Dippin' Dots: Curt Jones

In the late 1980s, Curt Jones was working in a Kentucky lab, using liquid nitrogen to flash-freeze animal feed. He wondered if he could re-invigorate his favorite dessert by pouring droplets of ice cream into a vat of liquid nitrogen and – voila! – out came cold and creamy pellets that he soon branded Dippin' Dots. The novelty treat spread to fairs, stadiums and shopping malls, and eventually grew into a multi-million dollar brand. But a few years ago, Curt was forced to walk away after the company was hit with debt, recession and a punishing lawsuit. PLUS in our postscript "How You Built That," how Nadine Habayeb hopes to popularize puffed water lily seeds from India with her snack brand Bohana. 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?

  So really quick before we start the show, I want to let you know that there are still a few tickets left for our live show in Boston. It's happening at the Back Bay Event Center this Wednesday. I'll be talking with New England natives and founders of Luke's Lobster, Luke Holden and Ben Coniff, two guys who literally met on Craigslist. So come join us Wednesday night in Boston for a live taping of How I Built This. It's super fun, and I hope to see you there. And one more quick thing, you can also join us for our last How I Built This live show of the year in Denver later this November. I'll be talking with Kurt Richardson, founder of Otter, the company that makes the Otterbox phone cases. You can get tickets for both our Boston and Denver live shows, supported by American

• 0:44Guy Raz?

  Express, at nprpresents.org.

• 0:52Speaker 01

  We were $13 or $14 million in debt, and they were trying to force us to pay that off. And of course, again, being a little bit stubborn, I'm like, we'll just go to another bank. Well, that's when the banking crisis was starting to hit. So by the time we did all of our paperwork and everything and had one or two banks that were interested, all of a sudden--

• 1:12Guy Raz?

  Everybody just tightens up, all the doors shut, no money.

• 1:15Speaker 01

  Yeah. Everything started going upside down.

• 1:25Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 1:36Guy Raz?

  I'm Guy Raz, and on the show today, a biologist Kurt Jones dripped ice cream into liquid nitrogen and turned it into Dippin' Dots, the novelty ice cream brand sold at stadiums, malls, and theme parks around the world.

• 1:53Guy Raz?

  So if I were to distill this show down to a single phrase, it would sound something like, "future entrepreneur identifies a problem and decides to solve it." Right? That's what got us Lyft and Airbnb and Dyson Vacuums. Problem, solution. But in the world of ice cream, especially by the end of the 20th century, you could argue that there wasn't really much of a problem to solve. Yeah, you could make more interesting flavors, maybe use higher butterfat milk, but reinvent it? I mean, where would you go beyond scoops and soft serve and shakes and popsicles and ice cream cakes and cookie sandwiches? Right? I mean, how do you out-innovate all of that?

• 2:37Guy Raz?

  Well, the short answer? With a lot of liquid nitrogen, which is really where the story of Dippin' Dots begins. It was 1988 and Kurt Jones was working as a biological researcher. And in the lab were vats of liquid nitrogen, which you may know pretty much freezes anything it touches almost instantly. Kurt also happened to be a guy who liked to make his own ice cream. And one day, hanging out in the lab, he wondered, "Could I use that liquid nitrogen to reinvent ice cream?" So a few weeks later, he brought in a jar of ice cream base, basically sugar, cream, and some vanilla. He gently dripped a bit of it into the liquid nitrogen

• 3:21Guy Raz?

  and instantly, those droplets froze into teeny tiny ice cream beads. Now, they didn't look like ice cream, but once Kurt tasted them, he knew he was on to something. And those ice cream pellets got him so excited, he quit his job to turn that little experiment into Dippin' Dots, the ice cream of the future. And it would soon spread to shopping malls and theme parks and eventually, sports stadiums. Now, today, Dippin' Dots is a brand that does a reported $300 million in annual sales. Except it's also a brand that no longer belongs to Kurt Jones and a brand that didn't actually make him rich, which means that unlike any of our other

• 4:06Guy Raz?

  episodes, this one is almost a cautionary tale about how you can lose the thing you built and the thing you loved. But for now, let's start at the beginning in rural southern Illinois, where Kurt grew up on his family's farm with his mom, dad, grandpa, and two older sisters.

• 4:26Speaker 01

  I remember driving a tractor for the first time from one barn to the other when I was seven years old. And, you know, I played sports and stuff in school, but I always felt like when I got home, I had to work, you know, to help, you know, feed the pigs and do things like that. So it's kind of a very early age, I guess, learning that responsibility. But it, you know, looking back, I'm glad I grew up the way that I did. I have no regrets at all. It was really a good way, a good way to grow up.

• 4:48Guy Raz?

  Did it feel, like, when you were a kid, did it feel like your parents struggled to keep food on the table? Or was the farm pretty prosperous?

• 4:59Speaker 01

  No, it felt like a struggle. You're exposed to all the talks about, you know, if it doesn't rain by Friday, you know, we're, you know, the crop's not going to get made, or you have diseases that can get in your, you know, your pigs, that kind of thing. So, you know, we never went hungry or anything like that, but we always knew that we were dependent on a lot of factors that were actually out of our control, you know, like weather and things like that. So I think I just, maybe that was good in a way. I kind of learned to live with risk a little bit.

• 5:31Guy Raz?

  Yeah. Given that your family didn't always have a lot of money around, were there ways that you kind of figured out how to earn extra money for yourself when you were a kid?

• 5:43Speaker 01

  Yeah, I mean, well, my dad had a radio and TV repair business. And so we had all these old tubes laying around. And so me and a friend of mine actually started our own little radio repair business, probably in grade school, like fifth or sixth grade. And then me and him also decided to get into the chicken business. One time we ended up.

• 6:04Speaker 01

  Well, he had ordered a hundred chickens to put on his farm and I ordered a hundred on mine and we were gonna go together and gather eggs and work together on it. And then me and another friend had a straw business, we called it, which is where you take wheat straw and bale it. And we sold that to a lot of the people that worked on roads because they would do their landscaping when they finished a project and they'd chop up straw and put down over the grass seed. And so, just always coming up with some little way to make a little extra money.

• 6:31Guy Raz?

  Did you, would you sort of look at your family's situation, you know, the whims of the weather or of whether there was market demand for corn and soybeans or whether there was some kind of disease that, you know, and did you ever think, I want to have a different life? I don't want to do this as a grown-up?

• 6:54Speaker 01

  Oh, I think so. When I went to school, I studied microbiology because I really was interested in farm-related things like making ethanol from corn and, you know, just things like that. But at the end of the day, it allowed me to get a job that actually had a salary, which was, really felt pretty good because I saw something steady there and I did enjoy the steady paycheck when I had it.

• 7:21Guy Raz?

  Yeah. So you, I guess you spent like six year, you spent six years getting your BA and your master's degree in microbiology. You graduate, I think this is around 1986, and you get your first job with a company called Altech Biotechnology.

• 7:38Speaker 01

  Yeah, just outside of Lexington in a little town called Nicholasville. And we lived in Lexington about eight or nine miles from where I went to work at.

• 7:48Guy Raz?

  What was that company doing? What was their, what was their business?

• 7:51Speaker 01

  Well, they were starting to get off into the animal feed business, making bacteria cells that could actually be put back into the animal feed. So in other words... You know, if we eat yogurt and it has lactobacillus in it and that's good for us and they call it probiotics.

• 8:08Guy Raz?

  Sure.

• 8:09Speaker 01

  We would concentrate those down, we would freeze them and then we would freeze dry them into a powder. So that's kind of how I got started with Altech was in the animal feed side, which is what they really grew with over the next several years.

• 8:19Guy Raz?

  And to be clear, I mean, why were you freezing these cultures? Was it so that like they essentially don't die so that they would keep their potency?

• 8:28Speaker 01

  Yes, and you want to freeze them as quickly as you can because if you ever notice like an ice tray and you put it in the freezer and you come back 30 or 40 minutes later, you'll see little needles across the surface. That's from freezing something very slow. If you freeze that very fast, those ice crystals are smaller. So if you freeze the bacteria cells quickly, you get tiny ice crystals and then there's a good chance that those cells can come back to life. So I started playing with liquid nitrogen, which I had never really worked with before, but I knew that it was very cold. It was 320 degrees below zero Fahrenheit. And I found that you could pour the nitrogen into the cultures and freeze a big blob or you could pour the cultures into the nitrogen and freeze a big blob.

