← Making It with Jon Davids
Making It with Jon Davids
200 - Chocolate Mogul: “We sold 47 million bars and we’re just warming up” | Jake Karls, Mid-Day Squares
00:47:49
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- [00:00]
John Davids
What's up, guys? JD Here. And on today's show, I'm bringing you one of my favorite episodes from the last year, my conversation with Jake Carls, co founder of Midday Squares. We talked back in December of 2024. Midday Squares is such a cool company. It's a chocolate brand built from the ground up by three co founders. And they've built a brand on social media that is just larger than life. Jake's a great guy. He tells it like it is. The good, the bad, the ugly, and everything in between. You guys are gonna love this conversation. That's coming up in just a sec. Welcome to the podcast. My name is John Davids, but you can call me J.D. i'm the CEO of Influicity, and on this show, I like to share the stories of some of my favorite businesses and the people behind them. If that's your thing, make sure to subscribe, tell a friend, share this show with someone that you think will get some value out of it. And get my best stuff to your inbox@johndavids.com and now let's get to the show.
- [01:01]
Jake Carls
You're listening to Making it with John Davids.
- [01:08]
John Davids
So, Jake, we're in December 2024 right now. Can you just give us all a snapshot of where Midday Squares is today?
- [01:15]
Jake Carls
Yeah. So crazy to think that it's December 2024. We started midday squares in August of 2018. So it's been almost six and a half years. And when we first started, you know, we were making 50 bars a day in our condo K. Now we are making over 90,000 chocolate bars a day in our own chocolate factory that we built in Montreal, which is super cool. We've sold over 47 million units, so 47 million bars so far in our journey. And, you know, we believe the party's just getting started. We sell in over 9,000 stores across North America. I remember when we were just in one little bagel shop in Montreal. Now we're in every state in the United States and every province in Canada. And, and yeah, we, we, we really believe that the next journey is going to be. We call it the road to 100 million. So the next, you know, two and a half years we're going to spend building the business up to about a hundred million of revenue and looking at what's next after that.
- [02:07]
John Davids
And I know you're super transparent. Can you give us just a sense of where revenues are today on that path to a hundred thirty plus million?
- [02:16]
Jake Carls
And, and we're going to continue to track at about 50% year over year growth. That's where we're, we're focused about 50 to 60% depending on, on the year. Not more than that, not less than that. That allows our manufacturing to grow foundationally strong and not just be like, you know, shoot ourselves in the foot. So that's where we're at. And yeah, we really do believe that the party at Midday Squares is just getting started today. You know, the last six and a half years, we focused on building our factory, focusing on the ops and the manufacturing side of our business. And now, you know, 2025 is going to be all about, you know, actually building the growth out, building the sales, the marketing, the innovation, the stuff that's mostly exciting, in my opinion. But we had to build a foundation for the last six and a half years.
- [02:58]
John Davids
Okay, so it's been six and a half years, and I gotta say, it's almost like you didn't exist one day. And then as a consumer of Midday Squares, I said to myself, I don't know how we ever didn't have this product. Like, you know, I think they even told me we were texting and I was like, I can't believe you guys just got into Starbucks. Like, why weren't you in Starbucks for the last five years? It doesn't make sense. Can you just give us a sense though, of what, what it felt like from the inside? So you start six years ago, you're in one, Montreal, Delhi, now you're in every state, every province. Did that happen super gradually or were there milestones where it was just like, boom, took off?
- [03:32]
Jake Carls
So it was strategic, you know, it wasn't just like spray and pray and go wherever we have the opportunity to go. It was actually, you know, we're going to take this somewhat systematic. You know, we approached midday scores at the beginning with the Facebook approach. So, like, build college to college, so get known in your college, then go to the next one. We did that same thing with like local cities. So, like our region in Montreal was the first. We did a bagel shop, then we did a juice bar, then we did the salad bar, then we did the local grocery store. And then once we surpassed that, we were then ready for the next city. But we would actually want to support the regional out the regional launches before we jump the gun to the next one. And then, you know, I'll never forget, we went into the US about two and a half or three years ago and we had a retailer called Air1, and they're a really famous retailer. Amazing partner, super high end. Yeah, super high end. The first one to take a chance on Midday Squares. And we were super jazzed about it. And the next thing you know, we went to do that exact regional play which was going to be like, build the Los Angeles region up. And the next thing you know, Sprouts, which is an amazing partner, 400 plus stores reached out to us. And like, we want to launch midday squares, 23 states. Let's go. And we would typically say no to that because we were going systematically, but we took it. And ever since that moment, it just went from Sprouts to next thing, you know, Whole Foods Nation, you know, across the nation, then to Target across the nation, 1800 stores. And it just started going. And we realized that we have no choice but to support, but to build. And now we're running on this hill and there's no going back. There's no going back.
- [04:57]
John Davids
Was that really inbound, though, or was that because of a lot of outbound activity? Like, how did Sprouts find you? How did Whole Foods find you? Get into the tactics, because I'm super curious about how this actually happens.
