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- [00:01]
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- [00:22]
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- [00:42]
NetSuite/Oracle Announcer
NY.
- [00:44]
If managing office supply runs is on your list, get Walmart Business to save time, money and hassle. It's everything you love about Walmart like low prices and wide assortment with even more for your business. Even get express delivery in as fast as one hour. Fees and terms apply. Start your free.
- [01:03]
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- [01:09]
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- [01:25]
Ariella Sapphira
More.
- [01:28]
Now I talk to founders who are asking for advice and it's like they haven't even built the product and they're like, exit strategy. I'm like wow girlfriend, wow. We were.
- [01:37]
Graham Winfrey
Different. The idea of making an exit can bring out all kinds of reactions in founders. Some never want to think about it. Others are putting a target sale price into their launch plans. Wherever you fall on the exit strategy spectrum, today's Founder Group Chat has something for you. I'm Graham Winfrey and this is the business model.
- [02:12]
For our final roundtable on scaling business. Ariella Sapphira, Fanny Gerson and Sarah Lafleur are back to talk exits. Sarah and Fanny are still running their companies, but Ariella has already completed an exit on her mental health startup Zyra. We hear the inside scoop on her exit after a short.
- [02:29]
Sponsor Announcer
Break.
- [02:32]
This podcast is brought to you by IHG Business Edge, where small and mid sized businesses unlock exclusive savings at more than 6,600 IHG hotels and resorts worldwide. Visit businessedge.ihg.com to learn.
- [02:47]
Graham Winfrey
More.
- [02:51]
So Ariella, you're the one founder here who has been through the exit process. Talk about what you were thinking in terms of the ultimate goal for your business in the early years. And did you have an exit strategy when you wrote your business.
- [03:05]
Ariella Sapphira
Plan?
- [03:07]
No, certainly not. And I didn't think there was never an end like I so I was just Obsessed with solving mental health care, working on mental health care, and had.
- [03:22]
To an extent that someone could fairly call me naive. I was just a teen. Like, I'm so excited and passionate about working on this, not thinking of any. There's no end. We're gonna do this forever. To the point that when people would. When those conversations came up sooner, I really responded from a place like, why would I ever stop doing this? This is what I'm supposed to do. And I. I think some part of that is helpful or true, which is like, I personally am very passionate about mental health care. I am still really passionate about it and still want to work on it. The passion that I have for mental health care is different than the business that is created. And when I look back, I think that advice would have been. It certainly was offered to me by that advice. But I was just so blind and pretty obsessed with how do we solve this? And would. Frankly, just a lot of exhaustion from the company and realizing that I could. There's still the Ariella Sapphira who loves mental health care and wants to work on it like she still exists and that is still real separate from this business. Exiting was a new realization for me five years in, and that's what ultimately would lead to us selling. But no, in the beginning, I mean, I know founders. Now I talk to founders who are asking for advice and it's like they haven't even built the product and they're like, exit strategy. I'm like, wow, girlfriend, wow. We were.
- [04:51]
Graham Winfrey
Different. So how did you make that turn from never wanna.
- [04:56]
Ariella Sapphira
Sell? Yeah.
- [04:59]
I mean, to be honest, to be real, burnout was a big part of it and.
- [05:07]
Being burnt out. We had also had to do a number of layoffs and I did not have the backbone to keep going after so many. So I think the real story is just like, I was just a human on the other side of it being like, I don't know how much longer I could. Like, I don't know if I can do another year of this right now, let alone five, ten, et cetera. And we were, you know, up against. We were going to do a fundraiser, which is a real marker of like, so you're signing up for five to 10 more years, if not 100. And I know, I know what I'm like when I'm fundraising, ready to spend the rest of my life on this. And also investors know what I'm like when they meet a me who's ready to do this forever. So I felt it was pretty evident in the journey of Like, I'm. Man, could I really look someone in the eyes right now and say, I'm going to give 10 more years to this? No, I will give a million more years to mental health care, but I really need a break right now. And that's sort of the shortened summary version. And we're fortunate that I worked out with timing and had a board who supported. And we're certainly along for the ride, including the exhaustion and burnout that came with it. But I did not go into the experience thinking that I didn't think beyond the next day. Sometimes I wasn't even thinking of the next.