• 9:13Speaker 01

  But I found that if you dribbled it in a little at a time, that you could actually form pellets. It's kind of like freezing raindrops in other words.

• 9:21Guy Raz?

  So you still have the active probiotics in these pellets. Let me, let me just ask you about, about liquid nitrogen for a sec. Because the freezing point, right, for liquid, for water is 32 degrees, zero degrees centigrade. You're talking about something that is minus 300 degrees Fahrenheit. I have to imagine that working with liquid nitrogen is very dangerous. It would be, it's like the, it's like the equivalent of working with lava, right?

• 9:48Speaker 01

  Right, just in the opposite way.

• 9:50Guy Raz?

  Yeah.

• 9:51Speaker 01

  It is dangerous, but what I tell people, because we've had a lot of people that worked around it over the last 30 years, but I tell them it's just like, it's kind of like handling boiling water. I said, you have to treat it with respect, but everybody works with boiling water if they're a cook. But the other danger that you have with liquid nitrogen is if you're in a very closed in area, it can displace oxygen. So you're not getting enough oxygen into your lungs. But other than that, it's a lot like hot water. You wouldn't want to fall in the vat of hot water either.

• 10:18Guy Raz?

  In the meantime, we're foreshadowing a little bit here. You used to churn homemade ice cream, even like as a teenager, like on the farm, right? And this is before we had like one-touch button, electric ice cream makers, right? This is, I'm assuming this is like salt and rock salt and ice and just turning and turning, you know, churn ice cream maker.

• 10:43Speaker 01

  Right. No, our family ice cream maker was exactly that. It had a little handle that you turned on a gear and it would turn the middle container, you know, through the ice. And you can kind of feel it when you're cranking it. It'll get a little harder to crank.

• 10:55Guy Raz?

  Yeah.

• 10:57Speaker 01

  But yeah, it's great when you open that up and see all that firm ice cream in there. You know, that's a good feeling.

• 11:01Guy Raz?

  And I guess ice cream like making just continued on like in through college and you would just make ice cream?

• 11:09Speaker 01

  Yeah, each time we got together, like my wife and daughter, we would make ice cream on a weekend and invite the neighbors over. And I think at some point, we actually had an electric maker. But I do remember still having a hand crank, even with my wife and daughter.

• 11:24Guy Raz?

  And did you start to think, hey, this process of liquid nitrogen and the bacteria seems kind of cool. I wonder what would happen if I used it on ice cream? Was it that linear?

• 11:35Speaker 01

  Almost, but not quite. It still took me a month or two to really have that idea. I actually started playing with other things first. Like I was interested in freezing things like watermelon and, you know.

• 11:46Guy Raz?

  When you, by the way, when you drop a slice of watermelon into liquid nitrogen and you pull it out, what is it like, is it like a piece of like steel? It's like an anvil? Like, how hard is it?

• 11:57Speaker 01

  Watermelon's actually a little bit different than like a grape because of the surface area of the watermelon. But, but yeah, like if you were to put a grape in there, you could, I mean, you could basically drop that grape and it would shatter. I mean, that's what it would be like.

• 12:11Guy Raz?

  And how long does the grape stay in there? Just for instantly, you drop it in and pull it out?

• 12:16Speaker 01

  Oh, a few seconds. You can actually watch it. It's like introducing heat. Um, so you'll see this nitrogen just boil like crazy. And then when it's, when all the heat has been extracted, you'll see it just kind of fall to the bottom and it's as cold as it's gonna get.

• 12:31Guy Raz?

  All right. You're working on this animal feed project on the side. You're just kinda having fun. At what point did you think, hey, maybe I should drip, uh, melted ice cream into this?

• 12:42Speaker 01

  Well, really, my first thought, to be honest with you, was how can I make this ice cream churn colder? And so without even thinking about liquid nitrogen, I started thinking about what if I put dry ice in here instead of ice? Well, dry ice is 109 below zero.

• 12:59Guy Raz?

  Into your ice cream maker?

• 13:00Speaker 01

  Right. But at some point, you know, my mind finally went to, well, wait a minute, you know, you know, even quicker way to freeze it would be using liquid nitrogen. And the reason I remember that is that for about the next two or three weeks, I thought about what it would be like to make, turn ice cream into beads. And the next opportunity we got to make ice cream, I told my wife, I'm gonna take about a quarter of this out and I'm gonna actually make some ice cream out of it into beads.

• 13:26Guy Raz?

  All right. So I think this is like 1987. You take, uh, you take like a cup of, of the mix that you were gonna churn for the ice cream before you churned it. And you take it back to your office or to the lab at Alte. Can you what? You start to drip it into the nitrogen? The liquid nitrogen?

• 13:43Speaker 01

  Yeah. Um, and I actually had a childhood buddy of mine with me that Sunday when I was telling him that I wanted to go try something. So we grabbed about a, I think it was a little quart mason jar of the mix and drove out to the lab. And, um, I pulled out a, probably about a half a gallon of liquid nitrogen into a, um, a cylinder. And I took a pipette and I took some of the ice cream mix and I dropped it in, you know, drop by drop. And probably after 100 drops or something like that, I said, well, let's, let's try it now. And I, and I meant, let's let it warm up and try it, but I, but both of us were so interested in it, we, we grabbed some before they really warmed up enough.

• 14:27Speaker 01

  So that's, that was something I learned very early on is you don't want to throw it in your mouth right after it comes out of liquid nitrogen.

• 14:33Guy Raz?

  Because it's right, it's like, it's like probably burns the inside of your mouth, right?

• 14:37Speaker 01

  Oh, yeah. Well, it, it will, it actually will weld your tongue to your cheek, for example.

• 14:42Guy Raz?

  Oh, my God.

• 14:43Speaker 01

  It just sits there and sizzles for a minute, you know, so. You know, once we learned not to burn our taste buds and, and once we let it, you know, kind of warm up to 30 or 40 below zero, it, it was really, really good. It was, and what I, what I was really hoping to find out was to see if I could detect any ice crystals in there. You know, with homemade ice cream, you have that real icy taste.

• 15:03Guy Raz?

  Yeah.

• 15:04Speaker 01

  And the first thing I noticed is that when I bit into the little beads, it was a totally different texture.

• 15:10Guy Raz?

  Smooth and creamy.

• 15:11Speaker 01

  Yeah.

• 15:13Guy Raz?

  You say that for, for a few weeks, you had been thinking about testing this out and you were getting increasingly excited about the prospect of turning ice cream into, into pellets.

• 15:25Speaker 01

  Right.

• 15:26Guy Raz?

  But I'm just curious why? I mean, ice cream is pretty great. So what was it about pelletized ice cream that you thought, this is going to be amazing?

• 15:38Speaker 01

  Well, there, there were two things. People like Haagen Dazs, like Ben and Jerry's, they get to a very smooth consistency in a couple of different ways. If you add butter fat, that basically masks the fact that you have ice crystals in your mix.

• 15:55Guy Raz?

  Ah, I see.

• 15:56Speaker 01

  So you can add butter fat or you can add air and both of those disperse ice crystals. So if you go to the Dairy Queen, for example, you get a very smooth creamy taste because it's got not a lot of butter fat, but it's got a lot of air in it.

• 16:10Guy Raz?

  Air, yeah. So it's like a lighter, fluffier ice cream.

• 16:13Speaker 01

  Yeah. So can I not add any air and not have a super high butter fat concentration, but then still have a smooth creamy taste? And that's what I found. I used a 10% butter fat mix because you have to use it at least, at that time, you had to have at least 10% butter fat to call it ice cream.

• 16:29Guy Raz?

  Right.

• 16:30Speaker 01

  So I was pretty excited because now you're going to get a very dense flavor, you know, from that because you're, you're not diluting it with anything.

• 16:37Guy Raz?

  Huh.