- [05:07]
Jake Carls
Number one, you need product market fit. So you're not going to build a business without having strong product market fit. Meaning like the consumers want this item or want this service. And we had that because we built Midday Squares. It was based on data. It wasn't based on, you know, let's take a random chocolate product and make it. No, we saw that chocolate was growing year over year very quickly, and plant proteins were growing very fast year over year. So we've made a baby of these two massive growth categories. So that's number one. Number two is we use a strategy called Build out Loud. I think this is a huge strategy that most businesses still don't do. And I think a lot of businesses have this unique opportunity to get ahead of the game if they do this. And what it is is just basically share the good, the bad, the ugly of how we build this business, tell the consumers, tell investors, tell retail partners on the social media platforms what we're doing. So we would share successes, milestones, failures, literally therapy, breakdowns, but also moments of complete greatness, moments that you see us achieving really high level, you know, situations. And what that did is it gave a one foot into the other person into Midday Squares, meaning that they already knew who we were before we had a conversation with them. And that made them already have a bias of friendship or a bias of I'm a fan and made the negotiations or gave us a little bit of leverage in terms of communication and how we would work with them. So a lot of the retailers found us because the buyers were scrolling through maybe LinkedIn or Instagram or TikTok. And we're like, this brand's really crushing it. They're building fans, they're building community. And in cpg, consumer packaged goods, which food and beverage, a lot of brands were focused on commodities and features rather than focusing on how do I make someone feel something, how do I build community, how do I get people to buy into what I'm doing, not just the products I have to offer. And that's what we did. And it works today with almost every single retailer, big or small. They'll always mention to us, you know, we've been watching you on social. We love it, we're feeling, we're part, feel like we're part of the journey. And same thing with Investor. We raised 17 million to date by building out loud, obviously with a good PNL and a good business, but getting the attention was the first step and that, that works through building out loud.
- [07:08]
John Davids
It's an incredible hack. When you have a public profile, you know, people sort of think, I always get confused when people say, well, what's the point of getting likes and shares and this and that? It's literally an unlock. So that when you go into a room with somebody, you Skip that whole 10, 20 minutes of trying to create rapport. You don't need to build rapport. Everyone already knows who you are. And that just, it's, it just, it's a massive advantage that people don't realize exists.
- [07:34]
Jake Carls
I think the future of everything and not just corporate, I think it's going to be personal. Brands are relevant, are written, are necessary. It's the modern day resume. And, and what I mean by that is like when you build a personal brand, it stays with you. It's. People are part of your community. They know you. Whether you know them or not, they know you, they're following you, they're inspired by you, they hate you. Whatever it is, it doesn't make a difference. You're evoking some sort of emotion and that will always pay off for the rest of your life. You know, when I go into a room, for example, yesterday, a room of 200 people, many people flooded me and they're like, hey, I watch, I follow you on LinkedIn. I'm, I'm always inspired. You make me feel like I could, I could achieve and that I could take massive risks. And I looked at that and I was like, holy shit, this person. I didn't even know this person before already has a connection. They skipped, we skipped the conversation. Part of having to do the whole shtick of selling, talking, pitching, all that jazz. And it was just connectivity right off the bat. And you cannot buy connectivity, you cannot buy community. You have to earn that. You have to earn the sense of relatability. Trust is earned, not bought. So I think the people that build these personal brands or companies that have actual brands that mean something other than just the products that they offer are at a huge competitive advantage over the next five to 10 years. And I believe I always say this, I don't know if I told you this the first time. The future of all marketing is gonna be number one, who is the best storyteller. Number two, who is the most authentic as a brand or an individual.
- [09:00]
John Davids
Okay, I wanna talk storytelling, I wanna talk authenticity. Before we leave this though, I just wanna understand one thing. Cause the megaphone, the brand makes a lot of sense. But, but do you have somebody internally who's also doing active outreach to the retail buyers or is it literally all inbound? Because I, you know, I love the story, but I also want to paint a realistic picture for the listeners. When you have the megaphone, do you still need the outbound or is that, is that really not happening?
- [09:25]
Jake Carls
So the mega, the megaphone works in two ways. It works, number one, in a positive way where someone becomes a fan of yours or likes what you're doing and is inspired. And that really works well in terms of the relationship you're going to build going forward with the retailer. Now we've had the other situation, which is basically the retail buyer does not like the content that we put out, does not like who we are. And they don't like the dancing. They don't like dancing with my shirt off. They don't like it. Which in my opinion is just good vibes. But again, they'll gatekeep it and then they'll actually maybe not communicate with us. Whether they tell us that's the case or not, it's very obvious because it's not a two way communication, it becomes a one way communication. Right? So that's one thing. Now we have an entire team that's of brokers which are third party salespeople that actually do do some outbound with our internal sales. The chief of revenue who's works at Midday Square, his name's Alex, does a great job and I travel with him a lot actually. It's really fun. But again, he does a bit of outreach and strategy on that. But A lot of it is like they already know us, right? So there is an outbound reach. But the already knowing helps with the like you said that initial first five, 10 minutes, which all you have usually is 15 to 25 minutes. So if you could skip the part of all the short talk and get right to juice, then you're already ahead of the game. So it makes the teams work, whether it's a broker or our sales team internally a lot easier when the brand is loud or the person you know, the founding team or the people that work there are loud in itself. And you don't have to be a founder to be loud. I think that's a critical thing that anyone's listening. My team, a lot of them are building their personal brands within and that helps Midday Square so much. And it helps them as well because at the end of the day, why would I stop them from doing that?
- [11:01]
John Davids
You have a team of rock stars. That makes a lot of sense. I look at brands like I study the food space a lot and I look at Sieta Foods, I've looked at Chobani, I've looked at Rxbar, I've looked at a lot of these companies and they've all had Chobani aside. Sieta and Rxbar had these sort of very loud exits and they actually were both PepsiCo. Do you look at companies in the food space? Is there anybody out there who's a model or are you just Willy Wonka doing it for the first time you your own way?
