Stacy's Pita Chips: Stacy Madison (2019)

Hey, it's Guy here, and I just want to mention that for the month of August, the entire team at How I Built This is taking a much deserved summer break. But don't worry, we're gonna still be bringing you fresh content every single week this month. Every Thursday, we're gonna post one of my conversations from the How I Built This Virtual Summit, which I hosted back in May. Last Thursday, we had a bonus episode about marketing from Gary Vee. And this week, look out for my conversation with the incomparable Brene Brown. She'll offer some of the best insights on leadership and vulnerability that Honestly, I've I've ever heard.

Anyway, on today's show You're gonna hear from an entrepreneur who turned day old Pita bread. into an irresistible snack. This episode first ran in twenty nineteen, and I hope you enjoy it.

When I got that sixty thousand dollar loan Within six months I went back and asked them for five hundred. And they said here, here's sure, here's five hundred thousand bucks. No, they said no.

Well they didn't say no, they said no. Not without equity. And we were like equity. Equity in what? We've got nothing.

Rama and PR. It's how I built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Roz, and on the show today, how Stacey Madison turned day old pita bread into a new snack, Stacey's Pita Chips. Then went on to sell her brand to one of the world's biggest food companies. For a quarter of a billion dollars.

So there are some startup stories where most of us are probably thinking I couldn't do that. Like Squarespace. If you heard that episode, You'll remember that Anthony Casalina was and is a gifted computer programmer. He had a highly specialized skill. Same story with Steve Matten, he literally designed and then fashioned shoes from leather. And sold them. But But then there are the stories where most of us can actually imagine doing that thing ourselves. Like Brian Scutemore, who bought an old truck and offered to haul away people's trash.

That's how he started 1-800 Got Junk. Or Lisa Price, who tinkered with homemade lotions in her kitchen. She went on to sell her brand, Carol's daughter, to L'Oreal. Well, today's story is of the second variety, the kind of story that almost anyone can relate to because it is such a simple and elegant idea. You take pita bread.

You cut it into wedges, you bake it, throw some Parmesan or seasoning on it. And voila! You've got Stacey's pita chips. Now even though the snack food industry today is a sixty six billion dollar juggernaut, Stacey Madison did not have a grand master plan to disrupt snack foods in the late 1990s. At that time, she and her boyfriend were literally selling pita wrap sandwiches from a sandwich cart.

in downtown Boston. The pita chips were an afterthought, a way to use up those extra pitas at the end of the day. Pita chips were never supposed to make Stacey rich, but eventually. Free Dole would come knocking with a fistful of dollars. But long before that, long before Stacey even sold her first sandwich. She was on an entirely different path.

She grew up in the suburbs near Boston. And after college, Stacy went out to California to get a master's degree in social work. She thought about becoming a psychologist like her dad, but he wasn't so enthusiastic about that. become a social worker rather than go on to get my PhD and be a psychologist

He was like, Oh, that's no profession for a woman. That's One thing that he said was smile and look pretty and you will find a husband. You know, I don't wanna make him sound like a jerk and he wasn't he was like a caring, loving man that put his family first.

But he was also a product of the fifties. Sure. I I read that you you actually moved to Washington D C to um To to do what, to to do social work?

Yes. I worked in a group home for Homeless Pregnant, drug addicted. Women.

And I have to tell ya, I mean I loved the job. It was very rewarding. But at the time I think I made twenty two thousand dollars a year. And

It was really Paycheck to paycheck and very hard to survive on that kind of an income. So I decided to go and get licensed And be able to private practice. Which eventually I did go on to do.

But I found it very isolating. Go and I unlock the door and And I do yeah marriage counselling and

Then my Evening is over, I've s seen five or six patients and I close the door behind me and I go home. And I put a lot of effort into getting those degrees and licenses and Realized that it ultimately it probably just was not

For me. So you're you're uh I guess roughly uh thirty at this time and and by the way, you were engaged To to a guy named Breck, right? No That ended.

I I think it was just Mutual. I think ultimately it was just not the right thing. I think we just both agreed. We had had the place picked out that we were gonna get married And it was kind of a bizarre story, but

I went and I had a massage. This is you I know you sounds like I'm going off on a tangent here, but it'll come back. Um I went and I had a massage. And the woman told me to take off all my jewelry and blah blah blah blah. And I took it off, I put it in the dish Got my massage and I got up and I went to get dressed and I was like, oh my god, all my jewelry is gone. Including my ring.

my engagement rang and I was just you know, it was from his family. It was like I was just so upset. And The girl was gone. She had Gone gone. Like never to return. I think she took off to Florida or somewhere. She n never came back to work. She just kinda took all my stuff. But

В Рік і, вас кав, в Риз реплят. immediately even and I don't care about the ring, even if it's just a cigar brand or something like that, that it kinda took so long replacing the ring that it forced both of us to look at Should we really be doing this? Maybe this was a sign or something and um ultimately, yeah, we just decided maybe we shouldn't get married.

