178 - Building a $340M Chocolate Brand by Accident | Hu Chocolate - Making It with Jon Davids

Summary

Making It with Jon Davids: Episode 178 - Building a $340M Chocolate Brand by Accident | Hu Chocolate

Overview

In Episode 178 of Making It with Jon Davids, host Jon Davids delves into the unexpected journey of Hu Chocolate, a brand that transformed from a small restaurant dessert into a $340 million chocolate empire. Through a compelling narrative, Jon explores the pivotal moments, strategic decisions, and underlying philosophies that fueled Hu Chocolate's meteoric rise. This detailed summary captures the essence of the episode, highlighting key discussions, insights, and lessons for aspiring entrepreneurs.

1. Introduction to Hu Chocolate

Timestamp: [00:00]

Jon Davids sets the stage by introducing Hu Chocolate, emphasizing its remarkable growth from an accidental creation to a multi-million-dollar brand. He highlights the founders—Jason, Jessica, and Jordan—and their initial venture into the food industry.

“These three turned a little restaurant into a $340 million chocolate brand. And they did it by accident.”
— Jon Davids [00:00]

2. The Founders’ Journey

Timestamp: [00:45]

Jon recounts the origins of Hu Chocolate, beginning in 2009 when Jason, a hedge fund professional, faced health issues due to his demanding job. This health crisis spurred him to adopt a cleaner diet, leading to the creation of healthier food options.

“Jason is drowning in spreadsheets and late night takeout. And his health is paying the price.”
— Jon Davids [00:45]

Determined to improve his well-being, Jason collaborates with his wife Jessica and brother-in-law Jordan to establish Hu Kitchen, a paleo-focused restaurant in New York City. Their commitment to clean eating and minimal ingredients quickly resonated with customers.

3. The Accidental Breakthrough

Timestamp: [02:30]

The turning point for Hu Chocolate came unexpectedly through one of their dessert offerings. A particular chocolate recipe became exceptionally popular among restaurant patrons, prompting the founders to consider spinning it out as a standalone product.

“They spin out the chocolate and turn it into its own bar so people can buy it individually.”
— Jon Davids [02:30]

This decision to focus on their signature chocolate laid the foundation for what would become Hu Chocolate's flagship product.

4. Scaling the Brand

Timestamp: [04:15]

By 2013, Hu Chocolate had made its debut in Whole Foods, quickly selling out and generating substantial buzz. The brand's commitment to simplicity—avoiding dairy, palm oil, refined sugar, soy lecithin, and other additives—differentiated it in the crowded chocolate market.

“It doesn’t have no dairy, no palm oil, no refined sugar, no soy lecithin. Just simple dark chocolate.”
— Jon Davids [04:15]

This minimalist approach appealed to health-conscious consumers, facilitating rapid expansion across multiple retail locations.

5. The Movement Formula

Timestamp: [06:50]

Jon introduces his "Movement Formula," a concept from his book Marketing Superpowers. This formula—Unifying Belief × Faith = Action—played a crucial role in Hu Chocolate's success.

Belief: Clean eating as a unifying principle.
Faith: Reinforcing clean eating through product attributes and brand messaging.
Action: Encouraging purchases through trusted, high-quality products.

“When you are the leader of a movement, you can sell a whole lot of product because people will know you, they will like you, they will trust you, and they will keep buying what you're selling.”
— Jon Davids [06:50]

By aligning their brand with the clean eating movement, Hu Chocolate harnessed collective consumer values to drive sales and loyalty.

6. Strategic Funding and Acquisition

Timestamp: [14:20]

Jon discusses the critical role of funding in accelerating Hu Chocolate's growth. Prior to its acquisition, Hu secured a Series A funding round led by Sonoma Brands, attracting notable investors like Mark Hyman, Tim Ferriss, Nelson Peltz, and Peter Attia.

“Hu did secure funding... Mark Hyman, Tim Ferriss, Nelson Peltz, Peter Attia.”
— Jon Davids [14:20]

In April 2019, additional investment from SNAC Futures, Mondelez International's innovation hub, paved the way for the eventual acquisition by Mondelez in January 2021 for $340 million.