- [11:29]
Jake Carls
I think we get modeled by the brand Nike, you know, for, for us at least at midday squares, Nike makes people feel something. They, they're all about achieving greatness. They've done it at scale, obviously, but you know, if you look at the stories that they tell of the athletes, they're real deep storytelling components. It's not selling a shoe, it's selling the feeling of what the shoe offers in terms of, you know, that greatness approach. So we model on that and you know, they've taken commodity and turned into something more meaningful than a commodity. And I think in food and beverage I have a lot of friends in the space and you know, they have great products and they've built great distribution and infrastructure. And most of them actually don't manufacture themselves, but they have this co manufacturing and they've been able to scale their businesses tremendously. And I give them so much kudos, it's so much respect. But at the same time, I go through the grocery aisle sometimes and I look at it and I'm like, I don't feel much like when I'm buying the products, I'm buying it based on price or function. But what if brands took that to the next level and treated it like more like Beauty World or. Or that Nike Ask and made people feel something? How much more would they sell, how much more would they build? And how much more excitement would that bring grocery retail? And that's what Midday Square is trying to do. It's taking time, but we're. We're focused on making people excited when they see it and be like, I feel energized. I feel fired up. I feel bold. I want to support them. I feel like I'm buying from a friend instead of being like, oh, I'm buying this because it's on my grocery list. And that's what we're really trying to accomplish. But look again, Nike is the brand that we look up to on a smaller level. There's some funky brands, you know, that we love. You know, I really.
- [12:56]
John Davids
It comes down to the storytelling element. It's more, as you said, like, people don't realize this, but before Nike shoes were a commodity. It wasn't a fashion statement, it wasn't a status symbol. And you're doing that with this category. I can totally see that. Can you talk a bit about the actual marketing? Because we use the word marketing and you could even use storytelling interchangeably. But I wonder, do you guys even have a marketing budget? Because for all of the awareness and noise that you're making, I feel like you almost spend nothing aside from the filming and the creative work. But there's no media buy behind this, is there?
- [13:30]
Jake Carls
So we look at marketing, you're right. As a storytelling component. And that's where we. We actually invest. A lot of the capital goes into that is to the creating of the content. And we actually have a. So we have a content creator with us, but we start to do a lot more on paid advertising this year. You know, focused on like influencer work, creators, community builders in that sense, but also, you know, getting a little bit better of the meta paying and meta ads and stuff like that. But again, they're based on the storytelling component. It's not so much sell, sell, sell in your face. It's more how do we bring you into our community and into the, you know, the unapologetic ness of how we're building this business, that one day you become this fan and then you see it at the grocery store and you're like, I want to buy the product. Or you see it At Metro or in or Target or Whole Foods. And you're like, wow, I know, I just saw those. I like those people. I want to buy the product now. We want to actually up that spend over time. But we have one person in marketing right now, only one person, and he's a content creator. He's, he's, he's focused on content. He's not strategy on marketing is in itself. Right. So over the next year, I believe we're gonna actually build a marketing team where we focus on traditional marketing as well, but also so traditional, paid and organic. But we actually have a department right now. We don't have that department. And a lot of it's been organic. And obviously, you know, we've, we've garnered 50 plus 75 million, I don't know how many organic views in last year, but it works, right?
- [14:52]
John Davids
So you actually hired somebody. So your, your sole marketing team member right now is someone who is a content creator. Before they even started working for you, they were just making content on social, is that right?
- [15:03]
Jake Carls
They were making YouTube. I think he was making YouTube videos for a company. But he, he has become very good at what he is. His name's James. He's been with us for, you know, three, three or four years already. He's a machine. He's amazing. He creates the content. He comes up the scripts, comes up all the ideas and, and the storylines. And we as actors, and I say actors in the sense of just being in the, in the, in the content, we're not acting. It's real life, it's authentic. But we just do what's going on. We, we, we run our business and then he captures and tells a story within and sometimes we need to do like a voiceover or a recording regarding what happened. But yeah, he's guiding it. But that being said, as we scale, we actually need to now shift some resources from all the ops that we spent on this first six and a half years on the manufacturing, the building of that team, which is now a rockstar team, and to now shifting a little bit of that resource and capital into the blowing up of this business and scaling the consumer attention and demand of the company. And we're going to go out and blow that up. And I think that you're going to see Midday Squares pop up a lot more in the next, you know, two, three years, both in Canada and mostly in the U.S. as we continue to grow. Because like I said, we have not unleashed our marketing. We've done good on organic storytelling, but we haven't unleashed Strategic marketing and traditional marketing at a level that we believe we could apply our own authenticity to.
- [16:22]
John Davids
Yeah, the muscle that you guys have flexed and have built over this time really is the earned media. So you've told stories that are so good that you can get hundreds of thousands or millions of views on TikTok, on LinkedIn, and that's amazing. And then once you put paid media behind this fire that you already have, you're going to create something massive. And I can already see like, I can already see you guys doing a takeover, you know, in Times Square or like doing something doing marketing stunt. I almost see it like, like a virgin Richard Branson type thing where you see you jumping out of an airplane or I get that kind of vibe from you. So on the building side, let's just go to the first six years for a minute. What's been the hardest part of building this business? Is it really just an ops headache or is it more of a brand building headache?
- [17:09]
Jake Carls
Brand building is not the headache. So one thing that we believe is one of our superpowers is making people feel something and building that community. And I think that that gives us already, like, again, a competitive advantage there. But the hardest part about Midday Squares has been the scaling of the manufacturing. So to give people context. In food and beverage, 80% of the products you see on a grocery store shelf, or 75% are actually typically third party manufacturing. Meaning the businesses in itself don't make their own products in their own facilities. They actually have a contract with a third party that makes it. Now they make almost 75 to 80% of all the snacks we eat. So you can imagine it's literally just difference of packaging and marketing and sales that is the difference. Midday Squares tried that route. We tried that. We went to 26 different co mans in the first year of our business and not one of them was able to make the midday square the way we wanted to. So we decided to continue with the innovation that we believed in to so much that we ended up having to figure out how to manufacture this by building custom machines. Figuring out how to make a facility where none of us.
