Talenti: Josh Hochschuler

After falling in love with the gelato shops of Buenos Aires, Josh Hochschuler came home to Dallas with a bold idea: bring authentic Argentine gelato to the U. S. He raised $600,000 from friends and family and opened a gelato shop called Talenti. The product was a hit - but the retail model wasn’t. Faced with mounting losses, Josh shut down the store and moved into a warehouse to pivot to wholesale. With time, tenacity, and a now-iconic clear jar, Talenti became a national sensation, and in 2014, was acquired by Unilever. Today, it’s the best-selling gelato brand in America. This episode was produced by Casey Herman and edited by Kevin Leahy, with research by Kerry Thompson and music by Ramtin Arablouei. Our engineers were Patrick Murray and Robert Rodriguez. You can follow HIBT on Twitter https://twitter.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis, and email us at [email protected] mailto:[email protected]. Sign up for Guy's free newsletter at guyraz.com http://guyraz.com/ and on Substack https://guyraz.substack.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?

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• 0:46Guy Raz?

  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. We get support from U.S. 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.

• 1:32Guy Raz?

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• 2:16Guy Raz?

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• 3:00Guy Raz?

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• 3:45Guy Raz?

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• 4:27Guy Raz?

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• 5:12Speaker 01

  It was getting close to Christmas time, and I was completely out of money. Didn't know how to make payroll. And so I remember I called a meeting and I said, "I'm gonna go to the bank and I'm gonna try to sign and get more money from the bank to pay you what I owe you. But if you leave in the meantime, I can't even service the customers I have, and I'll lose them as well." So they spoke amongst themselves and then came back and said, "We trust you. We're gonna stay. Go find the money." And I said, "You got it."

• 5:52Guy Raz?

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

• 6:03Guy Raz?

  I'm Guy Raz, and on the show today, how a 22-year-old landed in Argentina with no job and no plan, and came back to America with the recipe for the country's bestselling gelato, Talenti.

• 6:21Guy Raz?

  Have you ever visited another country and just thought, "Man, I wish I could recreate this at home"? It's sort of like when Howard Schultz first visited Italy. He became obsessed with the sidewalk café culture in Milan, and of course, the really amazing espresso drinks. Now, that was in the 1980s, when espresso drinks were super rare in the US. And Howard Schultz decided to try and bring as much of that culture as he could back home. Now, you might quibble with the idea that Starbucks is like a sidewalk café in Milan, but it did change the way Americans drink coffee. Today's story has a few of those elements. It's a story about falling in love with a culture and then building something inspired

• 7:06Guy Raz?

  by it. For Josh Hochschild, that culture was in Buenos Aires, and in particular, the legendary gelato shops around the city. In 1996, just after graduating from college, he decided to move to Argentina and just figure it out. He had no job, very little money, and he knew no one. Now, in a moment, you'll find out what happened once he got there, including how he became totally enchanted by the gelato he tasted. Now, just to get this out of the way, gelato and ice cream are different. Ice cream is higher in fat, gelato is churned a lot slower, ice cream often has eggs, gelato does not.

• 7:48Guy Raz?

  And finally, ice cream is usually hard, and gelato is softer and creamier. And in 1996, almost no one in America ate gelato. So when Josh returned to the US in the early 2000s, he came up with a plan, a plan to open a chain of gelato shops. But, as you will hear... That plan did not pan out. His dream came crashing down. And like many entrepreneurs before and after him, Josh Hochschild had to let go of his original vision, which was really hard, but also a blessing in disguise, because it would force him to think about turning his gelato into a product he could sell in other stores.

• 8:33Guy Raz?

  Talenti's rise was long and slow, but then something clicked and it just exploded in popularity. By the time Unilever bought the brand in 2014, Talenti was selling well over $100 million of gelato per year. And that was just the start. Walk into any major grocery store today and you'll find those eye-catching, clear Talenti jars showing every little swirl and speck inside. Today, it's far and away the best-selling gelato brand in America. As for Josh, he grew up in Dallas. His father was a back surgeon, but also an entrepreneur who built a pretty successful medical practice. From a young age, Josh was encouraged

• 9:18Guy Raz?

  to start his own business someday. As a college student at Boston University, he would save money and travel abroad during the summers. And after graduating in 1995, Josh visited Argentina and fell in love with the place. So he made himself a promise. He'd return to the States, sell all of his possessions, and hop a one-way ticket back to Buenos Aires, which is exactly what he did.

• 9:44Speaker 01

  I land there. It was like January 4th or 5th when I landed there.

• 9:48Guy Raz?

  1996.

• 9:49Speaker 01

  1996. And I go up to an information booth. And I say to the young lady behind the booth, I say, "Hi, I've come here now and I'd like to live here. What do you suggest I do?" And she just looked at me and she goes, "Hold on a second." And she starts calling over to the other information booths and gets everyone to come. She goes, "Just say again what you just said to me." And I said, "I want to live here. I don't know what I should be doing." And they all just start dying laughing that I just land there and I'm in the airport and I'm trying to figure out what to do next. So they told me everyone's on vacation down there. Everyone takes a month or even two months off, which is January and February, which is-

• 10:27Guy Raz?

  Because it's the summer.

• 10:28Speaker 01

  Yeah. And they said, everyone's in Uruguay right now. The country's closed down. So you picked the wrong day to arrive. You should have come two weeks ago.

• 10:36Guy Raz?

  Well, to be 22 and just not know what to do.

• 10:40Speaker 01

  Yeah.

• 10:40Guy Raz?

