Podcast Summary: Making It with Jon Davids – Episode 156: "Chocolate Mogul | 'We’ve sold 47 million bars and we’re just warming up' | Jake Karls, Mid-Day Squares"

Release Date: December 3, 2024

In Episode 156 of Making It with Jon Davids, host John Davids engages in an enlightening conversation with Jake Carls, the co-founder of Midday Squares. This episode delves deep into the remarkable journey of Midday Squares, exploring its rapid growth, innovative marketing strategies, operational challenges, and the personal philosophies that have fueled its success.

1. Introduction

John Davids sets the stage by introducing Jake Carls and highlighting Midday Squares' impressive ascent from a dorm room startup to a burgeoning enterprise poised for a $100 million revenue milestone. He underscores the company's unique achievement of building a cult-like brand with minimal marketing expenditure despite facing numerous financial hurdles.

John Davids [00:00]: "This company went from zero to $30 million a year selling their own brand of chocolate on their way to $100 million. And I think a lot more than that."

2. Snapshot of Midday Squares Today

Jake Carls provides a comprehensive overview of Midday Squares' current status as of December 2024. From humble beginnings in August 2018, producing just 50 bars a day, the company has scaled operations to manufacturing 90,000 bars daily in their Montreal facility. With over 47 million units sold and presence in more than 9,000 stores across North America, Midday Squares is on a strategic path toward $100 million in revenue within the next two and a half years.

Jake Carls [01:16]: "Now we are making over 90,000 chocolate bars a day in our own chocolate factory that we built in Montreal. We've sold over 47 million units so far in our journey. And we believe the party's just getting started."

3. Growth Trajectory

The discussion shifts to the company's exponential growth. Jake attributes this success to a strategic, systematic approach rather than random expansion. Initially focusing on localized launches, such as college campuses and local businesses in Montreal, Midday Squares gradually expanded its footprint. A pivotal moment occurred when Sprouts, a major retailer, approached them to launch in 23 states, leading to rapid exposure through Whole Foods and Target.

Jake Carls [04:16]: "We approached Midday Squares at the beginning with the Facebook approach. Build college to college, then move to the next one. Once we surpassed the local markets, we expanded systematically."

4. Marketing and Brand Strategy

A cornerstone of Midday Squares' success is their "Build Out Loud" strategy. By transparently sharing their business journey—including successes, failures, and daily operations—Jake and his team cultivated a strong community and brand loyalty. This authentic storytelling not only attracted consumers but also caught the attention of major retailers and investors organically.

Jake Carls [05:07]: "We use a strategy called Build out Loud. Share the good, the bad, the ugly of how we build this business on social media. This gave retailers and investors a glimpse into who we are, building trust and community before formal engagements."

John highlights the effectiveness of this approach, likening it to skipping traditional rapport-building phases with investors and partners.

John Davids [07:09]: "It's an incredible hack. When you have a public profile, you skip the initial rapport-building and are already ahead of the game."

Jake expands on the importance of personal branding, emphasizing that in the modern era, personal and company brands serve as essential resumes, fostering trust and relatability.

Jake Carls [07:34]: "The future of everything, not just corporate, is personal. Brands need to be authentic and excellent storytellers to build lasting connections."

5. Overcoming Challenges: Manufacturing and Resilience

Midday Squares' journey has not been without significant challenges, particularly in scaling manufacturing. Initially relying on third-party manufacturers, Jake explains how Midday Squares faced insurmountable issues with consistency and quality, leading them to establish their own facility. This move involved substantial financial risks, including machinery failures and production halts, which brought the company perilously close to bankruptcy multiple times.

Jake Carls [17:10]: "The hardest part has been scaling manufacturing. We tried 26 different co-manufacturers in the first year, none could produce our bars as we wanted. Building our own facility was fraught with mistakes and near-bankruptcy moments, but it gave us higher margins and manufacturing control."

The COVID-19 pandemic further tested the company's resilience. With a drastic 70% drop in sales, Jake recounts how they pivoted to supplying hospitals with their bars at cost, which not only kept operations afloat but also reinforced their commitment to community support.

Jake Carls [39:39]: "During COVID-19, we lost 70% of our sales and were on the brink of bankruptcy. Supplying hospitals with our bars at cost saved our business and kept our team employed."

