751: Inside the Mind, and Shopping Cart, of a Food VC with Elly Truesdell

13:23Jake Karls:Oh, my gosh. Yes.

13:24Elly Truesdell:Oh, my gosh.

13:25Jake Karls:Yes. that is something we follow, of course. But again, I think for us, it's sort of just thinking about behavior. It's what is the big behavioral shift, which is for us, snacking's never going away. And it's just increasing. And as the population becomes ages and the younger people are buying more, they're just snacking more. And so we're interested in sort of what products meet that mold that can also be considered to meet nutritional requirements.

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15:49Elly Truesdell:Head to Wayfair.com right now to shop all things home. That's W-A-Y-F-A-I-R.com. Wayfair. Every style, every home. We have to talk about Bachchan. Good week for you.

16:04Jake Karls:Good week for us, yes.

16:06Elly Truesdell:So you are an early investor in this company that was just acquired by Marzetti for$400 million. Congrats. Thank you. So like I've got a couple of questions. Like first, you know, you were early with them, I imagine. Like seed round or Series A?

16:21Jake Karls:We were Series A. And, you know, I have to say, first and foremost, congrats to Justin and his team. It's always in these situations. It's like, thank you, although congrats to Justin. You know, it's like such a phenomenal thing to build a business the way that he did and has. And yes, we were early. But I have to say, I met him really early and we didn't invest until a couple of years later. So could have been even earlier.

16:43Elly Truesdell:Could have been earlier. So what did you see in Justin as a founder, but also this idea of like Japanese barbecue sauce that was quite different? You know, I think many of our listeners know bachan and love it. And, you know, there's like a little bit of a viscosity kind of trick happening there. And Marzetti obviously agreed.

17:03Jake Karls:Yes. Yeah. I think for us, I always say I think products almost fall into two camps. It's like you're either solving a problem and meeting a need for someone. Maybe best example of that is like an athletic brewing. You're not drinking anymore. You needed a better beer or a Simple Mills. You know, you've decided suddenly you're gluten free or you need some allergen friendly snacks that met that need. The other side of things is products that you never knew you needed that become indispensable in your life. And that is where Bachans fits in. You know, I don't think anyone 10 years ago could have said I desperately need a Japanese barbecue sauce in my life.

17:37Jake Karls:But once you try that product, it's flavor, it's recipe. But it's also, you're right, the versatility of the sauce and how easily it pours. And you can put anything on it to the point of people cooking less but wanting an experience at home and to make vegetables and protein easy. There's so much in the product that's exceptional. It's such an incredible story. It is, you know, Justin's grandmother's recipe, which bachan is the Japanese word for grandma. And so there's so much there. and then it's so many details layered on top of that. It's their brand. It's their execution. But what I would say we really saw beyond knowing like, oh, this is excellent, tasty, great brand, great sauce, because there are a lot of great sauces, was that he was proving so early that the product resonated in natural food stores like a Whole Foods, I mean phenomenal in Whole Foods, as well as in conventional stores.

18:34Jake Karls:And that's what we always look for. Like, can this actually translate to a Walmart? Can it translate to a Kroger? I mean, he got picked up early in relative terms, especially at the time at Walmart for all 4 ,000 stores. Doug McMillan literally called them out on one of his earnings calls. He does not like talk about brands. And so they just have been able to appeal to so many different people at a price point that is unusual to be able to do that. So we were really impressed and attracted to that.

19:02Elly Truesdell:Did they have like good revenue figures when you went in? Like, do you look at that too, obviously? Yeah, of course.

19:08Jake Karls:They did. They were probably in some ways they were a bit later than we come in, but we felt incredibly confident. But so much of it is, yes, great revenue, but great velocities in a variety of markets. So it's not just that you've proven your, you know, the big difference for me is for years it was, can this work at Whole Foods and does the natural foods shopper love this?

19:29Elly Truesdell:You were thinking very, like, narrow. Very much.

19:31Jake Karls:Like, you know, like, I brought in white mustache 15 years ago, and she still only sells to five Whole Foods stores. That's so good. You know? And that, you know, a ton of specialty food stores. But that was my job then. It's my job now to find and identify those products that have the reach to, you know, tens of thousands, if not hundreds of thousands of doors across the country. And Bachans really has that.

19:57Elly Truesdell:Have you tried sour milk?

19:59Jake Karls:You know what? I have it and I'm hearing about it left and right.

20:02Elly Truesdell:They were on the phone. The founder was Kiki was on the show. Really pulling for them. Lots of lots of cool ideas there.

20:08Jake Karls:So much buzz. Yes, it's it's really seems fun. I need to try it. But yeah, it's good stuff.

20:13Elly Truesdell:So, yeah, congrats. I mean, congrats, Justin and Bachchan. And I mean, that's that's like a huge exit. Wow. Four hundred million. But they're doing like ninety five revenue, right?

20:22Jake Karls:They shared it. You know, it's always interesting what is being shared. I mean, the thing that I will say is they're they were a highly profitable company. So people love to talk about multiples. They love to share certain figures. But I think for any other entrepreneur that I'm talking to who's now using that as their mark, it's like, yes, and they were a really efficient company.

20:40Elly Truesdell:Yeah, that's a good side note. Yeah. The revenue or the margin was there. I wanted to talk to you about some of your writing because I really enjoy the sub stack, which I'm linking to. Let's talk about a story. Beyond Meat's new protein drink feels like a cry for help. Yes. You write, quote, what's interesting to me is that Beyond never had a slam dunk product. Let's have a little Beyond autopsy moment. What are you thinking about Beyond?

21:09Jake Karls:Sure. Yeah, no, thank you for the subsack mention. It's been really fun and interesting to think about. I guess what I'm often struck by are sort of recent stories or something like the Beyond Meat launch of an energy drink. But nicely, and for me, what's been fun is it's like, oh, my gosh, I remember 10 years ago when Beyond Meat launched. And we were launching them at Whole Foods, and it was a big deal. And it was simultaneously to the launch of Impossible Foods. And I got to go to that launch party. But Impossible was really taking this tact and had a strategy of we are not going into grocery.

21:43Jake Karls:We're aligning ourselves with the coolest, best chefs in the country. And that's our— And food service play.

21:48Elly Truesdell:Yes.

21:49Jake Karls:And that's our go-to-market. And that was interesting. Beyond was saying we want to be the grocery store, you know, meat alternative of note, and we want to be distributed and sold from the meat section, which was unusual and unique and cool. And when I look back on that period of time, because there were so many other products like, I shouldn't say just like that, but in the vein of, and I think about it as there was an agenda being pushed by executives, by investors, by innovators, and I would even put myself in this camp, of people who had influence over what people were buying that wasn't really attached to the consumer.

22:29Jake Karls:It was just Beyond had this incredible story. And this was all propelled by how much money there was going into food, particularly into food tech.

22:38Elly Truesdell:It was a feel-good story for everyone. Very virtuous. I feel like everyone wanted it to work.

22:43Jake Karls:Right. It's, okay, we're learning so much about greenhouse gas emissions that are tied to the beef and the cattle industry. And so I need an alternative because I already eat so much meat. And so this is a great alternative.

22:54Elly Truesdell:Like ecology, health. There was like so much.

22:56Jake Karls:Yes. And there was a lot. I mean, Bowery Farming and the entire indoor vertical ag industry was built on that of we're giving you a product that is better for the environment, et cetera, et cetera, et cetera. The problem across most of those products was you weren't asking the consumer, were they asking for it? And very often it was we're asking the consumer to have something that tastes worse, it costs more, and isn't, in the case of alternative meats, like probably isn't even what they want. And so to begin with Beyond Meat, I just don't – I never really – and listen, everything's very subjective.

23:30Jake Karls:But I don't think there were a ton of people who thought, oh, my gosh, this is totally delicious. I think people thought it was novel and cool. They enjoyed the beat that was mimicking meat. And there was a lot about it that was innovative. And that drew people to the product.

23:46Elly Truesdell:For the curiosity.