- [06:27]
Graham Winfrey
Day. Did you field unsolicited interest or did you have to go out and say, we're up for.
- [06:33]
Ariella Sapphira
Sale? We fielded unsolicited interest over the years. I did. It's funny, I didn't. I mean, I'm still young, but I was really young when I was 24, when I started the company. So I think of times that people reached out to acquire the company and I took part in those conversations. Didn't quite understand. Again, my brain was so on, like, but I'm doing this forever. So, like, what do you. What do you mean you'd want to acquire? Like, what does that even mean? And part of it was truly, like, I didn't go to business school. So I was like, literally, what do you mean? What does that.
- [07:01]
Fanny Gerson
Mean?
- [07:03]
Let me look it.
- [07:04]
Ariella Sapphira
Up. And I was, like, learning what Churn meant as well. Like, we were really figuring out business 101.
- [07:10]
Yeah. So it was. We, like, had. At that point, there were a number of people we had conversations with. So it wasn't by any means a fresh new effort. I've never. We've talked to many of these people before and knew what they were interested in, what they weren't interested in, which allowed the process to be faster than maybe it otherwise would have.
- [07:31]
Graham Winfrey
Been. Fanny, you've had several different ventures. How do you think about the future? And Lanny.
- [07:39]
Fanny Gerson
Orkina. Oh.
- [07:42]
I mean, as we were talking before, a lot of it is more in a personal way, like, do we have to leave the country? So now.
- [07:53]
That changes everything.
- [07:56]
But we don't want to close the businesses. So what are the different options? And we've looked. A lot of people have offered us through the years, like, franchising. I don't like the franchising model.
- [08:07]
Graham Winfrey
Because of quality assurance.
- [08:09]
Fanny Gerson
Issues. Exactly. But we've also been offered licensing overseas. So those are things that we're exploring now, like, you know, in places like Japan and.
- [08:24]
Maybe open in Mexico City, you know, and sort of see, okay, what are the parts of the businesses? So right now it's sort of, we're doing the opposite. Instead of scaling, we're editing and we're tightening, you know, and kind of, okay, let's see where we're at. And what does that look like in a, in a personal level? And I always thought, I never thought about it in exiting in any scenario. It's more, this is something that maybe our son could inherit if he wanted to, you know, but then he may have his own, you know, like my dad had a family business, you know, kind of those things. And he's going to have his own passions and things. But it was sort of something that we could give because also it's, you know, for us it's not just like the product, it's what are the values and the things, you know, the organizations that we support and the, so if we, you know, we're exploring options, do we maybe partner up with a different restaurateur or operator here? So but right now we're trying to sort of tighten and you know, evaluate in a personal level like the healthcare, like as I mentioned before, which is the most important thing and what would that look like? So we're thinking perhaps of going to Mexico for a year and kind of test it out. Can the business do back and forth and set up systems? Maybe it's like, oh no, there's a saying in Spanish that's que tengatienda que latienda, which rhymes. But basically it's like if you have a story, you better be present. So kind of like you gotta be. And we've always been hands on. So it's setting up these systems and so we don't know. That's a very long answer to say we don't know. We still always exploring and I keep going back like even if we found a co packer that could do the quality that we have, that we want and that we do, I don't know if that's what, that's what we want. There's days that I wake up, I'm like, we could totally be the Mexican Haagen Daz. You know, Haagen Dazs is amazing in the sense you find it in a deli or you find it in like very high end supermarkets. They have this, you know, and it's consistent and it's great. And very few people have been able to sort of do it that way. You have sort of like the high end, you know, gourmet ice creams and then you have the more. But this is sort of like taps a lot of different ones. But I love hospitality and so while on the one hand I would want everybody to be able to get these paletas everywhere in the country or maybe even further. There's so many points because there's so many breaks in the chain of cold, you know, the cold chain that there's a possibility that when you get your paleta it's not a good experience and it's not because the product is bad but because the melted and refrozz. Melted and refroze. Exactly. And so where is that? You're detached from the customer, you know. And so that's another aspect because it's like a whole different business. And I've also met like I met this woman who had. Who has this really delicious ice cream called Dolce in D.C. and she took a financial literacy course last year with James Beard foundation and she gave a presentation and she's like sort of like the ideal, you know, she has I think five or six shops in D.C. and makes her own ice cream. But then she did a co packer, she went through a co packer and she was nationwide in I don't know like a thousand stores, like really. And it was all self funded and I was. And that I saw it when I was trying to decide whether to pull out of Whole Foods or not knowing in my heart that it was the right decision. And after her presentation I said I am going to pull out because even though like she had the best case scenario and she talked about how much money she had to spend just on promotions because you have to have these, you know when you have like sales, not the slotting fees which is also a thing like when you go to the supermarket there's these things. For those who may not know there's a reason why you always see the same product like right eye level or right when you're exiting all over the country, you know, because they pay to be there. And so those are slotting fees and for people to go. But then there's a separate like promotional things and I can't remember the number but it was something like $500,000. And I said if you have to just how much ice cream do you have to sell to just make up for that, that's money you won't, you know, the margins are very low. And so I saw her a few months later and I said thank you, you know, and she said oh, I didn't want you to make a decision based. I said no, no, no, it was good. And she told me this thing, like.