6. Future Plans and Innovation

Looking forward, Midday Squares aims to diversify its product line under the concept of "functional indulgence"—snacks that provide both indulgence and nutritional benefits. Plans include introducing new flavors and product formats while maintaining their commitment to clean ingredients and freshness, achieved by refrigerating their products instead of using preservatives.

Jake Carls [30:35]: "We're developing new products focused on functional indulgence. Our vision includes refrigerated snacks that are preservative-free, offering clean ingredients while still being indulgent."

Jake reveals that innovation remains a priority, with upcoming products expected to launch within the next two years. This includes potential new product lines tailored to different consumer needs, such as nut-free options.

Jake Carls [33:55]: "Though I'm allergic to nuts, we're working towards nut-free facilities and diverse product lines to cater to all consumers."

7. Personal Insights and Company Culture

A significant aspect of Midday Squares' culture is the emphasis on mental health and personal development. Jake discusses the mandatory weekly therapy sessions instituted by the founders, which have been pivotal in maintaining team cohesion and preventing founder conflicts that could jeopardize the business.

Jake Carls [28:20]: "We instituted weekly therapy sessions to ensure we remain aligned and prevent conflicts that could destroy the business."

Jake underscores the importance of vulnerability and authenticity in building a relatable and trustworthy brand. This openness has fostered a loyal community and empowered team members to develop their personal brands alongside the company's growth.

Jake Carls [26:15]: "Therapy boosted our leadership and communication, making us better leaders and fostering a culture of openness and growth."

8. Conclusion: Persistence and Belief

Throughout the conversation, Jake Carls exemplifies unwavering belief and resilience. Despite numerous setbacks, including near-bankruptcies and operational hurdles, his commitment to Midday Squares remains steadfast. He credits the company's success to a combination of strategic planning, authentic branding, and an unyielding belief in their mission.

Jake Carls [47:20]: "We are giving it our 150% every day, doing what we believe is the best forward step. If we succeed, great. If not, the journey has still been invaluable."

John Davids wraps up the episode by commending Jake's persistence and the innovative path Midday Squares has taken, encouraging listeners to support the brand and take inspiration from their journey.

Key Takeaways:

• Strategic Growth: Midday Squares achieved rapid expansion through a deliberate, systematic approach rather than random scaling, focusing on localized markets before national exposure.

• Authentic Marketing: The "Build Out Loud" strategy leveraged transparent storytelling to build community and attract both consumers and major retailers without significant traditional marketing spend.

• Operational Challenges: Scaling manufacturing in the highly competitive food and beverage sector posed significant challenges, including machinery failures and financial risks, which were overcome by establishing their own production facilities.

• Resilience and Mental Health: Commitment to team wellness through mandatory therapy sessions fostered a strong, cohesive company culture, preventing internal conflicts and enhancing leadership.

• Future Vision: Plans to diversify product lines with functional indulgence and maintain high standards of quality and freshness position Midday Squares for continued growth and innovation.

• Personal Belief: Jake Carls' unshakable belief in the company's mission and his resilience in the face of adversity have been crucial to navigating challenges and driving the company forward.

Notable Quotes:

• Jake Carls [05:07]: "We use a strategy called Build out Loud. Share the good, the bad, the ugly of how we build this business on social media."

• Jake Carls [17:10]: "The hardest part has been scaling manufacturing. We tried 26 different co-manufacturers in the first year, none could produce our bars as we wanted."

• Jake Carls [39:39]: "During COVID-19, we lost 70% of our sales and were on the brink of bankruptcy. Supplying hospitals with our bars at cost saved our business."

• Jake Carls [26:15]: "Therapy boosted our leadership and communication, making us better leaders and fostering a culture of openness and growth."

• Jake Carls [47:20]: "We are giving it our 150% every day, doing what we believe is the best forward step. If we succeed, great. If not, the journey has still been invaluable."

This episode of Making It with Jon Davids offers invaluable insights into building a successful brand in a saturated market through strategic planning, authentic engagement, and unwavering resilience. Jake Carls' story serves as an inspiring blueprint for entrepreneurs aiming to scale their ventures while maintaining integrity and fostering a strong community.