So you um so you guys split up. Um meantime. There was this guy Mark Andrus, who you had met through your brother a few years before. He was a friend Did you guys start dating or w would you just kinda keep in touch?

So he was still a friend and I talked to him all the time about my disengagement and all of that. He was super supportive and eventually Our friendship led to dating. And He was

getting his PhD. So he was doing an internship in Hawaii. And said, Well, why don't you come out to Hawaii? And what did you do in Hawaii? So um Hawaii was an amazing experience.

We lived in Just this tiny box and there was no kitchen or anything and it and there was no bedroom. It was basically a cot. And we bought an electric walk. And we used to

Cook. In the walk we'd wash it in the bathtub and Eventually we found a roommate and she had a nicer apartment and we worked out a deal where We would Take her second.

bedroom and In exchange for a lower rent, we would cook for her. Yeah. And while I was out there, I worked at a restaurant. And I got a job at it as an assistant manager.

And the restaurant was going to open up a surf theme You know, another location, a surf theme restaurant. And They said, Do you want to be part of that opening? And I said, Yeah, that's great. And um We

had this big opening with, you know, all the surfers, the local surfers in Hawaii and even retired surfers, they came and the owners of the restaurant were like, If we could pull this off, you know, you guys are gonna get a big bonus and blah blah blah. And we did. I mean we were Money was coming in left and right and to the point that we had to stuff it in beer boxes and bring the cash down to the to the basement because they couldn't fit it all in the register. It was just crazy. So Successful opening of the restaurant. Um

Couple of weeks later I sat down with my general manager and said How about the bonuses they were talking about, you know, when they're coming and you know And he's like, Well let me meet with the owners and get back to you. Wait another couple of weeks. sat down with him again.

And he said, Well I spoke to the owners And they've decided that we need to let you go. Hm. And wow I was Devastated.

I never Lost a job. In my life. And then I I remember speaking to my aunt who was in the restaurant business and she's saying, Are you kidding me? Don't be so naive. They always hire people to get restaurants open and then they let'em go and ultimately I circled back and said, Well if I can work this hard

For someone else. Then Why can't I do it for Myself. Huh. And

It's it kinda funny because At that point Mark was still in his internship and We were in these high rise buildings and Downtown Honolulu and We were cooking meals for

And we figured, well, why not just put a sign in the bottom of the building And When people got home they could f well. It was

at the time of fax machines. They could fax over an order and we would just have their dinner ready. Wait, you would You and Mark'cause Mark was a trained psychologist, right? I mean that that's what his work was. But you guys were also just like pretty good home cooks. Yeah, we loved cooking. I mean

Mark was a total foodie and We marketed to our building and the surrounding buildings that if anybody else wanted us to cook them dinner, that we would do that too. We called it condo cuisine. And what were you offering? Like was it just like tonight's dinner is or you could order from a menu of things.

Oh no, it was just a more of a You know, you had a choice between Two or three items. Um yeah, we had seared tuna with uh Pineapple salsa and

Things like that. Needless. to say we were cooking in our apartment and got very quickly. Some guy, you know, called or knocked on the door and was like You can't do this.

So basically the health department. So so that didn't last long. Yeah, it was the health department that was like yeah, you are not doing this. If you want to do this, you have to get into a commercial kitchen and you have to Et cetera, et cetera. So that dream that dream died. And how how long, by the way, did it last before you were shut down? A couple of months. Three or four months.

I mean that clearly like that experience kind of set into motion this idea that maybe we could do some kind of business. Yes. Definitely. And it

Kinda picked me back up onto my feet after losing that other job. Mm. And Mark, even though he's

Getting his doctorate at this point. He always wanted to be a chef. Um he came from a family of doctors and it was kind of just that's what you're going to be. But it also meant that he was Setting aside his dream of becoming a chef. So

It was a really crazy decision, but we decided when we got back Ту масачуссет We would try something. In the food business.

Wow. So okay, Mark has a PhD in clinical psychology. you are a social worker by training. You always knew that you were going to go back to Boston,'cause that's where both of you guys were, I guess From Yeah, New England. And

he was gonna become a psychologist, but I guess your plan was hey, before you do that, let's just kinda test out This food business idea for a short time. Yeah. Going into this, I mean you gotta also keep in mind the reality of the fact that

He's got a hundred thousand dollars in student loans. I don't have a penny to my name. Right. So you you move back to Boston, nineteen ninety six. What did you guys decide to do? So

We decided to buy a food cart. 'Cause we couldn't afford Anything else? five thousand dollars and I worked with my sister who she owned a catering company in downtown Boston. She was a huge help in

you know, I laid out the menu and and she would look at the menu and tell me, you know, y you have too many items on here, you're gonna have too big of an inventory, you have to streamline this, you have to like she kinda always gave us that reality check on on what when that business sense And at the same time As'cause now we learned you have to be in a facility. So all of our menu we prepped

And made out of her Catering. Place in Boston. So what kind of food were you making? I mean this is this is like I'm imagining like a hot dog push cart with like you know a water bin that's hot and warm and like another bin to keep buns like steaming hot. Was that what the food cart looked like? Oh my god, yes. The food cart, yes, was a cart with

Um That was a hot dog cart. And we used to go out at night. After the bars closed. And we did the sausage scene. We were cooking up and we were just trying to get money

Any way that we could so that we could revamp the cart. And once we collected enough money, then we put the cart in to a shop and you know, I designed it, you know, made a pretty front and a Beautiful green awning. And we hollowed the whole thing out and made it almost into a deli counter.

