Katlin Smith: Founder and CEO of Simple Mills

22:39We actually started out in stand-up pouches. And so it's like, do you want to get the stand-up pouches made in advance? but then like the minimum order size, like 3000 units or something. I'm like, oh my gosh, what would I do with 3000 packages? So I decided I'll print off stickers that will go on clear packages and rigged up this whole setup with my residential printer. Around the same time, I also started to investigate how do I get into stores, which is like its own thing, where I called up my local Whole Foods store and just asked them the question, how do you get into a Whole Foods store?

23:16And they passed me around to a couple people on the phone. And I end up on the phone with the manager at that store. And he says, well, you just come down here and talk to me. I said, okay. He said, how about you come on Wednesday? And I was traveling four days a week. So I said, well, how about Saturday? And he said, Sounds good. So I went down, met with him on Saturday. I was really nervous.

23:44Katlin Smith:Did you bring product? Did you bring baked versions? Or did you bring a notebook? What did you show up with? I probably did have a notebook. I also had baked muffins as well as probably one of each flavor for him to see what it looks like. He pointed at him. He's like, so let me get this straight. That mix made these muffins. He was just really, really surprised that an almond flour muffin mix could taste like that. And unbeknownst to me, they had just started selling almond flour and just started selling a lot of almond flour. Like it was at the time, I think one of the top items in Whole Foods grocery by dollar sales was really taking off.

24:23And so she's like, we sell a lot of almond flour and these are great. Let's get you in here. So he started the process of paperwork, which takes about four months with Whole Foods. and four months later, we were on shelf. God, that's wild. You're kidding me.

24:37Katlin Smith:Did you know how rare this type of story was? No. I mean, people dream about even getting a meeting. So they say yes. Now you have orders. How are you funding all of this? What were your next steps? And were you trying to get Simple Mills into other stores? Or did you want to just start with a couple of Whole Foods and see how it went. What was your strategy? Because by the way, you have a full-time job. So right around this time is when I move up to Chicago from Atlanta for business school. I was trying to estimate how much product we needed, which was really difficult. I mean, the way that grocery sales work is they just place a PO whenever they need more product on shelf.

25:22It's not like, oh, we're going to place an order for 300 units or something like that. It's like they're literally placing orders for six items at a time. And so you're just trying to predict how often are they going to place an order for six items. And that had a very large margin of error. And so I was just trying to forecast it out and figure out like, how many stores can I take on? How much do I need to make and when? And it was very hand to mouth on the inventory because so often I was wrong. I would think that I had made way too much, At one point, my mom was like pawning it off to all of our relatives.

26:01And then a week later, I realized I don't have enough. I need another production run. And at some point, this starts to absorb all of my savings because there's a lag between when you pay for your ingredients and your packaging and when you ultimately get paid by the retailer for the finished product. And so my working capital situation, I mean, I sold my car. I liquidated all my savings. I mean, it's flashing ahead a little bit, but by the time we raised money, I'd maxed out all my credit cards. But you do want to stay in stock. But to your question on was I looking for other retailers, I was.

26:38I was looking to expand. I am an ambitious person. I'm like, let's do this as fast as possible. And so I'm also approaching other retailers. I'm approaching, I think, our second, third, and fourth retailers for natural grocers by Vitamin Cottage, Wegmans, and Earth Bear.

26:57Katlin Smith:I also have to ask, how are you doing this and then also starting business school at the same time? The cost of that and the time that that requires and then the cost of this and the time it requires, it doesn't compute. Yeah, it doesn't. I mean, I think that for one, having the prioritization in my mind really helped. So for me, the business always came first. I also really concentrated my coursework on classes that I could work on the business in. So I took things like entrepreneurial selling. I took accounting, which was great. I enjoyed it so much more the second time around because I was actively working in QuickBooks.

27:40And I'm just like, okay, let's just say theoretically, you have a transaction that looks like this. How do you file that? It's like having an on-call accountant. I ended up taking the New Venture Challenge course, which ultimately led us to raising money. But I took a number of these classes that let me work on Simple Mills at the same time, and that helped. That's so smart. Well, and look, this is something that they're really supportive of. So you can moderate your course loads. The first quarter, I took three classes. The second quarter, I took two classes. The last quarter I was there, I took one class and then I dropped out after that.

28:19We're still well in contact today because they want people to be successful in building these businesses. And it's such a great low risk stopping point in people's careers where it's not like you're having to quit your job to go and see if this business is going to be successful. You have two years to see if it's going to sink or float.