- [18:11]
John Davids
What was the problem though? So you're saying co manufacturers couldn't make it, like really though, why couldn't they make it?
- [18:16]
Jake Carls
Two things. Two textures was a big problem. And the way we make our chocolate, so we're very high in cocoa butter. Cocoa butter, which is high fat. So the machines were getting jammed. There's a bunch of other small little things. But every time we'd come with them, the Product, they would turn into something else. And they would tell us this little change, that little change, and they eventually compounded into big changes, right? So we're like, okay, let's build our own facility. We, we got debt from our Quebec government to fund the actual facility, build out of the machines, put the down payments down, the infrastructure. And then it took a very long time to get this place rocking. And we made a ton of mistakes, a ton of mistakes on the way. And, you know, near bankruptcy mistakes multiple times.
- [18:52]
John Davids
And, you know, example, like, you had a batch that was just unusable.
- [18:56]
Jake Carls
Many times the waste, waste was up at a high level. At one point, machine broke. We ordered a 500, $600,000 machine. Didn't work. Like, you know, being a small business, being a small business that can crush your whole business. Imagine that cash, right? Not being able to produce and then you get fines from the retailers. It just doesn't. It dominoes, right? Or we had one time in our, you know, we, we had a major issue in the facility and we couldn't produce product for a week. And when you can't produce a product for a week, your retailers are, you know, they need the product too, because they have end consumers. Right? We were not food manufacturers. We were all different types of entrepreneurs from different spaces. So being part of that has been very painful. Now it's been the greatest part of our business as well, because it's created a great storyline, but it's taught us that, you know, a lot of resilience, perseverance, like that, pain is part of the game. Like, I know, like people talk about in a cheesy way, but the manufacturing caused so much pain that I believe that we can get through almost anything going forward and whatever is going to hit us, whatever headwinds coming our way, because building a manufacturing plan, especially as millennials, which is not that many millennials that build manufacturing is a unique skill set. It's a unique asset to have. And again, the benefit of this whole thing is our margin is higher than our competitors because we control manufacturing. We're also able to innovate very quickly because we control the manufacturing. Now today is the only day that starting 2025, we're actually able to invest and press on gas for the first time. We were never able to do that because it would always cause a problem at manufacturing level, cause the machine to break down, team not to show up at night shift. You know, all these problems. Now we've stabilized a lot of that, and we're finally ready to rock.
- [20:27]
John Davids
Is there A point at which, or have you guys already hit the point at which you, you start making a lot higher profit and a lot higher gross margin because of volume, or is that something that is going to come at a much later time?
- [20:40]
Jake Carls
So it's coming, I believe the end of this year, end of 2025 and 2026, there's going to be a massive margin win. So right now we're experiencing one of the greatest crises in our business currently, which is the highest cocoa prices in terms of a commodity in history. You know, 100. Sorry, it's 100 year high. So we, we're paying an absurd amount for cocoa and it's killing our margin that we've won on because of the manufacturing for the last six years and it's eating away a lot of that. And that's going to come back end of 2025. So that's a tailwind that's going to push us back. So right now, all of our focus in midday squares other than next year spending on the marketing and sales is actually little optimizations of machinery wins on warehousing, wind on supply chain so that we could have extra margin wins. As you know, next year comes. So once we hit that next year and as we're scaling, we're going to, yeah, we're going to see really great margins for the food space that is higher than our competitors in our category. And that's going to give us a huge advantage as a business from a cash standpoint, but also from a, you know, just a business model. It's a, it's a way stronger business model. And we're super excited. And we've been waiting, we've been waiting for a long time. And every day we survive, we get closer and closer to that.
- [21:51]
John Davids
Mm, I'm hungry. You guys hungry? I could go over some fried chicken right now for, from Jollibee. And no, this is not a commercial for Jollibee. This is a commercial for Influicity. That's my marketing agency. And Jollibee is one of our amazing clients. You can see how we help drive more foot traffic to their restaurants across america@influicity.com. check out the case study. And hey, while you're there, check out all the other case studies from the amazing clients we work with. Influencer marketing, podcasts, social media, content, AI and so much more. And if you want to work with us, just hit the let's talk button over at the top of the website. That's influicity.com and I'll see you There you have an amazing persistence and yet another thing that I'm sort of getting from this and I hope people who are listening are realizing this. A lot of entrepreneurs really struggle with bringing clients on board so they'll have a good product. Usually it's a product or a service that it doesn't have nearly the kind of capital expenditure that you guys have building, you know, this chocolate bar. And at the same time they struggle with bringing on clients, bringing on customers, and that's the big struggle. You've actually taken the hard part and made it easy. And now you have brought an incredibly hard thing for you to do because I guess you're just glutton for punishment and you just like the pain because I could also see you just go, just doing a service business and winning clients over and this whole thing would just be gravy. But, but you actually believe in what you're building. And so you've given it six years and you know, I'm sure, I'm sure you'll give it a lot more time. But again, you've made the hard part easy. Do you see that?
