Lily’s Sweets: Cynthia Tice

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Guy Rosen on the show today. How Cynthia Tice started her first brand at an age when many people are planning to retire. and grew Lily's sweets into a four hundred million dollar business. Over the past decade, we've learned a lot more about how sugar impacts our bodies. Sugar along with refined carbohydrates is connected to chronic inflammation, which in turn is connected to conditions like type 2 diabetes and heart disease. And this Growing awareness of sugar and its downsides has led to an explosion of new products that use sugar alternatives. Many of these alternatives, like stevia or erythritol, or allulose, have only become popular in the past 10 to 15 years.

And what they offer is satisfying sweetness without the inflammation, without having any impact on your glucose levels. And so if you go to Whole Foods or Sprouts or even Costco, you'll now see a lot of snacks and treats that have less than a single gram of sugar per serving. And none of these products are marketed towards diabetics. They're targeting consumers who want to eat a bit of junk food, but without the sugar or even carbs. And one of the categories that's seen explosive growth is chocolate. Since 2017, low or no sugar chocolate sales have more than doubled. In twenty twenty four Americans alone will eat around 350 million dollars worth of low or no sugar chocolate.

And one of the brands that was way ahead of the curve. Lilies. It was launched back in 2011 by a food consultant named Cynthia Tice. At the time, Cynthia was helping small grocery stores source natural and organic products. And she knew that Stevia had just gotten approved for use in food by the FDA. She also figured that if used in the right way. you could make a pretty good chocolate bar using Stevia.

A bar that didn't taste all that different from one that was packed with sugar. Now at the time, Cynthia was nearing age sixty. She never thought about starting a brand herself, but when Lily's chocolate bars hit the shelves of Whole Foods, They were an instant hit. Now for the first few years, the business was mainly run by just four people.

Two of them, Cynthia's kids. Barely ten years after its launch, Lily's was acquired by Hershey's for more than four hundred million dollars. It was an unlikely turn of events for Cynthia, who never imagined she'd build a multi-million dollar brand. let alone in the latter half of her professional life.

Cynthia Tice grew up in the 1950s and 60s in and around Philadelphia and went to Temple University. She came from an entrepreneurial family. Her dad and uncle ran a small chain of clothing stores in the area. And although Cynthia's younger brother went into the family business, Cynthia was not encouraged to do the same. You know, my dad and my uncle were very old school.

And they were also quite um concerned about the women kind of getting in and getting involved and causing Problems to be perfectly frank. You know, they felt that it would be just best for the men to run the business and if the woman wanted to do something else, I mean, they could do something else n no one did. No You know, I was the first woman in my family to be college educated.

And I was also the first woman in my family to not get married. in you know, when I was twenty years old. So You know, then it became you know, once I graduated college. It was like what am I gonna do next? Yeah so at that point I was living in Center City, Philadelphia after college.

And Um I started to be a waitress. And it drove my father crazy. Why did it drive him crazy?'Cause he was like, I did not send you to four years of college for you to become a waitress. It's a great job though. You get tips, I mean I thought it was fine. And

You know, my last year of college was an interesting year because That was when I really got into natural foods. This is an in

Nineteen seventy four. where natural foods was I think I mean it was still very hippie ish. It was really California Right. There's probably pockets of it in like Vermont and other places. You're in Philadelphia Yes. So the way that I got into natural foods

was that I didn't feel well. I was like sick to my stomach all the time. And One day I'm sitting in the cafeteria. At Temple University.

And I'm Eating lunch. Complaining, as I always did, that I didn't feel good, and And some random guy next to me and I never knew who it was, I don't ever remember seeing him again.

But he literally turned around and said to me Well, no wonder you don't feel well. Look at what you're eating. And what were you eating? I probably was eating some fast food item and coffee. But I do remember

How striking That comment was To me, like it literally was like somebody slapped me across the face. And I began to Research diet.

And I Changed my diet radically. I I've stopped eating processed food. I just started to eat like whole grains and fruits and vegetables and you know, like I just started to feel better. And

And I was so excited about feeling Better. I became like a zealot.

And I I I used to go home for family dinners in Brown Baggot. Hm. You know, by by this point, around seventy five. Um there weren't a lot. There wasn't a lot. of stuff going on in Philly, but there was some stuff.

You know, there was a natural food store called A Scene. Um there was bread and circus. that existed in Yeah. In Boston. Yeah. There was um

Mrs. Gooches in California. California where I grew up. We used to go there. My mom would buy us carob chocolate. Which I hated. Uh. It was disgusting. Oh, so awful. But you know, yeah, but Mrs. Guchas and and this was in the in the mid seventies, I think

Obviously there were supermarkets in America. There were a lot of supermarkets, but the supermarket revolution was still unfolding, like there were still small grocery stores that people shopped at, right? Yes. A lot probably a lot more than today, a lot more independent. Grocery stores. Bye.

What ended up happening was during the time where I was trying to figure out what I wanted to do next. Іно, а майдан краї без. He came to me and he said, Well, you know, if if you wanted to open a store, why don't we open a store for you? What kind of store do you want to have? Um and I was like, Oh, okay, yeah, let's open a store for me. Uh I wanna have a natural food store.

So That was in N Seventi Seven. And he literally lent me ten grand. Which I never paid him back, but It was technically alone.

And he helped me uh find a location which at that point was on South Street in Philadelphia. Yeah. And it was really small, it was like a four hundred square foot. Store. But I had a friend who um

Owned a natural food store and we decided that we were gonna join forces and open a bigger store together, and that was in 1980. Um and so okay, so you had this I mean, you had this opportunity to open the store because you came from a family of entrepreneurs. They had a a a men's clothing shop, so How much guidance did did you get from your dad about, you know running a business because you know, I think as you would have a admitted at the time, you were just a couple of years out of school, no experience in retail, maybe, you know Watch your family, your dad, you know, and and uncles, but

Did he give you some pointers? Now he I remember That when I got my first bank statement. I was like, oh my God, what do I do with this? I did not know how to balance a checkbook. And he and I'm like, dad, I really need some help. And he's like, well, I'm really, really busy. Take it to the bank and tell them to help you with it.

