Lily’s Sweets: Cynthia Tice

When it comes to launching a multi-million dollar brand, Cynthia Tice was a late bloomer. Nearly 60 and looking for a healthy way to satisfy her love of chocolate, she set out to make an indulgent, sugar-free version, sweetened with stevia. After some disastrous early recipes, Lily’s Sweets launched nationally in Whole Foods, with just four employees. Cynthia correctly predicted that a growing number of shoppers would willingly pay for healthier treats, and just ten years after launch, Lily’s Sweets caught the eye of Hershey’s, which acquired it for $425 million. This episode was produced by Sam Paulson with music composed by Ramtin Arablouei. It was edited by Neva Grant, with research by Katherine Sypher. Our engineers were Robert Rodriguez and Kwesi Lee. You can follow HIBT on Twitter https://twitter.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis and sign up for Guy's free newsletter at guyraz.com http://guyraz.com/. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

  We get support from US Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't. Say you're 18 months in. Business is growing. You've got expenses coming from six directions. Gas for the van, office supplies, your phone bill, team lunches that are actually client meetings, and you're putting it all on whatever card you grabbed in year one. You're not thinking about it. Why would you? You've got bigger problems.

• 0:45Guy Raz?

  But here's the thing. Path A, you keep going like that. End of the year, you're sorting through statements, trying to figure out what went where. You've left hundreds, maybe thousands, on the table in rewards you never earned, money that could have gone back into the business. Path B, you pause and get the US Bank Triple Cash Rewards Visa Business Card. Now, you're earning 3% cash back on gas and EV charging, office supply stores, cellphone service, and restaurants. You pick up an extra $750 cash back as a bonus. And you've got a low APR on purchases and balance transfers for 12 months while you're scaling. Same business, same expenses, two completely different outcomes

• 1:30Guy Raz?

  based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association, pursuant to a license from Visa USA, Inc. Some restrictions apply. Our presenting sponsor today is Anthropic, the team behind Claude. Every founder on this show started with a hard question. Not the marketing plan, the 2:00 AM kind. Is this idea any good? Am I the one to build it? Should I quit my job? Anthropic got built the same way. A public benefit corporation founded on one hard question. How do we make sure AI goes well for people?

• 2:14Guy Raz?

  So they asked over 100,000 people their hopes and their fears and are publishing what they find, even the uncomfortable parts. Me? I've got my own hard question about AI. Here it is. If everyone has access to something that can help them write the business plan, build the prototype, analyze the market, maybe even come up with the idea. What separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. If you travel often, you'll want to hear about this unprecedented offer.

• 2:58Guy Raz?

  For the first time ever, new Delta SkyMiles Reserve American Express Card Members can earn two Delta Comfort round trip flights for travel within the 48 contiguous US states, Puerto Rico, or the US Virgin Islands. Plus, you can earn 50,000 bonus miles towards your next getaway. And who doesn't appreciate an elevated airport experience? Delta SkyMiles Reserve Card Members get access to the Delta Sky Club, your pre-flight oasis to recharge, with 15 visits and four one-time guest passes each medallion year when flying Delta together. That's up to $950 in annual value.

• 3:40Guy Raz?

  Value estimate based on $50 per visit rate to purchase additional visits or bring a guest to the Delta Sky Club. Make every trip feel more rewarding with the card that upgrades your travel. Apply today at delta.com/cardsocial. Offer ends November 4, 2026. Minimum spending requirements and terms apply. Flights are fulfilled as flight certificates valid for Delta Comfort or Delta Main to select domestic destinations. Book 21-plus days in advance. Up to $80 per person and taxes and fees apply. Other restrictions apply. When I pull up to a gas pump to fill my car, I'm not thinking about chemistry or engineering. I'm thinking about getting in. Filling up and getting on with my day.

• 4:23Guy Raz?

  And it reminds me a little bit of the founders I talked to on this show, because the best ones obsess over things their customers will never see. Tiny details, invisible improvements, relentless iteration. And not because anyone's watching, but because it makes the product better. That's what the mobile brand does. It engineers fuel the same way great founders engineer their products. Mobile Supreme Plus Premium Gas helps keep engines three times cleaner, which can mean better performance and improved gas mileage. It's for people who care about what's under the hood, even if they never see it. Three times cleaner compared to mobile regular gas in port fuel-injected engines. Actual results may vary.

• 5:07Guy Raz?

  Visit mobili fuels.com for details. Hey, really quick before we start the show, we have an announcement about a really exciting new thing we're launching, a newsletter. And like our show, the newsletter is designed to be interesting, informative, inspiring, and most importantly, fun. It's 100% free. And to sign up, just visit guyraz.com. That's G-U-Y-R-A-Z dot com.

• 5:46Speaker 01

  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.

• 5:55Guy Raz?

  Which is?

• 5:56Speaker 01

  Building a team.

• 5:58Guy Raz?

  Yeah, it's hard.

• 5:59Speaker 01

  And also to provide information to people so that they can do their jobs, to delegate and train.

• 6:06Guy Raz?

  Yeah, you're not a delegator. You want to do it yourself.

• 6:10Speaker 01

  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.

• 6:28Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:39Guy Raz?

  I'm Guy Raz, and 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 $400 million business.

• 6:59Guy Raz?

  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,

• 7:44Guy Raz?

  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 2024, Americans alone will eat around $350 million worth of low- or no-sugar chocolate. And one of the brands that was way ahead of the curve was Lily's.

• 8:29Guy Raz?

  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 60. 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.

• 9:11Guy Raz?

  Now, for the first few years, the business was mainly run by just four people, two of them Cynthia's kids. Barely 10 years after its launch, Lily's was acquired by Hershey's for more than $400 million. It was an unlikely turn of events for Cynthia, who never imagined she'd build a multimillion-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.

• 9:51Guy Raz?

  And although Cynthia's younger brother went into the family business, Cynthia was not encouraged to do the same.

• 9:58Speaker 01

  You know, my dad and my uncle were very old school, and they were also quite 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 women wanted to do something else, I mean, they could do something else. No one did. 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 when I was 20 years old. So then it became, you know, once I graduated college... It was like, what am I gonna do next?

• 10:39Guy Raz?

  Yeah.

• 10:39Speaker 01

  So at that point, I was living in Center City, Philadelphia after college. And I started to be a waitress and it drove my father crazy.

• 10:50Guy Raz?

  Why did it drive him crazy?

• 10:51Speaker 01

  Cause he was like, I did not send you to four years of college for you to become a waitress.

• 10:56Guy Raz?

  It's a great job, though. You get tips. I mean, right?

• 11:00Speaker 01

  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.

• 11:11Guy Raz?

  This is 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.

• 11:25Speaker 01

  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 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.