- [23:23]
Jake Carls
I love telling people we're going to be a 15 year overnight success story. You're so you said how much time? Yeah, we're dedicated, we believe. And I think the belief and I call it delusion. I love talking about this because we're a bit delusional. My partners and I, we were delusional when we started and we're delusional now. And that that delusion is actually, it's just a departure from what reality is. But reality is people don't think it's possible. A lot of people are like, the world doesn't need another chocolate bar company. You know, why are you going in the most competitive. It's so hard. Why manufacture? Why not just comment? It's always, why not do the easier route in. Some say it's easier. And the truth is, is because we, we truly believe, whether it's delusional or in a good way or not, that we can achieve something really great and become a new age chocolate snacking empire here in Canada and build it globally. And I think that the pain from it is now just common. I don't know what the difference is. I don't remember my life before it. I don't. And I've sacrificed a lot. My partners have sacrificed a lot. I've. Mental health has taken a huge toll. My sister took a leave of absence, a sabbatical from, you know, she's our CEO and she took Four or five months off, she burnt out, she had a breakdown, she had some health stuff. And there's a huge sacrifice component, but there's an addiction also to the belief and the idea that we really believe we can make that impact and become what, what we see clearly, but what maybe others don't even see at all. The moment we stop having fun or stop getting excited every day to wake up is the moment that we'll probably step aside. And I think that one thing that you're going to see going forward, John, is Midday Squares is now hiring an executive team that can run this company that have been there, done that in manufacturing, in food, in pharmaceuticals, where we're bringing a lot of different categories together and we're focused on becoming, my partners and I, as irrelevant as possible within the day to day operations. Not the brand, not the innovation, but the day to day of operating this business. We want to empower the team that we hired, that we built to become the leaders of this actual organization because we don't want to be super attached to the hip where everything relies on the three of us. And I could proudly say that we've already started that process. And like my sister stepping aside, the company's still growing and it's running with our leaders running it. You know, that, that aren't the founders. It's exciting times. And I think that if we could figure out the way to not burn the candle to the end, which my sister did and I did last year, I burnt out last year. And we could sustain kind of through the journey of flow and even pain. But flow with pain and joy. It sounds like an oxymoron, but it's true. I think we could build this thing to be the modern day Hershey's. I swear to God, I say this with the really unconditional self belief in.
- [26:01]
John Davids
It, with, as you said, the delusional self belief, which you have to have, you have to have the ability to bend reality if you're going to accomplish something like you guys are working on.
- [26:11]
Jake Carls
If I knew what I knew today, John, I wouldn't do. I wouldn't go into food and beverage. I wouldn't start this.
- [26:15]
John Davids
None of us would. None of us. Every, every entrepreneur like you, you can't rewind the clock and say, if you knew then what you know now, would you do it? Of course not. But that's the luxury of being ignorant.
- [26:24]
Jake Carls
Yes. And naive. We were so naive at the beginning, or ignorant, whatever. And that's the magic. I always tell people, don't try to get all the information. Don't try to be perfect because then you're never going to do it. You could always convince yourself out of anything. Being rational is easy to find, being irrational and is hard to follow through with in most cases. And I think that you need to be rational, you need to be delusional, you need to be naive to at least see something through.
- [26:48]
John Davids
I couldn't agree more. Can you talk about the vulnerability side of it? So the vulnerability, the sort of raw edge that you bring to the content, and when I say you bring it to the content, I mean there's two sides of that. There's the content, which is storytelling, which helps build your brand, but it's also very personal. Like, I remember seeing when your sister said she was burnt out and taking time off. And you talk about therapy and this kind of stuff. You know, it's funny because now in 2024, 2025, that is a flex. Like, it actually is very accepted to do that. But I feel like it wasn't so much back in 2018, 19. Did you lean into that before? It was the cool thing to do.
- [27:26]
Jake Carls
Yeah. And we didn't do it because it's cool. I think that. I think it's become cool. Like you said, it's the hottest thing since sliced bread, I believe. But the only reason why it's the hottest thing since last bread is because people, humans have always craved human connection, but now they crave it in the business world a little bit more. Right. So when we started, I just realized that somebody out there is going to watch our authenticity and say, I actually relate to him and her and I want to be part of what they're doing. Somebody will also say, I hate these people and I don't want to be associated with them, but that's okay. There's 7 billion plus people in the world. So I just said, if we just are ourselves, somebody out there is going to relate. And if we do that at scale, how many people can we build as, as fans or friends rather than just customers? Because customers.
- [28:09]
John Davids
Any of the three of you, when you said, like, let's do a weekly therapy session and talk about it to the world, was there anybody internally who was like, why would we do that?
- [28:18]
Jake Carls
Me, I was my partner, really. My partners were the one that suggested therapy and put forward a basically a contract, more or less, that basically I had to do it perpetual while we were in the business, the three of us, once, once a week or once every 10 days. And I was like, I'm the happiest guy that was so naive and stupid and immature at the time. I was just like, I don't need therapy. It's. It's not for me. You could do it. You could do you. I don't care. I'm not judging, but I ain't doing it. And they're like, well, you can't join as a third founder or third partner if you're going to. If you're going. You're not going to do it. And I was looking. I said, you're going to throw away all the work that we just did simply for therapy. And they're like, yeah. And I went there and I went to the first couple sessions, and it was the. It was the craziest, cool experience. And I say it because I realized that you could become better. It's coaching and. And performance, you know, is improved when you want to learn, when you want to become a better person, a better leader, a better communicator, more empathetic person. And that's what it did. So now I value therapy at a level that is on. It's one of my best investments or best investments that we as a business have made. And, yeah, that vulnerability started to relate a lot more because most people go to therapy or most people have coaches or they just don't want to talk about it. But I hope that we can be a voice and to show that it's not taboo. It's cool. It's cool to learn. It's cool to grow. It's cool to be a better person and a better leader. And we're loud and proud. It's one of our core values.
- [29:39]
John Davids
So I also think it's labels. I mean, people say the word, coaching, teaching, learning, that's all the same thing as therapy. The only difference is really the word. But at the end of the day, you're just bettering yourself 100%.
- [29:52]
Jake Carls
And why would you not want to do that? That's just, you know, like, why wouldn't you?
- [29:56]
John Davids
Yeah. So you've got this $30 million revenue company growing fast, and you've basically got. It's one product. You got three flavors. So what do we got here? We got the. Is this the cookie dough? This isn't the original, though, is it?
- [30:08]
Jake Carls
No. Cookie dough.