“Mondelez themselves went ahead and purchased the brand thereafter in January 2021.”
— Jon Davids [15:00]

7. Lessons in Focus and Customer-Centricity

Timestamp: [18:10]

Jon emphasizes the importance of focusing on core strengths and listening to customer feedback. Hu Chocolate's decision to hone in on their popular chocolate bar, rather than diversifying excessively, was pivotal in their exponential growth.

“They zoomed in on the product that everybody was asking for, the chocolate. And they knew they could be unique there.”
— Jon Davids [18:10]

He contrasts this with common entrepreneurial pitfalls, such as trying to please everyone and diluting the brand's mission.

“Do more by doing less. Focus.”
— Jon Davids [22:00]

8. Reflections and Entrepreneurial Insights

Timestamp: [21:30]

Jon shares personal reflections on leadership and the importance of not idolizing successful entrepreneurs. He highlights that success often stems from assembling the right team and leveraging diverse skills rather than solitary genius.

“Entrepreneurs and people who are business builders are basically just gathering resources and maybe they have some insight.”
— Jon Davids [21:30]

He advocates for analyzing successful strategies and applying best practices while avoiding others' mistakes, fostering a humble and pragmatic approach to business growth.

9. Funding Details and Clarifications

Timestamp: [16:40]

Addressing listener comments, Jon clarifies details about Hu Chocolate's funding rounds and corrects earlier misstatements regarding the founders' relationships, emphasizing the importance of accuracy and transparency.

“Jessica is Jason's wife. I get it. Sorry, I made a mistake.”
— Jon Davids [16:40]

He reiterates the significance of strategic investments and the role they played in positioning Hu Chocolate for a successful acquisition.

10. Conclusion: The Power of a Movement

Timestamp: [23:50]

In wrapping up, Jon reinforces the central theme of the episode: the synergy between a strong, customer-aligned movement and strategic execution can lead to extraordinary business success.

“When you also have an underlying movement, you can scale at hyperspeed.”
— Jon Davids [23:50]

He encourages entrepreneurs to develop and refine their own movement formulas, focusing on doing less to achieve more, as exemplified by Hu Chocolate's journey.

Key Takeaways

Customer-Centric Focus: Prioritize what customers truly want and excel in delivering it.
Movement Formula: Harness a unifying belief and reinforce it through faith-building actions to drive consumer behavior.
Strategic Investment: Secure and leverage funding to scale operations and seize acquisition opportunities.
Simplicity and Quality: Maintain a streamlined product offering with uncompromised quality to build brand loyalty.
Team and Leadership: Assemble a capable team and lead by empowering others, avoiding the pitfalls of over-reliance on individual brilliance.

Final Thoughts

Episode 178 of Making It with Jon Davids offers an insightful exploration into how Hu Chocolate's accidental yet strategic pivot led to unparalleled success. By combining a strong movement-based approach with focused execution, the founders achieved a remarkable $340 million exit. Aspiring entrepreneurs can glean valuable lessons on the importance of listening to customers, maintaining focus, and building a brand that resonates deeply with its target audience.

For more insights and in-depth stories of entrepreneurial journeys, tune into future episodes of Making It with Jon Davids.

Transcript

John Davis (0:00)