  And they're like, well, you speak no Spanish. You don't know anybody and you're asking for work? Like, that's what I would have said to you if I met you.

• 10:48Speaker 01

  Yeah, I was pretty bold. I was a, I was a little bit at the point where I needed money no matter what. So I started teaching English. And I did that to make money. Um, it was very little money.

• 11:00Guy Raz?

  Like Berlitz or one of these companies?

• 11:02Speaker 01

  Exactly.

• 11:03Guy Raz?

  And where, where were you living? Were you living in a youth hostel?

• 11:06Speaker 01

  So, um, I mean, the story's quite long, but just to kind of to make it not too long. I, I'd become friendly with a taxi driver who spoke English. And he knew of, um, an apartment where the person, they were renovating it. And so I said, oh, look, I'll make a deal. I will pay for two or three months' worth of rent upfront. So they can finish the paint and whatever they have to do. But I get to sleep there every day while they're doing the, the work. So I would sleep on the floor. I used like a, you know, a sweatshirt as a pillow. And they were finishing the construction of the apartment while I lived there. It didn't bother me very much. And I got to have a place where I could sleep and make food. So it worked out.

• 11:47Guy Raz?

  So what did you want to do in Buenos Aires? I mean, you had studied business administration and finance at college. Did, were you looking for work in that, in that area?

• 11:56Speaker 01

  I was. So whenever I had free time, I'd put on a suit and tie. And I would go knocking on doors downtown and ask for the, uh, human resources department and give them my resume.

• 12:08Guy Raz?

  At banks?

• 12:09Speaker 01

  At banks, at financial institutions. But the, the biggest problem I always had was language. And it was always frustrating for them because I didn't speak Spanish. So that made it, I kept getting no's. Until one day, there was a girl who was teaching at Berlitz. And she said to me, you know, my father had kind of a similar story to yours. He had gone to the States looking for work and, uh, ended up working for Bank of Boston. Go meet with him. I'll, I'll get you a meeting with him. So I went, I gave him my resume. I explained to him what I wanted to do. So he said to me, I'm going to give you a 30 day contract, which I still have. And of course it was back then, it was printed, a piece of paper. And I'm going to give you a, uh, Spanish tutor. And if you do a great job for 30 days, I'll give you 30 more.

• 12:55Speaker 01

  And so that was the beginning of my career at Bank of Boston.

• 12:59Guy Raz?

  What did he, what did you do? What was your job?

• 13:03Speaker 01

  So at first I was, for two years I was in strategic planning and they were at the time, growing branches of the bank. It was really good years in Argentina and business was booming. So they wanted me to do Excel spreadsheets and PowerPoints and stay there all night, printing things on the printer and then collating them and then stapling them and then, so I, you know, I kind of did the lowest level of work for that office. And because I spoke English, there was a lot of presentations that had to be made in English to corporate from Boston. And so they liked having me there to help the C-suite

• 13:45Speaker 01

  of Argentina to go through the English parts of it. So they all got to know me.

• 13:50Guy Raz?

  How, how quickly before you became proficient in Spanish?

• 13:54Speaker 01

  It was a process, probably within a year. Now, I didn't have any English speaking friends. So all my friends that I made spoke Spanish. I started dating a girl. So that, that's very helpful.

• 14:06Guy Raz?

  Argentinian?

• 14:07Speaker 01

  Yes. And we spoke in Spanish. And then, you know, just day in and day out at work, when I went out to eat, it would, actually I'd go home and my head would hurt because I would be trying so hard to learn how to communicate. And there would be times when you just don't have the words or know how to say things. And, and then over time, oddly enough, I started to gain a lot of vocabulary in the working world. So like in the finance world, I knew a lot of terms that a lot of people might not know otherwise.

• 14:34Guy Raz?

  Yeah. You would end up staying there for roughly five years. One of the things that you discovered there, which of course we're going to talk a lot about, is their ice cream, which if people haven't had Argentinian gelato, it's very different than Italian gelato. And gelato, Italian gelato is so different than American ice cream. It's soft and smooth and Imagine like 1996, 97, when you're trying it, you're like, wow, this is unlike anything I've ever tried.

• 15:05Speaker 01

  The way I like to describe it is there was this huge influx of Italians who came to Argentina. And they really clung to a lot of what they loved about their own culture and ways of life. And it influenced the language, a lot of the slang is Italian, a lot of the tango has Italian influence in the food, everywhere. And they really took so much pride that, and they didn't look to change things because this to them was like something that beckoned back to the old country. So they wanted to keep it the way it was. So the way I describe is that Argentinian gelato is the way Italian gelato used to be a very long time ago, 100 years ago.

• 15:41Guy Raz?

  So you tried gelato and it's just, it's just one of the things you're eating, like steaks and Malbec. But really what you're doing is you're working in finance. And when you were in Argentina, like you're a year, two, three years in, what did you think you were going to do? Did you, were there moments where you're like, I think I'm going to settle here forever. I think I'm going to live here. This is going to be my home.

• 16:02Speaker 01

  Yes, there were moments of that.

• 16:06Speaker 01

  The hardest part for me was I missed my family. Back then it was harder to get home. There weren't direct flights to Dallas. You would go through Miami. I had my mom's mother, my grandmother passed away and it was very hard for me to make it in time. I didn't for her funeral. That made a big impact on me. And then also my sister, my older sister started having children and I felt very far away because it was hard for me to see them. So although I loved being there in many ways, was thinking maybe this should just be home forever. There was that pull as well to come back.

• 16:39Guy Raz?