- [13:40]
Top of the mountain, you know, like amazing. Her co packer something. There was some kind of. I think it was listeria. Not in her products. In another line of ice cream.
- [13:53]
Graham Winfrey
Cakes. I think in the same co packer.
- [13:55]
Fanny Gerson
Facility. Same co packer facility. But the way that normally works is you, you know, they shut that line down while they do the investigation. But it was a very aggressive. Who apparently has a reputation of shutting places down and they ended up going bankrupt. This co packer and all of these companies, like all of these ice cream companies. There was Marco's ice Cream who was growing. Jenny's had all of these companies and he just didn't have enough coverage. And it was in the beginning of the summer, so they lost millions of dollars worth of products. And I said, I don't have the stomach.
- [14:36]
To your point for this. You're so detached from the control when it works great, it's amazing. And so I don't think that that's the route. And so sometimes I think, oh, if I went back to Mexico and I did the same thing. We're doing the Paletas and we could just do events, you know, like, we could just do big events because people have huge weddings and we do a lot of. Even now we do a lot of. And that I love to do. We do a lot of collaborations with fashion, fashion brands and with liquor companies, spirit companies. And I love that because it's also, you know, it challenges me in a creative way. And so I think it's more what. What do I want to do in. In my day to day. Yeah. But sometimes I still wake up and think, like, we could be the Mexican.
- [15:27]
Ariella Sapphira
Haagenhas. You could be if you want to.
- [15:31]
Fanny Gerson
Be. Exactly.
- [15:31]
Graham Winfrey
Exactly. Sarah, when can we expect the MM lafleur.
- [15:35]
Sarah Lafleur
Ipo? Oh my gosh. I would never want to go.
- [15:38]
Ariella Sapphira
Public. We'll start.
- [15:40]
Sarah Lafleur
There. But I am, you know, gosh, there's so much to say about this. I thought you both gave me so much to think about. And I've definitely both thought exactly what Arielle's thinking. I've definitely thought exactly what Fanny's.
- [15:53]
Fanny Gerson
Thinking.
- [15:56]
Sarah Lafleur
I.
- [15:59]
I really do love what I do. And I know this sounds. Sounds like so crazy, but like, you know, the vision of the company is the world's a better place when women succeed.
- [16:15]
And our medium just happens to be fashion. And fashion is such a hard category. It's like what people say about acting. If you love anything else, go do that.
- [16:26]
And it sucks. But I happen to love fashion and I love the power of transformation that people feel when they find just the right outfit. And I'm like obsessed with that feeling that we can give our customers. Like we were in. I was in Georgetown yesterday at our Georgetown store and I just like I saw that happen right in front of my eyes where she was like, oh my gosh, like look at me.
- [16:50]
Ariella Sapphira
You know, like I didn't, didn't know.
- [16:52]
Sarah Lafleur
I could look like this. And like, anyway, so I'm obsessed with that feeling. And.
- [17:00]
Yeah, so I guess the long story is like I'm in it for some reason. It's actually not for some reason. I won't tell you why because I feel ridiculous saying it, but I know I have another like 12 years in me.
- [17:16]
To be.
- [17:17]
Graham Winfrey
Exact. So 12 years is when the idea 12.