• 11:59Guy Raz?

  And what were you eating?

• 12:01Speaker 01

  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 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 in, I was so excited about feeling better. I became like a zealot.

• 12:45Speaker 01

  And I, I, I used to go home for family dinners and brown baguette. You know, by, by this point, around seventy five, 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 Cine. There was Bread and Circus that existed in, you know, in Boston.

• 13:07Guy Raz?

  Yeah.

• 13:07Speaker 01

  There was Mrs. Gooch's in California.

• 13:11Guy Raz?

  California, where I grew up, we used to go there. My mom would buy us carob chocolate, which I hated.

• 13:17Speaker 01

  Oh, it was disgusting.

• 13:18Guy Raz?

  It was so awful, but you know, yeah, Mrs. Gooch's. And, and this was in, 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?

• 13:35Speaker 01

  Yes.

• 13:36Guy Raz?

  A lot, probably a lot more than today, a lot more independent grocery stores.

• 13:40Speaker 01

  A lot more. But what ended up happening was during the time where I was trying to figure out what I wanted to do next, you know, and my dad was going crazy because I was a waitress. 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? And I was like, oh, okay, yeah, let's open a store for me. I want to have a natural food store.

• 14:07Speaker 01

  So that was in nineteen seventy seven. And he literally lent me ten grand, which I never paid him back, but it was technically alone. And he helped me find a location, which at that point was on South Street in Philadelphia.

• 14:23Guy Raz?

  Yeah.

• 14:25Speaker 01

  And it was really small. It was like a four hundred square foot store. But I had a friend who owned a natural food store and we decided that we were going to join forces and open a bigger store together, and that was in nineteen eighty.

• 14:41Guy Raz?

  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 men's clothing shop. So how much guidance did you get from your dad about, you know, running a business? Because, you know, I think as you would have admitted at the time, you were just a couple of years out of school, no experience in retail, maybe, you know, watching your family, your dad, you know, and uncles. But did he give you some pointers?

• 15:10Speaker 01

  No. 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.

• 15:20Guy Raz?

  Yeah.

• 15:20Speaker 01

  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.

• 15:39Guy Raz?

  Yeah.

• 15:42Speaker 01

  I don't think so. So then we hired, then we hired a bookkeeper, which was really useful.

• 15:49Guy Raz?

  Was it, you know, in those early days, 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.

• 16:00Speaker 01

  It was almost never truly profitable. But back in those days, I was single. 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.

• 16:25Guy Raz?

  Yeah.

• 16:25Speaker 01

  And, 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, it was always like hand to mouth.

• 16:38Guy Raz?

  Were you happy?

• 16:40Speaker 01

  I was thrilled. I was thrillingly happy. 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.

• 16:57Guy Raz?

  In the eighties, 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 1989, something happened that began to turn the tide and I remember this. And this was the ALAR scare, right?

• 17:14Speaker 01

  Yeah.

• 17:14Guy Raz?

  Because at the time, apples were coated with this, with this substance. It was called ALAR. And there was some connection between ALAR and cancer. And this was like a big deal. It was all over the news. And all of a sudden, I guess people started getting interested in, wait a minute, I don't want that on my food.

• 17:33Speaker 01

  Yes.

• 17:33Guy Raz?

  Is that, does that, was that a turning point for natural foods?

• 17:36Speaker 01

  Yes. I mean, 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.

• 17:49Guy Raz?

  Meryl Streep, of all people, was like big vocal about this.

• 17:52Speaker 01

  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.

• 18:07Guy Raz?

  Right.

• 18:08Speaker 01

  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 mission was to always make natural products more enticing. You know, was, was to really like seduce people into eating more, more naturally.

• 18:37Guy Raz?

  All right. So there's this, this kind of turning point, and 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?

• 18:56Speaker 01

  I saw there become more and more competition. And there was a big increase of, you know, a larger format natural stores that were targeting transitional shoppers. So shoppers that would normally shop in grocery stores that were now going into these larger format natural food stores that had a lot of expertise in merchandising and were willing to be more open to ingredients that small stores like mine were not necessarily comfortable with.

• 19:33Guy Raz?

  Yeah. And but but I imagine you probably had loyal customers. You people had you had people who really shop at your store because that was their local and they'd been going there since 1980.

• 19:44Speaker 01

  We did. We did. But by that point, I had been married for 10 years.

• 19:50Guy Raz?

  By the late 90s.

• 19:52Speaker 01

  Yeah. And my children were 10 and 7. And I started to really get burnt out. I was tired. I was tired of retailing. I had been doing it for over 20 years at that point. And I began to think that I didn't that I wanted to try to do something else.

• 20:13Guy Raz?

  Yeah. Yeah, I get it. And so what kinds of things were you thinking about? Like, what did you want to do next?

• 20:20Speaker 01

  So, you know, it was right at this time, actually, that the shift that you were talking about before was really in focus.

• 20:27Guy Raz?

  You started to see consumers, especially affluent consumers, looking for organic products.

• 20:34Speaker 01

  Correct. And I had this light bulb moment when I went to a seminar that was developed by FMI.

• 20:43Guy Raz?

  What's FMI?

• 20:44Speaker 01

  Food Marketing Institute, which was the big industry organization for supermarkets. And presenting at the event was Whole Foods Market. So we're sitting there and there's, you know, there's all these various topics.

• 20:58Guy Raz?

  And by the way, most of the people in the audience are from the big supermarket chains.

• 21:02Speaker 01

  Oh, they're all from super. There it's like Acme is there and Wegmans is there and, you know, probably Safeway was there.

• 21:08Guy Raz?

  But they invite the Whole Foods person to sort of explain what they're doing.

• 21:12Speaker 01

  Yes.

• 21:13Guy Raz?

  So these other, okay, I got you.

• 21:14Speaker 01

  Yeah.

• 21:15Guy Raz?

  All right.

• 21:15Speaker 01

  You know, Whole Foods gets up and they're presenting their strategic vision. And, you know, they get done and somebody in one of the supermarket retailers in the audience raises his hand and he goes, I just want to understand how you think you're going to, 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 industries to come into your stores, that's still not going to be enough.

• 21:41Guy Raz?

  It's tiny. Who's who are it's nothing.

• 21:44Speaker 01

  People are not.

• 21:45Guy Raz?

  Yeah, okay.

• 21:46Speaker 01

  And this woman, she goes, well, rest assured, we're not after their customers. We're after yours.

• 21:53Guy Raz?

  The Whole Foods lady says this to them. The Whole Foods rep says, we're after, actually, we're after your customers, Safeway. Yeah, wow. And, and, and it was just a shock, shocking moment. They were like, wait, what?