28:39Katlin Smith:Okay. So in those early days, I'm always interested in sort of like whether you realized it was a tipping point or not, or a moment that all of a sudden the business gathered a certain level of momentum. When you look back, what were some of those early indicators that this was a thing? I think one of them, I can remember exactly where I was. I was in my bedroom in Chicago, and I realized that we had become the number one bestselling muffin mixes on Amazon. not just like best-selling gluten-free but like best-selling muffin mixes on amazon can we go back please when did you get into amazon i put the product on amazon before we launched in stores and just to set expectations for people for one this was a very different environment in 2012 2013 than it is today but i did have this delusion that you put the item on amazon and it just takes off and it does not work that way i was gonna say yeah like they're like three billion products on Amazon, the likelihood of that surfacing to the top casually, organically would probably be low.

29:46I, for a long time, would sell like one or two items per month. And a lot of times they were to friends and family. Like I would look and it'd be like, my best friend bought a muffin mix. But I think that what really happened that launched us to the top is we had what would later be known as an influencer write about us. And the influencer space was just beginning. I mean, you have to imagine Instagram was just starting to get rolling a little bit. This influencer, so Danielle Walker, she's still out there today against all grain.

30:23Katlin Smith:She wrote about us on her Facebook page because this is really pre-Instagram and writes about how she discovered our products, took them on a trip, and they were awesome. And she sold us out of our Amazon inventory in like a span of an hour because everyone saw that. They went and bought our products. And of course, the way that Amazon algorithms work is items that are selling then show up higher in the search results. So we became the best-selling muffin mixes on Amazon. How long did that take? That was probably nine months in. Holy moly. I mean, like, that's crazy. Were you in grad school at that point?

31:06I was, yeah. I was probably three months into grad school.

31:09Katlin Smith:Sounds like in that very early days, you must have realized like, oh, I probably need to spend more time on the business. And I know the business always came first. But I mean, to have that level of success so early on, did you realize that was unusual? I don't think that I was framing up anything that was happening with any sort of expectation. I know that sounds kind of crazy. I was so focused on the business that I almost wasn't even assessing was the business successful. Honestly, it sounds really healthy. Yeah. You know, I was really inspired. I wanted this business to exist and I still believe in it.

31:47I didn't know what I didn't know too. And that was helpful. It's like I just had my head down and I was running.

31:54Katlin Smith:So early on, as you had mentioned, you maxed out your credit cards. You spent, I read,$70 ,000 of your own savings. You sold your car and your parents mortgaged their home to give you some additional cash to boost the business and just like the lumpiness of having to spend money for ingredients and getting something to shelf. And then when you actually collect on that money, like that cash flow can be very challenging. At what point did you decide to raise money and how did you know it was the right time? Well, I didn't know it was the right time. I got lucky in that one of the classes I took, the last class I took at Booth, I took the new venture challenge course and I took it with the motivation that I could work on the business during the class.

32:35And so I come into the class and one of the advisors is like, you need to raise money.

32:40Katlin Smith:Had you thought about it? No, not really. I think I was just beginning to raise this little mini round of$200 ,000, which is all I thought I'd ever need. I was in contact with a family friend who was going to help give us or finance that$200 ,000. And I'm like, I'm all set. I don't need to raise money. I had built this great little Excel model like the consultant I was, and it said that's all I need. What happened in actuality? So first of all, that deal fell through. The day we were supposed to close, he called me up and he wanted to renegotiate the terms of our agreement. I felt backed into a corner.

33:20And so I was just like, I guess that's just what you do. I was luckily at home with my parents when this happened. They were just like, absolutely not. And they were really upset. So they mortgaged their house and gave me$200 ,000.

33:35Katlin Smith:Ironically, I needed a lot more than$200 ,000. and$200 ,000 happened to be actually the amount of money I needed to bridge me through to raising the actual amount of money I needed, which was like$2.2 million. Had we gone forward with that financing, Simple Mills wouldn't be here today. It was so damaging to raise more money under that agreement that Simple Mills just would have failed as a result. And so it was really lucky it fell through. And I went back to Chicago and went into fundraising mode. So at what point did you realize what the actual number that you had to raise should be? I think probably somewhere in that course.

34:16I had a number of advisors who were helping me understand what it really takes to build a consumer brand. They were showing me the P &Ls for these large food companies. And they're like, they spend$50 million on one product launch. $50 million. They're like, you think you can get by with$200 ,000? And so really kind of helped me edit the assumptions around what it was going to take to build this and build it successfully. I will also say they helped me expand my mindset of what the business could be. And so they're like, is this just like a paleo gluten-free baking mix company or is it something much broader?