And we served healthy sandwiches rolled in pita bread off of The food cart. And then we made everything to order. So these were like I mean, wraps kind of became a big thing in the two thousands. It's the late nineties. And remember this, like pita pita bread sandwiches started to just like pop up all over the place. Yeah. But just to clarify that, it was basically a Chicken Caesar.

Rolls in a piece of pita bread. There were very few options. But we made uh you know, ours were you know, we had go cheese. We had Turkey and Havarty and we had more Up scale. choices.

So we prepared, we sliced all the meat, we put everything in a giant cooler. And then we went to downtown Boston. We would literally roll the cart up the street. and put it on the corner of Chauncey and Summer Street. And we'd get an ice delivery to the corner and we'd throw the ice in the bottom and then we'd put out all of the ingredients.

And then we roll it up in the pita bread, and then we had this big white piece of paper. And we'd roll the sandwich in the white piece of paper and we'd twist the bottom. So people were walking around. It was almost like they had this big white club and and so it was really good'cause they'd walk away and other people would say, Ooh, that looks good. Where'd you get that? Yeah. And what what was the name of the did you have a name for the push cart? Stacey's Delights. Stacey's Delights. D apostrophe L I T E S. D L I T E S. So it wasn't even D lights, it was Delight, that is so nineties. I love that. Yeah, with How did it do? Was it a hit? Did you guys get custom like lots of customers right away?

Yes, it was a hit. But we were not the only food cart down there. You have to remember that, you know, up the s you know fifty yards away is the pretzel cart and then there's the burrito guy and then there's you know, so it was at a time when in the food cart world. I mean now a food cart is more hip and trendy and more inviting. It's more of a food truck. But at the time a food cart had the connotation of um dirty and disgusting. Yeah. But the way that the cart was designed and that it was presented and that it looked and we had fresh tomatoes, uh you know, a mountain of them out front, and it was It broke the traditional mould of what is a food cart.

Yeah, yeah. And every day we ordered fresh bread. But where would you get the bread from? Just a local bakery. And It we'd always over order the bread because you can run out of alfalfa sprouts, you can run out of tomatoes.

And it's not gonna be a big deal, but in this business, if you run out of bread, you're closed. Yeah, so I I I think I see where this is going. So you you've all this extra bread and you're thinking What do we do with this extra bread? Yeah. And we didn't want to use it the second day because it's not as

Pliable to roll the pita sandwiches. Sure. So when we got back to the kitchen, we would cut them up and bake them into different flavor chips. And the idea was that you would You would do what with the pita chips? You would give them away, you would sell them? Like what initially what were you gonna do with them? So initially it was just a way to retain our customer base and to keep people happy as they were waiting in line. Uh,'cause it was a long wait. You had every pita sandwich.

Yes, and people would yeah, we hired a a college student. She was a cashier, but in between she'd go up and down with a basket of pita chips and just give them for free to people standing in line while they waited and people loved it because it was kind of like a happy hour. And you know, we gave'em away for free, but people started saying that they did want to buy them. So initially we would just put some in a little baggie with a little ribbon and and keep a basket of'em out on the food cart as well. And you could buy it for like fifty cents or an a a dollar or something. Yeah, buck. With the sandwich.

And just just out of curiosity like Did you guys experiment with the baking?'Cause I because pita bread can can like burn pretty quickly and it can get right like I I have to assume that you had to experiment with like the right temperature and The right flavors and stuff like that. That came. Later.

Initially we just baked the cinnamon sugar and the Parmesan garlic. Everybody thinks simply naked was our first flavor. It wasn't. It was The Uh Parmesan and

The cinnamon sugar. We were baking them in a four rack oven. I mean literally four or maybe eight tray sorry, it's eight rack oven. So we could spread out the pita chips on a tray and we could bake eight of them at a time. And you know you Really, we were making toast. Yeah, you were making thin slices of toast. Really good toast. Yeah, really good toast.

And um it wasn't until later as the company started growing That There was a a huge jump between I'm gonna make toast in my oven and I'm gonna manufacture. Hm.

And keeping in mind, I mean, Mark's deferring his loans and deferring his loans and that adds up Yeah, he's not at this point, he's like full on in the food business and you are too. He's not um using his PhD in clinical psychology. Right. You know, I got I was a clinical social worker, he's got his PhD in psychology and we're on a street corner selling sandwiches. And so at that point, you know, we are All in the We are going to do something and

We could not put our tail between our legs and go Running home. When we come back? As Stacey and Mark make a full pivot to Pita chips.