• 16:38Speaker 01

  But to be honest with you, what was the most exciting is that it was just a new way to consume something. And that's what I really wanted to find out. I wanted to find out what is, what this really intrigued people. I had no idea if it would really catch on, but that was the initial seat of excitement is that it had the possibility to catch on.

• 16:58Guy Raz?

  So when you brought this home to your wife and she tried it, what, what did she say?

• 17:04Speaker 01

  Well, she really liked it. The thing with my wife is that I think she knew when she, you know, kind of saw my excitement, it was kind of, uh-oh, you know, here we go.

• 17:15Guy Raz?

  Here we go.

• 17:16Speaker 01

  What's gonna happen next, right?

• 17:17Guy Raz?

  Because she knew that the gears were turning in your head.

• 17:20Speaker 01

  Right.

• 17:21Guy Raz?

  And you had this steady job and a child.

• 17:24Speaker 01

  Right. Now, as much as I liked my job, she knew that I was also growing a little bit frustrated because it, it was a very fast growing company and it was a very demanding job. I mean, I was working many, many hours a week and, and even she was a little bit like, wow, I didn't know I signed up for this, but I, I wasn't just looking to quit my job right away. In fact, I took the idea to my boss and said, you know, is this something you'd be interested in? I know you're not in the food business, but he, uh, he, he said, well, you know, it's a cute idea, um, you know, basically get back to work, you know, we're, we're doing something else.

• 18:00Guy Raz?

  Yeah.

• 18:01Speaker 01

  So he didn't really have an interest in it, but at the same time, I knew that for me, it was something that would percolate in my mind for a while and it did for about six months, um, until finally I, I told my wife one day, I said, you know, this is really not all I think about, but it's, it's really something that I think I'm gonna have to try. And she says, well, I know that. She said, you know, and you do whatever you think. I, I tell people sometimes, I said, you know, it was probably the perfect time for me to start a business because I think we had maybe $10,000 of savings and I sometimes say if we'd had $100,000 in the bank, we might not have wanted to risk it, but I felt like if it didn't work, I was still young enough that I could probably still get a job somewhere. And I don't know,

• 18:44Speaker 01

  for me, it was just like, you know, if I'm going to do this, I gotta try it 100% to give it a chance. And, you know, my wife was very supportive of it and she knew that we would get by, you know, somehow.

• 18:53Guy Raz?

  So you quit your job in 1987?

• 18:56Speaker 01

  Yeah.

• 18:57Guy Raz?

  You tell your wife, you quit and you say, "I'm gonna go for this. I'm gonna, I'm gonna go for it. I'm gonna start to, to do this." So what, what'd you do? I mean, you had, you mentioned you had $10,000 in savings.

• 19:09Speaker 01

  Right.

• 19:10Guy Raz?

  But that was everything you had.

• 19:11Speaker 01

  Well, what happened, I, I knew that we had the $10,000. I knew that we had a second vehicle that we could probably get by with one vehicle and we did sell that, our second car. We got $4,000 for it. And before I quit my job, it was during a period of time where we were just starting to get these mailouts from credit card companies.

• 19:31Guy Raz?

  Hmm.

• 19:32Speaker 01

  Well, we ended up, I think, getting like five or six credit cards and maxed them all out within the next year.

• 19:37Guy Raz?

  So that's like, what, like it's like $5,000 limits or something like that?

• 19:40Speaker 01

  Yeah. I mean, we had, at one point, I think we had between 30 and $40,000 in credit card debt with, you know, with a night, with a business that wasn't making money. So we, we were, we were struggling, you know, well, the first few years, we struggled quite a bit.

• 19:56Guy Raz?

  But you thought with this $10,000 and with this car sale, the $4,000, like I can start this business. I can start this liquid nitrogen ice cream business.

• 20:04Speaker 01

  I really thought so, yeah. And during that time, we collected some business cards of people that found it interesting. And this one guy left his business card, he was from Indianapolis. And he said, "I'm putting one of my stores," he said, "there's a space open next to me and if you want to hire me as your contractor, I can build out the store and we can get you into the ice cream business." And I thought, "Okay, well, maybe it's time to do it." And I think that was even part of my reason for quitting my job in November because he thought we could get open before Christmas, which is a horrible time to start an ice cream business, by the way.

• 20:37Guy Raz?

  Yes, right.

• 20:38Speaker 01

  But, you know.

• 20:39Guy Raz?

  It's cold, right? Even in Lexington, it's cold.

• 20:41Speaker 01

  Right. And, and as it turns out, this center that he was talking about, it did have about 20,000 cars a day that drove by, but that's exactly what they did. They drove by.

• 20:50Guy Raz?

  Yeah.

• 20:51Speaker 01

  There was not a good way to get in. So, you know, we made a lot of mistakes in the beginning, but, but the first mistake we made was, was working with this guy because he was basically somewhat of a shyster. He, he basically took a down payment, uh, which we didn't have a lot to work with anyway. But about a month after I'd quit my job, thinking we'd be open by Christmas, the, the store still wasn't finished and I was starting to get contacted by some of the, um, subcontractors that they hadn't been paid yet. And so we found out that this guy had skipped town with our money, but we were able to locate him and, and kinda got, we basically got control of our store again. Uh, we paid our subcontractors off and we started, you know, finishing out the store ourselves, but we did not get that store open until March.

• 21:34Guy Raz?

  Until March of 88.

• 21:35Speaker 01

  Right.

• 21:36Guy Raz?

  Right.

• 21:36Speaker 01

  And so we were about four months with no job and all of our savings pretty much tapped out by the time we opened the store.

• 21:44Guy Raz?

  Were you stressed out?

• 21:45Speaker 01

  Uh, to say the least, yeah. I was a little stressed.

• 21:48Guy Raz?

  What were you doing during that four month period? Were you just constantly chasing contractors and subcontractors or were you also still experimenting with the product that you would sell at that store?

• 21:59Speaker 01

  Oh, yes. I was very much doing all of that. I was experimenting with, uh, different pieces of equipment to make it, you know, to make it on a little bit larger scale. I was, um, working on the branding. Uh, when I quit my job, we, we really didn't even have a, um, a name for the product yet. And in fact, when we were going home for Christmas, we ended up having a naming party with some of our friends back in Southern Illinois. You know, we actually came up with the name Dip and Dots during that time. Someone had written down dip and dot, like two characters, but I heard it as dipping without a G in my mind. And that, to me, that was like the perfect name for it. Cause I was wanting to describe the product just a little bit, but yet have a, a very fun name.

• 22:38Guy Raz?

  What was the name before Dip and Dots?

• 22:40Speaker 01

  Well, we had, you know, yogurt was very popular at the time, like, uh, TCBY was very popular. And so most of our flavors were actually yogurt flavors and we actually were gonna call it the Yoglet Shop.

• 22:51Guy Raz?

  The Yoglet Shop?

• 22:52Speaker 01

  Yeah. Which, you know, yogurt being a piece of yogurt, basically.

• 22:55Guy Raz?

  Oh, like yogurt and pellet?

• 22:56Speaker 01

  Right.

• 22:57Guy Raz?

  Yoglet?

• 22:57Speaker 01

  And, um, yeah.

• 22:59Guy Raz?

  I don't think my kids would be running to the Yoglet, uh, stand at the baseball stadium.

• 23:03Speaker 01

  Right.

• 23:03Guy Raz?

  Yeah.

• 23:04Speaker 01

  So disaster averted there.

• 23:05Guy Raz?

  Yeah. So Dip and Dots becomes the name and, um, You opened the store in this little shopping center in Lexington, Kentucky in May of 88.

• 23:15Speaker 01

  Right.

• 23:16Guy Raz?

  And what's the reception? Do people line up? Are there lines out the door? Is it empty? Is it crickets? What's going on?

• 23:23Speaker 01

  Well, it's pretty much crickets because, remember, we had no money left to do any advertising with. Fortunately, during our little test market we did, we got a little newspaper article. And so when we opened the store, we actually had a local TV station within a week or two.

• 23:38Guy Raz?

  Yeah.

• 23:39Speaker 01

  But basically, the first customer that came in, we gave her a sample and she asked if she could buy a Coke. And so we sold the Coke was our first sale. And my wife always tells this story, but not too many customers later, someone came in and they said, "Well, you know, I don't get it. I want my ice cream to be soft."