• 22:03Speaker 01

  It was a shocking moment. And then the light bulb moment for me came about because, you know, a bunch of other speakers get up after that. And these supermarket retailers are now like, they're worried. You know, they're like, uh oh. 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

• 22:47Speaker 01

  consumer on the benefits.

• 22:49Guy Raz?

  Yeah.

• 22:49Speaker 01

  So this guy raises his hand and he goes, what do you mean educate consumers? How am I going to do that?

• 22:57Guy Raz?

  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 going to have to serve these, these customers.

• 23:08Speaker 01

  Yes.

• 23:09Guy Raz?

  Which I think is exactly what you wound up doing for a pretty long time, right? Like, I think that the next decade or so, working for like, like local grocery chains and advising them on health food.

• 23:20Speaker 01

  Yeah.

• 23:22Speaker 01

  You know, I was making more money than I had ever made before. It was more fun. I 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 shelf in, you know, in my office that I was like putting products on to measure them. So it was, it was great.

• 23:47Guy Raz?

  Okay. So you're doing this consulting at this point. And I imagine while you're doing consulting, a lot of people occasionally are saying to you, you know, Cynthia, 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.

• 24:01Speaker 01

  They did. I had people who were saying to me, start a brand, start a brand. And I began to think, yeah, you know, maybe I could do this. I believed that I had the expertise at that point. Like, I, you know, I really understood what it took to create a brand. I really understood all of the expenses involved with launching a 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 Wegmans 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.

• 24:45Speaker 01

  Like, it was like, oh, my God, this is, it's a lot of work and a lot of money. And I, I was very nervous about it, but I was piqued. You know, my interest was piqued.

• 24:57Guy Raz?

  And tell me, I know at the time you met, you were introduced 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, a natural sugar-free soda.

• 25:13Speaker 01

  Yeah.

• 25:14Guy Raz?

  But I guess you guys kind of hit a wall pretty soon after. Why? What happened?

• 25:20Speaker 01

  So we developed a product, and this was right at the end of 2007.

• 25:26Speaker 01

  And right at the end of 2007, Coke and Pepsi announced that they were coming into the diet beverage segment with a naturally sweetened diet beverage.

• 25:37Guy Raz?

  And that spooked you guys?

• 25:39Speaker 01

  We, we, we dropped the project.

• 25:41Guy Raz?

  You dropped the project thinking, there's no way we can compete with them.

• 25:44Speaker 01

  Correct. So we decide to pivot to chocolate.

• 25:49Guy Raz?

  To chocolate?

• 25:49Speaker 01

  Yes.

• 25:50Guy Raz?

  And, and so tell me why chocolate?

• 25:54Speaker 01

  Well, chocolate is my favorite food, but for me, especially as I got older, when I passed that 50 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 sugar alternatives, notably maltitol as their primary sweetener. But the problem with maltitol was that maltitol is, is a sugar alcohol that is intensively digestively upsetting.

• 26:36Guy Raz?

  Yeah.

• 26:36Speaker 01

  Now, people who were desperate to 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.

• 26:50Guy Raz?

  Yeah.

• 26:51Speaker 01

  But what ended up happening was I had discovered stevia as a sweetener.

• 26:57Guy Raz?

  Right. And, and stevia, just, just to be clear, is this natural sweetener that had just at that time been approved by the FDA for use in food?

• 27:06Speaker 01

  Yeah.

• 27:07Guy Raz?

  And in fact, it's what Coke and Pepsi had, or were just rolling out in their diet drinks, which I guess is why you guys decided to pivot to chocolate in the first place?

• 27:19Speaker 01

  Yes. So in 2008, Coke and Pepsi were experiencing this enormous downturn of diet beverages.

• 27:31Speaker 01

  And it was really due to the fact that there was enormous consumer distrust of artificial sweeteners.

• 27:38Guy Raz?

  Of aspartame.

• 27:39Speaker 01

  Yes, and Coke and Pepsi were looking for the holy grail of natural sweeteners because they were trying to rescue those sales.

• 27:48Guy Raz?

  They saw in stevia the holy grail.

• 27:49Speaker 01

  Yeah.

• 27:50Guy Raz?

  Because stevia basically comes from the stevia leaf and it's a, it's like,

• 27:54Speaker 01

  Yes.

• 27:54Guy Raz?

  I don't know, 20 times sweeter than sugar, but it doesn't have the same, it's not sugar. It doesn't spike your, your glucose, right?

• 28:01Speaker 01

  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.

• 28:13Guy Raz?

  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?

• 28:30Speaker 01

  Yeah, we did try putting some stevia into chocolate and, and I knew this chocolatier and I contacted him and he was trying to formulate with it.

• 28:41Speaker 01

  But everything that we got back was really not acceptable. It was horribly bitter undertones and ste-, you know, stevia, especially when you're using enough to really sweeten something, ha- has, 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.

• 29:12Guy Raz?

  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 rollout in Whole Foods. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 29:38Guy Raz?

  Does your team want a website that looks and feels handcrafted but is still fast to ship? Well, Framer is built exactly for that. With Framer, you design on a visual canvas with responsive layouts, hosting, and a CMS built in, so the work is production-ready from day one. And you can get it done with help from Framer's AI agents. Framer is the AI website builder that helps creators, teams, and businesses ship production-ready sites faster than ever while getting every detail right. Prompt, inspect, edit, and publish in one place at a whole new pace. AI agents and humans work together. The agents bring speed and scale, and people bring taste,

• 30:23Guy Raz?

  judgment, and control. Learn how you can get more out of your site from a Framer specialist or get started building for free today at framer.com/built for 30% off a Framer Pro annual plan. That's framer.com/built. Rules and restrictions may apply. AI isn't just opening new business opportunities, it's changing the way businesses get work done. The questions they ask, the decisions they make, the routine tasks they can hand off. That's the idea behind NetSuite Next, the next generation of NetSuite with AI woven into the tools your business already relies on. NetSuite Next surfaces insights exactly when you need them,

• 31:08Guy Raz?

  puts agents to work on routine tasks and problems, and lets you ask complex questions in plain language, like talking to a knowledgeable colleague. But technology is only part of the story. AI is also reshaping how people and teams work together, and that shift is already underway. That's why NetSuite wants to put a new expert-created business guide in your hands today. It's called Aligning for the Agentic Era: How AI is Changing Everyday Work. And right now, it's yours, absolutely free. Inside, you'll discover how AI could reshape work across your entire organization, and how to position your business to prosper from it. If your revenues are at least in the seven figures,

• 31:53Guy Raz?

  get NetSuite's free business guide, Aligning for the Agentic Era: How AI is Changing Everyday Work, at netsuite.com/built. The guide is free to you at netsuite.com/built. netsuite.com/built.