35:03And that I think is so much a part of who we are today. My goal isn't to change what a small select group of people are eating. My goal is to make it a lot easier for people more broadly to eat simple whole food ingredients. And so to do that, you have to create a broadly appealing brand and broadly appealing products. And so they really helped me maximize the vision for the brand as well. And that also leads to capital needs.

35:34Katlin Smith:Okay. So talk to me about raising that first major round. Was it easy? Was it hard? Did you enjoy the process? Was it illuminating? What was your experience like? Oh, it's extremely hard. Raising money for the first time as an entrepreneur is, I mean, you're just this unproven commodity. But you had some proof. You had a brand that was selling and number one on Amazon. And, you know, it's not like you were without data. You do. It became a lot more fashionable to build a consumer products brand later. If you think about where we were in 2012, 2013, they want a tech unicorn. And so they're like, what is this baking mix company?

36:12how is this going to be worth my while so it's difficult to get attention and each person I met with would point me to two other people they'd say you know this isn't right for me but maybe talk to these two people which I gladly did I mean I think kind of even just rolling back to the whole graduating through and job searching through the 2008 crisis I mean that is the playbook it's like you have got to just go with a mass amount of outreach. And so I was reaching out to a lot of different investors and my luck caught up with me one day when I had talked to so many different people that two people that didn't know each other walked into Whole Foods in Charlotte, North Carolina, and we're standing at the baking mix shelf at the same time.

36:58The man who later became our lead investor, Lou, he turns to the woman next to him and asks her, what do you think of this brand? And I had previously talked to her.

37:09Katlin Smith:But you had two separate potential investors have like a meet cute in the aisle checking out your product. Yes. And she told him, well, I'm thinking of investing in this company. And anyone who's raised money knows that nothing lights a fire under an investor demand for a deal. And so he calls me up later that day and he's like, I want exclusive rights to take a look at this deal for a week. And by the end of that week, we had a term sheet. Wow. And so what was the term sheet for? What did you think that that investment would go to in that first year or however long that you were thinking ahead?

37:47It was really the bare minimum. It's like, okay, we needed to hire our first employees. I need to make a little bit of money to cover my rent. We needed to update our packaging away from this packaging that I made for$100 on 99 designs and later edited in PowerPoint. We needed to finance some inventory. So it really was the bare minimum. I mean, we were extremely capital efficient. We did everything ourselves. It was not the what you picture on, I don't know, like Silicon Valley or something where it's like you get financing and it's like, oh, we get a fancy office. And no, it's, we are still scooting by, by the hair of our chinny chin chin.

38:32Katlin Smith:So at what point did you start thinking about newness and developing outside the baking mix category? I think it was a few years after that, we started playing around with crackers. and it first started because we had a vanilla cake mix. And with that, I started playing with it in my oven to see if I could make graham crackers out of it. And we're like, oh, these are pretty cool. What happens if we made crackers? And then started playing with those. And yeah, I mean, then started looking for a contract manufacturer for them. It just kind of all took off. We were inspired and started playing in other areas.

39:12Katlin Smith:So how do you think about innovation as a whole? Like, do you have a schedule for, we like to release new products every so often, or we know to go into a category when we get X number of requests for something? Like, what is the calculus that you do to think about R &D and innovation? Yeah. I mean, I think for innovation, first and foremost, we think about living up to our brand promise. What we do is we create these astounding nutritious products out of these ingredients that people don't expect. We put them into these amazing tastes and forms that consumers love. Crackers made out of almond flour.

39:52We've got these sweet, thin cookies made out of watermelon seed and cashews. Think about pop-ums, which we came out with a year or two ago, made out of butternut squash and red beans. We like to make sure that we're able to deliver first and foremost on that expectation. In terms of how quickly we go into different categories, I think it really is important that you give the consumer time to try the products that you already have. Time to experiment with them, play with them, add them to their pantry. So not going too fast is really important as well. And then in terms of how it gets done in our organization, in the early days, for me, I was the R &D officer.

40:36I was the R &D officer through the launch of our cookies. But over time, we've been able to add many more people on our R &D team. We've been able to add people on our marketing team. We've been able to add folks on our manufacturing and quality teams and ultimately really learn how these unique ingredients work. And that is something that's really special because it's really hard to work with butternut squash and red bean and almond flour.