• 24:00Guy Raz?

  Yeah.

• 24:00Speaker 01

  And I said, "Oh, I can make it soft." And so I went in the back and I actually took the beads and I added some ice cream mix and I basically made her a kind of a soft serve. And my wife just stared at me like, you know, we didn't open this store to make soft serve ice cream. And so I kind of learned my lesson, you know, to stick with what we had. But what we found over the next few days, especially because we opened on a Friday night, so we weren't very busy, but Saturday, we got a few customers in. And then when the TV spot ran, it was totally different. We had people kind of coming into the shop and actually trying it.

• 24:36Guy Raz?

  How were you making enough of the products? Were you literally like manually dripping the ice cream mix or the yogurt mix into liquid nitrogen yourself?

• 24:47Speaker 01

  Yeah, well, during that time when we were waiting on the store to be built, I designed a piece of equipment that could be described as a large cylinder. It probably held 30 or 40 gallons of liquid nitrogen. So I pumped the ice cream mix with a little parastaltic pump, which basically squeezes a hose so it never comes in contact with the product. You basically use a hose. And I would run a two and a half gallon bag. Uh, which is pretty standard in the restaurant industry of a mix that I had made uh, from a local dairy.

• 25:23Guy Raz?

  Just like cream and milk and sugar and.

• 25:25Speaker 01

  Yeah.

• 25:26Guy Raz?

  Yeah, okay.

• 25:27Speaker 01

  And we would just add flavorings to that and then we would pump it, let it drip through. And so after I ran two and a half gallons, I would take everything loose and I would pour it into a bigger container and then scoop it into like cork containers and put it in the freezer.

• 25:40Guy Raz?

  Right, okay, so, so as a somewhat, is this something of a dip and dots connoisseur myself, an expert with two children, I know about the different flavors. What, you know, you have the rainbow sherbet and you've got the banana split, which has some chocolate and banana and vanilla beads in there and uh, cookies and cream with different kinds of beads in there. What flavors uh, were you serving?

• 26:05Speaker 01

  Well, in the beginning, uh, on ice cream, it was vanilla, chocolate, strawberry, Neapolitan, which is a mixture of all three. We had a peanut butter, uh, mint chocolate, but we also had a lot of yogurts. I think we had a strawberry cheesecake yogurt, we had a pina colada yogurt and of course, vanilla and chocolate. So almost more yogurts than ice cream.

• 26:23Guy Raz?

  Yeah.

• 26:23Speaker 01

  When we first got started.

• 26:25Guy Raz?

  So, how did the store do?

• 26:27Speaker 01

  It, it didn't do that well. We, we ended up on the wrong side of town. Remember, we had taken the advice of this guy that was, ended up being kind of a shyster.

• 26:35Guy Raz?

  Yeah.

• 26:36Speaker 01

  But, you know, I, I think our total sales for that whole nine month period was like fifty-two thousand dollars and of course, we had more than fifty-two thousand dollars in expense, I can assure you. So, even though we did all the work ourselves, um, I think we did hire, you know, just three or four like part-time employees from time to time for weekends, but for the most part, we.

• 26:55Guy Raz?

  But it was you, it was you and your wife?

• 26:57Speaker 01

  Yeah, and, and my, my five-year-old daughter, she, she would run the cash register for us sometimes and she'd take a nap in the corner sometimes, but yeah, so we, we ran the store.

• 27:07Guy Raz?

  Um, can you remind me what your wife's name is?

• 27:09Speaker 01

  Uh, it's Kay.

• 27:10Guy Raz?

  Kay, right, okay. So, it's the three of you, it's you, Kay and your daughter, running the store more or less, uh, nine months, you close it down. It, it's not working, you cannot keep up.

• 27:22Speaker 01

  Right.

• 27:25Guy Raz?

  Um, what, what was your financial situation like at that point?

• 27:28Speaker 01

  Uh, it was pretty, um. Not very good.

• 27:32Guy Raz?

  So, your instinct was not to walk away from Dippin' Dots entirely, but to stick with it?

• 27:38Speaker 01

  Yes, I mean, at that point, I knew that we had had enough positive reactions that it had a chance to work. I mean, we had a few other things going on while we were running the store. Like, we took it to the state fair up in Illinois and gave out samples up there and got reactions. And so, eventually, we started doing a few little fairs and festivals. And we started talking about theme parks. And of course, we thought, well, there's no way we can get into a theme park. Nobody knows us or what we're about. But my sister, Connie, she said, well, I'm gonna call around a couple places. So, she actually called down to Opryland Theme Park in Nashville.

• 28:11Guy Raz?

  It was like a country music theme park, right?

• 28:13Speaker 01

  Right. And it was a very nice park. So, she called down there. She got ahold of the food service supervisor. And she would describe what we had. And he would ask...it's almost funny to hear her tell the story, but he would ask her questions like, well, how long's it been around? Oh, it's brand new. Well, how do you do the sales? Oh, well, we don't sell very much of it. Every question he asked, it was...she didn't have a good answer for it. And then, she knew that we weren't gonna get an appointment. But then, at the very last, he said, well, why don't you guys come down and see us, you know, on such and such a date? So...

• 28:45Guy Raz?

  This is, I think, around, what, 1988, or maybe early 89?

• 28:49Speaker 01

  Exactly. And so, they actually agreed to put the product into the park.

• 28:53Guy Raz?

  Wait, how did you convince them? You took samples down, and you got a meeting with them, and you explained what it is and everything, and that was it?

• 29:01Speaker 01

  Yeah. They looked for new things. And they really liked the taste of it. And they got so excited about it. They were building a new ride in the park called Chaos, which was an indoor roller coaster. And they wanted to feature it in this. And they started doing these projections about how much they would sell. They estimated they would sell... A hundred gallons a day and my little machine would only make four gallons an hour. So I figured, okay, well, we're gonna have to go into the ice cream business. We're gonna have to actually build a bigger machine. And so we made the decision to kind of move back home because we had a little two acre piece of land that my dad had given all of his kids two acres of land and we put a trailer on there when we got married.

• 29:45Speaker 01

  And then, of course, my daughter grew up there the first four years and but we had built a garage on that piece of land.

• 29:51Guy Raz?

  This is, this is back in southern Illinois on the farm.

• 29:53Speaker 01

  Right.

• 29:54Guy Raz?

  On the family farm.

• 29:55Speaker 01

  Yeah, we decided that we were gonna convert this little garage into an ice cream plant and supply Opryland with it.

• 30:01Guy Raz?

  When you got, when Opryland said, yep, we wanna, we wanna do this with you, wanna partner with you, did they give you like a cash advance? I mean, how did you finance? Cause you were gonna have to make a lot of ice cream ahead of the, you know, of your opening at Opryland. Who, how did you finance that?

• 30:19Speaker 01

  Well, no, they did not give a cash advance. And what happened is my dad and my mom said, you know, we wanna, we wanna try to help you raise a little bit of money and see if we can make this thing work. And so they went to the bank and the value of land at the time wasn't really, really strong, but it was strong enough that we could get a $30,000 loan. And that was really, my wife and I had already run out of money and we were in credit card debt. And by then we were all kind of partnered together. My dad and my sister had a little bit of ownership in the company. And so we started converting this, this little garage into an ice cream plant and we're expecting to make all this cash, you know, from Opryland, but it didn't, it didn't work out that way.

• 31:02Guy Raz?

  Yeah, why? What happened?

• 31:05Speaker 01

  When Opryland opened up in 89, they had to rush to get their ride done. So our concession area that, that we had been shown got changed. And so there was not near the demand for our product. In fact, when people got to our little stand, they thought they were getting ready to get on the ride so nobody would buy anything. And so these hundred gallons a day projections ended up being more like two gallons a day or something like that.

• 31:29Guy Raz?

  Wow.

• 31:30Speaker 01

  So when it, it didn't do real well the first year, of course, and then the second year came around, they still liked the product, they still liked us. So this year, we want to get your product out closer to where the customer is, where they don't think they're getting on a roller coaster ride. So this is when we kind of jointly came up with the kiosk concept, which you see in many theme parks today. It's a little standalone ice cream stand where someone stands behind it and sells it.