- [30:09]
John Davids
Okay, cookie dough. I got the peanut butter, which was called something else, but you couldn't call it that.
- [30:13]
Jake Carls
Yeah, Stupidity.
- [30:16]
John Davids
Yeah. And then I've got the newest one right here. Right?
- [30:18]
Jake Carls
Crunchy peanut.
- [30:18]
John Davids
Yeah, Crunchy peanut. Okay. So we've got these products, and I eat one almost every day, and My wife and my kids love them. And yeah, like, we're big fans, big supporters. Where else do you see this going? Because I'd imagine you see this as a platform to build other types of products. Is that something you think about?
- [30:35]
Jake Carls
Yeah. So originally it was just midday squares, the current bars that you're showing, the type of form factor, the experience, the function, the indulgence. Then we said, how can we build just an indulgence? I call it functional indulgence. So snacks that are both indulging and have some sort of benefit, whether it's high protein, high fiber, high fats to satiate you and you just feel good. And if you look at the way that the past 100 years, snacking giants built their business is they just gave you a ton of snacks, but unfortunately they're high in sugar, high in palm oil, all these seed oils. And it's just not for us as new consumers want to give our family or our kids our friends. So we're just becoming that platform where we are a midday snacking platform, an afternoon snacking set. And we're going to create a lot of products down the line that are focused on function indulgence. But most importantly, we actually love the refrigerated set, meaning we want to live in the refrigerator as our preservative. And we believe going forward we're so bullish on it that consumers will get used to going to look for snacks in the refrigerated section. Right now they're not. But we're seeing progress very slowly every year. More and more consumers are going to want this to become a destination where they have options of many different style of snacks that they could have that are preservative free, that are clean ingredients and actually still taste good.
- [31:56]
John Davids
It needs to be. I've always wondered this, why does it need to be refrigerated? Is it because there's stuff in normal chocolate bars that doesn't exist here and that you just said the fridge is the preservative.
- [32:07]
Jake Carls
So we don't use any preservatives to hold it all together or keep the taste profiles together. And at the end of the day, it just keeps the, the form and the experience fresher when you have it. I think that that's something that will stay true to. We don't use artificial ingredients, we don't use the additives and stuff like that. So yeah, the fridge actually helps that freshness feel. And again, it's. It's better for you. Right. So we're focused on that world. We don't want to be the super, super duper healthy, which is like extreme, extreme, extreme. We want to be the hybrid of indulgence meets function using real foods. That's it. That's the whole play.
- [32:39]
John Davids
Do you have a full like whiteboard sketch of this is what the next five products look like or. And how far away is that?
- [32:48]
Jake Carls
So we have some really cool innovation coming in the next, I would say two years total. So next year we're likely going to launch something really unique that might be something different than the Midday Square. I don't want to say it because it's not for sure, but we've been working on something that is extremely cool. Kids will love it, parents will love it. It's literally indulgence and function. But it's not a midday square. It looks similar to it, but it's not a midday square. Then we're also working on another flavor profile for the Midday Square line. Like the actual current line which is going to be like a birthday cake with maybe white chocolate. So that would be the last flavor we launch in that product line. And then the other product line that we create is a completely other one that is really unique that could have five different items as well in it. And I believe that that's the, that's the line that takes us from that 75 million if we want to couple hundred million dollars of revenue. The Midday Square line will take us from the 0 to 75, maybe 0 to 100. And then the next one takes us to the next step.
- [33:43]
John Davids
That's so cool. How much time do you spend on the kind of thinking through product and innovation and stuff like that versus being the megaphone for the company? Like is this something that really interests you?
- [33:55]
Jake Carls
So innovation, I'm going to tell you something fun right now. Innovation is obviously the lifeblood typically of an organization. The team, the innovation and the way you make people feel is the lifebloods, in my opinion. But I actually never tried a midday square because I'm allergic. I'm allergic to peanuts and nuts. So I started a company. I've never tried the product.
- [34:11]
John Davids
That's insane. You told me that once before, but I'm sure if I believed you, you've never tried the bar.
- [34:16]
Jake Carls
No, that's insane.
- [34:18]
John Davids
Why don't you just make a bar that you can eat just for yourself?
- [34:21]
Jake Carls
My vision to have our team is to do a maybe a nut free facility one day where we don't have nuts. And it could be kid snacks as well. But that's, that's futuristic. But in the end. Yeah, innovation. I don't work on innovation. I, I work on megaphone, I work on the network. I build friends for midday squares. Whether it's people that are in media, people that are in retail, people that are in marketing, in finance, whatever it is, I bring that network back to the business and I, I create a mega, a mega microphone. The second thing that happens is my sister actually with the R and D team works on all innovations. So they put forth a calendar, they put time and always we are continuously reiterating the current product lines, getting better ingredient suppliers, changing certain things, little here and there to make it both more optimized on the margin side, but also more optimized on our supply chain contractual side. So we have backups and safety in terms of, you know, making sure that it always stays, that we can always deliver the product and then third, making sure that tastes good and has the function that the consumer wants.
- [35:18]
John Davids
How much work do you guys do on the capital side? You raised $17 million. You said you took on a bunch of debt from the Quebec government to build the original facility. Are you constantly in fundraising mode? Have you reached or you plan to reach some kind of cash flow neutral position? Where are you there?