So I walk in to the bank with an envelope full of checks. You know, and I I like lay everything down You know, in front of the teller and I'm like My dad told me that you would help me balance this. Yeah. Yeah. I don't think so. So then we hired then we hired a bookkeeper, which was really useful.

Was it a you know, in those early days, a a profitable business? I mean you still had to pay rent and you had to buy inventory and so like you had to manage a business and it had to be sustainable. It it was almost never truly profitable. But back in those days I was single. Um, I really didn't care about money. I truly didn't. I lived in a really small Not good apartment. in a bad part of town. And

I just really didn't care. I was on a mission. But the profitability was really bad. Yeah. You know, we would

Barely. Barely. Barely make it. And that continued for you know, really for years. Really until I sold it. I mean, w it was always like hand to mouth.

Were you happy? I was thrilled. I was thrillingly happy that I just felt like I was doing something that I loved that I could support myself with that was good for other people and the planet. It was so fulfilling. And I just

You know, I loved it. Іні ітіс. Natural foods was for like kind of fringy people, right? In that sense that it wasn't like today where it's just mainstream. But I think

In nineteen eighty nine something happened that began to turn the tide, and I remember this. And this was the A lar scare, right? Yeah. At the time apples were coated with this with this uh substance. It was called alar Um and and there was some connection between alar and and cancer and

This was like a big deal. It was all over the news. And all of a sudden I guess people start getting interested in wait a minute, I don't want that on my food. Yes. Is that does that was that a turning point for natural foods? Yes. I mean there there were You know, there were sort of several, but that was really a big one.

Primarily because mothers and others really got behind it. And that was and Meryl Streep really Meryl Streep of all people was like big vo vocal about this. Very vocal. What we saw was people that had never before come into a natural food store came in for the very first time because Apples, when you think about it, apple and apple juice and apple sauce is like one of children's first foods. Right.

So You know it Like apples became became very, very scarce. Organic apples were like so hard to find. And You know. But once people came in, it was a giant opportunity for us because

You know My personal uh mission Was to always Make natural products more

Um Enticing. You know, was was to really like seduce people into eating more more naturally. Alright, so there's this this

kind of turning point, I a an at least an awareness from consumers. It starts to grow and Really in the nineties, you start to see more and more people going into these stores. And so Did you start to see any kind of shift in in your store in the nineties at all? I saw there become more and more competition.

And There was А бік інкріз. of you know l larger format natural Stores.

That we're targeting transitional shoppers. So shoppers that would normally shop In in grocery stores that were now going into these larger format natural food stores that had a lot of expertise in merchandising. And we're willing to be more open to ingredients that small stores like mine

We're not necessarily comfortable with. Yeah. Um and but but I imagine you probably had loyal customers. You pe people had you had people who really shop at your store because that was their local and they've been going there since 1980. We we did, we did, um, but by that point I had been married for ten years. By the late nineties. Yeah.

And um my children were ten and seven. And I w started to really get burnout. I was tired. I was tired of retailing. I had been doing it for over twenty years. At that point.

And I Began to think that I didn't. That I wanted to try to do something else. Yeah. Yeah, I get it.

What kinds of things were you thinking about? Like What did you want to do next? So you know, it was right at this time actually that the shift that you were talking about before was really Інфокус і стартусі консум, спеші affluent consumers. Looking for

organic products. Correct, and I had this light bulb moment. When I went to a a seminar Um that was developed by FMI. What's F M I

Food marketing institute, which was the big industry. Organization for supermarkets. And presenting at the event So

We're sitting there and there's you know, there's all these various topics. And by the way, most of the people in the audience are from the Big supermarket shape. They're all from super there. It's like Acme is there and Wegman's is there and you know, probably Safeway was there. But they invite the Whole Foods person to sort of explain what they're doing. So these other Okay, I got you. So You know, Whole Foods gets up and they're presenting their strategic vision. And You know, they get done and somebody in the one of the supermarket

uh retailers in the audience raise his hand and he goes I just want to understand how you think you're gonna, you know, like how you think your audience is big enough. Like like if you get every customer in the you know, to you know, from natural from the natural products industry to come into your stores, that's still not gonna be enough. It's tiny. Who's who are it's nothing. These people are not. And this woman she goes. Well, rest assured, we're not after their customers, we're after yours. The Whole Foods lady says this to them. The Whole Foods rep says, We're after actually we're after your customers safe way.

Yeah, wow. And and and it was just a shock, shocking moment. They were like, Wait what? A shocking moment. And then the light bulb for me came about. Because You know, a bunch of other speakers get up after that.

And These supermarket n retailers are now like they're worried. You know, they're like, uh And some other guy in in The audience raises his hand and he stands up and he goes.

Because they had talked about the importance of educating the consumer. Like the their their premise was, you know, what they were advocating was In order to score these sales of like these higher priced items like natural and organic and supplements and you know, you know, stuff without additives. You had to educate your consumer on the benefits.

Yeah. So this guy raises his hand and he goes What do you mean educate consumers? How am I gonna do that? So Just putting two and two together, you're thinking, Wait a minute.

I know this industry, I can help these conventional grocers make the transition to when they're gonna have to serve these these customers. Yes. Which I think is exactly what you end up doing. Uh For a pretty long time, right? Like I think that the next decade or so working for like like local grocery chains and and advising them on health food. Yeah.