• 31:56Guy Raz?

  Ah, cause up until this point, they were just selling Dippin' Dots where they were also selling chicken fingers and burgers and fries.

• 32:04Speaker 01

  Yeah, cotton candy and everything else.

• 32:06Guy Raz?

  So you wouldn't really even know what it was, you wouldn't ask for it.

• 32:09Speaker 01

  Right. So we were excited again. We'd already kind of went through one year of failure there. But again, they weren't ordering very much product. So about halfway into the year, I was starting to inquire about, well, how come we're not selling very much? And they said, well, and they were very honest with us. They said, we get busy, we only have so many employees, so we don't even open the Dippin' Dots stand. We put them.

• 32:31Guy Raz?

  Wow.

• 32:32Speaker 01

  And I said, so in other words, it's only being open like on a cloudy or rainy day, or when you don't have a lot of people in the park. And they said, yeah, unfortunately, that's the way it is. And so at the end of that year, we got a nice letter from them basically saying, you know, we really like you guys, we love your product, but we just haven't had success with it. So we need you to come and pick up your equipment. Well, this was at kind of the lowest point because, you know, by then we'd pretty much spent the money that my dad had went and borrowed on the farm and, and it was a pretty low point. Well, what happened though, is that there was a guy, his name was Kenny Perpoli, and his father was actually the general manager of the park. And I never really met his father. Anyway, he told me while I was picking up the equipment, he said, hey, you know what?

• 33:17Speaker 01

  I still think this could work. He said, we're actually getting a new food service supervisor, and he's coming from a different side of the park. It's where they do the games and stuff. And I think he might be open to doing something a little bit differently. You should come down and meet with him. I said, well, I'd love to. So.

• 33:31Guy Raz?

  Wow.

• 33:32Speaker 01

  He got me a meeting and when I went down and talked to him. He liked the product and he said, "Well, I understand it's not done very well here over the last two years." I said, "No, it's not." I said, "We've had success other places, though." And he said, "Well, it sounds like maybe we didn't do a very good job with it." And he said, "I'll tell you what, if you can come up with a little bit of money to remodel this building, we have a building over by the petting zoo. If you want to turn that into an ice cream shop, we'll let you run it and just pay us a percentage of sales." I said, "Well, that would be very interesting because we'd love to have access to all these people, but I didn't really know where we would get the money." And my sister and I went to a bank and we found a kind of a young loan officer and we

• 34:16Speaker 01

  were giving him samples and telling him about what we had and about our experience. He said, "There's no way I should really do this, but I'm going to recommend that we get you a loan." And it was, we had to have $20,000 because that's kind of what the remodel was going to take and a few other things we had to buy. But he helped us get that loan and then at the same time, my dad was able to get an additional $18,000 on our land because the land prices had gone up that year.

• 34:44Guy Raz?

  And I mean, all those things that happened, I mean, obviously a series of lucky breaks. But with all that money, like you guys had a, like you had a lot on the line there.

• 34:54Speaker 01

  Right. I was very nervous during that period of time because, mainly because we had put our family farm up for mortgage and I knew how hard it was to get the family farm even halfway paid off, you know? I think, I think because of that, though, it's kind of like when you hear the term vested interest. I mean, I had a very vested interest to make this work somehow and that's kind of what kept me going. And we opened this ice cream store in Opryland on a weekend and the temperature was, well, it was snowing the night before and we were putting up the menu board.

• 35:29Guy Raz?

  God.

• 35:30Speaker 01

  But even with that, the next day, though, we sold almost $300 worth of ice cream, which was higher than any day that they had done in the previous two years.

• 35:39Guy Raz?

  Wow.

• 35:40Speaker 01

  And so when we finally got good weather the following weekend, we, we were actually doing close to $1,000 in sales, I think, on one of the days. So we were off and running.

• 35:52Guy Raz?

  In just a moment, when we come back, how Dippin' Dots spread well beyond Opryland, but eventually faced a meltdown brought on by debt, recession, and a whole bunch of lawyers. Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR. Hey, welcome back to How I Built This. I'm Guy Raz. So it's the early 1990s, and Dippin' Dots are doing pretty well at Opryland in Tennessee. And Kurt starts selling them to a few other places, a few restaurants, even a video store. And all of the Dots, they're shipped in dry ice from his little factory in Illinois.

• 36:37Guy Raz?

  But one day, two women show up, and they want to sell the Dots way up in Minnesota. And they ask Kurt if he can make them a machine to make their own Dippin' Dots.

• 36:49Speaker 01

  And I said, well, gosh, I don't know. I mean, I guess you could. I said, this one's kind of a manual machine. I can probably make one that would be a little more automated. And, well, anyway, long story short, after a couple of months of talking with them, we actually sold a piece of equipment to them. And I think the total sale was like $20,000 by the time we installed it.

• 37:10Guy Raz?

  Now, here's what I'm curious about. I mean, it sounds like the value of your product was really in the IP. You had invented this product, and yet, somebody wanted to make it themselves, and you just sold them a machine without any concern that they would go on and just kind of rip you off?

• 37:30Speaker 01

  Well, we actually had a lot of concerns. But I think sometimes you're just in a position where you have to say, you know, well, I've got to take a risk because we need the money.

• 37:40Guy Raz?

  Yeah.

• 37:41Speaker 01

  And that's kind of where we were at that time. Now, that's the only time we ever really did that.

• 37:45Guy Raz?

  Yeah.

• 37:46Speaker 01

  And I think, and I like what you just said, because I think a lot of people do look at me sometimes and think I was almost naive in some of the things that I did and some of the things I tried. But I try to tell people, like, if I'm talking to a group of college kids or something like that, I'm like, you know, I really wish that business going forward, there would be more trust, because--

• 38:08Speaker 01

  Sometimes you just have to trust and give things a chance and you will get burnt a lot of times, but you have to stay open minded to get to the next level as well.

• 38:16Guy Raz?

  So it's sort of the early 90s. You start to find your footing at Opryland. Do you remember, like by what point did you start to see some money coming in? Like where you thought, hey, we're going to be okay?

• 38:32Speaker 01

  Well, it would have been 1991 that we would have started getting some actual income from Opryland. I think that first year, we ended up doing $350,000 in sales.

• 38:44Guy Raz?

  Wow. And then I guess like right around that time, you guys started to get into a few more theme parks, right?

• 38:52Speaker 01

  Right. We ended up getting into the Kennedy Space Center in the summer of 1992.

• 38:57Guy Raz?

  Wow.

• 38:58Speaker 01

  And my wife and daughter and I drove down in a, basically an old farm pickup that we used to deliver product in. And we put a kiosk in, it was a blue and white kiosk. And they wanted it to say, they didn't want it to say Dippin' Dots, they wanted it to say Space Dots.

• 39:13Guy Raz?

  Uh huh.

• 39:14Speaker 01

  And so we had come up with the term ice cream of the future the year before.

• 39:20Guy Raz?

  Ice cream of the future.

• 39:21Speaker 01

  Right. So we had come up with that term and it worked, it got people to stop and see what we were doing. And so I was setting it up one morning, we were trying to get open, like it was around 10 o'clock in the morning and one of them came over close to where I was at and I said, how's it going? I said, are you sampling? And she said, no. She said, people have just lined up to buy it.

• 39:42Guy Raz?

  Wow.

• 39:43Speaker 01

  And I said, what do you mean? I said, I've never seen that before. And I went over to where the kiosk was and sure enough, we had like seven or eight people in line. And I thought, holy cow, you know, this is amazing. And all of a sudden, we went from telling them how much they'd have to sample to how are we going to keep enough product down here?

• 40:01Guy Raz?

  Wow. Is that because people wanted to try the ice cream of the future?

• 40:04Speaker 01

  Yeah, I think, you know, it was just the perfect environment for it. You've got this bright blue and white kiosk that says, you know, Space Dots, Ice Cream of the Future. And somehow it just clicked and. So they started going through where Opryland had projected one time to do 100 gallons a day, they were almost doing that much. I mean, they were-

• 40:25Guy Raz?

  At the Kennedy Space Center?

• 40:26Speaker 01

  Right.

• 40:27Guy Raz?