23:47Jake Karls:Curiosity, discovery. And so I think for a couple years, Beyond and Impossible was really sort of held up by initial launches and people like me or in positions like mine that were really excited by the story and the promise and the curiosity. And then over time, pretty quickly realized, oh, consumers don't really love this. They're not coming back for more. It's not a great meat replacement. It probably shouldn't have ever been. You shouldn't have been sold on that. So, yeah, I in terms of where Beyond Meat has gone since then. And I guess I did mention that I just never thought they had a slam dunk product to begin with.

24:27Jake Karls:And then they just kept on iterating. And that I find it really interesting talking to generalist investors or tech investors who are in a food product or about to invest in a food product. And let's say to me, you know, the product's not quite there yet, but it'll get better. Don't worry. That to me is the worst thing you can do is to launch a product and plan on just making it better and better. Like you are losing your customer. You can try so many new products in this country at this point.

24:54Elly Truesdell:You have one shot. And like it's not a SaaS product. It's like literally it's like agriculture. And like you can't like change agriculture. There's like longer time spans with food.

25:03Jake Karls:So many things that impact why you wouldn't be able to iterate that quickly. not to mention the consumer just has so many choices. If they didn't like this product from the beginning, why would they ever go back? So I thought that was interesting. And then just in this roadmap and the announcement of them launching a protein energy drink, it just felt like, oh my gosh, this is serious. Like truly, I felt a cry for help.

25:29Elly Truesdell:Yeah, I mean, it's the most cynical move for them to do that.

25:32Jake Karls:Yeah. I guess it also, again, felt really, are almost to my point of like disconnected from the consumer to begin with it almost felt like you've got this whole consumers insights team throwing at you okay protein's big sparkling drinks are big you know it felt like energy's big yeah like it felt like this project in market size tam and where there's been growth and like what do you what did ai spit out or something yeah i

25:58Elly Truesdell:totally went to me like these are just truly just like pre like this is like ai generated consumer products.

26:05Jake Karls:Yes. And not, I mean, listen, we will see what happens. Maybe I'll be eating my words. But I do think there's something really interesting in food and drink that you find in the products and brands that resonate that you can't always quite define. Like with Batchans, everyone wants to know, well, what is it about Batchans? It's like, you can't define it. You can't put your finger on the one thing. It's so many different details. It's the execution of those details. It's the story. It's the...

26:33Elly Truesdell:Yeah, and there's no copycats. Like, Bloom and Celsius, like, have it. Right. Like, this Beyond drink is, like, third gen. 100%, yeah. So, like, you know, like, with Bachchan, like, there isn't, I mean, I'm sure, there's obviously Asian sauces. And Momofuku's CPG strategy was definitely in line with Bachchan and a direct competitor, of course. But Bachchan was, like, the one.

26:53Jake Karls:Its own thing. Absolutely. And that's because it came from a place of, I know everyone loves to use the word authenticity, but it's true. It came from a place of originality. It had an origin. And that's so much of what we look for and care about.

27:06Elly Truesdell:I really like this piece. The loneliness economy meets the dinner table. I'm going to quote you. Quote, businesses that look to bring us together, bucking the trend toward private, individual and isolated experiences, have a major opportunity to win, specifically in food. So, like, what did you mean by that?

27:25Jake Karls:Yeah, maybe this is sort of that same thread of food being unusual and distinctive. I think when you look at the landscape of how much time we're spending on our phones and the impact that technology has had on certainly younger people's lives. I mean, you read the statistics about a lot of which we included in that sub stack around loneliness and how young people feel. It's really, really sad and striking. But also, I don't think it just applies to young people. And to me, not only have we seen a couple concepts, which have been really exciting and interesting, around, okay, rather than combating the loneliness epidemic with creating more spaces for single seating in restaurants, which is on the rise.

28:12Jake Karls:literally dining rooms are being shifted to create more bar seating, is, OK, why don't we actually make there be restaurant experiences and a chain or a membership club opportunity where the intent is to find community, to meet other people, to dine with people you may not have met before. But that's understood at the door. So you're walking in with that mentality and some interesting sort of then if you've got the membership model, you can have sort of a set price and shared experience. So I think that's really interesting on the dining side. And truly, I feel like along with sports, there is something about food that you just can't replicate and how it brings people together.

28:55It's so just binding and all, you know, I think it touches people on every level.

29:02Elly Truesdell:Well, think about the comparison of sports and dining. It's like those are two events that you attend IRL where you're talking to the people around you. Like a sporting event, you're talking to your seatmates. It's when you're at a restaurant, you're talking to the people next to you. Like, what was that? Oh, yes. Yeah. And like you like you don't really talk to people at the grocery store. You don't talk to people at like a medical appointment.

29:22Jake Karls:Right.

29:23Elly Truesdell:You know, so it is totally that.

29:24Jake Karls:Or even going, it's made me think, or even going to the theater or going to some place where you need to be like synthesized. Yeah, there's just something very convivial about food. But what I also think is interesting, definitely in dining, there's also given how we live and how much we're on our phones, there's opportunities for brands and products to leverage their communities and tie people together. I mean, you hear about this all the time, but it's like these really devoted fans of certain brands coming together, doing things in real life or doing, you know, watch parties or doing things virtually together.

29:57Jake Karls:And I think that in both cases, food businesses really have an opportunity to try to get that.

30:03Elly Truesdell:What about on the CPG side? Is there something that comes to mind that pops up that has like real community around it?

30:08Jake Karls:Yeah, I mean, I think, I guess I haven't seen, I'm curious if I could see more examples of this, but there are brands, I think of like a Van Leeuwen or I think of a Graza that have such zealotry attached to them. And people do come out. I mean, I do know this for sure that in terms of when Van Leeuwen opens new scoop shops, it's 100 % driven by social media. They, you know, Ben, who's a friend, who's a founder, he'll ask every person who's coming through the door with any of their newest openings, you know, how'd you hear about us? He says 85 percent of it is through social. And so that's a way to discover a brand, to feel tied to it, to then meet other people who might be engaging with that brand.

30:50Jake Karls:So, yeah, maybe I don't have a great example of it yet, but I think there's a huge opportunity.

30:55Elly Truesdell:I mean, there's historical ones like Reese's. I mean, like I feel like there's communities around Reese's like with novelties being dropped. There's communities around Taco Bell. You think of those, they do definitely stunt events where people run a half marathon while eating Taco Bell because they're brand loyal. I love what Ben and Laura have built at Van Leeuwen. I mean, it's such a unique business in that their cafe shop level is growing as quickly as CPG, it seems. And it's crazy to see that.

31:22Jake Karls:Yeah. One thing that just came to mind, which I think will be really interesting to watch, is when Alison Roman opened her. You know, she has a store upstate in New York, but she opened a pop-up or sort of a limited-time store in New York City. And talking to her about it, the – I mean, just the volumes that they were doing out of that store product-wise, phenomenal. But having visited a couple times, it was just really fun to watch people walk through the door. I could hear, you know, she was there one time and I hear, you know, these three women be like, oh, my gosh, she's here. You know, it was a gathering place of people who care about food, they care about cooking, and they care about good products.

31:54Jake Karls:And so I think that's interesting is like in some ways, I mean, she could be doing that across the whole country in the pockets of her big fans and people come together around that shared sort of those shared values.

32:09Elly Truesdell:I mean, if she promised to show up at one of the shops every week around the country, perhaps, I feel like there's definitely like that shop was like her being there. She's a magnetic person. Yes. Yeah. She has great taste and eye and like, you know, full bloom. I think it's called Upstate is a really terrific place. Yeah. Like, I mean, are you going to invest in her company?

32:27Jake Karls:We'll see if there's an opportunity. But, I mean, I do think you think about it's just incredible when someone like Allison or you think about, I mean, as another example, like a Gwyneth Paltrow has created so much authority in a certain space of the world. And I would say in Gwyneth it's wellness and in Allison it's cooking and culinary. but where you can open a store, you can launch products, you can have experiences that people trust will be great. And I actually, I think that Allison did an incredible job with First Bloom in New York and even with her sauce. It's excellent.