  And I guess an opportunity came, right? Around 2001, you got an opportunity to transfer to Bank of Boston in.

• 16:48Speaker 01

  In Boston.

• 16:49Guy Raz?

  In Boston. So a job opens up. So you are, this is like almost five years in and that's what you're going to do.

• 16:57Speaker 01

  So the gentleman who was leading the office had come down from the States. And he had grabbed me because at that point I was bilingual. So I was able to help him manage the team. He was the one who got the offer to come back to Boston and then in turn made the offer to me. That was January or even before January of 2001. And I simply said to him, I want to take the job, but I want a few months because I'd like to go travel.

• 17:26Guy Raz?

  Okay.

• 17:26Speaker 01

  So I did that. I actually started in Easter Island and then headed east and made my way around the world, but spent a lot of time in Asia. So the last stop along the way was in Dallas to see my folks. And I get an email from my boss from Argentina who says, everything has been stopped. All of the hires have been dissolved. There is no job here anymore for you. It's gone because the dot com had busted.

• 17:49Guy Raz?

  Wow. This was in what, what, what?

• 17:52Speaker 01

  Summer.

• 17:52Guy Raz?

  Summer of 2001?

• 17:53Speaker 01

  Yeah.

• 17:54Guy Raz?

  Okay. You're 28 and you're done with Bank of Boston. And so at that point, I mean, did you start to think, well, I better look for another bank job?

• 18:06Speaker 01

  Yeah, it was a thought, but also my father, he, he had always told me that if you're going to try to start a business, it'll be a lot easier for you if you do that before you have a wife and children. So that kind of was going over and over in my mind. And I started to think, maybe this is a sign that this is the right time for me to start thinking about doing something. I, I can live off pasta for six months and sleep at one of my parents' guest rooms and try to build a business.

• 18:34Guy Raz?

  So like a sign, almost like a sign from God, right? Like maybe this is what, this is the moment to do it. I'm 28 and you know, you want to be back in the U.S. So first of all, what did you start to think about? Like, did you think maybe you'd start a financial consulting business? Like, because that was your background. What did you start to think about?

• 18:53Speaker 01

  So I was already missing Argentina and I immediately started to think, I really want to do something that combines Argentina with the States. Somehow I want to be tied to Argentina. And the thinking at the time after the dot com bust was, I really want to come up with something that's super basic, like something people will always want. And so it was food based. And I was thinking about Malbec wine or gelato.

• 19:23Guy Raz?

  All right, let's talk about food for a moment. I mean, you didn't have any experience in food. You just liked it. You just enjoyed it.

• 19:29Speaker 01

  Yeah.

• 19:30Guy Raz?

  But you knew some people in Argentina. So you thought, well, maybe I can, I don't know, import wine, or maybe we could do something with gelato, like, just kind of spitballing ideas.

• 19:41Speaker 01

  Exactly. I put it like onto a little PowerPoint and I walked around and anyone who would listen to me, I asked them, which, which idea did you like better?

• 19:48Guy Raz?

  And what would they say to you? They would like, who, what kind of people were you talking to about ideas?

• 19:53Speaker 01

  Yes, friends, old friends, my parents' friends. There was one gentleman who had bought an apartment from my mother who came from, I don't know if you've ever heard of Dean Foods, but it was a big dairy. And I was able to get a meeting with him and he told me that my idea was horrific.

• 20:09Guy Raz?

  Your idea to do ice cream?

• 20:10Speaker 01

  Yeah. So funny enough, the guy, what he said to me was, it's a terrible idea, it'll never work. But everyone told me that when I decided to get into the milk business. So don't listen to a word I'm telling you.

• 20:22Guy Raz?

  Okay. So you're, you're starting to coalesce around this idea of doing gelato in the US, in Dallas, right? Like opening up a gelato shop?

• 20:32Speaker 01

  Yeah, the whole concept was replicate the gelaterias that are in Argentina and open one. And then eventually more than one, starting in Dallas.

• 20:43Guy Raz?

  Okay.

• 20:44Speaker 01

  And especially at the time, you could buy gelato in places that had one or two stores, kind of a mom and pop type style, but it was pretty new. It was like cutting edge at the time.

• 20:55Guy Raz?

  Yeah. And when you, before you even put a business plan together, are you a cook? Like, are you a good home cook? Are you like, do you know how to make food? Or did you know how to make gelato?

• 21:06Speaker 01

  No.

• 21:07Guy Raz?

  No.

• 21:08Speaker 01

  Was not a good cook. I didn't know how to make any of those things, really. The thought was I will be able to find someone who can help do those, that part of the business. And then I was going to concentrate on other aspects of it.

• 21:20Guy Raz?

  And to be fair, Ben and Jerry's took a correspondence class at Penn State. That's how they learned how to make ice cream. You figured what? You'll, you'll go and find somebody in Argentina. So.

• 21:31Guy Raz?

  Tell me what the order of operations. Did you start with a business plan and then start to look for money and then go to Argentina? Or did you go back to Argentina to find a potential partner first?

• 21:42Speaker 01

  First, I went back down to Argentina.

• 21:45Guy Raz?

  Okay.

• 21:45Speaker 01

  And started to try to meet with the gelaterias that I knew of that I liked.

• 21:51Guy Raz?

  And you'd walk in and you'd say, what?

• 21:53Speaker 01

  Who owns your gelateria? How do I get in touch with this person? I'd like to speak to them about the possibility of bringing the concept to the States. And one of them, obviously, worked out and I was able to speak to the owner and they liked the ideas I had.