You know, I was making more money than I had ever made before. It was more fun. uh і was seeing my kids more I was you know basically working out of my home Because I would you know I would sort of generate all this information you know, with my own computer and you know, I had like a

a shelf in m in you know, in my office that I was like putting products on to measure them. So it was Yeah. It was great. Okay, so you're doing this consulting at this point. And and I imagine while you're doing consulting

A lot of people occasionally are saying to you, You know, Cynthia You you know so much about this industry, why don't you start your own brand? Like people probably said that to you from time to time. They did I had people who were saying to me, start a brand, start a brand. And I I began to think Yeah, you know, maybe I could do this. I s I I believed that I had the expertise at that point. Like I You know, I

Um I really understood what it took to create a brand. I really understood um All of the expenses involved with launching in supermarket. I

At that point had been working with other brands so I began to have relationships across the country with some key retailers like like whole foods and wagmans and you know so I had I had relationships where I actually knew buyers and I knew I knew what it took. But that was what was so Daunting to me. Like I it was like oh my god this is

It's a lot of work and a lot of money and I I I was Very nervous about it, but I was Pete.

You know, my interest was piqued. Um and and tell me, I I know uh at the time you met uh you were introduced to to a woman named Elizabeth Fisher and And the two of you started working On your very first product together, which was which was a beverage.

Uh natural sugar free soda. Yeah. Um, but I I guess you guys kinda hit a wall uh uh pretty soon after why why? What what happened? So We developed a product, and this was right at the end. Of two thousand and seven.

And Right at the end of two thousand and seven. Coke and Pepsi announced that they were coming into the diet beverage segment. with a naturally sweetened diet. Beverage.

And that spooked you guys. We we we dropped the project. You drop the project thinking there's no way we can compete with them. Correct. So

We decide to pivot to chocolate. To chocolate. Yes. And and so Tell me why chocolate.

Well Chocolate is my favorite food. But for me, especially as I got older when I passed that fifty year mark I really, really was trying to avoid sugar and I really really wanted to eat more than a small Square or two?

And I was seeing that there were brands that were beginning to pop into existence. that were utilizing other Um sugar alternatives. notably Maltatol.

Mm as their primary sweetener. But the problem with Maltol Was That Maltotol is is a sugar alcohol that is intensively

Digestively upsetting. Yeah. Now people who were desperate Two have their favorite food like a candy. And Didn't want to eat sugar.

would would tolerate those Digestive upsets, and in fact, I was one of them. Yeah. But What ended up happening was I had discovered Stevia as a sweetener.

Right. And and Steve you just just just at that time been approved by the FDA, Uh for use in food. And And in fact I it's what Coke and Pepsi had

Or just rolling out in their uh diet drinks, which I guess is why you guys decide to to pivot to to chocolate in the first place. Yes. So In two thousand and eight.

Coke and Pepsi were experiencing this enormous Downturn. of diet beverages. And it was really due to the fact that there was Enormous consumer distrust.

Of artificial sweeteners. Of aspartame. Yes. And Coke and Pepsi were looking for the holy grail. of natural sweeteners because they were trying to rescue those sails. They saw in Stevia the Holy Grail. Yeah. 'Ca stevia basically comes from the stevia leaf and it's a it's like I don't know, twenty times sweeter than sugar.

But it doesn't have the same it's not sugar, it doesn't spike your Your glucose, right? Yes. There's no um There's no impact on blood sugar level with stevia. But more importantly it didn't have any known connections to, you know, to cancer risk.

Right. And so When you and your partner decide let's go into chocolate What what do you what did you do? Did you like buy Stevia powder, like Truvia and start mixing it with you know, unsweetened chocolate wafers and melting it in your kitchen and pouring it into molds. Yeah, we did try putting some Stevie into chocolate and and I knew this chocolateer and I contacted him.

And He was trying to formulate with it. Um With everything that we got back. Was

Um, really not acceptable. It was horribly bitter undertones and st you know, stevia, especially when you're using enough to really sweeten something. H has ha you know, has terrible aftertaste and you know, has like this almost like a licorice flavor and and it just It was terrible. It was the worst chocolate I had ever tasted in my life.

When we come back in just a moment. How in the space of two years, Cynthia goes from the worst chocolate ever. to a national roll out. in Holford. Stay with us, I'm Guy Raz, and you're listening to how I built this.

Welcome back to How I Built This. I'm Guy Raz. So it's around 2010 and Cynthia and her partner Elizabeth are experimenting with Stevia to make a delicious sugar free chocolate. Problem is their first attempts Taste really awful. And then

something else starts to go sour. During that time. We experienced a falling out. You and your partner. Yes.

Used there was so and this is not uncommon, a story we've heard on High Belt this many times. Yeah we had different views and different expectations of each for each other. And um We We had a series of small arguments.

That culminated in a large argument. where we decided not to work together anymore. And was the just to just to kinda dig in a little bit deeper, because I think it's important with co-founders, was the difference of vision around product or branding or or design or all of those or

We hadn't gotten that far yet because we didn't we hadn't developed a product to work with. Yeah. It was It was truly personality. Right. Yeah. And and so it just didn't work out, and I think you guys decide to go your own separate ways and

That's it. More or less. Yes. Okay. But meantime, so

So you uh fr from what I'm saying, I mean you had Marketable. Had you given up on the idea? Did you think This is just not gonna work or did you think there was still a possibility to make to figure something out?

So I I Didn't work on it anymore. And then I discovered that someone had developed

what I was looking to develop. They had developed a Stevia sweetened chocolate. Yes. Was it a chocolate bar they were selling, or was it or was it like a a wholesaler? It was ingredients. So it wasn't somebody who was making chocolate bars, it was somebody making chocolate wafers for for restaurants or whatever, or whoever wanted to use it.