33:01Elly Truesdell:Yeah, I haven't tried the sauce yet, but it's like sold out in like minutes. It's what you could only.

33:05Jake Karls:I was like the biggest cynic and I said this, I'm like, oh gosh, another tomato sauce. It's excellent. It's really, really good.

33:13Elly Truesdell:Have you invested in a tomato sauce?

33:14Jake Karls:We have not. We, you know, I. So crazy.

33:18Elly Truesdell:We have so many. Like, we have founders and we have chefs and we have founder chefs. And there have been a lot of pasta sauce guests on this show. What is up with that?

33:30Jake Karls:It is. It's so funny. I think there's just an element of high frequency products are, you know, it's tough because we'll get amazing baking mixes pitched to us or amazing sort of obscure X product. And the hard thing about that in terms of what we need to think about is just like, OK, how ubiquitous can this be? What's the market size? And something like pasta sauce, something like tortillas, which we are invested in, something like salty snacks, it is so high frequency beverage. I mean, these are really, really high consumption categories. So they're just massive, which I think is why we see so many pasta sauces and a bit lower barrier to entry.

34:12Jake Karls:You know, you can replicate those things in a certain way. But I think the hard thing is for entrepreneurs or chefs who are setting out to make that sauce just to sell it. Like, good luck.

34:23Elly Truesdell:Good luck. And we talk about affordable luxury a lot on the show. And, like, I think that with pasta sauce, it's, like, truly a great affordable luxury when you have this premium pasta sauce that's, you know, maybe 2x the Prego. Yeah. You're still going to – you're going to buy it.

34:38Jake Karls:You're going to buy it. And it's affordable and it gives you just a little bit of what you need on a weeknight. Yeah.

34:44Elly Truesdell:Yeah. There's some good ones out there too, by the way. It's really improved and it's very competitive though.

34:50Jake Karls:Yeah.

34:50Elly Truesdell:I loved in our last conversation, I used the word trends and you pushed back called the movements. I'm not sure if that's still your vibe. But as we enter Expo West, a big trade show out West that some listeners may be attending, I'll be there. Are you going to be there? I'm not sure. And like, what would you say is like something in the movement zone that we're going to see at the in the spring trade shows?

35:12Jake Karls:Sure. Yes, I will. I will be there. I hardly ever miss it.

35:16Elly Truesdell:I'm sure you're just like, oh, so looking forward to it.

35:20Jake Karls:You know, I do love it just because I love people. And it is, I mean, I can't can't move a minute without running into someone I know, which is for me is very efficient and great. So I love being there, but less for the quote unquote trend spotting. And I do. I'm so much. I think I lamely earlier said the word movement. So you've called me out on it.

35:40Elly Truesdell:It was a link. It was cool. I respect it. It was very cool. Push back on me. I appreciate it.

35:45Jake Karls:No, no. I think it's so funny and interesting because of my 10 years at Whole Foods where people considered me to be this trend spotter. And in my mind, yeah, that was a little bit more of the job. And at the time, what was trending became pretty enduring and lasting. The trend was legacy categories that need to be disrupted or, quote unquote, or completely innovative because there's not – I can't find a peanut butter that doesn't have palm oil in it. I can't find a chocolate bar that doesn't have lecithin and, you know, a ton of other things that I don't want in it. And so that was a movement.

36:25Jake Karls:At first, it was sort of this Brooklyn Artisanal Movement, but that really influenced then a much larger, what became sort of cleaner ingredient decks, like an anti-alter processed foods movement.

36:35Elly Truesdell:I see it everywhere now.

36:37Jake Karls:So I guess what I would say in going to Expo West, I mean, I'm often I'm there to see our current portfolio companies just to see what's out there and often to feel like, wow, there are so many of X company. I mean, it will be the amount of protein at the show. I just am looking forward to seeing the number of beverages, the number, you know, where will fiber and gut health be on the pendulum. Yeah. But for us, I mean, we really do. We tend to invest in companies that have been around for a while and that maybe have bootstrapped for 10 years and are looking to take their first capital or are doing something really, really unique and exceptional like a Midday Squares.

37:21Jake Karls:You know, Midday Squares self-manufactures, which means no one can replicate their product. Yeah. They have so many things that's unique to them.

37:28Elly Truesdell:And then the Canadian government, as we'll hear later in this episode, popped in to help them with that factory.

37:33Jake Karls:Right, right. They've been really smart about leveraging resources around them. They're an incredible team. Their marketing and what they can leverage in themselves is totally unusual and distinctive. But I guess I will just be interested to see, you know, every year there's a new something. And I mean, last year, you know, I always try to write a bit of a recap of Expo. And last year, what I noticed was just smart little decisions companies were making. So for so long, there had been just such excess. There were so many SKUs, so many versions of things, massive booths, et cetera, et cetera. And what I ended up noticing last year around the edges, besides there being a ton of protein and whatever else, is that there were little tweaks to packaging.

38:25Jake Karls:There were better formats. There were better pack sizes. Because more than anything, it was almost like the industry had grown up a little bit and really been thinking about their consumer of what they want, how they're using us, and just functionality. Like so much of what we talked about earlier with Beyond Meat, it was just there's not a lot of like utility or function in these products.

38:44Elly Truesdell:I mean, they were trying to like charm folks like yourself and VC, but also the markets.

38:50Jake Karls:100%.

38:50Elly Truesdell:With this like kind of fictitious world of good.

38:54Jake Karls:And it was working at the time, of course. There is an element of what suits the time. And I do think right now, everyone's a little more sobered and isn't obsessed with plant-based eating, is thinking more in the way of, I don't necessarily want a gluten -free bread. I want a better sourdough. I want a three-ingredient amazing loaf of whole wheat sourdough. I want, you know, a really great yogurt to the sour milk, not a dairy-free alternative with 16 ingredients. Yeah. So that will be interesting to see. I always love staple categories that you find sort of the one breakout winner that's doing something novel.

39:40Jake Karls:So will be fun if there are any of those. A new popcorn.

39:45Elly Truesdell:Yeah. The snacking category. I mean, I have to imagine that price and just like value is, I guess, a better word. Value is going to be a topic. I mean, because looking at general consumers, like it's always being talked about. We see it at all forms of retail, the sticker shock at the grocery store.

40:08Jake Karls:Yeah. Yeah. Yeah, it's always interesting with a show like Expo West and what typically start in natural food stores, particularly as people, yes, 100 % across the board are feeling crunched, but where there's even maybe more acute crunch eating out of home. And so allowing yourself a little bit of that trade up to your point on a Raio's or a Carbone or any other sauce that's two or three times more expensive than a Prego feeling like, you know what, I can't really afford right now to go out with my family a ton. So we're going to have the better tomato sauce. That has been one thing that's been pretty since sort of all of my years, even 15 years ago at Whole Foods that we saw was fairly resilient.

40:53Jake Karls:And that coincides with Americans caring more about what they put in their bodies. So just prioritizing health. But that's not like the maybe Goop Kitchen or like Dr. Hyman$23 Sweet Green Bowl. It's I'm going to get a cleaner tomato sauce and make pasta and veggies at home.

41:15Elly Truesdell:Exactly. So there is like definitely some economics like the retail, the pricing and like the value of the perceived value happening. But at the show, it's like less of a topic you're saying.

41:25Jake Karls:I do think at the show it's less of a topic. It's sort of a bubble. It's weird.

41:30Elly Truesdell:It is a bubble. I'm glad you said that because, you know, you've got buyers. You've got like, you know, you're representing your consumers at your stores. But like it feels like a lot of these products with you look at MSRP. It's just not. It's like feels expensive.

41:44Jake Karls:Yeah. All the time. I'm always shocked by brands that pitch us on something that has so many competitors that they haven't even looked at the competitive set. It's, you know, they're launching us a six-pack of cookies that's$60. Yeah. And they're like, you know, I just don't think this feels that expensive because they're thinking about their New York City crumb, I don't even know the name of these things, LeVan experience. LeVan, yeah. When you're walking in, that's an enormous cookie. It's an experience. It's a whole thing. You're getting it fresh on the shelf. And so, yes, sometimes I think there's a pretty big miss on how people shop at the grocery store and what they expect from their grocery bill.