41:06Katlin Smith:They don't work the same way that wheat flour does. And we also refuse to use things like artificial flavors and artificial colors. We want to use these stunningly simple ingredients that people recognize. And so we don't have a lot of the things that food companies typically use to fill the gap or make things work a little bit easier for them on the production line. And so we've gotten really good over time at delivering that taste and quality that enables us to reach a much broader audience. Well, it's certainly working because today not only is Simple Mills a household name, you also are in over 30 ,000 stores, which is just mind-blowing from Target to Walmart to Costco.

41:53Katlin Smith:You're in my local Gelson's. You're everywhere. The product line offering has grown, as we've discussed, to include crackers and cookies and bars and pancake and waffle mixes and, of course, the baking mixes. Talk to me a little bit about, like, you were R &D in the very beginning. What is that recipe development part like now at this stage with a full team and the full breadth of, like, an operational company behind it? Well, we're able to experiment a lot more, which is really exciting. We also are able to play with a lot of different ingredients than we were before and even influence the companies who are making the ingredients to make them in a more natural way.

42:39So like as an example, in our history, we've influenced ingredient manufacturers to remove things from the ingredients and not use artificial ingredients. And so that's been really exciting and expands the repertoire of ingredients that we consider okay to put in our products. We also get to play with a lot more concepts that we might not launch too. So there's a lot more creativity and experimentation versus just a, okay, we're going to develop this single item and hopefully it makes it. And then I'd say finally too, now we have consumer testing to assess, okay, this product does actually taste good, right?

43:20Whereas before, I kind of had to rely on friends and family to tell me the truth, which is kind of hard to rely on because they just want to be nice. Uh, now we have empirical evidence of when things taste good or not.

43:35Katlin Smith:Talk to me about your team and the team that you've built over time, because I feel like managing people is such an interesting and distinct skill from everything else it takes to run a business. So how have you learned how to hire, how to manage? I came into this never having managed another team member and have had a lot of lessons over the years. But in all seriousness, you know, I think one of the things that has been really just important for my and our success has been the importance of learning throughout the stages of the business and also helping our leaders also continue to learn throughout the stages of our business.

44:18that it's not something that's static that it's like, okay, on day one, you have the skills to run a company of this size and scale and a team of this size and scale, nor do you want those to be your primary skillset. The skills that it took for me to run a team of 10 versus a team today of 120 or whatever we're at, it's very, very different. And so your brain adapts and it changes and it grows and it's not the same one year from the next. And you're continually having to invest in becoming the next version of yourself. But the other thing that I'd say about team is just how critical it is to get great people in your organization.

45:08And it's probably often said, but I'm not the one who makes our products today. I'm not the one who even says our strategy exactly today. These are ideas from our team that come together in beautiful ways. And so, so much of the long-term magic of an organization comes back to who gets brought into the organization and how they work together.

45:35Katlin Smith:So we have to get to the biggest news of all, which is that earlier this year, Simple Mills was acquired for$795 million, which is one of the biggest female founder exits, certainly in recent CPG history. Congratulations. That is outrageous and amazing and so exciting and cool. What does the future hold for you? What does the future hold for Simple Mills? Why did you decide this was the right time to sell. Talk to me about that entire experience. Like, wow. Totally wild. And also when you say that, I'm like, largest female, I'm like, that's not real. Okay. So back to your question on flowers. So I met Riles, their CEO, I think over five years ago at this point.

46:26So we've gotten to know each other over time. And the more that we got to know each other, the more that we realized, I think, what terrific partners we would be and also what terrific partners our organizations would be. Just that there's so much, I think, cultural synergy within our organizations and also potential that it creates for us as an organization. We're really excited about what we can build with them. We see opportunity to really broaden in our distribution, to accelerate our innovation, to amplify brand awareness. There's just so much that we can do together. And that's so much a part of my vision for Simple Mills is, again, it's like, how do we make this something that is available to so many people and interesting to so many people?

47:14And so it's really highly aligned with my mission in building this company. And so you'll continue to see us do these things. And specifically in 2026, we'll have lots of exciting new innovation coming out. So please keep your eyes peeled for that and lots of more good news from us. Very exciting. And congratulations.

47:36Katlin Smith:So on this podcast, while we like to celebrate the wins, we also like to talk about mistakes because everyone makes them throughout the course of their career. And I think we as women don't always talk about it. But I think it's really important to you because it reminds everyone that you can be resilient and that there's a way through even some of the darker moments of one's career. So I'm hoping that you can tell me about any mistake that you made and what you learned from it. One of the ones that stands out for me is pretty early on for us, we decided to go into cookies. And we did that at the same time that we were launching a lot of other products.