- [17:19]
Sarah Lafleur
Years. 12 years within 12 years. I have investors and I am very serious about wanting them to have a return so that I do feel strongly about. But I'm very much like separating that from my willingness to want to.
- [17:38]
Keep showing up every day, I guess. And right now I feel, despite the chaos of the tariffs and all, I feel.
- [17:46]
Graham Winfrey
Energized. When you have a mission as a founder, it's natural to have a drive to keep going even after you exit. So why did Ariella take a nine month hiatus after Xero was acquired? We'll find out after the.
- [17:57]
Sponsor Announcer
Break.
- [18:00]
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- [18:26]
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- [19:07]
NetSuite/Oracle Announcer
York, NY.
- [19:10]
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- [19:35]
Sponsor Announcer
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- [19:41]
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- [20:03]
Graham Winfrey
Learn more.
- [20:07]
Ariel, you've been through the entrepreneurial mill.
- [20:13]
There's a notion that after a matter of time you're going to start something else. Because.
- [20:19]
Fanny Gerson
You can't.
- [20:20]
Graham Winfrey
You can't.
- [20:22]
Tell us. Talk about your experience.
- [20:24]
Sarah Lafleur
With that. What's your.
- [20:26]
Ariella Sapphira
Next venture?
- [20:29]
I'm excited to create again.
- [20:34]
Yeah, I have the if you call it an illness, whatever it might be like, I certainly there's so much I want to make and I think mental health is a bigger issue today than it was five years ago. And for all the good that will come out of AI and our glorious new tech world, I also think there's a tremendous amount of loneliness and just bad that will come from it in terms of our mental health and human connection. So I don't know what I'll be building, but I care a lot about mental health. There's a number of things also outside of pure obvious mental health and just.
- [21:17]
Fun projects I want to create. Don't yet know which one, but I told myself that a board member advised I take nine months off and like truly fully off takes nine months to make a baby. Like I'm coming back to life after and I'm currently at what month? Seven.
- [21:38]
And grateful that I took the advice because two months in I was like, oh, I'm starting a new thing now. And I was ready. I was ready to commit in April to start something new. And I'm very grateful that he really pushed me to not do that.
- [21:54]
So we'll be enjoying some more time off. Like reading books that are not about mental health care and writing without the purpose of having.
- [22:04]
Fanny Gerson
A solution. Just being able to remember the thing you told us. I love that sentence you said when we were talking before that you said to.
- [22:12]
Ariella Sapphira
Your brother.
- [22:15]
Move at the speed of handwriting. Yes. Yeah.
- [22:18]
Sarah Lafleur
I'm keeping. That's a.
- [22:19]
Ariella Sapphira
Beautiful phrase.
- [22:21]
Sarah Lafleur
I know. I'm going to put that in my.
- [22:22]
Ariella Sapphira
Head. Yeah. I mean a lot of lessons around when you're not on your phone, your laptop all day. Wow. The brain can be a clear place. And we, I mean certainly in terms of mental health, can get to know ourselves much more kindly and much more truthfully if we're not in this like on demand autopilot mentality that we otherwise I think can.
- [22:49]
Graham Winfrey
Operate in. Last question for anyone is we're in such a tumultuous period right now, volatile period right now. But they say that starting new businesses in recessions, you know, challenging times is actually the best time to do it. Is there anything, not that you're going to start a new brand or a new venture right now, but is there anything that makes you think, oh, now is actually a good time to try out some new product or something like that that you've been.
- [23:19]
Sarah Lafleur
Thinking about? I mean, it's funny that we just talked about like AI being our downfall and then talking about AI, but I am implementing a lot of it at my company. It is incredible the power of what it is able to do and design wise or no, honestly more for.
- [23:43]
So I do think.
- [23:46]
It enables our stylists to work better. Often when so much of our work with our customers is.
- [23:54]
Picking the right outfit for her so that she doesn't have to to worry about it. And you know, our systems used to be like, you have to like literally go through their entire order history and like in your head kind of like be like, okay, she already.
- [24:06]
Ariella Sapphira
Has this, she already.
- [24:07]
Sarah Lafleur
Has this. And what AI is able to do is like, okay, she owns all these products and so like, you know, she's more likely to like, like this kind of item, this works back with that item. And like as a result the stylists are much more interacting with the customer than she is like staring at a laptop, you know, So I mean that's just like led to enormous efficiencies for us. And so I do feel like it's like this great leap moment.