- [35:37]
Jake Carls
I am a huge believer in the idea of always be campaigning, even if you don't need the capital, because you never know when that day is going to come. And it could be, it could be something you plan for for months or years, or it could be something that you need, something happened, you need something immediately. And in my opinion, we are always meeting with investors, we are always telling our story out loud and then connecting with these investors with no agenda, just to simply build a friendship. Because the people that we've brought into our organization already, they are super friends of us. Meaning that we built an entire relationship 9, 10, 12 months before even doing a deal with them, or maybe even two, three years before. And that's allowed us to have a strong alignment in how we work together and less problems even in bad times, right? So I'd say this, if you're the business and you don't think you need money, that's all good still campaign, go meet people, get on a plane, get off your lazy ass, show up to people, go to New York, go to Florida, go to Texas, go to Toronto, go to wherever you have to go to meet these people and spend 15, 20, 30, 45 an hour with them, get to know them, take them for coffee, go for dinner. Because the end of the day, you never know when that relationship's going to come up and you might need it and you might have to pick up the phone and that person will pick up the phone. Because when you show up in person, it's a sign of respect, It's a sign that you care and that you want this to work. Otherwise you could do it on Zoom, you could do it on a call which people half the time don't even listen.
- [37:00]
John Davids
The best time to talk to investors is when you don't need money. Because when you need money, they don't want that to be the first time they've heard from you. That's just the way it is. Have you guys gotten acquisition offers? Is that something that you've looked at or do you want to stay independent?
- [37:15]
Jake Carls
We, right now we're independent. I don't know what's going to happen. We, we do things in tours. So this is our third tour and it's going to end when we hit that 75 to 100 million revenue. And we're going to explore what's next after that and see where the organization needs to go. What from a, from a consumer standpoint, how our consumers feel, how our investor and our board feels and then what's best for the three of us as humans and our team. And we'll make a decision based on that. Whether that's an acquisition being acquired or whether that's us acquiring or whether that's going IPO or that's continuing to buy out maybe our current investors and continue running this for a legacy business for the rest of our lives. I don't know. All I could tell you is everything's done in three year plans and we stay very tight knit horse blinders on for those three years.
- [37:59]
John Davids
Yeah. The correct answer there, no matter what, is always no, we are not looking to be acquired. Because then when you get acquired two weeks later it's like, yeah, we weren't looking for it. That just got to happen 100%. Can you talk about the market as a whole? So like in my, just again, as an outsider, I don't live this every day, but I don't know anybody who's building a food brand with an organic marketing plan where they're not spending tons of money, you know, buying up media. And they have this cult following, this amazing brand and they have their own facility and they're doing 30 plus million revenue. I mean, are there a lot of guys like you or are you kind of a rarity?
- [38:35]
Jake Carls
I don't think there's a lot. I think it's a, you know, would I go into food and beverage again, I told you. No. It's one of the hardest spaces. It's very saturated. It's dominated by five, 10 businesses that own a lot of infrastructure, a lot of distribution power. And it's very difficult now. People throw around the word. People throw around the word 100 million. Like it's, like it's hot takes, like it's underwear. It's almost impossible. People don't realize how difficult it is. What are the odds of actually building a brand? And I don't say a private label. I don't say a commodity. I say a brand brand that does $100 million of revenue. It is insane. So, no, there aren't that many brands at this level. I think that people think there's a lot more than there are, but if you just look at the data, it's not as many as people think. And we've dealt with a lot of blowbacks. You know, like I said, close to bankruptcy, you know, almost want to throw on the towel. 36, 35, 36 times. You know, can you talk?
- [39:30]
John Davids
Sorry, I want to know about this because you mentioned almost bankruptcy a couple times. Is that the $600,000 mistake you were talking about? Talking about, or were there other times where you were actually on the brink?
- [39:39]
Jake Carls
COVID 19 came. You know, we lost 75% of our sales or 70 of our sales. We barely were able to hire, barely to keep our team employed. We ended up, you know, having no choice but to figure out how to. How to stay in business. We were like three weeks of cash left, and we ended up going to the hospitals and getting them to buy our squares for all the. All the staff as a way to fuel them through the hard times that they were going through. And that actually saved our business. They bought it at a cost. They worked with us. They bought like thousands on thousands on thousands and thousands of bars, which helped employ our team. And then we went on offense and we went guns blazing, spent the cash, hired a bunch of people, went full blazing on marketing, raised money, launched a flavor, and it just led to momentum. Right? And I always say to myself, in the moments that we're close to bankruptcy or close to a huge failure is always where greatness comes right after. And you got to be willing to have the courage. And I say courage is not a light word. Courage to do things that are bold, take risk on average decisions equal on average outcomes. And that's the truth. They can go either good or bad, but at least it's on average. And we've done that Every single time. And luckily, we're still surviving and we're still dancing and screaming and yelling and we're not dead.
- [40:44]
John Davids
Wow. That. I can't imagine that. And I didn't. I didn't know that. So. So during COVID you guys were up against it and literally almost out of business. And when people. And, you know, just because I've had a similar experience, it wasn't Covid, but it was something else. And, you know, when you're. When you've got two, three weeks of cash left and you're saying to yourself, okay, this is it. Typically what happens after that is the greatest time of your life, or you end it and start something new. But typically what happens after that is a lot better. The future's a lot better than you think in that moment.