Yeah, I was like, Oh my God, somebody did it. So I requested a sample They came to my house in in wafers. That are designed to be melted, presumably. Correct. And I tasted it and I'm like, Oh my God, these guys are really onto something. And

So what what they had done was something that I never thought of doing, which They had used other Sweeteners. To mitigate The

The the bitterness and the inten the intensity of stevia. And so namely they were using erythritol. And some fibers like Dextrin. And so they were able to kind of balance the sweetness with the bitterness out. Yes. Umright so they so you try their recipe.

And then what you you you contact them and say, Hey, this is great. I'd I'd love to see if we can work together. Yeah. And so I asked them to do some modifications, which they did. And are they also able to

make chocolate bars or is that gonna be a different place? That's a different place. Okay. First you wanted to just get the raw m ingredients. And this stuff melted like Like Sugar sweetened chocolate. Yeah. This was like the first thing that I had ever tried that was like, Oh my god, this is good. It was cocoa butter and cacao and dextrin and and uh erythritol and

And the cocoa butter gives it that like. creamy, rich viscosity um and that mouthfeel. And then you could decide y you could melt down and add Milk powder, right? To make milk chocolate. Or you could just you do dark chocolate if you want to keep it dark, or salt or Yeah, you could put inclusions in it. Yeah. Okay, so you saw that this was this had potential to be the raw material for A a sugar free chocolate bar?

Yeah. Okay. But again, even now, sugar free is still a little radical. Like when when when I say to people try not to eat sugar, they're like, really? Um and uh but uh there's a lot more awareness around ketosis, keto diets, and you know, and and and how sugar can cause inflammation. Cause when you eat uh like a like this is a time w we're talking about 2011 where paleo diets really start to t to get traction and Paleo doesn't allow refined sugar.

But it does allow coconut sugar and honey and some other things. Right. So Again, like Uh there there wasn't quite the awareness yet in two thousand eleven around Sugar free. Right now there's a bunch of sugar free candy and chocolates that are remarkable and how good they taste.

But Uh but why did you see an opportunity there? How did How did you know that there was it wasn't just gonna be this weird candy thing? So I really, really wanted chocolate like this.

And I believed that there were more people like me out there. Yeah. And I didn't want to compromise in taste. But I also Didn't want to be particularly moderate, like I didn't want to eat one little square of chocolate.

at a time. In order to avoid sugar. And I I just believed that that there would There were gonna be other people like me again.

Yeah. So all right. It's it's now around two thousand eleven. Um You have this idea. And I guess I guess you start to look for someone to sort of

go in on it with you, right? Like like a partner. Um, and I read that um that the person you connected with was a former colleague from your consulting career, a guy named Chuck Ginardi. Yeah, we had you know, we had remained friends since we stopped doing consulting together. And he said to me Uh

I've owned an I've owned a little store in Seattle and I don't I hate it and my wife and I are getting ready to move. Um We've adopted a child. And I'm looking for something to do. Do you have anything that we could do? Wow. He just j what great timing. Yes. And and I so actually he brought a few pro a few projects to me.

And none of them panned out. You know, and and finally I'm like, you know, well, I do actually have this other idea that I've been like sitting on Um So I told him about Stevie had chocolate and he was like, Let's do it.

Uh but I also told him that I was terrified to do it because I knew everything that would that went into Um You know, that went into Producing a brand. And and right away you knew you wanted to work with him because you

Just you guys. Unlike your previous partner, your personalities were better match, you and Chuck? We were better matched. We had been friends for a long time. And so Chuck says to me Let's do it. Let's do it. It's really exciting. Let's do it. I have you know, I have the

But I have the money. You know, I have the money to do it. How much money did you think you needed to get it off the ground? Um, so originally I believe he invested a hundred and twenty five thousand. Right. I didn't have that much to I didn't have money to invest.

My dad invested twenty five thousand. Right. And um You know, I we split the company fifty fifty because I've you know, I felt like that was fair. Yeah, I mean that's I mean it's a great I mean he puts in all the money and but it's your idea.

The money ended up which I didn't I I didn't one hundred percent understand this. Um in the beginning. Um because I just was so green. at the financials of business. I was completely green.

Yeah. And and honestly, if if I have advice to founders, it would be to fully investigate that better than I did because it turned out that the money was a loan. Which I didn't truly, truly understand at the time. Yeah. So

You know, initially Chuck uh came in with a small amount of money. And We developed the packaging. And you know, we I we we had the recipe for the chocolate.

And you had a manufacturer that could make the bars, make'em into bars? Yes. I found a manufacturer that could make the bars here on the east coast. And You know, then I started to do the work that I was really good at, which was price architecture. and um you know a a sales strategy and and

We developed samples and I decided that I wanted to take this product first to Whole Foods. Alright, before we get there. Did you have a name for it at that point? Yes. So when we started to really put together the packaging and stuff like that.

Um So Chuck has a niece. And she's twenty one and doing really well. Today she's twenty one. Yes. Or or maybe maybe twenty one or maybe even twenty two.

Okay. But back then she was seven years old. And she had been diagnosed with brain cancer. Oh. Wow.

Yeah. And so she goes for treatment. At children's hospital. Of Philadelphia. And

She has surgery and she has chemotherapy and she has radiation. I mean she really just goes through it. And she's in the hospital for a really long time and she finally gets out of the hospital. And she says to her mother, Mommy, I want to raise money. And her mother says, What do you mean?

And she said. Well in the hospital She's like the kids get really sad because they're not able to eat together because there's not enough wheelchairs to wheel all of the children into the dining room. In order to eat at the same time.

So I wanna do a fundraiser. Two. Байовілчер Форт. So the family has throws a fundraiser. And I'm invited to it because I'm friends with Chuck and friends with the family. And they raise the money.