• 22:08Guy Raz?

  You found somebody who agreed to work with you?

• 22:11Speaker 01

  Yes, Jorge.

• 22:13Guy Raz?

  Jorge, okay. And Jorge had a small chain of gelato shops in Buenos Aires?

• 22:18Speaker 01

  Yes.

• 22:19Guy Raz?

  And he said, sure, this sounds interesting. And you guys came to terms on what a partnership would look like. This is even before you had any money, right?

• 22:26Speaker 01

  No money.

• 22:27Guy Raz?

  To start this, no money, okay. And the idea was he was going to teach you how to make gelato and then you would go back to Dallas and make it? Or that eventually he would come to Dallas with you?

• 22:38Speaker 01

  Actually, the plan was that one of the guys that makes gelato for him, who was really good, was supposed to come and work with us in Dallas. So it wasn't initially going to be Jorge. It was going to be this other person.

• 22:51Guy Raz?

  So you start to learn how to make gelato? And what, tell me what you're learning?

• 22:56Speaker 01

  So I'm learning his way of doing things. And it was a very old world approach. It was all starting with the original ingredients, whatever that could be. An entire raspberry, a block of chocolate. He would caramelize nuts. He would roast the nuts. He would make his own paces and, you know, make his own butters, like nut butters. So he was showing me how they did things there. And it was a very manual, slow, in tiny little batches. And he started to show me how he manages the store, who does what, what are the roles inside the store.

• 23:38Guy Raz?

  Okay, so you're learning about just the process of making gelato, but ultimately you're going to bring somebody back with you who's going to be like the gelato master, right?

• 23:46Speaker 01

  Yes.

• 23:47Guy Raz?

  And let's just double click on gelato for a second here because it is different than American ice cream, right? Like, most ice cream that we eat in America is custard-based, it's got eggs, it's very rich and delicious. Gelato is mostly, there's different milk fat proportions and it generally does not have egg in it. I think it's churned more slowly, like, just tell me the differences between gelato and ice cream.

• 24:12Speaker 01

  So I always describe it with three main differences. It's, like, when you say churned more slowly, it's basically how much air is being incorporated into the product. So gelato has very low amounts of air.

• 24:23Guy Raz?

  It's super dense, but creamy.

• 24:25Speaker 01

  Super dense, super dense. So you get a totally different mouthfeel. It also has much, much lower fat, it could be half the amount of butter fat. And then it has really high solids, so you're avoiding water and that lends itself to texture and flavor.

• 24:42Guy Raz?

  All right, so you're back in '02 and now you know, you've got, sort of, developing a plan on, on starting, on opening a gelato shop in Dallas. But there's a challenge there, which is you need cash, to do, need money to do that. So, how much money did you have? Did you have savings of your own?

• 24:59Speaker 01

  I did have savings of my own and I basically made a list of people to speak to, friends and family, and I went and met with them one by one. It was about 110 people.

• 25:12Guy Raz?

  And you showed them what? What did you show them?

• 25:14Speaker 01

  A business plan I had built, which was one of the longest business plans you could ever imagine, and the vast majority, probably 95 of them or so, said no.

• 25:24Guy Raz?

  What was in the plan? Was it like, hey, do you want to invest in my ice cream shop? Or was there something bigger? Was there a bigger idea there?

• 25:31Speaker 01

  Well, yeah, the bigger idea was that it would become a chain. The pitch was, look, I've got these experts from Argentina who know how to make the product. The product is second to none.

• 25:41Guy Raz?

  Yep.

• 25:42Speaker 01

  There's a great opportunity here to do this. And part of the plan is, we want to introduce to people that, once they've gone out for dinner, they come by and have gelato, and people also bring it home. It was kind of like, I wanted to create this culture that I had become accustomed to when living in Argentina, where the night is a series of stops. You go one place first, maybe have an appetizer, or a cocktail, or a glass of wine. Next place for the meal, next place for the dessert. It didn't all take place in the same spot.

• 26:12Guy Raz?

  Okay, so how much money did you, were you able to raise?

• 26:17Speaker 01

  I think my goal was 600 grand. I think I got close to it. Maybe I was a little bit shy, but it was around there.

• 26:25Guy Raz?

  Okay, so you have, you've raised $600,000 to open a store in Dallas, it's 2002. First of all, what are you gonna call it?

• 26:33Speaker 01

  So I know, I actually had, in the business plan, when I built the plan, it already had the name. It was gonna be Talenti Gelato, from the very, very, very beginning. As I was doing research, trying to understand gelato and the history of gelato, I was reading a lot about this gentleman, Bernardo Buon Talenti, from Florence. He lived in the 1500s, and he was credited with, basically, inventing gelato. Actually, as the story goes, Guy, there was this huge banquet by Catherine de Medici, and each course, subsequent course, was gonna be more fantastic than the previous. And it culminated with his gelato. So, I basically took part of his name, and it was like a tribute to him. Okay, this guy invented it, I'm gonna name it after him.

• 27:18Speaker 01

  I've got this very old world, labor-intensive way of making things, and I'm sure he did it that way, so I'm gonna, I'm gonna name it after him.

• 27:26Guy Raz?

  Wow. All right, you have 600 grand to do this, to sign a lease, and to build this out, and to buy all the equipment. You opened the store in 2003, and, I mean, it's Dallas, and it's an unusual kind of ice cream, and did you get some attention? Did the newspapers start writing about you? Was it? What was it like on opening day?