And shake off the warnings of an industry expert who says they will never grow their business. Stay with us, I'm Guy Raz, and you're listening to How I Built This. From NPR Hey, welcome back to How I Built This from NPR. So it's the late nineteen nineties, and Stacey and Mark have created kind of a side hustle out of a side hustle, selling pita chips from the little sandwich cart they started in Boston.

And at a certain point the chips are doing so well that they decide to make more of them. They're using an oven that can only make eight racks of them at a time. But then They find a way. To scale up. We met a very nice woman when we were doing the food cart who sold pretzels. Um it was Boston Pretzel Bakery and

She said, Oh, I have a forty rack oven. Why don't you come try to make them over there? So we went over to Boston Pretzel And we mixed up our p the pita chips and we were able to make a rack of forty of them at a time instead of you know, instead of eight trays we could make forty trays. And

She had back up racks, so while forty were in the oven we could load up another forty trays and Forty came out and forty went in. And we were like, okay, well this is this kind of makes more sense. What I'm trying to understand is like at what point running this cart. Did you and Mark say, you know what, actually, the business we really should focus on is the pita chips and not the pita sandwiches. So I think The coming about of that whole thing was the struggle of getting in inside location.

And yeah. Come winter, it's really rough being out there in the cold. Yeah and we w started working with a realtor and the realtor kinda laughed at us and said If you want a tiny little indoor location near where you are'cause we wanted to keep our following of people. Um you and your food cart can stand on line behind

Oban Pan, Dunkin' Donuts, at the time Starbucks was coming into the world, you know, everybody wants those little spaces and We realized we had to make a choice. Hm. And we decided to go for the pita chips because in the winter I was working on on the pita chips and and the bag and the design and the licensing and all that I needed to do in order to get that off the ground.

So with the pita chips we could get bigger Faster. Yeah. And I took a bag, you know, we we had put them in almost like a coffee bag.

Like with little window. Oh yeah. Little plastic bag inside of the paper bag. So a lot of labor went into it. But you know what? I Took the bag and I I walked into Bread and Circus in downtown Boston and I said

Hi, I'm Stacey. These are my chips and I'd love for you to give him a try. Wait, you just walked into a bread and circus, which eventually was was bought by Whole Foods, and you asked did you ask for the manager to like Yeah, okay. And what did the manager say? He said, Wow, these are good.

Yeah. Yeah, I'd love to get'em. Um Now we have one store. Yeah. There was like six or eight of these

Fred and circus stores And he showed them to corporate. Huh. And there was nothing in them. They were all natural, and it was the time of the beginning of the natural food. Revolution and and that Just what we were innately doing.

And and obviously you guys Uh, presumably you chose the name Stacy's Pita Chips just'cause that's what it was called Stacy's Delight when you were a food car, right? We chose it because we thought that a female name on a snack food brand would sell more than a male name. Uh Yeah, the woman in the kitchen kind of thing is what I hate to say it. That's really.

That was the the thought it was that it sounded better than Than Mark's. Hm. Let's just pause for a moment and and talk about money because Even though you are getting some stores

you know, willing to pick up the chips and Uh to sell them. I I can't imagine your business could could operate entirely on like the sale of pita chips, how did you have money to to run this thing.

Yeah, I mean we had A lot of Dad. between the two of us. We ran up our credit cards.

We applied for so I I was I started working with the neighborhood development center and they helped me write uh Business plan. There was I I really network with everybody I could possibly draw information from. Um so there's the neighborhood center, there was um I think Jewish vocational services.

was in downtown Boston and there was this one girl that used to eat at the cart and she said to me Um, how do you know if you have enough bread? And she'd ask these weird questions And of and one day I said, Why are you asking me these weird questions? She said, Well, I teach a business plan Boot camp. And

Yeah, uh use your cart as an example all the time. Wow. And I said, Really? I'm like, Can I take that class? She's like yeah, you wanna take you come on over and and I went and I took an eight week business plan boot camp. So between all of these agencies that I kinda worked with,'cause remember I didn't have a business degree. I didn't know I didn't know what a business plan was. Yeah. So after that eight weeks I realized that I didn't just need twenty five thousand dollars for the packaging machine, but I also needed twenty thousand dollars to buy bags to run on the machine. And then I needed twenty thousand dollars for this thing that people kept calling working capital. So that was all new to me.

So I where I thought I only needed twenty five thousand dollars. You needed sixty. I needed sixty. Yeah. Right. How did you get sixty thousand dollars? So the neighborhood development center in Jamaica Plain helped me spruce up my business plan a little bit and put me in touch with a bank that they used

That Work with the SBA? So we had to put down twenty percent of the sixty thousand? And that's where our family

Kicked in. You needed to put up twelve thousand bucks in collateral, basically. Uh yeah. And that was a sixty thousand dollar loan from a small business administration backed Bank in Boston.