42:23Jake Karls:So we look a lot for that. And then how is that going to work if you are looking to go into mass? Because so much of what we are, you know, deciphering is can this work across channel? What does that pricing look like when you hit Kroger or Walmart?

42:38Elly Truesdell:Yeah, the discount and how that works as opposed to specialty. Yeah, it's it's I guess the buyers are they've I mean, it depends on what they're working for. Right. So that's really the conversation.

42:49Jake Karls:Yes. Yeah. And I think, you know, the Whole Foods shopper still is pretty is not as price sensitive. I think people are always surprised that the Sprout Shopper really is, which is the other store that people point to as, oh, I'm launching nationally with sprouts. I always caution brands based on their price point of and do you really know that consumer? Are you you feel good about this price point? Because very often that's the feedback is it is it's a lower lower price point consumer. And there's not never the same velocities as Whole Foods and as some of these other sort of independent shops.

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46:04Elly Truesdell:Two quick questions and I'll let you go. What are you seeing in beverage right now? That's interesting.

46:09Jake Karls:What's interesting in beverage? I do think, you know, I think Olipop and Poppy are just, those are revelations. Those are really impressive, cool companies that really had distinctive formulas. Like we talked a little bit about this earlier, but beverage truly, it is so easy to walk into a beverage house, take a powder, take something, sparkle it up and have a new beverage that you market. And so for us, we're always looking at what are you doing? Is there something to this recipe? Is there something to this formula that is somehow defensible? So I do think there's some interesting things with fermentation, like old school fermentation, like a tapache and some of these.

46:52Jake Karls:Yeah, or kombucha. Yeah, like where there's a brewing element. If you can not rely on natural flavors, I think that's a huge edge in beverage because so few beverage brands do. I mean, Spindrift is a remarkable supply chain and product in terms of how they can make those free from natural flavors. Like they are – some of the stats on how much of like the blood orange supply they own in the U.S. is unbelievable. And so we're – I am always sort of watching. I think that a company like Tash and how just they've really stuck with this excellent product. They're starting to show up in a big way in food service.

47:33Jake Karls:They've done great, great work. So I think I may have in our first episode not been as bullish on beverage. You weren't. I never really am. Or more that I think it's incredibly, incredibly hard. Competitive. and it weighs a ton

47:49Elly Truesdell:and like shipping costs are crazy. There's so many things that make it

47:53Jake Karls:tricky and difficult and we're such a small fund that it's hard to come in this early and expect you know these brands have to raise so much money. So that keeps us a little bit out of things but I will say there's always the exceptional I mean I nicely was like brought in one of the first cold brew brands that was ever sitting on a grocery store shelf 16 years ago and now it's on every Dunkin' Donuts menu and Starbucks across the country. So there are these unbelievable, you know, the repeat in beverage can be massive.

48:26Elly Truesdell:What was that early cold brew company?

48:28Jake Karls:Grady's was one of the first. Of course, Grady's. Grady's, man.

48:32Elly Truesdell:I remember meeting him at a trade show.

48:33Jake Karls:Yeah.

48:34Elly Truesdell:The dude had never been to a coffee farm, by the way, which shocked me, but I guess it makes sense.

48:38Jake Karls:Yeah, yeah. That's been an incredible. I mean, there wasn't even a place on the shelf for them. So that's been cool to watch that.

48:45Elly Truesdell:Very interesting that you were there. Okay, so last one is just the frozen section, the freezer section. I feel that we touched on it earlier, but there's such innovation happening there. And it's truly about changing the consumer behavior around frozen and saying that and giving them the grace that heating up a meal is cooking.

49:06Jake Karls:Yeah, I'm a huge fan of frozen. I've been for a long time. I mean, we – it was so fun. In 2013, I worked very closely with the Roberta's team to launch Roberta's Frozen Pizza, which has now been around for a long time. Yeah. In that clear, you know, translucent bag. They hung it on racks, did a similar thing with Table 87. There was this whole – Yeah, that's crazy. Little mini renaissance.

49:29Elly Truesdell:Yeah.

49:31Jake Karls:And so – and had a – you know, have worked with a couple of brands along the way in those earlier years. And so I always thought like, oh, Frozen should – I always felt like Frozen should be a destination more than it was. And nicely now I do think thanks to a couple really excellent entrepreneurs and great products that are coming out of Frozen. You know, there's a brand called Evergreen Waffles doing, you know, waffles and breakfast staples that are just so easy. We eat them all the time with my family. Some really interesting – I mean some of the Asian foods brands. I mean, Mimi Cheng's phenomenal product, Mila, Laoban, they're all in their own right offering a really excellent product that, again, it's like getting the equivalent delivered to your home of dumplings, not delivered very well in a format that's not traveling versus having the pouch bag that you can do at home.

50:26Elly Truesdell:And do it really like specifically the number you want.

50:29Jake Karls:Number you want.

50:30Elly Truesdell:It can be eight.

50:31Jake Karls:And in a preparation that really works at home, I think there's a lot of promise there. And I will, I expect to see more. Like I think in terms of how many chefs have entered CPG, few have actually gone into Frozen. I think there's so much more room for there to be chefs in Frozen just in terms of product integrity and quality. But I hope they can really get it right because I haven't seen it yet.

50:55Elly Truesdell:That's exciting. I mean, I think chefs definitely know, obviously, how to portion and know, but it's all about the formulation that can work at scale. Right. That's the hard part.

51:06Jake Karls:Very hard. And that, I mean, that's sort of the whole game. So much of my time at Whole Foods, we get pitch products that we thought were incredible and like, okay, you're launching 50 stores. And realize after the fact that they had brought us a kitchen sample or something they'd made at home, they go and commercialize it. It's a completely different product. So, I mean, that is really the when a scalable product has its magic is, oh, this still tastes really good and I can make it in the millions.

51:34Elly Truesdell:Crazy. Ellie, thank you so much for joining. I want to have you back soon.

51:38Jake Karls:Amazing. I'd love to come back. This is so fun.

51:44Elly Truesdell:Jay Carls, welcome. This is Taste. Great to meet you.

51:47The TASTE Team:Oh, we did a hug right off the bat. There was no shaking hands.

51:50Elly Truesdell:It was a big hug. I'm a hugger, too. I like your energy, buddy. You feel it.

51:54The TASTE Team:You feel it, right?

51:55Elly Truesdell:Buddy, well, you're here because I love Midday Squares. I'm a huge fan of Evan Customer for a while. We have a lot of founders on the show. I just wanted to unpack your story a little bit. And honestly, your background is cool and the way you work with your family on this company. But, you know, how many have you sold so far?

52:16The TASTE Team:We've sold 60 plus million, 65 million. I have zero clue. But it's definitely a lot of squares. but the unique fact is I live in Montreal. And Canada's population is about 40 million. So we're almost double each person that lives there technically if they were a square.

52:30Elly Truesdell:Yeah, I love that. I feel that's a huge moment if the population times two has had.

52:34The TASTE Team:We got to get times 10 though. That's the goal. 10, 20, 30.

52:37Elly Truesdell:You're on your way. I mean, we're going to talk all about like a little bit of the founder journey from you. But before we get into that, where do you like to go when you're out in New York?

52:45The TASTE Team:You're not going to love this answer. So when I'm in New York, I'm in office to office or I'm in a hotel. So I don't get to experience the dining of New York City, which I'd love to. So I experience like coffee shops. Yeah, sure. Hotels and offices. So whatever they have, I take. Now, from a coffee perspective, you know, I was at Felix Roasting Day and it was really good. Like I had an espresso and it was sharp. And I was just like, not only do I feel amped, but I found it delicious. We don't have that where I'm from.

53:16Elly Truesdell:No, I love that. Well, let's – tell us for our listeners who don't know Midday Squares and, you know, you should know it. This is unpaid. Being straight, this is – I invited you in because I love it. What is it? What are you guys doing?