  And as you were kind of growing in the mid 90s, where were you, were you and Kay, your wife, were you guys mainly working at the Opryland kiosk, or did you just start to travel around various kiosks that were selling Dippin' Dots?

• 40:42Speaker 01

  Well, during the theme park months, we ended up renting an apartment in Nashville, and we would take other people down with us because it took several people to run the park. So sometimes we would have six or seven or eight employees, and instead of putting them in hotel rooms, we rented one apartment. And my mother was a nurse, and she would get these things we called eggshell mattresses that were little foam rubber things, you know, like, once they were used and they threw them away, she would grab them and bring them home, and we would use those for beds for people to sleep on. So Kay and I were typically in Opryland most of the time during the summer.

• 41:22Guy Raz?

  And what about the revenue? You know, by the mid 90s, was revenue pretty good? Did you, were you able to kind of pay back the loans? Were you, I mean, were you making a lot of money at that point, or was it still kind of touch and go?

• 41:38Speaker 01

  Well, by the mid 90s, we were starting to make a little bit of money. So within five years or so, we had reached a million dollars in sales on a wholesale level. And then in addition to that, we had the retail profits from Opryland, which it was starting to become profitable. And then, of course, the park shut down, unfortunately, because we just got it figured out how to make money there. But we were starting to get some revenue, and not rolling in the dough by any means, because when you wholesale a product and you start getting customers, you always have to kind of bring up the back end. Like, we had to figure out how to make kiosks, we had to figure out how to, you know, keep freezers in stock, and we had to build- You know, we went from like the garage to a 2,000 square foot building that needed

• 42:21Speaker 01

  to be built out. So you're always spending pretty much what you made, but we were starting to generate some income, at least in the mid 90s.

• 42:27Guy Raz?

  I guess by the late 90s, you decide, hey, you know, instead of selling to wholesalers and then they have kiosks, let's franchise this thing. Let's get people to take on a franchise and set it up in shopping malls and wherever. And how many people signed up to become franchisees?

• 42:46Speaker 01

  So we had 105 of our dealers sign our franchise contract.

• 42:51Guy Raz?

  Okay. And then what were the terms? They had to obviously buy dipping dots from you at wholesale prices, right?

• 42:57Speaker 01

  Right.

• 42:58Guy Raz?

  And then what was your take from that, from the sales?

• 43:01Speaker 01

  We actually lowered our price when we converted to a franchise, but we did start collecting 4% of their sales.

• 43:09Guy Raz?

  4% of your annual sales would go to dipping dots, which is a pretty good deal, actually. It's not bad at all.

• 43:14Speaker 01

  Right.

• 43:15Guy Raz?

  How do you, by the way, how do you account for that? How do you make sure that people are actually giving you 4% of their annual sales?

• 43:23Speaker 01

  Well, that was a real problem because these folks were out doing fairs and festivals, handling a lot of cash. We knew that we weren't getting all of our royalties at the end of the day, but we pretty much knew how much product we were selling and we could estimate what we should be getting back. And eventually, many years later, we actually kind of changed the way that we collected. We actually started building the franchise fee into the product. It was kind of like you paid for the product and you paid an additional 10 cents a bag for the franchise royalty, if you will. And then we collected like a penny for the advertising fund and, you know, kind of set it up and did it that way. And it actually made it better for everyone.

• 44:00Guy Raz?

  Do you remember what your annual sales were at their peak?

• 44:04Speaker 01

  At the peak, that would have been 2006. We did 40, almost 47 million in sales. I think it was right at 47 million.

• 44:13Guy Raz?

  Wow.

• 44:13Speaker 01

  And that was wholesale sales.

• 44:15Guy Raz?

  Wow. You know, I'm sort of curious because I've read that, you know, you also had some competitors, people who were trying to do what you were doing. There was one in particular called Mini Melt. And I guess this guy was making it in Texas. And it was a product pretty close to yours, to dipping dots.

• 44:32Speaker 01

  Right.

• 44:32Guy Raz?

  And this actually turned into this like very complicated legal battle, like lawsuits and counter lawsuits. And it like lasted for like 10 years and cost you like $10 million. Is that right?

• 44:45Speaker 01

  It is and you know, I, I think at the time, I probably was naive. I thought that, I really thought that our legal system, and I don't want to sound wrong, but I, I really thought you, you would get justice, if you will.

• 45:00Guy Raz?

  Sure.

• 45:01Speaker 01

  And, and all we really wanted the guy to do is to stop what he was doing because we, we felt like he was infringing a valid patent.

• 45:08Guy Raz?

  Right.

• 45:09Speaker 01

  The first name that he used when he was just directly infringing every step of our patent was where we were dipping dots, ice cream of the future. The name of his company was Dots of Fun.

• 45:20Guy Raz?

  Wow.

• 45:21Speaker 01

  Tomorrow's ice cream today.

• 45:22Guy Raz?

  Wow.

• 45:22Speaker 01

  You know, so totally playing what we were doing. And so, we were suing him for, I think around sixteen million dollars. Well, he countersued us for ten million dollars. And ours was based on infringement, his was based on antitrust because he, he, one of the defenses you have if you're being sued for patent infringement and you're caught red-handed is you can say, "Well, we want to see if the patent's valid." So my patent basically got put on trial and what they ended up doing is they said that our patent was going to be invalidated because of fraud that me and my patent attorney back in nineteen eighty-eight, eighty-nine perpetrated on the, the patent office. Well, there was

• 46:06Speaker 01

  no fraud, but the, when it came down, they basically said, "Well, you're gonna lose your patent." That was hard enough, but then the judge said, "Well, because we proved that there was fraud, yes, you should have your attorney's fees paid." So all of a sudden, we were stuck with a six hundred thousand dollar bill.

• 46:23Guy Raz?

  Wow.

• 46:24Speaker 01

  Well, then the attorneys from Dallas that had been in it all this time, they said, "Well, we want our attorney's piece paid." So we ended up having to come up with basically four million dollars at the end of this lawsuit. So we had spent six million, we ended up spending four on, on them.

• 46:39Guy Raz?

  Wow.

• 46:40Speaker 01

  And I had to spend an additional seven hundred fifty thousand dollars to appeal this decision to get my name cleared that I had not committed fraud. But we did not get our patent back. It's ridiculous, to be honest with you, but that's...

• 46:55Guy Raz?

  I mean, I'll say it. You don't have to say it, Kurt. At the end of the day, the only winners are lawyers.

• 47:01Speaker 01

  Well, you did say it, and you're exactly right. And looking back, you know, a lot of... Some people ask me, they say, "Well, what would you do different if you, you know, if you look back now?" And I suppose the correct answer is like, "Well, I would have settled, and then it wouldn't have cost me $10 million." But my answer is that I probably would do the same thing again, because you're built the way you're built, you know?

• 47:23Guy Raz?

  Yeah.

• 47:26Guy Raz?

  Here's what I'm wondering. 2007, a couple of things happen. Sales start to slow. You've got to pay this... all this money for lawyers, and you've got to pay the lawyers of this other... of the other side of this lawsuit, which is crazy. And then 2008, financial crisis. It's like a perfect storm of just bad news. Do you start to feel the impact on the business pretty quickly?

• 47:52Speaker 01

  Well, we do. You know, in 2007, we actually had almost identical sales that we had in 2006. I mean, within $100,000, we had another decent year in sales. But it was actually different for us, because we were used to growing every year.

• 48:05Guy Raz?

  Right.

• 48:06Speaker 01

  So it was kind of a level, and it was a little concerning. But the real concerning part was the fact that milk prices had gone up 34% that year. Gas prices started going up a lot between 2006 and 2007. And then our liquid nitrogen costs went up like 10%. And so, all of a sudden, on almost the same sales, we had... went from like a net of $2 or $3 million in profits to a loss, actually. And we're looking at it, thinking, "Wow, well, you know, hopefully it's a one-year thing." Nobody really thought about... I mean, the recession hadn't really started yet.

• 48:44Guy Raz?

  Yeah.