So you got sixty thousand dollars. Which gave you how much runway, h how long could you could you function off sixty thousand dollars?'Cause you s you're you're you're talking about needing to buy a machine to seal the bags to buy the bags and and then you're not left with a whole lot. Sixty thousand dollars was not gonna go very far because yes, we bought the machine, we bought the bags But the one thing that we did have

We had customers. Both the consumer. And the retailers that loved our chips. And kept reordering. And when I got that sixty thousand dollar loan

Within six months I went back and asked them for five hundred. Wow. And they and they said, Here, here's sure, here's five hundred thousand bucks. No, no, they said no.

Well they didn't say no. They said no Not without equity. And we were like equity. Equity in what? We've got nothing. Yeah. I mean this company's not worth anything at this point.

Um So They said no to five hundred. And over a couple of months we were able to scale it back and they did say yes to three hundred and fifty.

Wow. So so you got a a three hundred and fifty thousand dollar loan From the bank. Yeah. But how did you get the word out about the PETA chips? I get it that you were you were kind of pounding the pavement and you were asking for managers at at l at local you know markets and asking to talk with them, but

How did people find out about the chips? Was it entirely word of mouth? I mean, this is pre internet, pre-social media, pre I mean, you didn't have ad dollars. We would go everywhere we could to sample. So we would go into the store and we would set up a table and we would just give away chips for free, just like we did on the cart. And people would try them and they would buy them and that just that's how we built our customer base. We had three words. Sample, sample, sample. Did you at this point have a vision for how big this could be? Were you and Mark saying 'Cause I have to a s assume you were still doing a lot of the legwork. You were still maybe even baking

the chips and uh or maybe hiring people to help you, but Did you think this is gonna be huge, is gonna be a national brand, or was was that your ambition at this point, or not quite? No, our goal was to be a regional brand, more like Cape Cod Potato Chips, and we were we were going to keep things manageable and in the northeast. But what happened was with the growth of the natural food industry. There were these pockets like Colorado and

Atlanta and California and there were the these little pockets where the natural food business was really Booming. And you know, the whole creation of whole foods and and them buying up all of these smaller stores. We were in all those smaller stores. So we were in the bread and circus and wild harvest and then they all became

Whole foods which grew Tremendously. So our Initial plan to be a small regional Brand

We had to rethink that. And I think that you know one of the things that Mark and I were really good at was Yeah. not being so locked to

A straight path. That we were able to see when other opportunities came along. So for example, the pita chips over the food cart, or um, you know, rather than sell into small gourmet food stores, we're gonna go into the natural food you know, we we're like, well we could sell to these Ten stores or this one chain has a hundred.

But the the business was still you and Mark, right? It was you were the only permanent employees at this point? So It was Mark and I for the first two years, and then my brother, who at this point Had his PhD also.

Um and we said to him, You wanna sell some chips? And You know, and ha ha ha ha we were all joking around about it, and then he came back like couple weeks later and said You know what? If I don't try this now. He's married, they don't have kids, and what if I don't try this now, when am I going to try it again? He's like, Sure.

Huh. 'Cause his wife, she was an accountant, she had a steady income So Yeah, he said you can just pay me minimum wage and then We'll give it a try and after the first of the year you you can just kinda start

Paying me back as we start Generating a little bit of money. And that's what really, really important Is that in the beginning we Surrounded ourselves with

Believers. I m here you've got two psychologists and a social worker. running a pita chip business, right? Like how implausible is that like w like nobody would say, I wanna start my business, I need two psychologists and a social worker. But somehow like You're you guys all brought these skill sets to this

To this thing. I was street smart and those guys were both street smart and book smart. You know, so we all work together on trying to figure out how we're gonna do this. And I'll tell you, at one point we had Paid fifteen hundred dollars. And we flew a consultant up from Frito.

Uh he was a retired Frito. Guy. And He walked into our how we were running things.

Mm. And he was just like, These are very good and they taste good. But This cannot be done. Huh.

This is a home baked type Product. And it's fine, but you won't be able to scale this business. Wait, why did he say that? Was it w were you literally like hand cutting the pita Peter Bread's Mark's right bicep.

Was like Three times the size of his left because he was literally using a knife to cut bread. Well. So when This guy walked in and he saw, you know, we're cut hand cutting bread and we're handbagging everything and

Each batch took a certain amount of time and then we have to like, you know, scrape off the trays and clean everything and He was just like, Yeah, you'll never be able to bring this product to market on any kind of scale. So

For us that was A really hard blow. I bet. We Also still found it hard

To believe. Like If we can take forty racks, yeah, forty trays of pita chips And we can make that. Why can't we just line up a whole bunch of these ovens

And be able to make so many racks at a time. Mm and then what that led to was us realizing we needed a curve conveyorized oven. You needed a conveyor belt oven where you could just throw the pita on there and it would just go through the conveyor belt and then p come out the end and just into a just a big barrel and the pita chips were made. Yeah, in the end game we ended up having to purchase a

Custom built Oven. It was the size of a of a fifty two foot like an eighteen wheeler truck. Wow. But you were still, I mean, or Mark was still hand slicing the PETA into the right shapes. You can't scale that. Like one or two or ten people can't do that. So how did you solve it

That problem. You're right on target here. So you we we broke it down into each stage of making a pita chip. And that piece of it, what we did was we w we would go and we would tour other factories. So we went down to Cape Cod Potato Chips and we went on that tour that everybody in Cape Cod goes on that tour. But you just went as tourists? We went as tourists and we looked through that window and we saw

They were Cutting potatoes. With this machine, and we asked him, Well How does that machine cut the potatoes and

they gave us the name of the machine and then we went out and we contacted that company And said This is what we're trying to do, and we had this guy who worked for us. Who could tinker with anything. And so what we ended up buying was a machine that used to cut carrots

For Campbell's soup. So you know how they cut those tiny little squares? Sure. Well What he did is he took those blades and space them further apart.