• 32:10Speaker 02

  With a Spark Cash Plus card from Capital One, you earn unlimited 2% cash back on every purchase. And you get big purchasing power, so your business can spend more and earn more.

• 32:31Guy Raz?

  Hey, 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.

• 32:53Speaker 01

  During that time, we experienced a falling out.

• 32:58Guy Raz?

  You and your partner?

• 32:59Speaker 01

  Yes.

• 33:00Guy Raz?

  And this is not uncommon, a story we've heard on How I Built This many times.

• 33:05Speaker 01

  Yeah, we had different views and different expectations of each for each other. And we had a series of small arguments that culminated in a large argument where we decided not to work together anymore.

• 33:22Guy Raz?

  And was the, just to kind of 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 design, or all of those?

• 33:35Speaker 01

  We hadn't gotten that far yet, because we hadn't developed a product to work with.

• 33:39Guy Raz?

  Yeah.

• 33:39Speaker 01

  It was truly personality.

• 33:42Guy Raz?

  Right.

• 33:43Speaker 01

  Yeah.

• 33:44Guy Raz?

  And so, it just didn't work out. And I think you guys decide to go your own separate ways. And...

• 33:51Guy Raz?

  That's it, more or less.

• 33:53Speaker 01

  Yes.

• 33:54Guy Raz?

  Okay, but meantime, so, so you, from what I understand, I mean, you had developed this prototype of this chocolate that was not marketable. It was too bitter. Had you given up on the idea? Did you think this is just not going to work? Or did you think there was still a possibility to make, to figure something out?

• 34:14Speaker 01

  So I, I didn't work on it anymore. And then I discovered that someone had developed what I was looking to develop.

• 34:26Guy Raz?

  They had developed a stevia sweetened chocolate?

• 34:28Speaker 01

  Yes.

• 34:29Guy Raz?

  Was it a chocolate bar they were selling? Or was it, or was it like a wholesaler?

• 34:33Speaker 01

  It was ingredients.

• 34:34Guy Raz?

  So it wasn't somebody who was making chocolate bars? It was somebody making chocolate wafers for, for restaurants or whatever, whoever wanted to use it?

• 34:41Speaker 01

  Yeah, I was like, oh, my God, somebody did it. So I requested a sample. They came to my house in, in wafers.

• 34:48Guy Raz?

  That are designed to be melted, presumably?

• 34:50Speaker 01

  Correct. And I tasted it and I'm like, oh, my God, these guys are really on to 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 bitterness and the intensity of stevia. And so namely, they were using erythritol and some fibers like dextrin.

• 35:18Guy Raz?

  And so they were able to kind of balance the sweetness with the bitterness out?

• 35:22Speaker 01

  Yes.

• 35:24Guy Raz?

  All right. So they, so you tried their recipe and then what? You, you, you contact them and say, hey, this is great. I'd love to see if we can work together?

• 35:32Speaker 01

  Yeah. And so I asked them to do some modifications, which they did.

• 35:37Guy Raz?

  And are they also able to make chocolate bars? Or is that going to be a different place?

• 35:42Speaker 01

  That's a different place.

• 35:43Guy Raz?

  Okay. First, you wanted to just get the raw ingredients?

• 35:46Speaker 01

  Right.

• 35:46Guy Raz?

  And this stuff melted like, like sugar sweetened chocolate?

• 35:50Speaker 01

  Yeah. This was like the first thing that I had ever tried that was like, oh, my God, this is good.

• 35:55Guy Raz?

  Because it was basically what cocoa butter and cacao?

• 35:58Speaker 01

  It was cocoa butter and cacao and dextrin and, and erythritol and...

• 36:04Guy Raz?

  And the cocoa butter gives it that like? Creamy, rich viscosity.

• 36:09Speaker 01

  Yeah.

• 36:09Guy Raz?

  And that mouth feel. And then you could melt down and add milk powder, right, to make milk chocolate.

• 36:17Speaker 01

  Exactly.

• 36:17Guy Raz?

  Or you could just do dark chocolate if you want to keep it dark, or salt.

• 36:20Speaker 01

  Yeah, you could put inclusions in it. Yeah.

• 36:22Guy Raz?

  Yeah. Okay, so you saw that this was, this had potential to be the raw material for a sugar-free chocolate bar?

• 36:30Speaker 01

  Yeah.

• 36:31Guy Raz?

  Okay. But again, even now, sugar-free is still a little radical. Like, when I say that people try not to eat sugar, they're like, really? And, but there's a lot more awareness around ketosis, keto diets, and, you know, and how sugar can cause inflammation. Because when you eat, like, this is a time, we're talking about 2011, where paleo diets really start to get traction. And paleo doesn't allow refined sugar, but it does allow coconut sugar and honey and some other things.

• 37:00Speaker 01

  Right.

• 37:01Guy Raz?

  So, again, like, there wasn't quite the awareness yet in 2011 around sugar-free. Right now, there's a bunch of sugar-free candy and chocolates that are remarkable in how good they taste. But, but why did you see an opportunity there? How did, how did you know that there was, it wasn't just going to be this weird candy thing?

• 37:24Speaker 01

  So, I really, really wanted chocolate like this. And I believed that there were more people like me out there.

• 37:31Guy Raz?

  Yeah.

• 37:32Speaker 01

  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 going to be other people like me again.

• 37:49Guy Raz?

  Yeah. So, all right, it's now around 2011. 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. And I read that, that the person you connected with was a former colleague from your consulting career, a guy named Chuck Janardi.

• 38:11Speaker 01

  Yeah, we had, you know, we had remained friends since we stopped doing consulting together. And he said to me, I've owned, 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. We've adopted a child and I'm looking for something to do. Do you have anything that we could do?

• 38:31Guy Raz?

  Wow, he just, what great timing.

• 38:34Speaker 01

  Yes, and, and I, so actually he brought a few, 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.

• 38:50Speaker 01

  So I told him about stevia chocolate and he was like, let's do it. But I also told him that I was terrified to do it because I knew everything that would, that went into, you know, that went into producing a brand.

• 39:06Guy Raz?

  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 matched, you and Chuck?

• 39:16Speaker 01

  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, I have the money, you know, I have the money to do it.

• 39:29Guy Raz?

  How much money did you think you needed to get it off the ground?

• 39:33Speaker 01

  So originally I believe he invested a hundred and 25,000.

• 39:38Guy Raz?

  Right.

• 39:38Speaker 01

  I didn't have that much, I didn't have money to invest. My dad invested 25,000.

• 39:44Guy Raz?

  Right.

• 39:45Speaker 01

  And, you know, I, we split the company 50 50. Because I've, you know, I felt like that was fair.

• 39:54Guy Raz?

  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.