So As we're conceiving of what to call this brand. We knew that we wanted to have a charitable component to it. And we decided to Call it Lily's

In honor of Lily. After this girl. And to name Nonprofits that support children with brain cancer or Атер серіс із

as the recipients of our charitable donations. Well. And Lily is healthy and and uh a gr a grown up today. Yeah. It it's interesting'cause I didn't know that story. There's nothing on the packaging that tells that story, I think. Right. Yeah. There you there originally was.

Right. Like when we first launched on the back it said Lily, one brave girl. And it told uh it told information about her. I I think the reason why I point this out is that um A lot of brands. um really push their social mission.

And I'm not convinced that that sells product. I I think I think what sells a product is a good product. I I couldn't agree more. The social mission's important for culture. It's important for motivation for the team. And eventually can really be important for the brand, but but Um, but it's interesting'cause I did not know that about Lily said it had this component. Uh,'cause it wasn't really something that you you you push front and center. Right. We and exactly for that reason.

I mean, we had l large discussions that we did not want to be Alex's lemonade. We wanted to be a delicious chocolate bar that had a charitable Give back. Yeah. And And so The two of you are kind of developing this and Chuck puts in the bulk of the

money w this loan to to get you off the ground. And what was Chuck's role gonna be? Was he were you gonna be the CEO? Was he gonna be the CEO? Did you even talk about that? Um So actually Chuck was the CEO.

But that was honestly because I was so green at business that I didn't know that the CEI was higher than the president. You were the president, he was the CEO. I was the president and he was the CEO. Okay. But You know, Chuck um deferred to me a lot. about business strategy because

The truth was I had m more experience. Than he did. Yeah, with um, you know, with doing this. And it was, you know, also my idea and I had found the recipe. So, you know, honestly. I was kind of bringing a lot to the table at that point, but

Um We we we worked really well together, and he is, you know, he's still Honestly, one of my best friends. Um So we put together this the the packaging and you know, we've

you know, we found the coman and the pricing and did all of that. And then um We took it to Whole Foods for their category review, the candy category review. Yep. In August of two thousand and eleven. And

I knew that I was presenting to the grocery buyers. But I had a relationship. with the um the I I believe he was the vice president at that point of of merchandising

A guy named Earl Schweitzer? You knew him from just your consulting work? I knew him from my consulting work and he was their boss. So I was like on the plane with our prototypes. And I Email them.

And I just said, you know, I want you to know that we're coming in. And I really hope. that you can come to this meeting. It would be so great to see you. I would just love it. What did you bring? What w did you bring a packaged chocolate or was it not yet packaged? No, we bought we developed four skews. Okay. Yeah, my belief is that when you have it an innovation, the innovation should stand on its own and you shouldn't innovate with

flavors. Outside of the innovation itself. So I picked original or plain. Um almond. Crispy rice.

And I And at that point I did I did sort of veer a little bit because coconut there was a j a giant halo around coconut at that particular Time. So we chose coconut as our fourth item. And we take'em to the meeting and we go walking in the door and

Um The two buyers are there. And we sit down in front of them. And They're kinda you know, I'm like this is the next Beck's thing too.

you know, whatever the best thing in the world is. And this is two thousand eleven when when again, Yeah, sugar free was still diabetic candy. Yeah. So we're sitting down in front of them and in walks Alright. Schweitzer.

Yeah. And they're sort of they're tasting it and they're like, Uh, okay. And somehow I have the wherewithal to look at Earl and say, Well, what do you think? And he says I think it's good.

He said it's Good he's like, it's not green and black. You know, but it's it's a good solid chocolate that it'll appeal to Um special diet customers, which is one of our focuses. Hm.

And the whole meeting changes, you know, the whole you know everything changes. And do they make any decisions at that meeting? Mm. No. They don't make any decisions, they just say, Okay, thank you very much.

And then we go home. You you and Chuck. Chuck and I go home. Yep. And we wait. And in the meantime You know.

So up until that point, just to uh kind of give you a a sense We've probably spent 50 grand. and you know, in developing the packaging and getting the samples produced and you know, and in in you know, in everything that that took. So you know, hadn't been an enormous layout of cash at that point. And

I had decided That Um If Whole Foods didn't say yes, we weren't gonna move forward. Like I like. Like Chuck didn't know that.

You were not gonna just try another retailer and you felt like it's a it's whole foods whole foods are bust. No, I was like, you know, this is the like this is so risky. You know, I don't know that I'm gonna you know, I don't think that I'm gonna push. for it if um if Whole Foods doesn't say yes, but In November of that year. I get an email from Earl and it says, Congratulations, you've been chosen. as a national brand.

For Whole Foods in and and your uh launch is gonna be March of two thousand twelve. Wow. Yeah. Okay. Pause for a moment. I'm sure you were super excited about that. I was

How many chocolate bars did you have to how many orders did you have to fulfill a national r uh release? Yeah. That's like tens of thousands of chocolate bars. It was a lot. Did you have the cash to finance that?

So that's when um that's when Chuck was able to um loan the business Money, but again, like I you know, me being green, I was just s super unclear. About that. So he did and we were you know, we were very diligent at producing what we needed. We've met all the deadlines. We w we never had an out of stock

You know, I knew how to do that this part. I knew how to execute this launch. You know, it was it it was seamless. So so that co manufacturer was able to you were able to finance that run. And get it in time for January of twenty twelve?

Yes. Exactly. I mean you were fifty nine. At this moment. Yeah. Fifty nine years old, first time brand builder.

Well It actually gets more interesting because Um Because it was alone. when we got to signing our operating agreement papers. You and Chuck. Yeah, which were not signed until after we had

Um procured. You know, the launch at Whole Foods um we decided that we would not Um take salaries until Chuck's money was paid back. Right.

Uh that would that meant that I had to work another job like I had to continue to do my consulting career. Consulting work in that first year. In in s in subsequent years. And subsequent years. Wow. While you're trying to build a Lily's. Okay, so you've got this launch. At Whole Foods.