53:27The TASTE Team:We're trying to dominate the afternoon snacking space in the better for you category, let's call it. You know, refrigerated. You know, it's your 2 p.m. snack that gets you through your afternoon. And we have functional chocolate squares and now we have a new no-bread PBJ line, which we're going to develop a lot of. And the idea is just like you're hungry too. You want something good. You want something tasty, but you don't – you want something also clean ingredients. And that's kind of what we've created. It was me, my sister and my brother-in-law. And it's now seven and a half years later. It's been a crazy up and down.

53:54The TASTE Team:And CPG, consumer packaged goods, is not for everybody. I think it's, people don't realize it's not sunshine and flowers every day. It's actually, it's a lot of pain. And eventually it turns into souffle, I guess.

54:06Elly Truesdell:Yeah, you're on your way to a really nice omelet. We'll call it that. We'll call it like.

54:11The TASTE Team:A nice, beautifully cooked omelet.

54:13Elly Truesdell:Yeah, perfect. Jacques Pepin style omelet. I love that we're going metaphors with egg-based things. I want to hear about the original formulation of Midday Squares because I think what I like about it is not just the macros are tremendous. I really want to eat this. I looked at the ingredients, and there's nothing that I don't recognize. 130 calories, at least for the peanut butter one, and a really perfect format. Format is great. When you're working with your family on this original formulation, what is that like?

54:43The TASTE Team:It was crazy. My sister is a foodie. So she's, she created this product and she made it for my brother-in-law, who's my other business partner. Cause he was eating junk food at like the afternoon. Like, you know, when it's 2 PM, you get a crash, you want something, crave something. So she's like, I can make you something cleaner. And this was two years prior to even us launching this company. And long story short, they ended up commercializing that product together. And they came to me in like July of 2018. They're like, do you want to help us build the next biggest afternoon snacking business?

55:10The TASTE Team:And I looked at him and said, you're out of your mind. Like the world doesn't need another health bar. The world doesn't need another chocolate bar. At the time, our first SKUs were actually chocolate-based. And I'll never forget, we saw a data point that showed that dark chocolate at the time was growing and that plant proteins were growing. So we just made a baby of those two growth categories. And then I told my partner, I said, if we're going to build this, we need to tell our story in a very unique way because at the end of the day, there's thousands on thousands and thousands of products.

55:35The TASTE Team:And we don't have the budgets to go buy up shelf space or we're in the fridge, so end caps and refrigeration. So I said, we're going to have to document this story on social media. where people will be interested in the brand. So they'll want to be part of this journey with us so that when they go to the grocery store, they feel like they know us, they're friends with us. So we showed everything, day one, therapy sessions, breakdowns, how we got into our first retailer, legal battles, everything you could imagine. Damn. Yeah, that no one sees. And what that did was it created hype and excitement from a consumer.

56:04The TASTE Team:So that allowed us to get some leverage with the retailer. And then that allowed us to get more space and more this. And the next thing that compounded and compounded. The only thing my partners asked me day one, other than helping them blow up the brand was to go to therapy with them every week or once every seven to 10 days for communication. So to stay aligned on this journey and protect our family, because this business wouldn't be worth it if we built it so big and then hated each other, right?

56:28Elly Truesdell:So it's like an executive coach style therapy. Yes.

56:31The TASTE Team:He's an actual therapist, but he works with a lot of like businesses and partnerships because I found out recently that a big data point is that a lot of businesses don't just fail because of bad product or capital that are some reasons but a lot of times it's because of founder conflict or partnership conflicts tension builds pressure is high and especially in consumer you know you're going against all odds and things are going to go wrong and if you don't stay aligned then there could be a volcano blow up on like a

56:55Elly Truesdell:fight and that could be the end right yeah so keeping that line open is cool let's talk about the aesthetics because i think that's a huge part when when you go to the the cooler the end cap the where you're at refrigeration session they kind of jump out like font choices the colors Is that you? So it's my sister.

57:12The TASTE Team:She was a fashion, she was designing clothes before. So she had this background in fashion and lifestyle. She wanted to bring more of like a shoebox feel to the grocery store. When you go to the grocery store, like I said, there's 30 ,000, 40 ,000 items, right? So what we did was number one that was different is every bar, most bars are rectangular. Ours is square. So already from an actual image standpoint, when you're looking, it's different. Second was colors are critical. You know, you need to get people to stop. and shop. Now, the part about colors is you can't get carried away with colors that don't relate to the flavor.

57:45The TASTE Team:So the flavors have to be aligned also. And look, at the end of the day, I think if you don't have the right packaging or you don't have the right price point or you don't have the right, you know, merchandising on a shelf, you're going to get hurt. It doesn't matter how good your product is or your brand is. People need to be able to visibly see you and it needs to be merchandised in the right spot of the store.

58:00Elly Truesdell:Yeah, so like orange for peanut butter, you know, yellow for cookie dough. We did cookie dough

58:03The TASTE Team:and then beige for brownie. And then, you know, now our no-bread PBJ has the strawberry one is red with like fun nostalgia to it yeah again that's not the end decision at the end of the day that's one of the end decisions but but you also need to pull people in to the store to want to know who you are and then second is they it needs to be at the right price point if you're completely off price point you're not going to get the trial you need what

58:25Elly Truesdell:was it like entering this kind of wonky cpg world i mean there's so i love that i love it because it's like i follow some of these trades and like i know i get into like founder journey shit and And like it's – I mean I love the people making the products. But like the actual – like the media around it, it feels like there's a lot of payola. There's a lot of pay to play. And there's also just kind of like corniness, being honest.

58:49The TASTE Team:To be honest with you, I didn't know enough about this space before going into it. Now I know a lot more. And it's really hard. And at the end of the day, you need a mix of traditional like marketing and experience in CPG mixed with now a new age of the attention. economy. Yes. Where if you don't get attention, you're screwed. I'd say as everyone, it doesn't matter how good you are, how good your product or price point is. If people don't know you and they don't try you, how could you build a business? Right? Look, I think that it's one of the hardest industries, in my opinion, from seeing certain other industries.

59:22I think what you see is a lot

59:24The TASTE Team:of brands go in and out. You know, foundational, you know, people are in a rush and it seems like in CPG. I wish that people would be more patient with time and allow things to go. I always say it's not a three-year overnight success story. It's a 20-year overnight success story. We're right now a seven years in already or seven and a half years in. This journey is only gonna start compounding, I believe, by the 10th year, it's gonna see its final hockey sticker, but it took that long just to get there. People are in this instant gratification thing or just show dopamine instead of foundational growth.

59:56The TASTE Team:When we start at Midday Squares, everyone told us to change our product. The square, it's a two-texture layer. They're like, just get it co-manufactured. So get a third party to manufacture it. We decided we're going to build our own factory because we want to keep the same product or a similar product that we were making at our home in our condo when we started to a scaled product. Because if we could land people on the moon, then we could make a midday square, right?

1:00:17Elly Truesdell:I love the way you look at it. Yeah. So we did it.

1:00:20The TASTE Team:We built a facility. It went from 50 bars a day in 2018 that we were making our condo kitchen, the three of us, to now making up to$150 ,000 every single day.

1:00:27Elly Truesdell:Yeah, I mean, it's remarkable to take control of the production and not have to compromise with a co-packer because co-packer will make you. Of course, the quality and just even the shapes of the equipment they have. You had to custom build everything. It was hard. So we just heard from Ellie from DuFerre, like your VC. We love her. Yeah, like that's cool. Like what's it like being approached and working with venture and just like getting to that from that 50 bars in your condo and getting that money to make it work? What's that process?

1:01:00The TASTE Team:So we're mixed with infrastructure debt from our local government to build the factory. So that actually worked towards – like it was debt. We were loaned money to build up machines and create jobs in the city, which is great. That was a great program. The second thing is we raised venture money from different people like Ellie and other institutions to go out and grow the team and actually grow the business. So, you know, for us, I think two things. You need a good business model if you're going to raise capital. Second is not just to raise capital for the sake of capital. That's not good. Third is the way that we were able to attract investors early on and today is we were telling our story out loud on social media and people were watching.