• 27:47Speaker 01

  Yeah, it was great. We got a lot of great coverage and people loved the product and we had long lines of people coming to buy it. So in that regard, it was wonderful. We had, we were really making a name for ourselves. I remember the Dallas Morning News did a whole article talking about the best ice creams and gelatos in all of Dallas and they ranked us number one. So we were getting some good coverage and people loved it.

• 28:13Guy Raz?

  And how long does that last? I mean, does the, does it, does a hype must eventually fade, I imagine? Or did it last for a long time?

• 28:21Speaker 01

  Well, when the sun was out, it was lasting. The summers were great. Winners were really hard. People loved it. But yeah, the summers were great, but the numbers weren't working out.

• 28:32Guy Raz?

  What's the problem?

• 28:34Speaker 01

  The problem is the average ticket. The small size was, let's say, $2 and almost everyone was just buying that. And the store itself was quite large and there was a lot of overhead. And the business model was built on there being a considerable amount of people that would buy the larger containers in the styrofoam and take it home in order to get that transaction up.

• 28:55Guy Raz?

  But nobody was doing that because Americans buy ice cream at the grocery store.

• 28:59Speaker 01

  If I sold one, I was happy. It was, it was shockingly disappointing how few people would buy anything of any considerable size.

• 29:07Guy Raz?

  But did you try to educate people on how to do that? Or did you just expect people to do it?

• 29:12Speaker 01

  Oh, I had A-frames everywhere outside. I had signage everywhere. We were doing, running specials. There was signage all over the store. I had the-

• 29:19Guy Raz?

  The signage that said what?

• 29:21Speaker 01

  You know, buy one, get one, or whatever the promotion was, or here, you know, here's the container, you should take it home and have a party and look how we can beautifully present it and this, that and the other. It was like hitting my head up against culture. It was like trying to convince people to change the way they did things. It just wasn't working. And I had some chefs from around town that loved to come. And the chefs really liked it. And they were asking me, hey, can you make it a really large size for me and I'll buy it for you? I'll sell it at my, at my restaurant. In 2004, so the second year of the store, I started doing that. I would have a cooler. I would sit there and help make it, put it in the cooler, deliver it to the restaurant. And I was doing that and

• 30:04Speaker 01

  they loved it. And it was, it just kept growing. I was like, wow, this, there's something here about- Going this other route, this is going to be really helpful and amazing.

• 30:12Guy Raz?

  But still, I imagine that's not quite making up for the loss.

• 30:16Speaker 01

  No, it wasn't making up for the loss. We were losing money. And this one chef from a very popular steakhouse here in town, which was, is owned by a gentleman who also owned a little specialty supermarket, said, look, we love your product. Would you now put it in a container that we can set inside this little specialty supermarket and we'll sell it there? And sales were amazing. And that's when I started to say to myself, I'm being held down. I can't, first of all, I hate the retail life. It was not for me. The way I would describe it was, I'm always working when everyone else wants to be having fun, right? Nights.

• 30:56Guy Raz?

  You were there seven days a week?

• 30:57Speaker 01

  Yeah, yeah, from morning to night. And the most intense times were when everyone would be either having dinner or going out or whatever they're doing. And I'm always working. So I said, wow, this is, you know, I'd rather work when people are working and not work when people aren't working because I want to be able to do things as well.

• 31:16Guy Raz?

  And you were dating your now wife at the time?

• 31:19Speaker 01

  So I hired my wife to be the pastry chef at the store. We, we had a little pastry display. I was crazy about her. It took her a little longer to figure out that she loved me too.

• 31:30Guy Raz?

  As it often does.

• 31:33Speaker 01

  And we eventually started dating and, and, but this was all in 05. So as I was starting to try to say, maybe I need to start thinking about, there's a better opportunity out there going into this other space of restaurants, which is food service.

• 31:48Guy Raz?

  So you start to basically say, I gotta close this store.

• 31:51Speaker 01

  Yes.

• 31:51Guy Raz?

  This shop. But your whole business model was about building shops all around the country.

• 31:57Speaker 01

  That's right.

• 31:58Guy Raz?

  A year and a half in, you realize that's not going to work.

• 32:02Speaker 01

  It's not going to work. It was heartbreaking.

• 32:07Guy Raz?

  When we come back in just a moment, how that heartbreaking decision to close the shop actually set up Talenti to grow much, much bigger than Josh had ever imagined. Stay with us. I'm Guy Raz and you're listening to How I Built This.

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• 33:54Guy Raz?

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• 34:39Guy Raz?

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• 36:03Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2005 and Josh makes an agonizing decision. He's going to close down his retail gelato shop, but he's still making gelato. He's just pivoting to service wholesale accounts. When you went to your 15 investors and you said, "I'm going to close the store and do this," what was their reaction?

• 36:26Speaker 01

  Well, probably some level of disappointment. But for the most part, I was dead set on making sure they were all whole. So I said, you're coming with me. You're going to own part of this business. But I just think that the opportunity is elsewhere. Again, these were friends and family at the time. So most people were like, look, we're betting on you. We want to see you succeed. So if you really think this is the direction that it needs to go, and it's sad to see that store close, but let's go for it. Let's try this new angle.

• 36:53Guy Raz?

  Did it feel like a relief? Or were you sad? Or was it both?

• 36:57Speaker 01

  All the above. There was a lot of emotion involved. I had spent quite a long time working on it. I spent long hours there. It was a dream. And it felt like somewhat of a failure, closing it down. I had to let everyone go, including my wife. And I basically ended up moving into a tiny little warehouse, taking the machines over there and had one hourly helping me. And actually, Guy, that move was scary because I had already started to sell to these restaurants in this one store. And you can't just disappear for a while because all of a sudden you're moving and they need it every week. They need the product because they're selling it. And I didn't have a freezer anymore.