Where were they gonna put the the chocolate bars just with every other chocolate bar? Yep. And was it gonna be the first sugar Uh uh free.

Chocolate bar or Stevia Sweden chocolate bar? It was the first Stevia Sweetened Chocolate Bar because remember there were some multitale. Chocolate. at Whole Foods, but they they were not performing well and Um

You know, they were they were regional rather than national. Again, in twenty twelve when you launch this,'cause I think it's March of twenty twelve. I'm thinking I go back to the story you told about that meeting of grocers in you know in in in Philadelphia in two thousand where they're like, Who's gonna buy your stuff, Whole Foods? and they're like, Actually we're going after your customers. Yeah. But uh now I'm saying to you Who is gonna buy Lily's chocolates in twenty twelve? Who who are these customers? Cause it's Gotta be a tiny

percentage of consumers at that point. Well, that is Exactly what they thought and they were okay with it. Did you think that? No. I thought this is delicious chocolate that has no sugar. There's no reason not to buy it.

I mean why not have less sugar and less calories if you can still have the same delicious Taste. I'm with you. I'm just saying there's a lot of skep there was gonna be a lot of skepticism around that. Well, there was there was, but I knew what to do, which was I demoed it like crazy. So I hired demo teams all over the country and I did frequent promotions. So I did like six promotions a year, so basically half of the time it was on sale. And you know, it's pretty well known that

Uh promotional activity stimulates consumer trial. So consumers were trying it because, you know, there was a sales sign in front of it. That meant you were losing a lot of money that first year. I wasn't, actually. I wasn't No, I wasn't because we didn't have infrastructure that commanded expense. So we had no employees. It was me and Chuck. We weren't we were not drawing a salary. We were we had no physical structure. The co manufacturer was pr was packaging it and and getting it and and shipping it. For you? Correct.

Like I had no understanding. That Brands Frequently

Have a pathway. to um profitability. Like that was not in my vocabulary back in those days. You thought you had to be profitable from day one. I did. Which which I think most people should think, but they they don't.

Yeah. Yeah. So we lost money the first year. We lost a little bit of money, not a lot. And every year subsequently we we were profitable. But the business is still a small business. The business is a small business that is kicking.

But I mean it's growing. I don't think there was ever a year that we grew less than forty percent. Well. And most years we were doubling.

And in that by twenty fourteen, let's say, do you remember was your revenue over a million dollars? Oh yeah. Well it was a it was almost a million dollars the first year. So you were going sh you were like by maybe by twenty fourteen you were what? Five, six, seven million dollars? I I think we were probably at the five million.

Okay, so in that first year you're sampling it like crazy, just giving it to people. And that was enough to stim I mean that w that was and the promotions was enough to stimulate Sales Yes. Yes. And how did you get the people to come back when it was more expensive to buy it again?

I don't know, but interestingly enough When we analyzed the the effectiveness of our pro promotions later on, you know, um, when I had a new team involved and we were capable of doing those kind that that type of analysis, it was determined that price Was not really as important.

To Lily's as to other brands. And I believe primarily because our attributes were what people were really looking for. You know, this this low sugar attribute, especially in a great tasting product, yeah, you know, was was really innovative and disruptive and desirable. So Cynthia You you get into Whole Foods right and you're sampling it and clearly people are

responding to this. Wow, this tastes really good and it's there's no sugar. And then you start to um add other produ other s product lines. I think uh chocolate chips and maybe milk chocolate. Um, but I know that pretty soon in into this, like twenty fourteen, Chuck stepped down. As CEO, did he also Did you guys also dissolve your partnership at that point?

Um so Lily's was an L C and We bought him out of a number of his Shares. You raise money from invest from professional investors or from friends and family? No, from France France.

Yeah. Because you wanted you needed more cash or or because Chuck wanted wanted out or what? He wanted out. He um you know, he wanted to enjoy his family. And um he really wanted his loans repaid. So we paid back his loans, he retained some ownership. And um

He he actually found his replacement a a wonderful woman named Laura Fraga. And We continued to run the company virtually. My two kids came in and joined and we were From that point forward a team of four. Your kids joined you.

They're now they were now adults. They were young adults, very young. So it was you and your kids and Lauren. Um and you raised some money from do you mind telling me how much you raised total from from friends and family to just at that point? I think it was three hundred and fifty thousand. Okay, so still not you're not talking about millions of dollars. Yeah, it wasn't.

Yeah, and so and and the cash flow. Alone was enough to sustain it? It was not only Enough to sustain it. It was enough to sustain it.

In The midst of A law battle that cost a lot of money. All right, so now we get to twenty fifteen. Because twenty fifteen.

Um, your old partner who you started the the soda beverage that never got off the ground and then you looked into m chocolate and then you guys went your separate ways. um she comes back and she she sues you and she claims and I've read the law the the case, um, and she claims that this was developed together, that you had developed this business together, and that she was entitled to some ownership. Yes. Um and so now you've got a lawsuit on your hands. So first of all

Uh stressful. Super stressful. Yeah. Uh, and now you know that this is just gonna Consume a part of your life for some time.

Yeah. It was it was one of the Hardest and saddest. uh events of my life. When we come back in just a moment.

Cynth emerges from a two year legal battle. Only to face another challenge. Scaling a brand that only employs Four people. Stay with us.

I'm Guy Raz and you're listening to How I Built This. Hey, welcome back to how I built this. I'm Guy Raz. So it's 2015 and Lily Suites is now a solid small business and growing steadily. But Cynthia has a problem. Her former partner is suing her. claiming she's entitled to a stake in the brand.

So how did you deal with running the business and also dealing with the lawsuit? I don't know, I just did it. You know, I had to do it, so I did it. You know, I I I was Really busy?