1:01:38The TASTE Team:So, like, we were told on LinkedIn, on X, on Instagram, on TikTok. and when we showed the story, people got to know us. So it was like they almost were building trust before even communicating because we were showing hard moments and we were showing great moments. We showed the good, the bad and the ugly and what that does is it shows perspective to somebody watching saying, I'm getting to know these people a little deeper than just the surface level stuff that typically you see. So that actually allowed us to build warm relationships before we even like reached out to them and that helped a lot.

1:02:07Elly Truesdell:Yeah, I mean having that affinity from this wide audience, it all rolls back to the product being dope. Most important. Yeah, right? I mean, there's something about biting into a square. It's something satisfying, right? There's like the different layers and having those different textures. It feels almost like a pastry chef made this. And I think that's a real separator from a lot of these, like we can talk about the Davids of the world, which don't feel chef-y. Those feel honestly pretty like made on the moon, kind of space age.

1:02:40The TASTE Team:So what we did, you know, and I give my sister credit is, you know, the first product that we created was two years in the making. Think about it, our brownie batter. It's our first flavor. In my opinion, it's not our best, but I like it. But it was two years. Then the innovation after took a year and a half for almost every SKU that we launched. So there was a lot of, I would say, craftsmanship that went into it, but also, again, quality of ingredients that you choose. The textures are important. Today, more than ever, form factor and textures make a difference. People like to bite in and feel certain things.

1:03:11The TASTE Team:And then, you know, like someone said before, aftertaste. Aftertaste is critical to a snack. And for us, we focused on not having that aftertaste. And I would love to bring up what I was eating, at least in my Uber on my way here, was I was snacking on our new No Bread PBJ, which just came out about a month ago, not even. And it's so good. It hits the spot. I'm not just saying this because that's a bias because it's my company. But I was hungry. I needed something to give me a boost. I needed something that was also like, you know, indulgence. but I feel good. I was energized after it. And that product took two years to build out, two years of tons of resources, tons of folks working on it.

1:03:47The TASTE Team:And tens, if not, I think it was maybe 50, 60 trials. I don't know the exact number, but I can get the number for you. It was trials after trials, a thick jam top, jelly top, on top of a bed of peanut butter. To keep those together, the know-how on the manufacturing was so complex. It took two years.

1:04:05Elly Truesdell:I mean, it's a feat to have a jelly topped product in like a wrapper. Without bread. Yeah, without bread, without any kind of sandwiching that stays in its form and isn't sticky to the touch where you – Exactly. It's like – I mean getting rid of that sticky factor.

1:04:24The TASTE Team:It's huge. Well, a big thing was like midday squares are first. The functional chocolate bars, they're darker chocolate with protein. Yeah. A lot of parents reading them for themselves or adults reading them for themselves. Now what we found with this no bread PBJ is parents are actually, you know, before school, we're seeing so many kids videos. They're sending us their videos of their kids eating it in the car. They're pushing it up and they're not making the mess. And this is a huge opening for us because if we can get the whole family, that's a household, you know, consumption. And that's how we're building it.

1:04:52The TASTE Team:We want to be a family snack. We want to be for everyone. And I think it's just like, you know, again, you know, not rush. We weren't in a rush. We took the time to build this out. We use data and our team of R &D is very, very strong on what they do and they work really hard.

1:05:08Elly Truesdell:Yeah. I mean, it's impressive and I love the form. Are you going to expand, you said, into different flavors of jam? Flavors, yes.

1:05:16The TASTE Team:So already we have one coming out within the next couple months. Yeah. A brand new one. That's a fan favorite for a lot of people.

1:05:23Elly Truesdell:Yeah.

1:05:24The TASTE Team:And then we'll work on it.

1:05:25Elly Truesdell:It can't be grape, is it?

1:05:26The TASTE Team:I can't tell.

1:05:27Elly Truesdell:Because grape, I mean, grape is, I love grape, but it's polarizing. So I feel like that's not the problem. But you need options, right?

1:05:32The TASTE Team:So, but what I could tell you is this, is we do things based on data and also our consumer feedback and then what's possible in our manufacturing capabilities. So that's the three pillars of innovation. And what we do is, you know, we study it all and then you make the magic of those three things together and see what you can create, right? Yeah, yeah. And I think something that we're proud of at Midday Squares is we don't just believe in launching new flavor taste differences with a similar exact thing. If you try all of our squares, they're very, they look similar in terms of like square format and two texture.

1:06:05The TASTE Team:But they're all very different in terms of actual textures in your mouth and taste profiles. Even our peanut butter, no bread PBJ peanut butter is different than our peanut butter chocolate peanut butter on the bottom. They're very different in terms of taste. That's because I believe that every consumer deserves to get something new each time. Some sort of newness. How many doors are you in right now? So we're in about 10 ,000 stores across North America, Canada, U.S. and you know what's crazy is it all started with one bagel shop

1:06:32Elly Truesdell:really

1:06:32The TASTE Team:you know in 2018 shout them out

1:06:34Elly Truesdell:which one let's go

1:06:34The TASTE Team:his name is Jeremy and he owned a bagel shop called Real Bagel yeah it's no longer in business unfortunately but I can tell you this we were three hustlers me and my sister my brother and we started we begged for someone to take us at the beginning homie should ask for equity yeah he should if you're listening to Jeremy I love you yeah and he took a chance he said I'll take one box and ever since that moment I knew retail was going to play a huge deal. And now we're in about 10 ,000 stores. And there's still about 30 to 40 ,000 more to go into North America.

1:07:03Elly Truesdell:Yeah. You're in Costco, right?

1:07:04The TASTE Team:Costco, Canada. We're in Target here in the US. We're in Whole Foods, Sprouts, Albertsons, many great retailers. And also on our website. We still do 25, 30 % on our website.

1:07:14Elly Truesdell:So you do like a direct to consumer subscription with a discount?

1:07:17The TASTE Team:No sub. Wow. No sub? Only in very certain cases we'll do sub. And the reason being is my partners and I have had some rough experiences with subs where it's hard to cancel. and stuff. So it gives you a bad taste, even if the product is so good or the brand is good.

1:07:32Elly Truesdell:Because they want to cancel mid-stream and then they start complaining that they didn't get their money back and discuss some service. We just don't like that. Order what you want.

1:07:39The TASTE Team:Order what you want. Have fun. You do have to order two boxes, which is a minimum, because it is a refrigerated item, right? So it could be out, enjoyed on the go for five days, but we have to be very careful with shipping.

1:07:48Elly Truesdell:Now, have you, I'm sure you've thought about it, but making a shelf-stable product?

1:07:53The TASTE Team:Everyone asks us that. So between you and I, here's the thing. Fresh snacking, refrigerated is growing right now really fast because consumers seem to you know believe that it's healthier and most time it is healthier there's no preservatives or additives not all the time though but it's a set that's been we're seeing you know i think last year 16 percent one of the grocery stores increase that's huge for a category i mean they're putting in new coolers you see some of these retails you see it conventional yeah targets doing a great job but you see it at conventional you see it at natural you see that you know everywhere they're putting these coolers in.

1:08:24The TASTE Team:Now, if we would have gone into ambient or non-refrigerated, we could have put pallets in some stores. We could have done massive displays. But you know what? At the end of the day, we like refrigeration and we believe in fresh snacking that it's going to be something that keeps growing and is not a trend, is not something that it's going to be here for good. So we're investing in that. And that's not to say in five years that we won't maybe touch ambient, but for now, we want to dominate the refrigeration section.

1:08:48Elly Truesdell:I mean, you also make it very clear in the package It can be on the run for five days. Yeah, travel. Have fun. So it's not like a 12-hour.

1:08:56The TASTE Team:No, and look, there's still shelf life when it's in the fridge. If you look at the best buy dates, sometimes they're anywhere from like 100 to 150 days in your fridge. Yeah. You have to look at the best buy date, though.