• 39:58Speaker 01

  The money ended up, which I didn't, I didn't 100% understand this in the beginning. Because I just was so green at the financials of business. I was completely green.

• 40:11Guy Raz?

  Yeah.

• 40:12Speaker 01

  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.

• 40:25Guy Raz?

  Yeah.

• 40:25Speaker 01

  So, you know, initially Chuck 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.

• 40:39Guy Raz?

  And you had a manufacturer that could make the bars, make them into bars?

• 40:42Speaker 01

  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, and I decided that I wanted to take this product first to Whole Foods.

• 41:05Guy Raz?

  All right. Before we get there, did you have a name for it at that point?

• 41:09Speaker 01

  Yes. So when we started to really put together the packaging and stuff like that,

• 41:16Speaker 01

  um, so Chuck has a niece and she's 21 and doing really well.

• 41:21Guy Raz?

  Today she's 21.

• 41:22Speaker 01

  Yes, or maybe, maybe 21 or maybe even 22.

• 41:26Guy Raz?

  Okay.

• 41:26Speaker 01

  And, but back then she was seven years old and she had been diagnosed with brain cancer.

• 41:34Guy Raz?

  Oh, wow.

• 41:35Speaker 01

  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.

• 42:16Speaker 01

  So I want to do a fundraiser to buy a wheelchair for the hospital. 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 raised 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.

• 42:45Guy Raz?

  After this girl.

• 42:47Speaker 01

  And to name nonprofits that support children with brain cancer or other serious illnesses as the recipients of our charitable donations.

• 42:59Guy Raz?

  Wow. And Lily is healthy and grown up today.

• 43:04Speaker 01

  Yeah.

• 43:05Guy Raz?

  It's interesting because I didn't know that story. There's nothing on the packaging that tells that story, I think, right?

• 43:09Speaker 01

  Yeah, there originally was.

• 43:12Guy Raz?

  Right.

• 43:12Speaker 01

  Like when we first launched on the back, it said Lily, one brave girl. And it told information about her.

• 43:20Guy Raz?

  I think the reason why I point this out is that a lot of brands really push their social mission. And I'm not convinced that that sells product. I think what sells a product is a good product.

• 43:32Speaker 01

  I couldn't agree more.

• 43:34Guy Raz?

  The social mission is important for culture. It's important for motivation for the team. And eventually can really be important for the brand. But it's interesting because I did not know that about Lily. It had this component because it wasn't really something that you push front and center.

• 43:50Speaker 01

  Right. And exactly for that reason. I mean, we had 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.

• 44:03Guy Raz?

  Yeah. And so the two of you are kind of developing this. And Chuck puts in the bulk of the money with this loan to get you off the ground. And what was Chuck's role going to be? Were you going to be the CEO? Was he going to be the CEO? Were you going to be co-CEOs? Did you even talk about that?

• 44:22Speaker 01

  So actually Chuck was the CEO. But that was honestly because I was so green at business that I didn't know that the CEO was higher than the president.

• 44:33Guy Raz?

  You were the president, he was the CEO.

• 44:35Speaker 01

  I was the president and he was the CEO.

• 44:37Guy Raz?

  Okay.

• 44:37Speaker 01

  But Chuck deferred to me a lot about business strategy because the truth was I had more experience than he did with doing this. And it was also my idea and I had found the recipe. So honestly, I was kind of bringing a lot to the table at that point.

• 44:58Guy Raz?

  Yeah.

• 45:00Speaker 01

  We worked really well together and he is, you know, he's still honestly one of my best friends. So we put together this, the packaging and you know, we, you know, we found the co-man and the pricing and did all of that. And then we took it to Whole Foods for their category review, their candid category review.

• 45:22Guy Raz?

  Yeah.

• 45:22Speaker 01

  In August of 2011. And I knew that I was presenting to the grocery buyers, but I had a relationship with the, the, I believe he was the vice president at that point of, of merchandising, a guy named Earl Schweitzer.

• 45:43Guy Raz?

  You knew him from just your consulting work?

• 45:45Speaker 01

  I knew him from my consulting work and he was their boss. So I was like on the plane with our prototypes and I emailed him. 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.

• 46:05Guy Raz?

  What did you bring? What, did you bring a packaged chocolate or was it not yet packaged?

• 46:10Speaker 01

  No, we bought, we developed four SKUs.

• 46:12Guy Raz?

  Okay.

• 46:13Speaker 01

  You know, my belief is that when you have 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 almond crispy rice. And I, and at that point I did, I did sort of veer a little bit because coconut, there was a giant halo around coconut at that particular time. So we chose coconut as our fourth item. And we take them to the meeting and we go walking in the door and 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 best thing to. You know, whatever the best thing in the world is.

• 46:58Guy Raz?

  And this is 2011, when, when again, sugar free was still diabetic candy.

• 47:04Speaker 01

  Yeah. So we're sitting down in front of them and in walks Earl Schweitzer.

• 47:09Guy Raz?

  Yeah.

• 47:09Speaker 01

  And he sits down and they're sort of, they're tasting it and they're like, eh, 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, I think it's good. He's like, it's not green and blacks. You know, but it's, it's a good, solid chocolate that'll appeal to special diet customers, which is one of our focuses. And the whole meeting changes, you know, the whole, you know, everything changes.

• 47:44Guy Raz?

  And do they make any decisions at that meeting?

• 47:46Speaker 01

  Uh-uh. No, they don't make any decisions. They just say, okay, thank you very much. And then we go home.

• 47:53Guy Raz?

  You, you and Chuck?

• 47:54Speaker 01

  Chuck and I go home.

• 47:55Guy Raz?

  Yep.

• 47:55Speaker 01

  And we wait. And in the meantime, you know, so up until that point, just to kind of give you a sense, we've probably spent 50 grand in, you know, in developing the packaging and getting the samples produced and, you know, and in, you know, in everything that that took. So, you know, hadn't been an enormous lay out of cash at that point. And I had decided that if Whole Foods didn't say yes, we weren't going to move forward. Like I, like Chuck didn't know that.

• 48:29Guy Raz?

  You were not going to just try another retailer? You felt like it's Whole Foods, Whole Foods are bust?

• 48:34Speaker 01

  No, I was like, you know, this is 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, 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 and your launch is going to be March of 2012.

• 49:01Guy Raz?

  Wow.

• 49:02Speaker 01

  Yeah.

• 49:03Guy Raz?

  Okay, pause for a moment. I'm sure you were super excited about that.

• 49:07Speaker 01

  I was.

• 49:08Guy Raz?

  How many chocolate bars did you have to, how many orders did you have to fulfill? A national release?

• 49:14Speaker 01

  Yeah.

• 49:15Guy Raz?

  That's like tens of thousands of chocolate bars.

• 49:18Speaker 01

  It was a lot.