48:15We had a really small team. I think we were probably about eight people at the time. And so we launched the product and it has quality issues from the start. So the product was breaking. I mean, you'd receive a package of the cookies and they'd just be shattered like dust. The only application for these cookies is ice cream topping. And this was really disappointing. And of course, we had to scramble and figure it out. And we did. We did figure it out. And our cookies today are fantastic. They continue to grow leaps and bounds every year. But I think that what that really taught me is, first of all, the importance of pacing, but also discipline of not going too big too fast.

49:00And also, there's this spirit within entrepreneurship of agility and running fast and going after the growth. that gets really over-talked about. And it doesn't weigh the other side of that, which is it's also really important to be smart about decisions and to be sure before you launch a product to make sure that you have high quality. It's not like you can just provide a software update overnight. It's a lot harder to update a product formula and get that on shelf. And once consumers have a bad experience with a product, it's hard to get them coming back. And so really, appreciation for the importance of the decisions that we make and not just leaning on agility and speed.

49:46Fair.

49:47Katlin Smith:So a lot of the folks who listen to this podcast are in their first lives and they know that they want to make a change in some form. Maybe they want to stay in their same industry, but a different aspect of it, or maybe they want to change industries altogether, but they're nervous about making that leap. They're nervous about selling their car and spending all their savings they're nervous about making some big change. As someone who has made that leap, what advice would you give someone who's standing there thinking about it, but just hasn't made the move quite yet? I think twofold. One is about the question of, do you make the leap?

50:24And on that front, I think about the level of passion and dedication that some career moves require. And so is that something that you're prepared to indulge in and something that you gravitate towards. There are things that to me sound like nice ideas that I could work on, but that I'm not ultimately passionate enough about to spend that level of effort, the kind of effort where you're like, I would like to read about this on a Sunday morning. That's a great litmus test. The second thing that I think about is that it's never going to feel comfortable. I'm a pretty risk-averse individual. It's not something I love doing, taking risks.

51:06And yet I founded a business. But what I realized is that I had to blind myself to the risk itself and just jump off the diving board. Like I have this memory of jumping off this 30-foot diving board as a kid and just being absolutely terrified. But you're already up there and someone else is coming up the ladder. You're like, I just got to do it. I just put one foot in front of the other and then I step off and not think too hard about it. And I think that's kind of what it's like. You just close your eyes and jump.

51:38Katlin Smith:So my last question is my favorite, which is if you could step into a time machine and go back in time and speak with your younger self and give younger Caitlin at any point in your career some advice, what would you say? Stay learning. I had a wonderful advisor who told me that being an entrepreneur is one of the most downwardly mobile professions out there. And what she meant is that if you knew it right, being an entrepreneur means that your business grows faster than you can, than you can learn and grow and develop. And so because of that, I've taken a really intentional approach to my learning and education.

52:16But I think it's true across careers, whether an entrepreneur or in a broader career, investing in that learning and not looking at it as like, oh, I'm giving my employer more of my time and effort. No, like giving yourself learning is the greatest gift in the world because it builds the foundation for your future.

52:36Katlin Smith:Amen. I hear you on that. Well, Caitlin, thank you so much. This has been such a pleasure on so many levels as someone who is personally a big fan of your work and has your brand all up in my pantry. I love what you have made and it was so fascinating getting to hear the backstory. So thank you for making the time for us today. Thank you for having me.

53:06Katlin Smith:That was Simple Mills founder and CEO, Caitlin Smith. For more inspiring interviews with women like Caitlin, head on over to secondlifepod.com where we have so many more for you to peruse. If you like today's show, please subscribe on Apple podcasts or Spotify or wherever you get your podcasts. And don't forget to rate and review us. We love seeing you spread the word on social. And now you can tag us in your posts. We are at Second Life Pod on Instagram, Twitter, and Facebook. We always want to know who you're interested in hearing from on the show. So send in your requests to hello at secondlifepod.com or you can DM us on Instagram.

53:45Katlin Smith:I'm at Hillary Kerr. The show is at Second Life Pod. Our DMs are always open. I'm Hilary Kerr, and you've been listening to Second Life. This episode was produced by Hilary Kerr, Summer Hammeris, and Natalie Thurman. Our production assistant is Raven Yamamoto. Our editor is Natalia Perez. Our audio engineers are at Treehouse Recording in Los Angeles, California, and our music is by Jonathan Leahy.