1:09:05Elly Truesdell:Yeah, you got to check the best buy dates. Don't quote me on that. I actually had one in my bag for like two weeks accidentally, and I ate it all night.

1:09:11The TASTE Team:Were you okay?

1:09:12Elly Truesdell:No, I'm good. You know, I'm good. I'm good. I'm good. What about C-Store? So C-Store would be great. Because, you know, we love sheets here. I know. like a pro sheets and i and i just you know when driving around america you're like the fresh

1:09:25The TASTE Team:snacking is huge it's c-store right now such an opportunity now look c-store it takes a certain amount of like how you distribute it you have to manage it really strong yeah we're not ready at the moment that being said you're not in c-store we're not in c-store we're not not yet that being said i believe it's a huge opportunity going forward and that 30 to 40 000 other doors that I talked about doesn't even include C-Store. Oh, no way. It's actually way more.

1:09:49Elly Truesdell:Wait, so you're waiting for Walmart, right?

1:09:52The TASTE Team:You got Walmart, you got Costco, you got Publix, you got all these massive great partners. You know, even again, like pharmacy, like huge opportunity to like, yeah, everyone can the beauty about a midday square is it's an afternoon snack. It's it's it could sell in almost any type of retailer. Obviously not like, you know, fashion stores, but everywhere like, yo, bro, you got some fashion. Yeah. We got some merch. It's coming soon, by the way. Really cool stuff. So get ready. But one thing is, is like at the end of the day, we just need coolers. So if you have coolers, we can work with it. Now, we don't just launch retail for the sake of retail.

1:10:27The TASTE Team:We have to be prepped for support on the retailer. We want our velocities to be high. There's no point of going in there for the sake of dollar value. Because once you're in and you start failing, you're out six months later. They boot you pretty quickly. Exactly. So we go slow. Patience.

1:10:40Elly Truesdell:So when you say slow, what does that actually mean? Is it just being like slightly selective? Selective. or taking not the full store, you know. Both.

1:10:50The TASTE Team:So like instead of let's say a national launch with certain retailers, maybe we'll do like, you know, a couple hundred stores, do really well, then do it extra. Because like, you know, for example, like Target has their Target app. You could work on their Target app and invest in there to learn how to get, you know, more trial and all these things. So I think it takes time to understand how each retailer or channel strategy should be. And I think that we've learned over the last seven years is no one's alike. They're not like, like Target's very different than Whole Foods. Whole Foods is very different than Sprouts.

1:11:19The TASTE Team:And they might have similar consumers, but how they shop is different. How they interact is different. So we studied that and we took our time. And I think the beauty of patience is you actually see what foundational growth can actually be and foundational success can be. How close are you to Walmart right now,

1:11:34Elly Truesdell:breaking in?

1:11:35The TASTE Team:We love Walmart. We sell in Walmart Canada and it's a great partner. And then Walmart US is something that we're working on. I mean, that's going to be. It'll be huge. It would be huge. It would be huge for you guys. Yeah. And we want Midday Squares to be available for everybody across North America, within distance of everybody. And that's something that, you know, again, is important to us is distribute where the consumer wants it. Yeah. And work with them to make sure it works really well within that retailer.

1:11:59Elly Truesdell:You own the pipes. We're vertically integrated. You are, exactly. And that's obviously for margin that really helps.

1:12:05The TASTE Team:Margin and also from a creative standpoint on innovation. so we could do things that like some machines just aren't able to do you know and i think that that's going to give us an advantage in the long term maybe at the beginning risk a top line at

1:12:18Elly Truesdell:the like currently if you're going out to like you know co-packers around the country in america and getting you know your 10x your production but it might be a shitty product yeah or it might not

1:12:27The TASTE Team:be like as as as great like for us we want trust with our consumers yeah and that's the most important thing you can have is yeah is deliver what you say you're delivering on in terms of texture, flavor profile, and the price point. And if you don't, you're going to build a distrust and they're not going to come back. They're going to leave your product. And just, so for us, the focus is give people what we say we're giving and make sure it's that high quality that we want to be.

1:12:52Elly Truesdell:I feel the Americans want bigger format. I feel like a 2X, 3X, 4X square.

1:12:56The TASTE Team:Form factor of size is going to be something really important in the next five years because how people snack has changed. And like when they're snacking, how much type of snacking are they doing so one thing i could tell you is we used to be two pack two squares in a pack day one august 2018 till like 2020 i think it was we were two squares and what we found a lot of the feedback was was they would eat one and then people would put it back in their fridge later and it'd be the pack would already be open and like it'd be less fresh so they actually when we did change it to one square a lot of them were like wow this is perfect size because it's just enough for a snack it's not a meal but it keeps you full for a little bit and it makes you feel energized, but you don't feel over like over the amount.

1:13:36The TASTE Team:So we like this. We're 35 gram product right now.

1:13:38Elly Truesdell:I know. Or you're like me who just goes for two. I just went for two. I ate two this morning. Yeah.

1:13:44The TASTE Team:One in the Uber, one in the one on the way here.

1:13:46Elly Truesdell:So what's your daily intake like looking like?

1:13:48The TASTE Team:Right now it's three PBJs a day, which is pretty wild. But you have to imagine, Matt, I was this is a crazy story. I was allergic to peanuts for most of my life. No way. I found out a year ago that I had outgrown the allergy. And it's not medical advice for anybody. I did the testing i did the challenging and i outgrew it and now i eat peanuts like i'm obsessed like i have an obsession where like i like to smell it in the morning i go eat my pbj midday square i eat the peanut butter midday square i just i'm i'm scoffing a lot like well so you were out there

1:14:20Elly Truesdell:selling this and you couldn't even eat it for like the first most of the products 80 % of the

1:14:24The TASTE Team:products i couldn't eat and i would i was pitching but i'll be honest i would tell my retailers i've never tried but i believe in the company that's what i started they'd laugh they'd be like you never tried your product i'd be like no but i believe in the concept of what we're creating

1:14:35Elly Truesdell:right i guess that offers a pretty interesting you know angle so when i first tried i was scared

1:14:39The TASTE Team:i'm like what if i don't like it but i i do like it you could watch my consumption to see the trust

1:14:44Elly Truesdell:i eat a lot it's really fun to hear this story i mean i i feel like this that this kind of energy and controlling the pipes is like uh you're you're really you're really an example for founders out

1:14:56The TASTE Team:there like what advice would you give patience yeah play the long game you know for us i think like i said i don't look at this as a three four five year overnight success it's it's going to be a 10 to 20 year overnight success story and you got to be okay with that and i'll tell you why because the decision making you're going to make it's it's it's it's always in long term short-term decision making typically never works more or less and i think that's the first thing the second thing is block out all the noise and comparisons and and media that you see social media we talked to a little bit about before everyone's you know promoting xyz and it looks like perfect and then you know you're on your own game and play your game because that's what you're best as cheesy as that sounds you are the best at you you're not the best at being someone else or being another brand and if you could stay true to those two things blocking out the noise and being patient i believe as long as you have the great product yeah you're going to win and it's going to reward

1:15:46Elly Truesdell:you over time is patience about uh really having a focus on margin uh over top line and growth

1:15:53The TASTE Team:at first we focused on top line and then margin became the most important thing not because of the market by the way i think the market shifted to that as you saw but for us it was like we need margin to fund this business so like you know at the end of the day you're not going to go build a business and not have a sustainable business you're not going to just build a top line business without being able to you know it exists for 30 40 50 years right and i think that things got

1:16:15Elly Truesdell:kind of confused for a little bit yeah well money was cheap so top line was easy and clearly people just wanted to pump and dump their companies.

1:16:24The TASTE Team:And margin is a lot of telling stuff out of a business. If you have a good margin that can sustain, the business can go through a lot of good or bad times. It really can. And look, cocoa prices went through the roof. The last two years, we had 40 plus percent of our product was cocoa. You can imagine the price goes up four times and it's almost half your product. You get screwed, but we didn't raise prices. We chose to keep prices and we just innovated out of chocolate, right? And we kept our chocolate and innovated. Now we're seeing Coco come down, so we're getting a tailwind. But we ate up a significant amount of margin for almost two years that hurt the business.