• 49:19Guy Raz?

  Did you have the cash to finance that?

• 49:21Speaker 01

  So that's when, that's when Chuck was able to loan the business money. But again, like, you know, me being green, I was just 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, 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 seamless.

• 49:50Guy Raz?

  So, so that co-manufacture was able to, you were able to finance that run and get it in time for January of 2012?

• 49:58Speaker 01

  Yes, exactly.

• 49:59Guy Raz?

  I mean, you were 59 at this moment.

• 50:02Speaker 01

  Yeah.

• 50:03Guy Raz?

  59 years old, first time brand builder.

• 50:06Speaker 01

  Well, it actually gets more interesting because, because, because it was a loan, when we got to signing our operating agreement papers.

• 50:19Guy Raz?

  You and Chuck?

• 50:20Speaker 01

  Yeah, which were not signed until after we had procured, you know, the launch at Whole Foods.

• 50:27Guy Raz?

  Wow.

• 50:28Speaker 01

  We decided that we would not take salaries until Chuck's money was paid back.

• 50:33Guy Raz?

  Right.

• 50:34Speaker 01

  So that meant that I had to work another job, like I had to continue to do my consulting career.

• 50:40Guy Raz?

  Consulting work in that first year?

• 50:42Speaker 01

  In, in, in subsequent years.

• 50:44Guy Raz?

  In subsequent years. Wow. While you're trying to build.

• 50:47Speaker 01

  Yeah.

• 50:48Guy Raz?

  Lily's. Okay. So you've got this launch at Whole Foods. And where were they going to put the, the chocolate bars, just with every other chocolate bar?

• 50:56Speaker 01

  Yep.

• 50:57Guy Raz?

  And was it going to be the first sugar free chocolate bar or stevia sweetened chocolate bar?

• 51:04Speaker 01

  It was the first stevia sweetened chocolate bar because remember there were some malt at all chocolates.

• 51:09Guy Raz?

  Okay.

• 51:10Speaker 01

  At Whole Foods, but they, they were not performing well and. You know, they were regional rather than national.

• 51:17Guy Raz?

  Again, in 2012, when you launched this, because I think it's March of 2012, I'm thinking, I go back to the story you told about that meeting of grocers in Philadelphia in 2000, where they're like, who's gonna buy your stuff, Whole Foods? And they're like, actually, we're going after your customers.

• 51:34Speaker 01

  Yeah.

• 51:35Guy Raz?

  But now I'm saying to you, who is gonna buy Lily's chocolates in 2012? Who are these customers? Because it's gotta be a tiny percentage of consumers at that point.

• 51:46Speaker 01

  Well, that is exactly what they thought, and they were okay with it.

• 51:50Guy Raz?

  Did you think that?

• 51:51Speaker 01

  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?

• 52:04Guy Raz?

  I'm with you. I'm just saying, there's a lot of skepticism around that.

• 52:09Speaker 01

  Well, 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 it's pretty well known that promotional activity stimulates consumer trial. So consumers were trying it because there was a sale sign in front of it.

• 52:37Guy Raz?

  That meant you were losing a lot of money that first year.

• 52:39Speaker 01

  I wasn't, actually. I wasn't.

• 52:41Guy Raz?

  You weren't?

• 52:42Speaker 01

  No, I wasn't because we didn't have infrastructure that commanded expense. So we had no employees. It was me and Chuck. We were not drawing a salary. We had no physical structure.

• 52:55Guy Raz?

  The co-manufacturer was packaging it and shipping it for you?

• 53:00Speaker 01

  Correct. Like, I had no understanding that brands frequently have a pathway to profitability. Like, that was not in my vocabulary back in those days.

• 53:15Guy Raz?

  You thought you had to be profitable from day one?

• 53:17Speaker 01

  I did.

• 53:18Guy Raz?

  Which I think most people should think, but they don't.

• 53:21Speaker 01

  Yeah. Yeah. So we lost money the first year. We lost a little bit of money, not a lot. And every year subsequently, we were profitable.

• 53:30Guy Raz?

  But the business is still a small business.

• 53:33Speaker 01

  The business is a small business that is kicking butt. I mean, it's growing. I don't think there was ever a year that we grew less than 40%.

• 53:43Guy Raz?

  Wow.

• 53:44Speaker 01

  And most years, we were doubling.

• 53:46Guy Raz?

  And in that, by 2014, let's say, do you remember, was your revenue over a million dollars?

• 53:51Speaker 01

  Oh, yeah. It was almost a million dollars the first year.

• 53:55Guy Raz?

  So you were going, you were like, maybe by 2014, you were what, five, six, seven million dollars?

• 54:01Speaker 01

  I think we were probably at the five million.

• 54:03Guy Raz?

  Okay, so in that first year, you're sampling it like crazy, just giving it to people. And that was enough to stimulate, I mean, that was, and the promotions was enough to stimulate sales?

• 54:14Speaker 01

  Yes. Yes.

• 54:15Guy Raz?

  And how did you get the people to come back when it was more expensive to buy it again?

• 54:20Speaker 01

  I don't know, but interestingly enough, when we analyzed the effectiveness of our promotions later on, you know, when I had a new team involved and we were capable of doing 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 low sugar attribute, especially in a great tasting product.

• 54:51Guy Raz?

  Yeah.

• 54:52Speaker 01

  You know, was really innovative and disruptive and desirable.

• 54:57Guy Raz?

  So Cynthia, you get into Whole Foods, right? And you're sampling it and clearly people are responding to this. They're like, wow, this tastes really good. And it's, there's no sugar. And then you start to add other product lines. I think chocolate chips.

• 55:14Speaker 01

  Yes.

• 55:15Guy Raz?

  And maybe a milk chocolate. But I know that pretty soon into this, like 2014, Chuck stepped down as CEO. Did he also, did you guys also dissolve your partnership at that point?

• 55:27Speaker 01

  Um, so Lilly's was an LLC and

• 55:30Guy Raz?

  Yeah.

• 55:30Speaker 01

  We bought him out of a number of his shares.

• 55:34Guy Raz?

  You raised money from invest, from professional investors or from friends and family?

• 55:38Speaker 01

  No, from friends, friends. Yeah.

• 55:40Guy Raz?

  Because you wanted, you needed more cash or, or because Chuck wanted, wanted out or what?

• 55:45Speaker 01

  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 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.

• 56:13Guy Raz?

  Your kids joined you. They're now, they were now adults.

• 56:17Speaker 01

  They were young adults, very young.

• 56:20Guy Raz?

  So it was you, 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?

• 56:29Speaker 01

  I think it was 350,000.

• 56:32Guy Raz?

  Okay. So still not, you're not talking about millions of dollars.