These three turned a little restaurant into a $340 million chocolate brand. And they did it by accident. It's called Hue Chocolate, founded by Jason, Jessica, and Jordan. This is a better for you snack that won lots of customers with less ingredients. And I'm going to tell you exactly how it happened. Welcome to the podcast. My name is John Davis. You can call me J.D. if you're a fan of this show, you know what I'm going to ask. Make sure to leave a rating review on Apple, Spotify or wherever you're listening to this. And hey, go ahead and sn tap a photo of yourself listening to it and share it on Social, Instagram, LinkedIn, TikTok, Facebook. I will repost it. Make sure to tag me in it. John Davids. Get my socials over@johndavids.com and hey, while you're there, get on the newsletter. And now let's talk Hugh Chocolate. You're listening to Making it with John Davidson. Rewind to 2009. Jason's a hedge fund guy and he is drowning in spreadsheets and late night takeout. And his health is paying the price. He's got gut issues and brain fog and it's really starting to get to him. So he decides to turn things around, starting with clean eating, less processed foods, and more whole organics. Before long, he's actually feeling a lot better. There's just one problem. It's 2009 and clean food is really hard to come by. Even healthy brands are loaded with preservatives. They're not exactly that healthy, and he wants to change that. So he teams up with his wife and brother in law and they're going to get to work. They're going to do it themselves. So the crew decides to open a restaurant serving paleo food that is packed with flavor. And they call it Hugh Kitchen in New York City. Right away, people are loving this place. There's one thing on the dessert menu that they love more than anything else, and that's the chocolate. And customers keep asking for it. It's Hugh's own recipe. They're making it in the restaurant and it's really becoming a brand all on its own. The gang realizes they have something really big on their hands. So they spin out the chocolate and turn it into its own bar so people can buy it individually. And they're doing that in the restaurant. It's growing and growing. Word of mouth is spreading, and this bar is about to explode. So fast Forward now to 2013. Hugh Chocolate. This bar now lands on the shelf at Whole Foods and it's selling out. They can't keep it on the shelf. The bar's building buzz because of everything. It doesn't have no dairy, no palm oil, no refined sugar, no soy lecithin. Just simple dark chocolate. It's basic and people love it. It's innovation by subt. And it's working. At the end of the year, it's in 40 stores, and the next year it's in 85 stores. By 2021, Hugh is the fastest growing premium chocolate brand in America. And then Mondelez scoops them up for a cool 340 million bucks. Pretty good for an accidental chocolate bar. You see, I don't think Hugh was ever really in the chocolate business. I think they started with a movement and they turned that into a restaurant brand. And they just listened to their customers. They started with a movement and they kept going, listening to customers and super serving them with exactly what they wanted. Healthy food for healthy humans. And by the way, that's where hu comes from. Human. Your product matters a lot. But when you also have an underlying movement, you can scale at hyperspeed. It works for the biggest companies and the biggest brands in the world, just like it worked for three people selling chocolate. Now, if any of you have read my book, you will know, by the way, there's the book for you watching on YouTube, marketing superpowers. You will know that this really resonates with me because of the movement. The movement formula is something I talk about in the book. And what is the movement formula? What is the formula itself? Say it with me. If you've read the book. Unifying belief times faith equals action. So you've got belief, faith and action. Let's go through the hue chocolate formula, the movement formula, and figure out what the belief, faith and action are in these cases. So the belief is very simple. The unifying belief is always very simple. When you are orchestrating a movement, it's clean eating. There were a lot of people that were really into clean eating around this time, and a lot of brands that jumped on this movement and really blew up. I'll tell you about some of those in a second. Let's talk about faith. What are the faith builders? What are all the things that are going on that you can reinforce as a brand to really keep driving this point home? Well, let's think about it. Faith builders. No dairy, no palm oil, no refined sugar, no soy, lecithin, gluten, paleo, intermittent fasting, keto juice, cleanses, organic farm to table stuff, right? Think about all the Ways you can reinforce with faith that this is the way to do it. Clean eating and all the ways that clean eating is all around us. Brands like Vital, Protein, RXBar, Bulletproof, Coffee, Peloton, CrossFit, SoulCycle, they all blew up around this time, jumping on the same movement. And then the action was really simple. The action was buy the chocolate. Buy my product, Buy my product, Buy my product. When you're the leader of a movement, you can sell a whole lot of product because people will know you, they will like you, they will trust you, and they will keep buying what you're selling. And if you want to know a whole lot more about the movement formula, make sure to grab the book Marketing Superpowers. Grab a few chapters at Marketing Superpowers. Book Business owners and marketers. Honest question for you. Is the money you spend on social media worth it? Can you point to sales you've made from Instagram or TikTok or LinkedIn? If the answer is no, I've got something for you. It's a playbook I wrote called how to Build a Social Media Selling Machine. It's a nine step formula designed to turn your social media into a true sales channel, one that produces revenue at scale. Get it now@johndavids.com Playbook if you're spending more than $100,000 a year