- [41:13]
Jake Carls
Yeah, you nailed it. Like, and then you build a muscle. This muscle is critical. The resilience muscle and the ability to have the courage to step into the bold decision. Right? And every time that we're faced in these hard moments and, like, now, like, there's. There's so many headwinds like, like right now, like, there's. There's. There's instability and, you know, politics that are causing stuff. There's supply chain instability there. There. We've been through hell. Super high inflation over the last couple years, so it just, like, hit us with something else. We're going to fight back, you know, and, like, at the end of the last 10 years of entrepreneurship has been, you know, some of the. In my opinion, at least my lifetime, some of the hardest moments, and we've continued to just push forward, continued to not play defense, but play offense, and it's worked and we're still here. And I always tell people, the one who stays in it the longest that can withstand the most amount of pain and pressure usually wins the biggest. At the end of the day, they may not be the sexiest, they may not be the hottest, but they eventually get it at the long term. And, you know, you look at brands like Kind or Cliff, they're. They had a multibillion dollar outcomes. They stayed in the game for 20, 30 years, suffering the pain, the hardships, and they got that outcome. When you hear a brand like that going from selling for three to five billion dollars, that's crazy. And I get why. They were able to withstand immense amount of pressure, immense amount of pain, immense amount of anxiety, and they kept going. Their resilience was there, and they did it. So for me, fucking throw us something. Throw us another headwind, a lawsuit that this, that, that, it comes all the time now. It's just a muscle that we just continue to lift and get stronger and stronger with, and it makes us a better leader. And like I said, no matter what happens in Midday Squares, whether we crash, go to zero, or we build a billion dollar business, what I've learned on this journey is going to apply to the rest of my life. And Midday Scores doesn't define me, doesn't define my partners. It's just a part of our cha. Our chapter of our book. Right now maybe it's 10 chapters, 20 chapters, I don't know. But at the end of the day, it's not my full life.
- [43:11]
John Davids
If we were talking in five years and Midday Squares didn't work out, it didn't get to where you wanted it to go, what will have gone wrong? What do you think is the main thing that could, that could get you. At this point, I think the biggest.
- [43:24]
Jake Carls
Mistake would have been, would be sorry if we didn't do therapy as partners. Gonna sound crazy. We would have founder conflict. That would have destroyed the business and we would have been misaligned and we would have done things that probably would have been irrational. And tons of businesses do this. Tons of businesses go through partnership conflicts. They don't have communication and eventually things just collapse. And then the whole organization feels this volcano and it slowly starts to collapse the business.
- [43:51]
John Davids
The band breaks up.
- [43:52]
Jake Carls
Yeah. And then. Exactly. Or then someone buys it for pennies on the dollar and then tries to revamp it. And anyways, that would be one of the reasons, number two would be if we can't figure out how to manufacture this at scale. That would be the other big, big thing. But we're getting there.
- [44:07]
John Davids
I feel like you already are. There is 80, whatever the number. 30 million. 80 million. Is that not considered scale?
- [44:13]
Jake Carls
If you would have asked me six years ago, yeah. You know, I think the one thing, one disadvantage that I, I least experience is I want more and not more money. I'm not talking about money. I want more. More impact, more boldness, more, More risk. I want, I want to achieve more. I want to just keep going. And it seems sometimes so slow, but it's not actually slow. And I'll give you a great example. I sometimes get sad. I'm like, well, we're not moving fast enough. We're not growing fast enough. We're not this, we're not that. And I start to go through these crazy stories in my head where I'm like, I feel a bit depressed. I'm like, like, yeah, We're. We're here, but where are we going? Or we're not. It's taking too long. And then I'll go to, like, I'll be in, like, you know, New York, and I'll walk into a Target, and I'll see, like, six of our slots of Midday Squares and on the store, and I'll be like. I'll be like, holy shit. One of the top retailers in the world is carrying six of our items. They gave us dedicated shelf space. We earned that shelf space. And if I would have looked at three years ago, I would have said, that's impossible. So progress and growth is such a messy thing, and sometimes you have to actually just zoom out completely to appreciate how much actually is growing and compounding happens, Even if it's 0.5% a day, which seems small, grows really big over time. And sometimes I forget that. And yeah, so scale is. We have scaled. We have showed product market fit. Now it's about getting to the next objective scale that we want to get to. And yes, it's different skill sets. It's. It's there. There's gonna be a lot more issues, but there's also a lot more cash that comes in. So a lot more growth on our market and fun things. Right? So it's a unique time, and I'm excited for the next chapter right now. And I don't know what's going to happen, but I have belief that we will get there.
- [45:48]
John Davids
Rewinding the clock is a great way to get perspective and just show yourself how far you've come. The other thing, just going back to what you said a few minutes ago, which I thought was so important, getting to $100 million in revenue is so damn hard. And people throw these numbers out, especially when they throw fake numbers out. Like, I raised 50 million, or I raised, like, okay, you can get a mortgage. It doesn't count as revenue. The point is getting to 100 million, getting to 10, 20, 30 million. These numbers are thrown around on Instagram like, Everybody's just making $5 million in their sleep. It is so hard. It's so hard.
- [46:22]
Jake Carls
Don't people honest, Honestly, it's hard. And try doing it with something that I always say this people, with all due respect, doing with something that you created. If I got this sweet potato. Look, I have a sweet potato. I bought this. I could. If I got it at a good deal, I could resell it. Because it's already known. The sweet potato is known. People want sweet potatoes. I can resell it. I could probably get this thing to 100 million if I had the best pricing, best infrastructure, just by pure brute force. Now, building a brand, something different, something that no one has, and starting from zero and building it up to 100 million, I believe is almost impossible. Almost. That means there's a slight possibility. And we believe that we have that slight possibility. And. And again, I always tell you, whether. Whether it happens or not, all I know is we are giving it our 150% every day and we're doing what we believe is the best front foot forward every day. And if that fails, it fails. And if it doesn't, which we don't think it will, then let's fucking go.
- [47:20]
John Davids
Let's fucking go, man. I love it. Everyone go out. Get your Midday Squares bars. This is my favorite. I love that guy. But this is the new guy. You got to get them all. Jake, thanks so much, man. This was awesome.
- [47:31]
Jake Carls
Love you, brother. Appreciate you so much. Thanks for giving us a voice.
- [47:34]
John Davids
Thanks for listening. If you enjoyed this episode, make sure to leave a rating or review on Apple and Spotify. Wherever you listen to podcasts helps other people find the show and it lets us know that we're doing something right.