• 48:45Speaker 01

  In fact, someone in our accounting department contacted our local bank. They said, hey, you know, we're having a rough year. We might not be able to pay this down the way we normally do. Or we want to talk to you about restructuring something. And the local bankers, like, oh, yeah, we're familiar with your business. You guys are, you know, you got forty million dollars in assets. So, and so they said, you know, look, we'll, um, we know you just spent a couple million dollars on your plant doing some things. Well, you know, we'll look at all your collateral, you know. Basically, don't worry about it. That we'll, we'll just give you a three-month extension.

• 49:15Guy Raz?

  The bank said this.

• 49:16Speaker 01

  The bank said this. Um, but on the day that that three-month extension was due, we got an email that said, you're in default because you have not paid your credit line down. This puts all of your term loans in default as well.

• 49:33Guy Raz?

  Wow.

• 49:33Speaker 01

  And of course, again, being a little bit stubborn, I'm like, well, we'll just go to another bank. Well, that's when the banking crisis was starting to hit. So by the time we did all of our paperwork and everything and had one or two banks that were interested, all of a sudden

• 49:47Guy Raz?

  Nobody.

• 49:47Speaker 01

  everything started going upside down.

• 49:48Guy Raz?

  Everybody just tight, everybody tightens up, all the doors shut, no money. Everything freezes. No one wants to give you money. So you have, you've got this thirteen million dollars in debt. And I guess from what I read, your creditors kind of also devalued your assets. And so it meant that there was a point where Dippin' Dots as a company owed the creditors more than you actually owned in assets.

• 50:13Speaker 01

  Yeah, and that's the sad part about the way that this all works because fear comes into the play. You know, a lot of things happened to where all of a sudden, yeah, we were upside down. I mean, there's no other way to, uh, to say it.

• 50:25Guy Raz?

  So you start this now, what's going to become a, a multi-year, I think a three-year kind of standoff with your creditors, trying to restructure these loans. Meantime, are, are sales declining, continuing to decline?

• 50:41Speaker 01

  They are, and that's the part that really, I mean, part of our standoff and part of our strategy was that, is that we know we'll pick right back up and we're going to have good sales next year. You know, we just got to survive till next year, but I don't think anybody saw the recession that we had at that time. I don't think anyone knew how bad it was going to really be.

• 51:01Guy Raz?

  Yeah.

• 51:01Speaker 01

  Like I said, fear sets in because I'm thinking we can sell our way through it, but, you know, I think a lot of our franchisees and just everybody kind of wants to kind of hide under a rock till the storm's over. And so, less product is sold and before long, you've got a negative trend which, you know, doesn't, doesn't work out for you.

• 51:20Guy Raz?

  What about your personal finances? Were, like, were they in trouble at that time, too?

• 51:26Speaker 01

  Yeah, you know, I mean, we could have taken the position of, well, you know, here's the keys to the building. You, you know, you bankers come in and figure out how to work it, and we could have walked away and been okay. But, you know, we, we also had 200 employees. And by the way, I grew up on a farm in the second poorest county of the state of Illinois, right next to the poorest county. And I knew, growing up, that, you know, the jobs that you get in that area, if you weren't farming, were you could be a teacher, or you could work at the prison. And that was, you know, there was a few other little factories and things around there, but not much. And we had provided, you know, about 200 jobs for that area. I guess we were just thinking, you know, hey,

• 52:11Speaker 01

  we just got to get through this, and everything's going to be better. I mean, I just kept that going. And then, you know, 2008 comes, 2009, 2010. I mean, it just keeps going on and on and on. And it certainly affected us personally quite a bit.

• 52:28Guy Raz?

  You essentially get to a point where you, you know, you can't, the banks are just not going to refinance this, and you got to figure it out. And you got to the point where you had to file for bankruptcy, for Chapter 11 bankruptcy. At that point, was the idea to restructure the company and come back to fight another day? Or did you think it was going to be the end of the road?

• 52:52Speaker 01

  Well, I always thought that Dippin' Dots would survive. It's such a strong brand.

• 52:59Guy Raz?

  Yeah.

• 53:00Speaker 01

  And we actually felt like, we're going to dig our way out of this. We just really need to work out something with the bank. Well, it ended up, you know, when you go into a bank and somebody wants your business, they're friendly, just like anybody else trying to make a sale. But when you get on the wrong side of the bank, it's like you're dealing with, well, I don't know how to describe it, but you're not dealing with the same pleasant salespeople that you signed up with.

• 53:23Guy Raz?

  Yeah.

• 53:24Speaker 01

  So this meeting ended up getting a little bit heated. And they actually said, well, we're glad you could come up and meet, and unfortunately, this isn't going to work out. But by the way, we've actually already filed foreclosure papers on it. So we call it, make a meeting in good faith. And while we're on our way up there, they're actually putting foreclosure papers together.

• 53:44Guy Raz?

  Wow.

• 53:45Speaker 01

  Well, the only option you have at that point, if you don't want somebody coming in and running your business the next day, is that you can file for bankruptcy. And I learned more about bankruptcy in those next few hours driving home than I ever knew. And so the idea is that, yeah, well, we'll file for a Chapter 11. Because we knew if we could just restructure the debt, if we could get somebody in there that would just work with us, that we could figure out how to make everything work.

• 54:07Guy Raz?

  So the idea was, you'd restructure and then come back and see if you could get it off the ground again. But what happened was, somebody came in and made an offer to buy Dippin' Dots.

• 54:20Speaker 01

  Right.

• 54:21Guy Raz?

  This was May of 2012, Chaperal, I think it's pronounced Chaperal Energy. Scott Fisher, his dad, Mark Fisher, made an offer, bought Dippin' Dots. And that was it. It was no longer your company. Were you sort of in a position where you kind of felt like you had to, you had no choice? You had to sell?

• 54:43Speaker 01

  Not exactly. I mean, the way that that happened was about three days after we had filed for Chapter 11. Of course, this hit the press, you know?

• 54:53Guy Raz?

  Sure.

• 54:54Speaker 01

  And I got an email from the Fishers. I don't know what I sent the initial email was basically, you know, are you looking for an investor? And I thought, you know, um, yeah, I wouldn't mind that.

• 55:05Guy Raz?

  Right, yeah.

• 55:06Speaker 01

  We thought, well, hey, you know, let's just be partners, you know, and we kind of structured up, um, or kind of had kind of a deal that we kind of put together, we thought would work for each entity. And so unfortunately, in doing that, though, I kind of put my eggs in their basket.

• 55:20Guy Raz?

  Yeah.

• 55:21Speaker 01

  And I don't want to be very negative here because I don't know everything that happened on their side, but basically my deal with them kind of kept getting worse and worse to where I ended up with really no ownership in the deal. They basically bought the company for the debt. They kept me on as CEO for three years and, um, I was supposed to be able to earn back into the company, you know, based on performance and, and we did have good performance once we got the bank out of the way.

• 55:48Guy Raz?

  Yeah.

• 55:49Speaker 01

  With very little money being put into the company, we, we got our sales up 16%. You know, the rest of 2012, uh, we went up 22% the next year and then about 25% in the third year, but there was a, um, a point in there to where it was an automatically renewable agreement, but it could be terminated by either side and, and, um, they dealt me out of dippin' dots, basically, um, I don't know what the reason was exactly. They just said, you know, well, I think we're gonna, uh, not renew your contract and we're gonna run it ourselves. And so basically we, we were kind of left on the street.

• 56:26Guy Raz?

  And, and what, you walked out of there with nothing?

• 56:30Speaker 01

  Well, I stayed there for three years and I made a decent salary. And we cooperated during that whole process of that six month period of backing things out of bankruptcy and, and bringing in new owners because we thought we would always be a part of it at some level, you know, that, that, those are things that we, we might not have done a lot of the things we did, you know, had we known how things were going to turn out. But again, we don't have any regrets. I mean, Dippin' Dots was great to us for over 25 years and so we're, we're not complainers. We're, you know, we've.

• 57:05Guy Raz?

  I, I understand.

• 57:06Speaker 01

  What we've learned to do is just. Accept it, you know, and you get up and you fight the next day and you do something. You know, I always say to my wife, I said, hey, fortunately, we've been able to keep our health through all this and we all know how to work. And, you know, we started this new coffee company and it's kind of like we're back in 1988 again, to be honest with you. That's kind of where we've been the last year or two, just trying to take something that we know and do something similar to what we did.