• 37:42Speaker 01

  Once I was shutting down, and there was a very kind man who owned a frozen distribution company, who I asked, do you mind if I put a pallet of product in your freezer? I'll pay you rent or whatever you need. I just, I have to have product to get through the next couple of weeks while I move. And he just said, don't worry about it. You just use it. You don't have to pay me anything.

• 38:00Guy Raz?

  And when you went to your Argentinian partner and you said, hey, we're going to shut down the store. I need to focus on wholesale. What did he say?

• 38:09Speaker 01

  He totally disagreed with me. He was very opposed to kind of this new direction we were going in. It's frowned upon down there. You don't take artisanal, high-end products and sell them in the quote unquote industrial setting. So they just lost all interest. The relationship was dwindling. And it just seemed like the right time to say, look, I will do what I can to buy you out. So let's come up with a number. It might take me five years, but... Give me time, but over time I will buy your your part out. But I was riddled with debt.

• 38:43Guy Raz?

  And did you, I mean, you had to break the lease, right?

• 38:47Speaker 01

  Uh huh, yeah, I had to meet with the landlord and explain to them the plan and I had to go out and find someone to take over the lease and I saw I found someone who took over the lease and then I negotiated with them to buy my own freezer back because it was considered part of the building. So there was a lot of work trying to wind it down. It was a lot of work.

• 39:06Guy Raz?

  Do you remember how much debt you were in? Were you like more than 200,000, 300,000?

• 39:11Speaker 01

  Probably something like that, like 200,000 to 300,000. If as long as you don't consider the fact that at the time there was a lease, right? So

• 39:19Guy Raz?

  Yeah.

• 39:20Speaker 01

  I had to figure out a way out of the lease and the easiest way is to find someone to take it over.

• 39:24Guy Raz?

  Um, okay, you're 31 ish at the time with this debt. Were you comfortable with that? I mean, were you, were you like, I got this or were you, was it stressful?

• 39:33Speaker 01

  Very stressful and it just kept getting more stressful because I kept taking on more debt. But you might recall that those years, five, six, seven, banks were very willing to hand out money.

• 39:45Guy Raz?

  Oh, yes, they were.

• 39:47Speaker 01

  So I was one of those guys that they were handing money to. Had it not been for that, those times, it would not have qualified.

• 39:55Guy Raz?

  Yeah, they would not have given you the money today and and you couldn't have probably gotten a credit card today with that much debt.

• 40:00Speaker 01

  Right, and I don't know if you remember this too, but it used to be handing out credit cards, 0% interest all the time. So I had like 16 of those that I built up. I got, um, I was able to buy a house with like 5% down, a little house, and then I took a second mortgage out on that and then put it into the business. So I was doing everything I could to come up with any penny I could to stick it into this business. And it was all on me personally at that time and I was carrying the investors because I had told them I would do everything I can to take care of them. There was a couple of capital calls that they had the option to put in some more money and some of them ended up putting a little bit more money in, but the vast majority was on me.

• 40:37Guy Raz?

  Right, because it seems like a failing business at this point.

• 40:40Speaker 01

  Without question.

• 40:41Guy Raz?

  So the investors are like, ah, you know, I don't know about this. Let's just see what happens. You're taking on debt, but you move into this small space to just make ice cream for restaurants and then that one specialty store with the idea that you would turn this into a business doing like pints, like Ben and Jerry's style, pints?

• 41:01Speaker 01

  Yes, pints to specialty stores as well as.

• 41:06Speaker 01

  The larger containers to restaurants. The plan was we're going to sell bigger ticket items in pint format as well as in these larger containers for restaurants, hotels, convention centers, stadiums, cruise lines, you name it, that was the model.

• 41:23Guy Raz?

  And who was making the gelato in that little warehouse for you?

• 41:27Speaker 01

  I was.

• 41:27Guy Raz?

  You were making it now?

• 41:29Speaker 01

  Yeah, I was making it, I was delivering it, I was doing the accounting, I was the lawyer, I was the janitor. I had one employee, she was hourly, and she would help me. So if I'm out making deliveries in my old green Chevy Tahoe, she would stay there and make sure everything's running properly. And that went on for that year, 2005, that's what it was like.

• 41:52Guy Raz?

  And I can't imagine you're doing more than a few hundred thousand, maybe two, three hundred thousand dollars in sales max?

• 41:59Speaker 01

  In 2005, I did a hundred and seventy-five thousand dollars in sales.

• 42:02Guy Raz?

  Right. So it's tough business.

• 42:05Speaker 01

  Very tough, very tough. I mean, I was selling furniture, I was selling anything I could to fund the business. And keep in mind, I was now dating my current wife. I ended up buying an old beaten up white delivery van and started picking her up for dates in this van and she's just like, what the hell is going on here? This is crazy. Milk's in the back with sugar because I'd go and buy all my raw materials with the van. Walgreens and CVS used to have a special where you could buy so much milk at a certain price, but you could only buy so much. They wouldn't allow you to buy more. So I would go around to every CVS and Walgreens in the whole city, buying milk and putting it in the back of the van to take back and make gelato. And so anyways, she lived through that whole, that whole episode.

• 42:50Guy Raz?

  All right, but your customers still, small, it's a small customer base. It's like high-end steak houses and restaurants in Dallas, a specialty store. And that's 2005.