- [24:37]
I mean having had a company for a decade pre AI and now being in a company where AI is just like so democratized.
- [24:49]
I would have had a completely different P and.
- [24:51]
Fanny Gerson
L structure. This is sort of like when you're in the food industry, you're always thinking, not just in the food industry, but I think very purposefully to reduce waste or how can you reutilize this ingredient to do that? And I think that because of what's happening, I have this new goal, as far as I know, maybe there's more out there, but as far as I know, to be the first no food waste donut shop in the country. And I say no food because it can't be no waste, because we do packaging and we do, you know, things. And so there's always, like, little things. So we have, for example, like, signature hot chocolate, and we make croutons out of our donuts, unglazed donuts. And that's something we started. And so it became, like, a thing, but now it's, like, so much more purposeful. And because. And so I. It was really funny because I texted someone and I ended up texting the wrong Justine that I was trying. And so it turned out, and she's like, oh, what are you up to? She's like a friend of a friend that was living here, but now she lives in Hawaii, has her own farm. Long story short, I'm gonna hire her to help her. I mean, to help me, not help her, to help me as a consulting. Because this is a lot of what she does. And so we're working through some problems. So I said, these are some of the things that I'm doing. So, for example, like, we squeeze a lot of lemons and limes and some things we're gonna be able to do at La Ny Orquina as well, because also we have to think about the relations that exists, you know, that there's certain things you can and can't do, you know, depending on your Department of Ag or Department of Health. And so, for example, all the, you know, the remains of the citrus, we are turning them into syrups that then we turn into something else, you know, and then she's like, oh, well, sometimes instead of. Cause. But sometimes when you try to save something, it ends up. You end up wasting more because you waste more time or more energy. But it's sort of to create all these ecosystems that, hey, actually, these chicken farmers love.
- [27:09]
Eggs. Eggshells. Okay, so how can we do, you know, so to create this ecosystem? So right now, because, yeah, circular economy. And she says, but not only, like, to her point, she's like, it's not just about saving, you know, in every way in the environment or money, but actually to make sure you make money out of these things, because then that becomes also something people want to support or want to.
- [27:36]
Ariella Sapphira
Talk about. Can I add one thing, please? I've spent a lot of the past few months thinking about AI and all that it can do for society. And there's a tremendous amount of good it can do. And that I believe in. And I also am seeing so many people turn to it and rush to it really thoughtlessly. And just certainly in the venture community, I think every tech company is doing it as quickly as possible. And I see it happening outside of tech as well. And when I think of what everyone can do, certainly if you're a founder or a company leader today is like, of course you understand your business this more than anyone else. And you might be able to identify ways that AI thoughtfully, earnestly is helping the experience you want to create or the returns you want to deliver to shareholders. But what I hope we all can do right now is recognize this is a really pivotal moment for humanity and society and we have now witnessed enough waves of technology and how it's really destroyed humans, human connection, relationships, mental health. And so I think what this time can be, if we choose for it to be, is.
- [28:51]
A moment where we show up and stand up for just what is humanity and remembering what it means to build a quality life and a life where humans interact with humans and feel fulfillment from that. I don't yet have a recipe or an answer. I don't know if I ever will for what that can look like for all people. But I think as so many leaders jump in this moment to immediately wipe out workforces with AI as much as possible, I would encourage everyone to first ask what am I trying to do? And if that's what you're trying to do, great. But I would, I would love for everyone to just ask themselves first, what am I trying to create? What do I want to do with with my one life? And let me answer that question before I replace my entire world with a hyper.
- [29:35]
Graham Winfrey
Personalized machine. Definitely cosine asking yourself that question before you just leap out and start start a new business. Thanks so much to all three of you for being so generous with your time and sharing so many from your.
- [29:46]
Fanny Gerson
Entrepreneurial journeys.
- [29:47]
Graham Winfrey
Thank you.
- [29:49]
Thanks for tuning in to our first Founder Group Chat series. We'll be back again next Friday with an all new roundtable, a new host, new founders and a new topic. The Business Model returns Monday when Chloe Aiello circles back on this week's Big Story. Be sure to subscribe wherever you get your podcasts and on Inc. S YouTube channel at YouTube.com incmagazine.