And when he first spaced these blades and and all of us are kinda gathered around the opposite end of the machine, holding a bucket where the these are tempted chips are gonna come out. And so he he feeds the bread into the machine, he starts tossing, you know, a piece of bread, a piece of bread, a piece of bread and we're standing out at the other end and we're like Holy shit, lo and behold. Pita chip. It's a chip, you know? And that was the very last day that Mark ever cut a piece of bread. You and Mark eventually got married, right? And you were business partners and then you got

Married'cause you were together, right? Yes. We had been together for a long time. And eventually we just Got married. Mm.

Uh in in ninety seven. And all was good. Yeah. Yeah. All right, nineteen ninety nine, you get your production method down, you get the machines you need

Your revenue is growing. Um I have to imagine that there are big chip companies looking at you guys, even though you're this tiny little New England based pita chip company and thinking, Ha, pita chips, that's the new craze. Let's make pita chips and crush these guys. Not really, because so at this point in time in the company, as we just started to grow, It was also during the time of the no carb phase. It was all those

No carb, low carb diets. Oh yeah. And we were like, Here we are. Once again we're making toast. And We thought oh my God.

That's gonna put us out of business. Like all these time all these things along the way, you think, Oh my God, that's gonna put us out of business. Oh my god, that's gonna put us out of business. But Ultimately people loved the chips. It was something people ate all the time and it was becoming a staple in their cabinet. It wasn't just a one time purchase. Yeah.

Yeah. Alright, so you guys are uh kinda operating under the radar, but growing steadily. Do you remember the first year you you actually turned a profit like a significant profit? Was it was it in nineteen ninety nine or in two thousand? Um people say it takes three years. I would say it takes

Five. Right. So it took some time. Yeah. But I guess you guys hit a million dollars in revenue like a around two thousand one, which sounds super impressive. Did did that mean that you guys were All m making lots of money. No. we really paid ourselves very little and if anything, we really weren't making anything'cause everything went back into you know, if we needed another oven. Well, you know, you don't buy this, you don't dry that, you don't do this because you need another oven.

Yeah. So you guys Uh, by two thousand one you're you're starting to become more sort of stable in the production process. Uh

But just about I think about five years after the two of you get married You mark divorce. You decide To get a divorce that year. Yeah. But then you stay honest as fifty fifty business partners. That this is not normally how the story unfolds. Like normally this is very messy and traumatic and difficult. I mean it it doesn't sound like that's what happened.

Yeah. Like I'm not gonna say we didn't argue. I mean certainly we argued over a lot of things. I mean there's a lot of tension And The employees had to put up with us like

I partnered with each other and and you know what? And they they'd go look oh boy, there they go and they'd turn around and they leave the room and You know, and then and then eventually everybody would come back to their desk and and And that's okay. But We had a common

Goal. And I would have to say I think he'd probably agree that during the time that we were married for the most part it was a Successful marriage, but we also had a successful divorce. Mm.

It was clean and it was clear. And We shared the company like it was our child. and everything that we did was in the best interest of the company. So we went to court

Together. and we went before the judge and we said we want to get a divorce and We're splitting this fifty fifty and we really had no assets. Yeah. Everything we had was the company. And we agreed we built this together and we were splitting the company. And we were both going to stay on. And the judge was like, Wow, this was

The easiest one. I think it's surprising, at least for me, and I think probably for a lot of people listening, just because It it it seems to me that it takes a r remarkably like clear headed people to come to this agreement to say, hey, you know, like we're not gonna be romantic partners anymore, but

we're really good business partners and we've got this good thing going. And let's keep it going. Now now when I hear that I'm thinking, of course you would say that. That makes total sense. But most people don't say that. So The greatest gift. That mark.

Gave me. During this period. was his honesty. Because it One point he said, I don't know.

When or if I wanna have children. Yeah. And I was in my mid thirties already. So you know He said that to me and it was really I mean it was that night that

I left. I went to the factory. I had you know, I brought my dog to the factory all the time. So I really I went to the factory and I slept in the dog bed that night. But you know, now that I look back on it, I mean really

Could you imagine if we would have stayed together and and we might have had ended up having a kid, that he wasn't really into having kids and it didn't and that could have been that road that so many people go down and it ends up being a mess. Yeah. But I did decide to start a family and he was Very supportive of that. I think this is like two years a later, right, two thousand three you you gave birth to to your twins.