on marketing, you can't afford to miss this. Grab it now@johndavids.com Playbook now I want to get to some of the comments. Now, I shared this story on social media. Millions of you saw it on Instagram and TikTok and Facebook and LinkedIn, of course, in my newsletter. I want to get to some of the comments. Somebody said in the comments that Jason was a lot more than a hedge fund guy, that he was a brilliant guy, a brilliant mind, and he was a mathematician. I don't know Jason, so I might be getting some of this wrong. But people in the comments who know Jason were sort of saying I was underselling him. And you know, I do this a lot in my content and my stories and my business breakdowns. And I do it for a reason. I don't like putting anybody on a pedestal. I really don't like doing I don't care what you do. If you're a billionaire, if you're a multimillionaire, if you're great at e commerce, if you're great at business or whatever it is. Listen, I know a lot of these people. I know a lot of very, very wealthy, very, very successful people. And I got to Tell you, are some of them a lot smarter? Yeah, a lot smarter than me, that's for sure. But are they any better? And are there things that they can do that others can't do? Very rarely. And the reason it's so rare is because entrepreneurs and people who are business builders are basically just gathering resources and maybe they have some insight. But the things that they can't do themselves. Let's say they're not good at math, or they're not good at manufacturing, or they're not good at logistics or technology. They're not good at any of that stuff. All they're going to do is bring people together and motivate them and give them incentives and resources to grow and grow and do that stuff for them. There are so many things as an entrepreneur that I am not able to do. Tons of stuff. I built tech businesses that have made millions of dollars. I don't code one line of code. Right. We do all kinds of things at Influicity that I am personally not an expert in, but I recruit some of the best people in the world to do them. And that's why we're world class at so many things. And this is why in every story I tell, I refer to people, whoever they are. I gotta tell you, I'm not impressed by a lot of them, but whoever they are, I will say, this is a guy, this is a girl, this is a woman, this is a man. Cause they're just people like everybody else. I don't like putting anybody on a pedestal. So I will say you're a hedge fund guy, all due respect, you're a guy that happened to made a bunch of money. You're a woman that happened to make $100 million. That's cool. But anybody with the right resources and the right incentives and the right mindset and the right team can do it. And if you need any more reinforcement on this, by the way, just go and listen to the podcasts. Brian Scudamore at 1-800-got-JUNK or Todd Graves at raising canes, or Manjeet Minhas at Minhas Brewery or whoever. These are great people. These are friends of mine in many cases, and I have great respect for them. But I don't think it's helpful to put them on a pedestal. I do think it's helpful to analyze what they did and how they do it and how you can take the best practices and throw away all the mistakes. That's what I try to do every single time here. When I'm talking to all you guys, a Few more points from the comments. People were asking about funding. Yes. So Hugh did secure funding. Prior to its acquisition in May 2018, the company closed a series A funding round from Sonoma Brands, and there were a whole bunch of big investors. Mark Hyman, Tim Ferriss, Nelson Peltz, Peter Attia. So a bunch of others were in that round as well. April 2019, they got some more investment from SNAC Futures, which is Mondelez International's innovation hub, I believe. And then Mondelez themselves went ahead and purchased the brand thereafter in January 2021. And then a lot of people got me in the comments. Oh, I made a mistake. I called Jessica, Jason's sister. Jessica is Jason's wife. I get it. Sorry, I made a mistake. I got to double down on this again, guys. I love in this story how Hugh listened to their customers. How many people don't do that? How many entrepreneurs, how many business builders, instead of listening to their customers, make the excuse of sticking to their mission? And it really is an excuse. I'm going to do exactly what I set out to do. Imagine if Hugh had said, we want to serve the most people we can. So we need to stick with a restaurant because we need to serve lots and lots of different kinds of food. And I've heard this kind of thing from other business builders, also entrepreneurs and people in marketing and sales. They'll say, listen, I want to give my customer everything that they need to succeed. I want to be everything to everybody. And Hugh went in the opposite direction. And think about the opportunity they would have missed if they had said, no, we got to stick with this restaurant concept. We've got to serve salads and pastas and pizzas and everything to everybody. They didn't do that. They zoomed in on the product that everybody was asking for, the chocolate. And they knew they could be unique there. They actually expanded by focusing all their efforts on one simple thing. Accomplishing more by doing less. Even Today, it's a $340 million company that pretty much still just sells chocolate. I think they also sell crackers. But I'll be honest, I go to their website, I can't even see the crackers. They really just sell chocolate. They were acquired for $340 million a few years ago. I'm sure they've gotten a lot bigger since then. Certainly they're selling it a lot more places. And they're actually growing, growing, growing by doing less and less and less. And that's a lesson for all of us. Focus. Get your movement formula down. Do more by doing less. That's the story of Hu Kitchen, which became Hugh Chocolate, which became a $340 million exit for Jason, Jessica and Jordan. Let me know what you guys think. You can get me@johndavis.com get on the newsletter, talk to you all next time.