• 42:59Speaker 01

  That's right.

• 43:00Guy Raz?

  And how many different flavors are you making? Do you remember? Because that's also challenging. If you've got to make like 10 different flavors, it'd be more efficient to make like three.

• 43:09Speaker 01

  Oh, I was making any flavor anyone wanted. I had certain chefs that said wasabi ice. One guy wanted wasabi ice. Whatever you want, I will come over the formula. I will make it and it will be exclusive to you. And I did that for any restaurant that was willing to work with me.

• 43:23Guy Raz?

  So how did? I mean, while you're doing this, you're making the ice cream, you're delivering it, you're hand packing it. Because you don't have a, I'm assuming you didn't have the machinery that could pack the ice cream.

• 43:32Speaker 01

  No, it was all hand on, yeah.

• 43:35Guy Raz?

  So this is like, this really is a farmer's market business, right?

• 43:38Speaker 01

  Yes.

• 43:39Guy Raz?

  And this is a point where I have to imagine you're thinking, how am I going to get out of this hamster wheel? Because I'm doing all these things. I've got an hourly employee and I don't have time to do business development or try and pitch other stores or whatever.

• 43:54Speaker 01

  Yeah, I did have that sensation that that came more about a year later. But yes, that, that in 2006, there was a broker who had seen the gelato.

• 44:04Guy Raz?

  This is like a broker who represents food brands?

• 44:07Speaker 01

  Who represents Costco.

• 44:08Guy Raz?

  Ah, okay.

• 44:10Speaker 01

  For Texas. And she called me and said, I love your product. Would you consider working with Costco Texas? And of course, I was excited, thrilled, said yes. And the first thing they said is that the only way to get in is to do something called road shows. So you would actually go to the, whichever store it was, set up a little stand and sit there and sell your product to everyone who's shopping in the store. So I did that for a very long time. I drove around the entire state. So at the time, I did have Costco as a customer on a very limited basis for a short period of time. It was, it was very, very helpful. And we were getting new, new restaurants and that specialty store that I had been in had expanded. They had several locations in different areas. They had all picked up the product. So I had like five or six of those as well.

• 44:56Speaker 01

  That year, we did 430 grand in sales. So things were growing and I was starting to take on more help, employees at the warehouse and sales were building.

• 45:06Guy Raz?

  Okay, this is 2006. And that specialty store, which is really where it all began. Now they're growing and they're ordering more ice cream. But apparently they're having problems. The specialty chain is behind the scenes. They're having financial problems.

• 45:21Speaker 01

  Yeah, I did not know that.

• 45:24Speaker 01

  I got into this bad cycle where you allow for a customer, let's say you have 30 day terms where they, whatever they buy from you, they can pay you 30 days later, where they would go beyond that timeframe. And you would let them slide? And I'd let them slide because I wanted to be able to sell to them. There was always the fear that if you lay down the law and say, I'm not going to deliver until you pay me what you owe me, that you lose the customer. It is a dangerous slope and that is exactly what happened. I got way past 30 days, past 60, probably past 90. So I had, it was a very important client of mine and I didn't know how to kind of get myself out of that situation. And, and so what, what happened? So, um, towards the end, before they went bankrupt,

• 46:08Speaker 01

  they ordered this huge order, like way larger than normal. They received it and then they marked it way down and sold it off, but I never got paid. So it was really bad for the business. That and then a couple of the restaurants had gone out of business as well. I was owed a lot of money and it was getting close to Christmas time. Everyone who worked for me celebrated Christmas and it was an important time for them. And I was completely out of money. I basically didn't know how to make payroll. I owed payroll. 15 employees you had roughly? Roughly. And so I remember I called a meeting and I said, everyone, let's huddle up and talk. And I said, I'm going to go to the bank and I'm going to try to sign and get more money

• 46:50Speaker 01

  from the bank to pay you what I owe you because I don't have it right now because of what just happened with this big customer. But it's going to take a week or two weeks, you know, 10 days to get this done. If you leave in the meantime, I can't even service the customers I have and I'll lose them as well. So I really need you guys, please, to give me some time and I will pay you what I owe you. And I know the timing is horrible. So they spoke amongst themselves and then came back and said, we trust you. We're going to stay. Go find the money. And I said, you got it.

• 47:23Guy Raz?

  Okay, how did you find the money?

• 47:24Speaker 01

  Went to the bank, signed for more.

• 47:27Guy Raz?

  And they gave you money?

• 47:28Speaker 01

  They gave me more money.

• 47:29Guy Raz?

  Even though you were heavily in debt?

• 47:31Speaker 01

  Heavily in debt.

• 47:32Guy Raz?

  Oh, man, the early 2000s, what a time. What a time.

• 47:36Speaker 01

  It was unbelievable, but...

• 47:38Guy Raz?

  It was like a personal loan you took out, or what?

• 47:40Speaker 01

  Yeah, personal loan. I remember because I'd been waiting to get the news, waiting to get the news, waiting to get the news. And it was amazing news and then, of course, we stayed in business. But it was a moment. The entire time, every time I would call my father and say to him, you know, this is happening and this is hard and I'm worried about this. And he'd say, you keep going, it will work out, you keep going, it's gonna be fine. And this time I called him and he said, you know, maybe you're gonna have to close the doors. And that was just heartbreaking. But we didn't, we made it through. It was a real crisis moment.

• 48:13Guy Raz?

  I mean, it must have been, it was a loan that was big enough to cover payroll, but it was not, I imagine it wasn't a giant loan. It was probably a couple, you know, a few, maybe 10, $20,000.

