that's making hundreds of thousands of bars.

1:04:36But we ultimately ended up at a small dairy farm in New York. And that was where we started to see our first efficiency on the margin profile. So when we identified this facility, we upgraded and they were actually able to send in tubs. And then as we grew, tubs became tankers. And so we were starting to get a better margin profile just through scale, but also just improving the fundamentals of everything that was going on in the business. All right. So you start to get more efficient, but you also start to, you know, as you start to get more successful, you start to attract competitors, including Ben & Jerry's, which launched their own Greek yogurt line around 2014.

1:05:26When you heard about that, were you worried? Were you nervous? Of course. That was a scary moment. At that point, we probably had 10 employees. We had an office space in Boston. And every Friday morning, we would host these little breakfasts where everyone had good energy. It was right before the weekend. And one of those Friday breakfasts, we're walking down this long hallway in our office, and the conference room just felt different. It was like, everyone's looking into it. We're all walking together. There was like a tint of blue on everything. And we walk into the conference room and across this small alleyway in Boston above, ironically, our favorite bar was a billboard that said, introducing Ben and Jerry's frozen Greek yogurt.

1:06:15And it was a tough moment to swallow our pride and act like this isn't a big deal in front of our team. but that was a scary moment for sure. Yeah. I mean, that's the 800 pound gorilla right there, right? Even though Ben and Jerry's might not see themselves that way. I mean, how did you respond to that? Was there anything you could do or respond? No, there was nothing we could do other than put our head down and just continue to improve our product. It was almost a validation of the proposition we had and we were in the market with at that point, maybe for 18 months. And the competitors came fast and quick.

1:06:54It wasn't just Ben and Jerry's. That was a moment that, you know, ironically was legitimately in front of our faces in our office every single day for months that we were reminded that other folks with a lot more money and a lot more horsepower are working diligently to bring their equivalent to the market. But it wasn't just them. I, you know, Yoplait had launched Weight Watchers, Skinny Cow, Like they were all coming. Was there any hardball? I mean, there's limited space in the freezer section. And, you know, some of these companies are very powerful. They have a lot of influence. Did any of them kind of try to push you out?

1:07:31Oh, yeah. It was, it got extremely crowded. And yeah, like you said, it was all the big guys that have deeper wallets than we do or bigger pockets. And there were a few instances where we would get like strong armed out by someone else just paying more for our space. But I think at the end of the day, like we were in there first. We had been listening to consumers. We knew where we had to go in kind of this shift towards indulgence and improving our product. And I think we were always one step ahead of them in terms of our product taste and quality. And we were able to get ourselves back into every single one of those stores that we had gotten strong-armed out of.

1:08:13Wow. So, all right. I mean, at a certain point, I mean, you were growing. And did you, you know, you'd raise some money from family and friends to start that first production run. But then I guess around 2013, you actually did a few like bona fide fundraising rounds and you raised, you know, a decent amount of money around$10 million by 2015. And so how was the business doing at that point? I mean, did you guys gain some financial stability? Yeah. It was kind of the point in time where I felt like we went from just like treading water and doing a really good job at treading water to actually swimming and moving forward.

1:08:54And like we were at a point where like we were able to grow the business in a smart, financially responsible way versus just selling a lot of product and having a really great brand of products, but not necessarily being able to sustain that for 10, 15, 20 years if we had to because of how much we were losing. And so it was a key moment for us because everything that we had said was going to happen was happening. And we were seeing those results. Yeah. And ultimately, we came through on all the core things that we knew we needed to do to get to break even. And in 2015, we got to profitability and it was a real joyous occasion for the company.

1:09:35And ever since then, we've been profitable. What about things like, you know, like trends, right? like keto and paleo and, you know, dairy-free. And I mean, that kind of now you go to the frozen aisle and the dairy ice creams are like just a few. It's like mostly oat and almond milk and cashew milk ice cream. It feels like that, at least to me. Like it feels like the dairy ice creams are like one shelf and everything else is like non-dairy. And that really started to happen. Did you guys start to look at your product and say, okay, we need to introduce a non-dairy line or we need to introduce a keto brand or, you know, stuff like that?

1:10:17I think from the very beginning, we were pretty disciplined in like, we are a product made with the goodness of Greek yogurt. And that is who we are. We're not a free of everything brand. We're not full of fat and sugar. Like, we really stayed in that lane throughout all these trends and fads that came and went. And it was trying. I mean, when you had brands like Halo Top enter the category and have these rocket ship growth out of nowhere, it was – you're kind of sitting there being like, are we doing something wrong and should we be following? But we stayed disciplined and, you know, these fads, they come and go.

1:10:52And, you know, we knew we were a brand that wanted to be around for a long, long time. But presumably you're also thinking about other products beyond just the ice cream bars. I think at a certain point you've even introduced pints of ice, of frozen Greek yogurt, right? Yeah, the pints are difficult because we, that really was our offensive against Halo Top. Yeah, we had, as you may know, Justin Wolverton of Halo Top was on the show. And, you know, that brand, right, it was just, it was the number one selling ice cream pint, I think, in like 2017. And it was high protein and, you know, relatively low calories.