Yep, I was thirty nine years old. I gave birth to my twins. Um I mean I went to Boston IVF. And That's how I I had the kids and I and I I've always spoken openly

About that. that I was financially and emotionally ready to start a family and I just needed a little help. Yeah. So At this point when your girls were born.

In two thousand three. Was Stacey's Pita Chips w was the trajectory Like, was it clear that it was going to be A much bigger brand, or or did it still feel like It was a you know g g more successful regional

Brand. So at this point Um, the company was growing like crazy. It was successful enough that we could each be taking A decent salary.

We couldn't Pull that much out of the business, but you know, it was enough so that we could each, you know, buy a car and you know, we could each buy our own place or w or whatever. So it was successful enough to do that, but we really We decided how much we gonna pay each other And

then everything else just stayed in the business. And were companies coming to to you guys at this point and saying, Hey, we want Stacey's pita chips in our in our stores? Yeah. So I think it was when we

Got into the Club accounts? like Costco and Sam's Club and all all those. So we started manufacturing for them And then we got into Trader Joe's and we just and it was the perfect demographic for us. And

Trader Joe's was an amazing company to do business with. They paid On time or early. Well.

And because of that We were able to Not take on equity. Wow. And at that point, you know, everything just went back into the business. But we were just about to give up give up a piece of the company and we never ended up actually doing that because we got Trader Joe's and they were ordering by the chocolate.

And when we were selling when we say truckloads, I mean it's really Amazing. When Trucks are lined up. We're selling a you know a

two dollar item. We're not selling computers, you know. So Yeah, when we're when we get to the point that we're doing, you know, thirty, forty, fifty million dollars in sales, those are Two dollar sales or one dollar sales. That are going so there's like just truckloads of chips going out the door. And

At this point we were We had um moved to the Seely Mattress factory where we bought the building and It was Two or three hundred thousand square feet, something like that. It was basically four acres inside. Wow. And we converted

the seely mattress factory into a giant Peter Chip. Factory. I think it's like By two thousand five, two thousand six.

You're selling like More than fifty million dollars worth of pita chips a year, which is sixty five, I think. Sixty five, thank you. Um Pepsi announces that they were acquiring Stacy's.

How did that happen? Did they approach you like a year before? Did they say, Hey, we're really interested in buying your company, is is that what happened? Or d or are you looking to sell it? So A couple of months before we saw them at a trade show and and they were like, Oh, this is a good product and In order for them to even look at you, you have to be at least fift million in sales and blah blah blah. And we were nowhere near there at the time and

And that was the only contact we ever had with them. Then You know, a year later at the Trade show again. There was this one month window where we got

phone calls from Three Of the biggest food companies in the world. And

We were like We better start. looking at this. And this at this time I had Two little kids. Yeah, they're two years old. Cingle mom

So we we really said, you know what, we should we should where we never considered selling Yeah. We should maybe Think about this. Yeah.

So so you decide Uh to sell. Yeah. In the middle of working on a deal, uh There's actually there's actually a fire in the factory.

Yeah, there was a big, big Fire and We had already signed the SPA we s the stock purchase agreement. We had already signed that But it hadn't closed. We agreed on a price and all of this. And then we had a fire. There was nine million dollars in damages and twenty five percent of the factory was burnt down.

Yeah. And that's a really hard phone call when they call you, you don't know what they're gonna say. And basically the way that it ended up working out is you know, we still ultimately had a brand That was worth it.

Value And We were like We will get it back up and running. And

The way we did it was we built a wall. across half of the plant, so we were still able to manufacture on the side that Wasn't burnt down. And then the other side, we call in every person over the last decade that had helped us with anything and then People were working electricians, they brought in like w the one guy turned into six guys and

Overnight, round the clock. We were supposed to close in December. And By January

twelfth. They inspected the plant and they said We don't believe it. Well They're back up and running.

Place looks great. Send him the check. Exactly. Send them in the check. Which it would have been nice to see a check, but So we all sat in front of the computer just looking like Waiting for the number to change. Is it there? Is it there? Is it there? Is it there?

And then it was like, you know, the the money transferred in and we did Obviously. Close the deal. I've asked, you know, other entrepreneurs about the sale of their business and there are different answers. I r I I asked um the co founders of Reddit why they agreed to sell their company at the time they did, and the answer was,'cause it was more money than I had ever had in my life. I didn't grow up with a lot of money and it was life changing money, which I think is a fair answer.

Um I I have to assume that was a a a factor, if not the factor in your decision. It was life changing money. But It had also become

You know, where we loved this business And we loved running it. At a point The tables turn and And the business starts to run new.

So I think It was the perfect timing. Yeah, I was working crazy hours. I was lucky if I got home on time before my kids went to sleep. So for me it was the right time. For Mark I think it was the right time. He was burnt out. Um

That being said After it sold. There's this major Like This was my

Whole life. This and my and my kids and What am I going to do now? So what what did you do? How long

Did you stay with Stacey's after you? Sold to Pepsi. One very disastrous year. Wha what was what was what was disastrous about it. It was so hard. I was

Contracted to stay, but I really only had to work twenty days a year. But I didn't know what else to do, so I would really go in every day. And I think I was more in the way. And I thought that I was gonna be Like a buffer.