• 56:34Speaker 01

  Yeah, it wasn't. Yeah.

• 56:36Guy Raz?

  And so, and, and the cash flow alone was enough to sustain it?

• 56:41Speaker 01

  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.

• 56:51Guy Raz?

  All right. So now we get to 2015 because 2015,

• 56:57Guy Raz?

  your old partner who you started the, the soda beverage that never got off the ground and then you looked into chocolate and then you guys went your separate ways. She comes back and she, she sues you and she claims, and I've read the law, 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.

• 57:17Speaker 01

  Yes.

• 57:18Guy Raz?

  And so now you've got a lawsuit on your hands. So first of all,

• 57:23Guy Raz?

  stressful.

• 57:24Speaker 01

  Super stressful. Yeah.

• 57:28Guy Raz?

  And now you know that this is just going to consume a part of your life for some time.

• 57:33Speaker 01

  Yeah. It was, it was one of the hardest and saddest, uh, events of my life.

• 57:42Guy Raz?

  When we come back in just a moment, Cynthia 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.

• 58:17Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2015 and Lily's Sweets 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?

• 58:40Speaker 01

  I don't know. I just did it. You know, I had to do it, so I did it. You know, 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 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, where my chocolate chip's going to be able to get produced.

• 59:12Guy Raz?

  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 didn't they not say that?

• 59:20Speaker 01

  They did not make me feel that it was an open and shut case. They believed in me and they, they believed, they really believed in me and they believed that I was not guilty of lack of fiduciary responsibility, which is what the case said.

• 59:35Guy Raz?

  Yeah.

• 59:36Speaker 01

  But, you know, they didn't, they didn't, they never said this is a guarantee.

• 59:40Guy Raz?

  I'm curious, you know, we've had, we did insomnia cookies a short time ago. And in that story...

• 59:47Guy Raz?

  The co-founder split early, early in the business and then many, many years later, when a part of it was sold, the original co-founder sued and they went to, they got all the way up to, you know, the day of the trial and they decided to settle and that it just went away. Was there ever any moment where you thought, let's just, let's just do that. Let's just find some settlement and move on?

• 1:00:11Speaker 01

  No, because it was the very early days and at a certain point, her attorney offered a settlement sum that I would never have been able to, like I couldn't have come up with it.

• 1:00:23Guy Raz?

  Yeah. So you had to fight it.

• 1:00:24Speaker 01

  I had to. Yeah.

• 1:00:26Guy Raz?

  But in the end, you triumphed. You won.

• 1:00:28Speaker 01

  Yeah. Yep.

• 1:00:31Guy Raz?

  Did it feel like a massive weight was lifted in 2017 when that happened?

• 1:00:36Speaker 01

  It did feel like a massive weight was lifted. It did. It did.

• 1:00:42Guy Raz?

  It's really hard because, you know, humans are, were emotional, all of us. And, you know, 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, and so it's hard. It sucks.

• 1:01:02Speaker 01

  It, it, it does. Yeah.

• 1:01:05Guy Raz?

  Yeah. So, once that passed, right? Were you now, I mean, now 2017, if you're growing every year like gangbusters, you've got to be thinking, all right, to get to really to the next level, we've got to get outside investors in, like professional investors in.

• 1:01:24Speaker 01

  So I was not really thinking that exactly. What I was thinking was, oh my God, this surpassed my wildest dreams. Because at that point,

• 1:01:39Speaker 01

  I was in my 60s.

• 1:01:40Guy Raz?

  I love this.

• 1:01:41Speaker 01

  Yeah.

• 1:01:42Guy Raz?

  You're in your 60s, you're, it's your first time founder.

• 1:01:46Speaker 01

  Yes.

• 1:01:47Guy Raz?

  Of a brand and it's like by 2017, what, you gotta be doing 25, 30 million dollars in revenue.

• 1:01:55Speaker 01

  I was doing 20. We were, we were at 20.

• 1:01:58Guy Raz?

  And you had four employees.

• 1:02:00Speaker 01

  But our run rate by the, by 2018, when we partnered with our equity partners, VMG, we, our run rate was 40. So, beginning in 2017, 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.

• 1:02:29Guy Raz?

  Which is?

• 1:02:31Speaker 01

  Building a team.

• 1:02:32Guy Raz?

  Yeah, it's hard.

• 1:02:33Speaker 01

  And also to, to, you know, provide information to people so that they can do their jobs, you know, to delegate and train.

• 1:02:41Guy Raz?

  Yeah. You're not a delegator.

• 1:02:43Speaker 01

  Mm-mm.

• 1:02:43Guy Raz?

  You wanna do it yourself.

• 1:02:45Speaker 01

  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."

• 1:02:56Speaker 01

  That's my delegation. Not, not good.

• 1:02:59Guy Raz?

  By the way, I totally understand that impulse and it is a certain, I mean, part of it is there's a certain type of person who's good at it and part of it's training. People can learn how to do that.

• 1:03:08Speaker 01

  Yeah, yeah.

• 1:03:10Guy Raz?

  But you'd been a solo practitioner as a consultant for most of your career, so...

• 1:03:14Speaker 01

  For my whole career.

• 1:03:15Guy Raz?

  Yeah. So you were used to working by yourself in your home office or whatever and...

• 1:03:19Speaker 01

  Yeah.

• 1:03:20Guy Raz?

  It was you, it was just you?

• 1:03:21Speaker 01

  Yes. And so, you know, the other thing that, that I understood was, you know, I said to my kids, "Do you really wanna 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 Lilly's, even if I continued to try to grow it and build a team. I spent like, the whole 2017 doing due diligence and contacting different investors and different bankers and, you know, different founders and just, you know, really, really to try to figure out what my options would be. I ended up talking to a founder.

• 1:04:06Speaker 01

  And she advised me to contact VMG. She's like, just give Wayne a, here's Wayne's email address. Just email Wayne.

• 1:04:18Guy Raz?

  So tell me about the equity partners, VMG, the Velocity Made Good. They're based in San Francisco and they, I should say, do a lot of CPG investing.

• 1:04:26Speaker 01

  They do a lot of innovative CPG.

• 1:04:28Guy Raz?

  Yeah.

• 1:04:28Speaker 01

  And the reason that I was so interested in speaking to them was that they tout themselves as very founder friendly. And that, that was really important to me. So I emailed Wayne and we started talking. And like in January of 2018, they sent me 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.

• 1:05:08Speaker 01

  So we started to do the, you know, the whole diligence process, which was equally as stressful as the lawsuit, I have to say.

• 1:05:16Guy Raz?

  Yeah.

• 1:05:16Speaker 01

  It was 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, 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, you know, forever.

• 1:05:43Guy Raz?

  But they did it and they made it, they made an investment in, did they, it was a majority investment?