You know, I think the fact that I was so busy working and the company was doing so well was, you know, really kind of counterbalanced the heartbreak and stress of the lawsuit. But there was a lot of nights that I didn't sleep. That that was you know, that was where the stress sort of came in. But You know

I was stressing about other things as well, like you know, like where were my chocolate chips gonna be able to get produced. Yeah. Did your lawyers feel like you had an open and shut case? Did they did they tell you that? Did they make you feel that way or did they not say that? They did not make me feel that it was an open and shut case. They believed in me and they They believe They really believed in me and they believed that

I was not guilty of lack of fiduciary responsibility, which is what the case said. Yeah. But You know, they didn't they didn't they never said this is a guarantee. I'm curious, you know, we've had we we did insomnia cookies a uh a short time ago and and in that story

Um the co founders split early, early in the business, and then many, many years later, when a part of it was sold, uh the original co founder sued um And they went to Uh they got uh all the way up to, you know. the day of the trial and they decided to settle. And that it it just went away.

Was there ever any moment where you thought just Let's just do that. Let's just find some settlement and move on. No, because um It was the very early days and At a certain point.

Um her attorney offered a settlement sum that I would never have been able to like I couldn't have come up with it. Yeah. So you had to fight it. I had to, yeah. But in the end you triumphed, you won. Yeah.

Yep. Did it feel like a massive weight? Was lifted. In twenty seventeen when that happened. It did feel like a massive weight was

Lift it. It did. It did. It's really hard because you know, humans are We're emotional.

Um all of us. Uh and you know, w especially when you're friends with somebody at some point in your life. We've all had these situations where Those friendships unravel. But you do remember good times. And uh and so it's hard.

It sucks. It it it does. Yeah. Yeah. So once that passed, right? Were you now I mean now twenty seventeen

If you're growing every year like Gangbusters, you gotta be thinking, all right, to get to really to the next level. We've gotta get outside investors in, like professional investors in. So I was Not really thinking that. Exactly.

What I was thinking was Was Oh my god. This surpassed my wildest dreams. Because

At that point. I was in my sixties. I love this. Yeah. You're in your sixties. You're a it's your first time Founder. Yes.

of a brand and it's like by twenty seventeen, what? You gotta be doing twenty five, thirty million dollars in revenue. I was doing twenty. We were d we were at twenty.

And you had four employees. But our run rate By the by two thousand eighteen when we partnered with um Our equity partners, the MG. We our run rate was forty. So beginning in two thousand seventeen, once the lawsuit was finalized. You know, I really started to focus on okay, what's the next step.

Because Probably Like if I had to identify my greatest skill It's probably self awareness. And I knew what I was good at, but I also knew what I wasn't good at. Which is

Building a team. It's hard. And also to to You know provide information to people so that they can do their jobs. You know, to delegate and train. Yeah.

You're not a delegator, you want to do it yourself. It's not only that, I just don't have the time to train you. Like my kids would call me up and go, Mom, how do we do this? And I'm like You know what? I don't have time for this. I figured it out, you should too.

That's my delegation. Not good. By the way, I totally understand that impulse. And it is a certain I mean p part of it is there's a certain type of person's good at it and part of is training. People can learn how to do that. Yeah. Yeah. But you'd been a solo practitioner as a consultant for most of your career, so my whole career. Yeah. So you were used to working by yourself and you're

Uh home office or whatever. Yeah. It was you it's just you. Yes. And so, you know, the other thing that that I understood was, you know, I said to my kids, Do you really want to like get involved in a bigger way? And they were like, No, Mom, this is your dream. We don't want this. So

You know, I I saw no succession plan. For For lilies, even if I continued to try to grow it and build a team. I spent like

The whole two thousand seventeen. doing due diligence and contacting different investors and different bers and Um You know, uh different founders.

And just, you know, really really to try to figure out what my options would be. I ended up s talking to a founder. And uh She advised me. Two

contact VM G she's like just give Wayne a c Here's Wayne's email address. Just email Wayne. So tell me about the equity partners, VM G the Velocity Made Good. They're based in San Francisco, and they, I should say, do a lot of CPG investing. They do a lot of innovative CPG. Yeah. And the reason that I was so interested in speaking to them was that they tout themselves as very Founder friendly.

Mm-hmm. That was really important to me. So I emailed Wayne. And we started talking. And

Like in January of Um, two thousand eighteen. They sent me a A a letter of intent. And it basically was like, We are super interested in you.

you know, we'd like to we'd like to make an offer. They made an offer and it was like It was like one of those magic things of like the figure that I was envisioning is what they offered. So we started to do the you know, the whole diligence process, which was equally as stressful as the lawsuit, I have to say. Yeah. So it is so hard.

And it was a tremendous amount of work. VMG was thankfully very patient and very nice. Because there were times where Like I was like oh I th it was it was so much information. And you know, for people who've never been through the process, they're you know, they sort of ask you to declare anything that you Ever think could ever be a problem in the future.

for the you know, forever. But um They did it and they made it they made an investment in did they g it was a a majority investment? They made a majority investment. Um

They hired a f a a woman, Jane Miller. To be the CEO. Her background is big CPG. And her Her real expertise was building a team.

and managing a team and scaling. Within a month, She had found us as as space for as an office in um Boulder, Colorado. And they wanted to move it to Boulder because Boulder's such a food center, I think. And that's where she lived. Yeah. And she lived there. Okay. Yep. Yeah. And then Ші просиди та хай форі.

Wow. And you became at that point more like a brand ambassador? Yeah, I mean That's like another topic which I actually think is a big topic. And it's something that's like near and dear to my heart is like

The topic of Um how do you utilize a founder? In in you know, after an acquisition. Yeah. Cause what did you want to do? You did not want to do operations. You didn't want to run a staff. Well, I didn't want to do operations. And I did not want to wrap reports, but I but I did want a job. And I was not effective at communicating that.