1:17:00The TASTE Team:But we were able to take it because of how we built the organization from vertical integration and having margin as a front focus. But that shouldn't – margin focus shouldn't take away from your product market a fit of taste and price. Without those two – You can't sacrifice it for a couple extra bucks.

1:17:17Elly Truesdell:I mean that's for sure.

1:17:19The TASTE Team:And have like a Like I have a raison d 'etre Don't be the brands that go So wide Focus on who you are, what you do What you sell and just lean into that

1:17:31Elly Truesdell:At all costs Have any of the founders visited Farms, producers?

1:17:36The TASTE Team:My sister and brother-in-law went to visit Across the world, they went all over That's nice to hear, a lot of places don't do that No we did it and also we're big We like to know the stories and stuff like that And also the people And look, I think that people don't realize how craft, how much craftsmanship goes into food, even like the snack products, even some beverages, like there's a lot of touch points. And I've always wanted to show the behind the scenes as much as we can because there's some trade secret stuff. But, you know, maybe in the future we'll make some sort of, you know, not docu-series, but like a docu-like type of content where you could see.

1:18:09The TASTE Team:I bet. That'd be great for your audience.

1:18:11Elly Truesdell:So, Jake, like you get to exit and you make a bunch of money and you get to really start over. What's for you an interest for our next chapter for you?

1:18:19The TASTE Team:My biggest interest in life, and I spend a lot of time currently doing it, which helps Midday Squares, but it's not the only reason. I want to inspire more people to take risks. And it sounds really cheesy, but I want to inspire the younger generation to believe in themselves and look at other paths in life. There's not just that one path. So I go to schools every week, universities. I go to elementary schools. I go to high schools. And I talk about risk and failure. and I talk about how, you know, reframing your relationship with failure and leaning into who you are as a human, me as a human, is your best chance at success at life.

1:18:51The TASTE Team:And I don't know what success is to you or it could be, it's very different to you, to me, to anyone, but taking the time to go fire up that young generation and show them another path, it's my impact that I'm making. It's where I want to spend a lot of my time because, you know, just where I'm from, there's 100 ,000 fewer entrepreneurs than we had 20 years ago. Wow. That's a big number.

1:19:12Elly Truesdell:And people just aren't doing it.

1:19:13The TASTE Team:I think risk, risk aversion has come in and I want to just inspire more risk. Doesn't mean you should take that route, but it just, there's a, there's a path and a possibility. And look, my partners and I are three average individuals that have big personalities. We're loud as hell. We're delusional in a good way, but we believe we have unconditional belief. We see a little light that's driving us. And if we could build hopefully a very scaled CPG business, we'll have done it by being us and taking our own path. That's the inspiration I want to show.

1:19:40Elly Truesdell:That's cool. So when you're not doing public speaking and you're not working on the brand, what's for fun?

1:19:46The TASTE Team:I play outdoor hockey. Oh, cool. A lot.

1:19:48Elly Truesdell:Yeah.

1:19:49The TASTE Team:And I do padel, you know the sport paddle?

1:19:51Elly Truesdell:Yeah, yeah.

1:19:52The TASTE Team:Racket sport. If I'm in a warmer temperature, I'll do the padel. If I'm in my cold temperature where I live. You're playing on the pond? Not on the pond, only on weekends. But during the week, I play in the neighborhoods. Every neighborhood where I'm from has a rink more or less five-minute walk, ten-minute walk.

1:20:04Elly Truesdell:That's cool.

1:20:05The TASTE Team:So I go and I go alone. I don't even go with friends. Yeah, yeah. And it could be snowing. I don't care. I just want the wind it sounds weird the wind to hit me the cold and then just to be with a puck which I grew up with I played hockey almost every day growing up and it just reminds me of like you know it decompresses me down to not about business not about anything like that and it's just me in the ice and me in the puck and I feel just the competitiveness but I also feel this this nostalgia and I also get a little bit of a workout so

1:20:32Elly Truesdell:I do that

1:20:33The TASTE Team:and I play Catan

1:20:34Elly Truesdell:with my friends that's nice so physical activity what's the heated rivals take in Canada are people loving the show? People love that show.

1:20:41The TASTE Team:Yeah. Have you checked it out? I only watched the first episode. Yeah, yeah, yeah. My wife and I watched it, was that a week ago? Yeah, yeah. And it's super interesting. I watched like three. It's good. It's popular in Canada.

1:20:53Elly Truesdell:Yeah, yeah. It's fun. It's a great show. It's fun. Yeah.

1:20:55The TASTE Team:You know, and again, storytelling, right? Everything's storytelling based. And I think that at the end of the day, like on the game of entrepreneurship back to that, like you got to find the things you love to get through the journey. because what I've learned is like, you got to have good laughs outside of work. You got to be able to do things. Like me, like playing hockey is a good laugh for myself, but I go play Catan, like the board game. Oh, Settlers? Settlers with my friends. It's so competitive that the loser has to do a prank call at the end. So there's like a, like there's a loss. Like if you lose, you have to call somebody.

1:21:27The TASTE Team:You have to do Jerky Boys?

1:21:29Elly Truesdell:Oh my, you know, Jerky Boys. Jerky Boys is a 90s prank call comedy duo. It's on Spotify.

1:21:35The TASTE Team:Oh, I'm going to listen to this. This is going to be fun.

1:21:37Elly Truesdell:Jerky boys, they're like the legend. This is fun. The absolute goats for prank phone calls.

1:21:40The TASTE Team:You know why I do the prank calls? They're not harmful, by the way. They're very fun to people. And I usually tell the person after.

1:21:46Elly Truesdell:Yeah.

1:21:46The TASTE Team:But it's to bring out the child inside of me a little bit more. Because you sometimes forget as you grow up your youth. Yeah. And prank calling is like immature a little bit in a fun way. Yeah. So I prank and like, you know, it's just I'll do like I'm delivering hot pizzas, like, you know, some fun stuff. And like, you know, like I'll be outside your house. and like, I don't know, it's just, you know, as an adult, it's funny.

1:22:05Elly Truesdell:So the loser has to make the prank call. And are you doing -

1:22:08The TASTE Team:We choose the person before. I see. It's usually someone relatable to us because it's got to be fun. It can't be something - It's someone like maybe you know. Yeah, we know. Yeah, yeah. So we know the person and we know that they'd find it funny. So like we call them after and tell them.

1:22:20Elly Truesdell:Prank phone call therapy, like this idea of like this child life, going back to childhood, inner child. We could go Freudian a little bit, but like that's kind of, I feel this.

1:22:30The TASTE Team:Well, I didn't do well in school and I was the class clown. So the way I compensated through my insecurities of my lack of academic skill was I would prank. I'd be the prankster. So it brings me back to the fun time. That was like a really fun time in my life where like I was in school. Yes, I didn't do well. I got bad grades. But I had the time in my life. And whether it was like, you know, doing all kinds of creative pranks, that was my childhood. So this brings me back at 32 to doing it. And people say that you're 32 pranking people. I'm like, why not?

1:22:58Elly Truesdell:Dude.

1:22:59The TASTE Team:As long as you're not harming people and you're coming from love, place of love, it's all good.

1:23:02Elly Truesdell:Don't grow out of it. Jake Carls, I really am pulling for you guys. I'm a fan. Appreciate you. Thank you so much for joining this. Thanks for having us. And don't stop.

1:23:16Elly Truesdell:This is Taste is hosted and produced by Eliza Abarbanal and me, Matt Rodbar. The show is edited by lead producer Clayton Gumbert and supervised by Pat Stango, director of media production and development at Penguin Random House. Thanks to Shalia Harris and the production team at Penguin Random House. Theme music by Steve Rydell. Episode portraits by Louise Zergon Pomeroy. Logo design by Ellie Skirzat and Ian Dingham. Visit Taste Online at tastecooking.com and make sure to subscribe to our newsletter to keep updated on all cool things in the world of taste.

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