• 57:37Guy Raz?

  Which I guess we should mention that over the past few years, I guess two or three years, you started this company Forty Below Joe, which is a, makes coffee dots. So like, you know, like kind of Dippin' Dots, but for coffee, like a shot of caffeine, right?

• 57:52Speaker 01

  Yeah. And I started playing with freezing espresso right out of the espresso machine with liquid nitrogen. And part of my thinking was that I'd always heard people, like baristas at Starbucks and different places, say, you know, you really want to use your espresso shot immediately because within seconds it starts breaking down, you know. And so I thought, well, what if you captured it right when it was made and froze it and then kept it at a very cold temperature, would it, would it, would it change? And in doing some experiments, I found that it didn't, you know. Not only could you bring it back to life a day later, you could bring it back to life a month later.

• 58:36Guy Raz?

  This, this new venture, Forty Below Joe, may, it may take off. But either way, your legacy, you know, your story is a story of incredible success and, and the, the odds were against you and you kept coming back because you believed in this thing and you got it to be a $40 million a year company.

• 58:56Speaker 01

  Right.

• 58:57Guy Raz?

  Which is extraordinary. And then obviously, you know, we, we know what happened later. But when you think about it, do you feel like that success was the product of luck? Or do you think that success came primarily from how hard you worked?

• 59:15Speaker 01

  I think luck always has a little bit to do with something, but I think it came, and not just me, I mean, believe me, I had, you know, a lot of family members and a lot of other people, you know, that were close to the company in the early days that worked really, really hard. But no, I think luck always plays a little bit of a role, but I think most of it is just from perseverance that we all had and the belief that we had in it. Because it's funny, you know, dipping dots is just one of those things that when you get around it and you're working with it, it kind of takes on a life of its own. It's kind of like a magical thing and we don't really know what made it that way. If you told me to go invent a product that all kids would like, or the majority of kids

• 59:58Speaker 01

  would like, I wouldn't know where to start. It's just one of those things that happened.

• 1:00:01Guy Raz?

  Yeah.

• 1:00:02Speaker 01

  And as much as we talked about how much we don't like the way the American legal system is, I really believe in America because, you know, you have opportunities to do anything you can dream of. And I think I'm a perfect example of that.

• 1:00:17Guy Raz?

  During all of these points where like you almost failed, you ran out of money, you went back, you raised more money, you ran out of that money, then you got a lucky break, and then you had some success. Did Kay ever say at any point, "Hey Kurt, like you have a degree in microbiology, like let's get off of this hamster wheel. Let's just get a job with a paycheck. Let's just stop doing this."

• 1:00:43Speaker 01

  No, she never did. And, you know, Kay and I are high school sweethearts. We went together for five years and have been married almost 40 years now. But I think she just knew what she got, you know, and she kind of knew my personality. And she's been with me every step of the way and has agreed with decisions that I've made, you know, right or wrong.

• 1:01:05Guy Raz?

  Sounds like that was probably the greatest decision that you made.

• 1:01:08Speaker 01

  Yeah, I think so, because we've certainly been through a lot together and we are closer today than we probably ever have been. And it's just a new chapter of our life and we'll just see where it takes us.

• 1:01:22Guy Raz?

  That's Curt Jones, founder of Dip and Dots, and his new company, 40 Below Joe, which is now available in about 200 locations. And by the way, you can also enjoy 40 Below Joe in fully melted form. Curt says that Kay actually likes to heat up the frozen espresso pellets in the microwave, add a bit of water and hazelnut creamer, and voila, she's got a hot cup of hazelnut joe for breakfast.

• 1:01:58Guy Raz?

  Hey, thanks so much for sticking around because it's time now for How You Built That. And this week, our story is about snacks.

• 1:02:06Speaker 02

  The majority of snacks that we eat in the US are made of three things. They're made of corn, wheat, and rice.

• 1:02:12Guy Raz?

  But Nadine Habayeb thinks Americans should, you know, branch out a little.

• 1:02:17Speaker 02

  There are so many beautiful ingredients that exist in the rest of the world that we just don't know about yet.

• 1:02:23Guy Raz?

  And Nadine actually discovered one of those beautiful ingredients about three years ago when she was hanging out with her friend Priyal, who'd just come back from a trip to India.

• 1:02:32Speaker 02

  She pulled out this bag of these homemade snacks that, at first glance, looked like popcorn.

• 1:02:41Guy Raz?

  What looked like popcorn to Nadine were actually popped water lily seeds.

• 1:02:45Speaker 02

  Popped, white, fluffy seeds.

• 1:02:48Guy Raz?

  Harvested from lily pads that grow in northern India. And people there have been snacking on them for centuries.

• 1:02:55Speaker 02

  It has a very beautiful smokiness to it. It easily sort of dissolves in your mouth.

• 1:03:01Guy Raz?

  And almost immediately, Nadine kind of got addicted to these crunchy little puffs. And she remembers saying to Priyal, you know what? I bet we could sell these things.

• 1:03:11Speaker 02

  Yes, it was that immediate. We looked at each other and we thought, this is something we have to bring to the US market.

• 1:03:18Guy Raz?

  Now, conveniently for Nadine, she was in business school at the time, and she started to do a little research on water lily seeds.

• 1:03:26Speaker 02

  They have about 50% more protein than popcorn. They have fewer calories in fat. And my favorite part is that they actually have no kernel. So there is nothing to get stuck in your teeth.

• 1:03:36Guy Raz?

  Anyway, Nadine decided to experiment with her own puffs. She went to an Indian specialty store near her apartment in Boston. She bought a bunch of puffed seeds and made them with all different kinds of seasonings: cheeses, Indian spices, sriracha. And she started giving out samples to classmates and complete strangers, asking every question she could think of.

• 1:03:58Speaker 02

  If they would buy it, how much they would buy it for, what kind of flavors they wanted, what kind of texture where people were looking for.

• 1:04:05Guy Raz?

  And Nadine got enough positive feedback that she and Priya decided to order a half of a shipping container full of puffed seeds from India. And then they started to look for a co-packer who could roast and season them.

• 1:04:18Speaker 02

  And so we called tens of, hundreds of different co-packers to try to see if somebody would be willing to work with our product. But the second that somebody heard "seed from India," they were like, "Nope."

• 1:04:33Guy Raz?

  And Nadine was actually sympathetic to why the co-packers were saying no to her.

• 1:04:38Speaker 02

  An agricultural product from India, you need to be very sensitive with because the quality standards are not the same as they are in the US.

• 1:04:48Guy Raz?

  But eventually, Nadine's partner Priya was able to work with Indian farmers to make sure the seeds were top quality. And the two of them were finally able to convince a co-packer to start roasting the snack. They called it Bohana, and last April, they launched.

• 1:05:04Speaker 02

  We definitely didn't know how people were going to take it. We just kind of hoped that people would love it as much as I did.

• 1:05:13Guy Raz?

  And so far, so good. After about nine months on the market, Bohana snacks are sold online and in about 150 grocery and specialty stores across the Northeast, and the brand has made about $100,000 so far. And Nadine says they are no longer the only puffed water lily seeds on the market. This snack is actually becoming a thing.

• 1:05:35Speaker 02

  We're seeing the same kind of thing happen with this ingredient around the world in the same way that we saw quinoa, or acai, or chia happen here in the US.

• 1:05:47Guy Raz?

  That's Nadine Habayeb of Bohana. And if you want to find out more about the company or hear previous episodes, head to our podcast page, howibuiltthis.npr.org. And of course, if you want to tell us your story, go to build.npr.org. And thanks so much for listening to the show this week. You can subscribe at Apple Podcasts or wherever you get your podcasts. And while you're there, please do give us a review. You can also write to us at [email protected]. And if you want to send a tweet, it's at howibuiltthis or at Guy Raz. Our show was produced this week by James Delahoussie with music composed by Ramtin Arablouei. Thanks also to Julia Carney, David Ja, Sanaz

• 1:06:28Guy Raz?

  Meshkinpour, Neva Grant, and Jeff Rogers. I'm Guy Raz, and you've been listening to How I Built This.