So initially when you know when Jane And I started together. You know, there was this big misunderstanding of like she thought I wanted no role, and I was like, What do you mean I want no role? I want a role. We had to work through that. And Um

It was it was pretty painful. It was more painful than sending my kids to college. Really? It w pa painful because I mean I mean I understand. I think I understand this, but You got a big check. Right, but I'm gonna go. uh more money than easily than you've ever seen in your life. And you not were never rich. Never mind. And so here you are you know almost gonna hit sixty. And wow, you get a nice check. They're thinking see ya. Yeah, you're thinking, No, no, this is my baby. I I I I I came up with everything, a logo and the

I I you know, like I I've been d doing this now since twenty twelve. Right. I wanted to work in some capacity. Yeah. And I really, really encourage any founder to Um, spend some time. developing your own thoughts and communicating that effectively to your your to your next set of partners. Um, you know, the old paradigm is that you have to sort of wipe out the old team.

But that's an old paradigm. It doesn't have to be the new paradigm. And you know, as soon as as Jane and I understood that We created a new paradigm and our relationship. was really successful and were really, really, really good friends. So what were you able to do? You didn't move to Boulder, you stayed in Philly.

No, we we we stayed in Philly, but we talked about it and you know, she she gave me jobs that were very You know, like I became sort of like the head of the our charitable committee, which was an ongoing uh, you know, an ongoing thing that we did. So we gave you know, we continue to give money to nonprofits. And that was really amazing. So

You felt like and I think this makes a lot of sense that There were things that you didn't want to do. Right. And so they take it over essentially and and start to manage and run the business. And did it mean that That your life slowed down a little bit or a lot.

So It wasn't that I didn't want to do it as much as I knew that I wasn't capable. Of it. I mін Lily's was a category disruptor. And

It was growing beyond Yeah, we we You know, it was we hit the marketplace at the right time when there was this growing awareness of sugar. And that was the lucky part. And lilies grew.

At a speed that no one really, including myself, ever imagined. A hundred and ten million dollars in sales just Eighteen months after that, Investment. Yes. It's a massive I mean, once you hit a hundred million dollars in sales and you're still privately owned, that's when the big boys start to like circle and say, Wait, what's this brand? This is interesting. Yeah. Which is exactly what happened. Exactly.

And you know, we had a successful exit at at the right time. June twenty twenty one, the acquisition was announced. Yes. four hundred and twenty five million dollar acquisition. Um you still had chairs.

Yes. Bite at the apple as they say, which is pretty amazing. And um and that was really it. That was sort of when I mean when you were I think. Out out, right?

I was, and I w I was really ready at that point. I was you know, really ready and um I was so Pleased and honored that Hershey's acquired Lily's it was very synchronistic for me. Um because Hershey's has this um

Commitment to female leadership. And I you know, by then I had enough experience with bigger businesses that I knew that there was no fit for me at a you know at a massive, you know Enterprise like Hershey's, so you know, I was I was really, you know, I was ready to end that journey. And now of course it's a it's a part of Hershey's portfolio.

company and so lilies are everywhere. I mean they're not just at Whole Foods or Walmart and uh Target's and uh obviously there's direct to consumer sales. Yeah. Jane and her team did a fantastic job of getting it everywhere and certainly Hershey's is continuing that. Mm.

Cynthia, I more fifty eight, you launched this business. Right. And You are a very young seventy. Yeah. But God, can you imagine when you're fifty eight thinking

Yeah, I'm gonna Um Cynthia. you're gonna make a ton of money. Like first of all you

It wasn't on your radar at all, right? It wasn't on my radar at all. It's sometimes even hard for me to like believe it. Yeah. If that makes sense. And and honestly I would say don't ever think it's too late if you have passion for what you're doing and you love it and you understand how much work it's gonna be, like

One of the things that was painful with the new team Of Lily's was that um You know, I felt out of place with younger You know, with you know everybody on the staff was like forty and below. I was like But but the truth is

P your experience brings you a Depth. Of wisdom. And don't underestimate that power. I I do not think

That I would have been as Able to successfully launch Lily's the way I did. without having had the breath of experience. That comes from years of practicing your craft.

Yeah. When you think about What happened? Injured. Life and

And the story. And again I I just I I love that It was a late breaking development in your life.

How much of of what happened do you do attribute to to to all of the experience you brought and the hard work and how much do you think had to do with The luck and the timing of it all. I mean I think Fifty fifty. I think my experience

Was Instrumental. But I think there was a big aspect of luck with regards to timing that I didn't really understand at the time. I took advantage of it. But I didn't you know, I did not know.

That Um There would be this much interest in curbing. Sugar. So that was the giant luck factor.

And it was giant. That's Cynthia Tice. Co founder of Lily Sweets. By the way, although she no longer works at the company, she is still a Pretty committed booster.

I eat a bar of lilies a day. A day. I mean it's amazing. You can now have like a hot fudge sundae that's sugar free. I mean you could have like a ch a uh a sugar free chocolate fountain at a wedding. Yes, you can. Yeah. We've had sugar free chocolate fountains at parties. Can't you really? Absolutely. It's delicious. No reason not to eat it. I I have dipped my finger in a chocolate fountain. When no one was looking.

Yeah, it's fun. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at gyros.com. This episode was produced by Sam Paulson with music composed by Ramteen Arablui. It was edited by Neva Grant with researchance from Catherine Cypher. Our engineers were Robert Rodriguez and Quasi Lee.

Our production staff also includes Alex Chung, Carla Estevez, Devin Schwartz, Chris Massini, Carrie Thompson, John Isabella, and Elaine Coates. I'm Guy Raz and you've been listening to how I built this.

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