1:11:31when that was happening, that Halo Top craze, that was your response to Halo Top. Yeah, we were willing to dabble with innovation but not remove our moat of Greek yogurt. So we went into pints with eight flavors and we got some distribution. And it was in those moments that we truly realized the marketing frenzy that was happening by some of these brands that was creating the velocities that were contributing to their revenue growth and becoming the bestseller within a short amount of time. And we were in market for a year, as you are, when you sell something in. And after that, we retreated because we just felt it wasn't sustainable.

1:12:16At that point, it was like a race to the bottom. It was a race to the bottom. Oh, like just in terms of like pricing. Yeah. People were promoting in a way that was buy a pint, get a pint free. And then you get that pint, you get another pint free. It just was like, you could, you mathematically just couldn't make sense to us. And so we took our shot on innovation. We weren't afraid of that. We believe in the ability for Yasuo to move into packaged form. It was just, we were launching into a chaotic moment in a category that hadn't had a moment like that in a long time. And we ultimately retreated.

1:12:50I'm curious about the sort of the long-term planning of the business? Because I imagine that maybe early on or maybe at a certain point, both of you came to the conclusion that you needed to eventually figure out how to get acquired, right? And so this is, you know, this is a natural trajectory. You seek some type of exit. And so when did you guys start to think about, okay, how do we set ourselves up for an eventual acquisition? It wasn't something we focused necessarily on obsessively. But when we got to a certain point around that break-even year of profitability in 2015, we started to look more seriously in 16 as who could be a longer-term partner.

1:13:39And in 17, we built a great relationship with a private equity firm, and we partnered with them at the end of that quarter. This is Castania or Castanea? Cassanea Partners, based here in Boston. Got it. I mean, I think, could me and Drew have continued to run it post that, of course, but I think that we felt we had done it for a long time. Our lives, personally, were changing with the birth of our first kids, both of us. Me and Drew both had kids one month apart. And I think we were a little bit tired of the day-to-day, and we wanted to step back and take a more 10 ,000-foot view approach of the business and stay as board members, but bring on someone that we were kind of willing to hand the reins to since it had been our baby for 10 years.

1:14:27In 2023, Unilever announced that it would acquire Yasso, and that's happened. It's been acquired, and you guys are, I think, no longer part of the company, right? Are you advisors, or are you completely out of Yasso now? We're brand ambassadors for Unilever, for the brand. Got it. Got it. Okay. and um but that's it it's now i mean it's kind of full circle like you were unilever was the big sort of you know 800 pound gorilla and you know ben and jerry's obviously is a unilever brand and um yeah i mean you these were sort of your your competitors kind of like your enemies back in the day maybe um and now you're now you're in the in in that world um how do you feel about that?

1:15:12It feels great. It feels like the dream we always share. It makes us super proud of the team that got us this moment. And, you know, we're really looking forward to continue on with them as brand ambassadors and see the team continue on as operators of the business as they bring Yasso to more people, which was always our goal. When you think about this journey that you've taken, how much of what happened do you contribute to the work you put in and how much do you think had to do with luck. Yeah, it was a perfect combination of luck and hard work. We're not naive to know that there were so many balls that bounced our way favorably.

1:15:50There were also a lot of obstacles that came our way that we had to overcome that required hard work. But for it ultimately to end up as a brand that Unilever saw a tremendous amount of value is just a testament to the hard work that went into it by so many people. And as founders of a brand, it creates something that people put that much energy towards and they cared so deeply for. It was just such an unbelievable sense of gratitude that we have for everyone that worked just as hard as us in different areas and at different phases of the journey. Amanda? I think it's a mix of both. I think hitting the market at the right time is important, but there was a lot of hard work.

1:16:32I grew up in the industry. I don't think I'll ever leave it. I still see it with my dad. He's in his 70s, And all we talk about together is food because we love it. And so I think it's something that is part of my life and I don't see it ever going away. I think it's just sticking with it through those really dark times or those tough times or those setbacks. But I think there's always a bit of luck of just being at the right place at the right time.

1:17:04that's Amanda Klain and Drew Harrington co-founders of Yasso by the way these days they've got a full range of flavors like fudge brownie cookies and cream and birthday cake but their number one bestseller mint chocolate chip hey thanks so much for listening to the show this week please make sure to click the follow button on your podcast app so you never miss a new episode of the show and it's totally free. This episode was produced by J.C. Howard with music composed by Ramtin Erblui. It was edited by Neva Grant with research help from Catherine Seifer. Our audio engineers were Gilly Moon and Maggie Luthar.

1:17:42Our production staff also includes Casey Herman, Carrie Thompson, Alex Chung, Elaine Coates, John Isabella, Chris Messini, Carla Estevez, Sam Paulson, and Ramel Wood. I'm Guy Raz, and you've been listening to How I Built This.

1:18:05If you like How I Built This, you can listen early and ad-free right now by joining Wondery Plus in the Wondery app or on Apple Podcasts. Prime members can listen ad-free on Amazon Music. Before you go, tell us about yourself by filling out a short survey at wondery.com slash survey.