Between You know, the new leadership team and the employees and I think I'm I probably just created More confusion. So it was eight months of

Yeah, I probably just was in the way. Yeah. Um, I can im like you don't sound like a person who is different from the person who you were in high school or college. Of course we all change and we we grow and evolve, but like You you sound like a very down to earth person. But um all of a sudden you were

You had a this wealth that y I have to assume you weren't you had no experience with How did it change the way you live your life or anything else? I think it Even today.

Sometimes when I go Uh Do something. you think twice, Oh, can I do that? Oh can I buy that? Oh can I you know and

Initially. I went out. And I bought a castle. Right? Right.

buy a big house in a beautiful neighborhood and get a sports car and do all that. And I did. But Then I realized My kids can't

ride their bike and they go on the bus and and there's only five kids on the bus'cause everybody else is going to private school and and I was like We're done. We're done with this house. I put the house on the market. And I bought a

Smaller house in a Neighborhood where our neighbors are Right next door. And you could Yeah.

Borrow a can opener? And the kids can ride their bike and yeah, that's how I'm wanted to raise My family. I'm just curious, I mean you

You were young, you were um in your early forties. having accomplished this incredible thing like growing this business in The whole rest of your life ahead of you I mean

Huge part of that incredible, exciting like I, you know, I think m lots of people listening would say I I would love to have that. But at the same time you had to figure out, I guess what you were gonna do with the rest of your life, right? Right. People are people look at you like

You can do anything but at the same time you look at yourself and and you're like, Well now what am I gonna do with my life? Of course I'm I'm a mom and I'm parenting and that's first and Foremost. But um What else am I? Yeah.

And it's a very hard position, it's very hard place to be. And the past four or five years I've had Some Big medical. Challenges

I had breast cancer, I had an autoimmune disease, I had a full knee replacement. So I was really kind of knocked down for four years. And When you're in that position, you really feel Like the money at that point

Doesn't matter. You know, if There's a day. But you think You may die.

All of a sudden there's this Mortality. Yeah. And you have to think of your kids. It's the most awful thing to think about What's gonna happen

With my children. Yeah. Who's gonna give them a hug? Who's gonna You know

Take care of m obviously you know, my I mean, I've got family that would that would step in and take care of them, but but it's the little things, it's the day to day things that you mentally go through. Um that makes it really hard. How's your How's your health now? Now I'm good.

That's great. I had double mass actomies. Yeah. Yeah. Don't identify myself.

As a cancer survivor, I just look at it as this was a shit ass time in my life and now it's over. Mm. And Yeah. All of that you know.

getting past the medical issues Selling the company. All of that adds up to Taking control. And that's my sense of bold.

So you kinda got it now, you got your mind in a new space. Amazing. Um Stacey, when you think about the trajectory of your Life in your career and

the incredible success you had. Do you do you think that it's because of The skills that you brought and the hard work that you brought, or do you think that luck played a a bigger role in in that. You know, a lot of people say, Oh, she got lucky. Yeah.

That really pisses me off. 'Cause you know, yeah, maybe the stars aligned and maybe the timing was right for a lot of things, but Each and every one of the challenges and the hurdles That you overcome Others might not have gotten there.

And we did. I could have very easily Followed The path That

My father You know I Probably could have just stayed in that comfort zone. But You know.

Yes, by moving to this place and moving to that place and taking on additional challenges, you know, I think you develop the skill Somewhat of a survival skill. That's got us to where we were in Two thousand seven.

When we sold. Yeah, maybe there was some luck in there, but there was a lot of skill. that's involved in crossing that finish line. That's Stacey Madison, co-founder of Stacey's Pita Chips. By the way, Stacey is still in the food business. A few years ago, along with her brother Dave, she launched a new energy snack called Bee Bold Bars. But she hasn't forgotten her first obsession, and she still gets excited when she sees somebody buying.

A bag of repeat of chips. There was a time I was in the grocery store and this woman picked up two or three bags and she put them in her cart and I just couldn't resist. I'm like, you know what? I'm just gonna go tell her. And I and I did. I went up and I said, those are my chips. And she looks at me and she goes No, they're not. They're my chips. Oh my god. Thanks so much for listening to the show this week. If you are not yet a subscriber, please do subscribe or follow wherever you get your podcasts. If you want to write to us, our email address is hibt at npr.org. To find us on Twitter, it's at how I built this or at guy. And on Instagram, it's at how I built this NPR or Or at guy.ros. This episode was produced by JC Howard with music composed by Ramteen Arablui, who was edited by Neva Grant with research help from Candace Lem. Our production staff includes Casey Herman, Rachel Faulkner, James Delahouse, Julia Carney, Elaine Coates, Farrow Safari, Liz Metzger, and Annalise Ober. Our intern is Harrison BJ Choi, and Jeff Rogers is our executive producer. I'm Guy Raz, and you've been listening to how I built this.

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