• 1:05:51Speaker 01

  They made a majority investment.

• 1:05:54Speaker 01

  They hired 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 a space for, as an office in Boulder, Colorado.

• 1:06:15Guy Raz?

  And they wanted to move it to Boulder because Boulder is such a food center, I think.

• 1:06:19Speaker 01

  And that's where she lived.

• 1:06:20Guy Raz?

  And she lived there. Okay. Yep.

• 1:06:21Speaker 01

  Yeah. And then she, she proceeded to hire 40 people.

• 1:06:26Guy Raz?

  Wow. And you became at that point more like a brand ambassador?

• 1:06:31Speaker 01

  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

• 1:06:39Guy Raz?

  Please.

• 1:06:40Speaker 01

  The topic of how do you utilize a founder in, in, you know, after an acquisition?

• 1:06:46Guy Raz?

  Yeah. Cause what did you want to do? You did not want to do operations. You didn't want to run a staff.

• 1:06:51Speaker 01

  Well, I didn't want to do operations and I did not want to write 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 it was, it was pretty painful. It was more painful than sending my kids to college.

• 1:07:20Guy Raz?

  Really? Painful because, I mean, I mean, I understand. I think I understand this, but you got a big check, right?

• 1:07:26Speaker 01

  I got a nice, I got a nice sized check.

• 1:07:28Guy Raz?

  And probably more money than easily than you've ever seen in your life. And you'd not, were never rich.

• 1:07:34Speaker 01

  Never rich.

• 1:07:34Guy Raz?

  And so here you are, you know, almost going to hit 60 and wow, you get a nice check.

• 1:07:40Speaker 01

  They're thinking, see ya.

• 1:07:42Guy Raz?

  You're thinking, no, no, this is my baby. I, I, I came up with everything, a logo and the formulation and I, I, you know, like I've been doing this now since 2012.

• 1:07:52Speaker 01

  Right. I wanted to work in some capacity.

• 1:07:55Guy Raz?

  Yeah.

• 1:07:55Speaker 01

  And I really, really encourage any founder to spend some time developing your own thoughts and communicating that effectively to your, your, to your next set of partners. 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 Jane and I understood that, we created a new paradigm and our relationship. Was really successful and were really, really, really good friends.

• 1:08:28Guy Raz?

  So what were you able to do? You didn't move to Boulder. You stayed in Philly.

• 1:08:31Speaker 01

  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 our charitable committee, which was an ongoing, uh, you know, an ongoing thing that we did. So we gave, you know, we continued to give money to nonprofits. And that was really amazing.

• 1:08:52Guy Raz?

  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?

• 1:09:10Speaker 01

  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 mean, Lily's was a category disruptor. And it was growing beyond, you know, 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 Lily's grew at a speed that no one really, including myself, ever imagined.

• 1:09:39Guy Raz?

  A hundred and ten million dollars in sales just 18 months after that investment?

• 1:09:45Speaker 01

  Yes.

• 1:09:45Guy Raz?

  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, which is exactly what happened.

• 1:09:57Speaker 01

  Exactly. And, you know, we had a successful exit at, at the right time.

• 1:10:02Guy Raz?

  June 2021, the acquisition was announced.

• 1:10:05Speaker 01

  Yes.

• 1:10:05Guy Raz?

  It was acquired by Hershey's.

• 1:10:06Speaker 01

  Yes.

• 1:10:07Guy Raz?

  A $425 million acquisition. You still had shares.

• 1:10:13Speaker 01

  Yes.

• 1:10:13Guy Raz?

  You still had some ownership. So you got another bite at the apple, as they say, which is pretty amazing.

• 1:10:18Speaker 01

  Yes.

• 1:10:20Guy Raz?

  And, um, and that was really it. That was sort of when, I mean, when you were, I think, out, out, right?

• 1:10:26Speaker 01

  I was, and I, 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.

• 1:10:45Speaker 01

  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.

• 1:11:00Guy Raz?

  And now, of course, it's a, it's a part of Hershey's portfolio company. And so Lily's are everywhere. I mean, they're not just at Whole Foods, they're Walmart and Targets and obviously there's direct to consumer sales.

• 1:11:12Speaker 01

  Yeah. Jane and her team did a fantastic job of getting it everywhere and certainly Hershey's is continuing that.

• 1:11:20Guy Raz?

  Cynthia, I mean, when you were 58, you launched this business, right? And you are a very young 70.

• 1:11:29Speaker 01

  Yeah.

• 1:11:30Guy Raz?

  But God, can you imagine when you're 58 thinking, man, I'm gonna, if somebody said to you, Cynthia, you're gonna make a ton of money. Like, first of all, you, it wasn't on your radar at all, right?

• 1:11:41Speaker 01

  It wasn't on my radar at all. It's sometimes even hard for me to like, believe it.

• 1:11:47Guy Raz?

  Yeah.

• 1:11:47Speaker 01

  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 going to be. Like, one of the things that was painful with the new team of Lily's was that, you know, I felt out of place with younger, you know, with, you know, everybody on the staff is like 40 and below. I was like, but, but the truth is, 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 breadth of experience that comes from years of practicing

• 1:12:32Speaker 01

  your craft.

• 1:12:33Guy Raz?

  Yeah. When you think about what happened in your life and, and the story, and again, I just, I love that it was a late breaking development in your life. How much of what happened do you 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?

• 1:12:56Speaker 01

  I mean, I think 50/50. 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 there would be this much interest in curbing sugar. So that was the giant luck factor. And it was giant.

• 1:13:33Guy Raz?

  That's Cynthia Tice, co-founder of Lily's Sweets. By the way, although she no longer works at the company, she is still a pretty committed booster.

• 1:13:44Speaker 01

  I eat a bar of lilies a day.

• 1:13:46Guy Raz?

  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 sugar-free chocolate fountain at a wedding.

• 1:13:57Speaker 01

  Yes, you can. We've had sugar-free chocolate fountains at parties.

• 1:14:01Guy Raz?

  Have you really?

• 1:14:02Speaker 01

  Absolutely. It's delicious. No reason not to eat it.

• 1:14:06Guy Raz?

  I have dipped my finger in a chocolate fountain when no one was looking.

• 1:14:10Speaker 01

  Yeah, it's fun.

• 1:14:14Guy Raz?

  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 guyraz.com. This episode was produced by Sam Paulson with music composed by Ramtin Arablouei. It was edited by Neva Grant with research assistance from Catherine Cypher. Our engineers were Robert Rodriguez and Kwesi Lee. Our production staff also includes Alex Chung, Carla Estevez, Devin Schwartz, Chris Messine, Kerry Thompson, John Isabella, and Elaine Coats. I'm Guy Raz, and you've been listening to How I Built This.