DTC Podcast Summary: Ep 501 - How Mid-Day Squares Scaled to $36M with Careful Costco, Costly Cocoa, and a Bitcoin Supply Chain Makeover with Nick Saltarelli

Release Date: April 21, 2025

In Episode 501 of the DTC Podcast, host Eric Dick engages in an insightful conversation with Nick Saltarelli, the visionary behind Midday Squares, a rapidly growing direct-to-consumer (DTC) ecommerce brand. The episode delves deep into Midday Squares' journey to scaling their revenue to $36 million, overcoming significant supply chain challenges, and leveraging innovative solutions like Bitcoin to streamline operations. This comprehensive summary captures the essence of their discussions, highlighting key strategies, challenges, and forward-thinking approaches that have propelled Midday Squares to success.

1. The Road to $36 Million: Launching at Costco

Nick begins by recounting the pivotal role Costco played in Midday Squares' growth trajectory.

• Strategic Partnership with Costco:
  "[We are] 35% of the way to the goal... trailing 12 months is about 29 million. So we're, I like to say we're 35% of the way to $100 million a year." (01:32)

  Midday Squares dedicated two years to land a partnership with Costco, emphasizing the importance of "taking your time and doing it right." The launch wasn’t just about securing shelf space but about building a strong foundation that resonates with Costco's member base.

• The Roadshow Experience:
  "The roadshow was single-handedly the most important thing. We broke a 10-year-old record... selling the most amount of product ever in terms of dollars in 13 days." (03:00)

  Hosting a relentless 13-day roadshow, Midday Squares not only shattered sales records but also fostered a sense of community and excitement among their fanbase. This collective effort was instrumental in transitioning from 40 initial stores to a national presence within two weeks.

2. Overcoming Supply Chain Challenges with Bitcoin Integration

A significant portion of the conversation revolves around the tumultuous cocoa market and how Midday Squares innovated to mitigate these challenges.

• Cocoa Price Surge:
  "We've hit 11,000 USD per metric ton in the last 12 months... Midday Squares 35% of the product is cocoa. So our margin was just destroyed." (07:38)

  Cocoa prices skyrocketed unpredictably, crippling traditional supply chains. Nick highlights the necessity of first principles thinking, inspired by Elon Musk, to dissect and address the root causes of the inflated costs.

• Bitcoin as a Supply Chain Solution:
  "With Bitcoin, I was able to set up this network where I was just sending people money... It was costing me 16 cents to release funds into Indonesia in three minutes." (14:39)

  By integrating Bitcoin, Midday Squares revolutionized their payment processes. This allowed real-time transactions, fostering trust and efficiency within their network. The ability to disburse funds swiftly enabled Nick to build a reliable "army" of on-ground partners who could manage operations seamlessly.

• Cost Reduction Achievements:
  "We've been able to reduce our cocoa cost by about 35% just by doing this process." (17:01)

  The strategic use of Bitcoin not only streamlined payments but also significantly cut down costs, enhancing the company's profitability despite external economic pressures.

3. Scaling Production Amidst Growth

As Midday Squares expanded, scaling production became a critical focus area.

• Investment in Manufacturing Capabilities:
  "We had to buy a $500,000 machine... we spent a year setting up the plant to handle that volume." (20:01)

  To meet the increased demand from their Costco partnership, Midday Squares invested heavily in advanced machinery and expanded their manufacturing facilities. This proactive approach ensured they could sustain growth without compromising product quality.

• Balancing Capital Expenditure and Profitability:
  "I constantly live in a duality of where I feel like I'm losing and winning at the exact same time." (21:21)

  Nick candidly discusses the challenges of balancing heavy capital investments with the need to maintain profitability. The ongoing expansion efforts are poised to yield significant returns once the cocoa crisis stabilizes.

4. Rethinking Marketing Strategies with 'How Brands Grow'

A transformative segment of the episode explores the insights from Byron Sharp's seminal book, "How Brands Grow."

• Market Penetration Over Retention:
  "Retention is going to be a big piece that we're not going to focus on. We're going to just focus on building out our market share." (32:12)

  Contradicting conventional DTC wisdom, Nick emphasizes prioritizing market penetration over obsessive retention metrics. This shift aligns with Sharp's findings that broader market reach is more impactful for scaling than focusing solely on retaining existing customers.

• Challenging Traditional Metrics:
  "They have data suggesting that retention... is three times more expensive than just acquiring a new customer." (32:12)

  By adopting these insights, Midday Squares is recalibrating their marketing strategies to emphasize acquiring a diverse customer base, ensuring sustained growth and enhanced market presence.

5. Leveraging AI and ChatGPT for Operational Excellence

The conversation also touches upon the integration of artificial intelligence tools to boost efficiency and innovation.

• AI as a Multifaceted Tool:
  "We use it in every single facet... we're encouraging people to find their own ways to implement it." (25:22)

  Midday Squares has embedded AI, specifically ChatGPT, into their daily operations. From research and development to documentation and standard operating procedures (SOPs), AI serves as a virtual asset, enhancing productivity and knowledge accessibility across the organization.

• Future of AI in Business Operations:
  "AI is not going to have this one moment where it's the unlock. It's just going to become ubiquitous." (27:27)

  Nick foresees AI becoming an integral part of business processes, much like computers, driving continuous improvement and innovation within the company.

6. Future Endeavors and Global Expansion

Looking ahead, Midday Squares is poised to further expand their global footprint and solidify their market position.

• International Supply Chain Engagements:
  "We broke bread over there [Ecuador]... the next trip will probably be Ghana." (17:38)

  Nick shares plans to engage with international partners, including government bodies like the Ministry of Agriculture in Ecuador. These efforts aim to integrate Bitcoin more deeply into their supply chain, ensuring greater efficiency and reliability in global operations.

• Commitment to Innovation:
  "There are no rules outside of the law... take the bull by the horns and start chipping away." (18:54)

  Embracing a philosophy of relentless innovation and proactive problem-solving, Midday Squares continues to break barriers and set new standards in the CPG and DTC landscapes.

7. Closing Thoughts and Acknowledgments

As the episode winds down, Nick offers final reflections on the journey and expresses gratitude towards collaborators who have contributed to their success.

• Acknowledgment of Influencers:
  "Please, I would love to listen to how 'How Brands Grow'." (35:04)

  Nick credits influential figures and resources that have shaped Midday Squares' strategic direction, underscoring the importance of continuous learning and adaptation.

• Community and Team Support:
  "We have no pending lawsuit with either of those companies and all is good." (24:27)

  Addressing external challenges transparently, Nick reassures listeners of their commitment to maintaining positive industry relationships and ethical business practices.

Notable Quotes with Timestamps

• On Entrepreneurial Resilience:
  "We sit and wait for the powers that be to solve our problem, or we take the bull by the horns and we start chipping away." (00:52)

• On Supply Chain Innovation:
  "With Bitcoin, I was able to set up this network where I was just sending people money." (14:38)

• On Marketing Paradigms:
  "Retention is going to be a big piece that we're not going to focus on." (32:12)

• On AI Integration:
  "AI is not going to have this one moment where it's the unlock. It's just going to become ubiquitous." (27:27)

Conclusion

Episode 501 of the DTC Podcast offers a treasure trove of insights from Nick Saltarelli, illustrating how Midday Squares navigated complex challenges to achieve remarkable growth. From strategic partnerships and supply chain innovations to reimagined marketing strategies and AI integration, the episode serves as a masterclass for evolving DTC brands aiming for scalable success. Nick's candid reflections and forward-thinking approaches provide actionable takeaways for entrepreneurs seeking to carve their niche in the competitive CPG landscape.

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