• 48:22Speaker 01

  I think it was more than that. I think it was like 70 or 80,000 dollars. But it was, it was way more than they probably should have given me, but they did. But back then, it was like, why do you only want 70, you know, take 80. It worked out for me. It saved the business.

• 48:34Guy Raz?

  But you are still, okay, so now you've got some cash to keep the business going. You're in Costco, you're in a few Costcos in Texas or doing these road shows. Being in Costco must have given you visibility. Guys, that's what happens, like, other people who work for other brands will see you somewhere and they'll say, oh, this is an interesting product. Did any of that happen? Did you start to get contacted by other grocery companies, or, yeah?

• 49:00Speaker 01

  Yeah, so that is true, that's helpful. But it's also if you can have good numbers and show what you're able to do and tell the story, it's incredibly helpful in the sales meetings. And so that's the point when we started going around and meeting, literally in the stores, with the frozen aisle manager, who could be a teenager, and saying to them, look, we're selling here, we're selling there, let us go on yourself, try us out. And that was starting to go into 2007. And that's kind of how we started getting more and more stores in 2007, was meeting with the frozen aisle manager.

• 49:36Guy Raz?

  But these are independent grocery stores?

• 49:39Speaker 01

  So Whole Foods was way different back then.

• 49:43Speaker 01

  Each store had a lot of autonomy and they were able to take us on. So that would be one example, but there was some other specialty stores that were just getting started. Maybe you've heard of Sprouts.

• 49:53Guy Raz?

  Of course.

• 49:54Speaker 01

  Time Sprouts had very, very few locations. They were out of Arizona, but they had come to Texas and they had opened, I think it was two locations in all of Texas. And so that would be another example. So we were able to get into these kind of specialty markets that had the autonomy to be able to make these decisions and put us on shelf.

• 50:13Guy Raz?

  Hmm. Let's talk for a moment about the packaging, right? Because part of, I think of what's really distinctive about Talenti is, is the pints, right? Like the, the clear plastic containers where you can actually see the gelato, right? And it makes the brand stand out on the shelves. I mean, what was it packed in at the time?

• 50:34Speaker 01

  So way back in 2004, when I started at that first specialty store, in the very, very, very beginning, I was doing it in those little tiny styrofoam containers that they use in other countries often. Shortly thereafter, I had gone to a trade show. It was actually in Italy. They had a new display case that rather than having metal pans, it was made out of transparent plastic. That pan allowed for you to see the ribboning, all the different swirls, the bits and pieces, the inclusions. And so I was like, wow, I should try to do something like that on the shelf in a, in a supermarket. So I came back and I, I found a jar and I showed it to my wife and I said, what if I were to package it in this?

• 51:18Speaker 01

  And she said, that's a terrible idea. That looks like a urine sample jar. No one's going to ever buy anything from that. So, but I wasn't discouraged. I said, no, no, no, it's going to be great. You'll see, watch, watch, watch. So I came up with the pack. That was pretty early on. That was still in oh four. The concept of not being in a, in cardboard, in a, when there was a sea of cardboard and coming out with something completely different that would hopefully generate trial, started pretty early on. It started in oh four.

• 51:44Guy Raz?

  Okay. So 2007, you get into, getting into more Whole Foods locally and then Atlanta and Denver. Business is starting to pick up. How are you financing this? I mean, again, these businesses are paying you at 30 days. You've got to make the product, deliver it, and you're not a cash-rich business at this point. So I imagine you're, once again, running into challenges.

• 52:09Speaker 01

  Yes. Finances were very, very tight. And then the salesperson that we had knew of a friend in Minneapolis, and he helped us get a couple of chains in Minneapolis. And I knew that I couldn't just keep going into further debt. And I had started to go out and try to find a more sophisticated investor, a bigger investor to come in and put in some real money to give relief to these investors that I've been carrying since the days of the store.

• 52:42Guy Raz?

  And did you want just investors, or did you want operators to come and work with you?

• 52:47Speaker 01

  I really wanted smart money. I was trying to find someone who I thought could bring a lot of value. I started to feel like I really don't know what I'm doing, and I need someone who has more experience in this, who can show me the way. I think I have a great product, and I've got all the energy in the world to go and make it happen, but I don't know exactly how that works, and I need help with the expertise.

• 53:10Guy Raz?

  Okay. So you're looking around, and you get somehow connected to these guys, Steve Gill and Eddie Phillips. Before we talk about who they are, how were you connected to them?

• 53:19Speaker 01

  So in 2007, a friend from college was in town. He had done public relations for Steve and Eddie at Belvedere Vodka when they still owned it.

• 53:30Guy Raz?

  These guys had founded Belvedere Vodka?

• 53:32Speaker 01

  Yes, and Chopin Vodka.

• 53:34Guy Raz?

  Okay.

• 53:35Speaker 01

  At that point, they no longer owned them. They had sold them. They sold them to Louis Vuitton Way Hennessy, but they were kind of now wanting to do something again. And, but I didn't know that. But this friend of mine from college had come to Dallas, and we were together, and I said, he said, "What are you going to do? How are you going to finance this thing?" Things are going well as far as the top line, but it is unsustainable what's happening here. And I said, I'm so anxious, so much need to meet someone. You know who would be perfect is these guys that you just did this PR for. And he said, well, hold on, I'm friendly with them. And picked up his phone and called them and said, hey, Steve, you should meet this guy, Josh, he has a business that he'd love to tell you about it.

• 54:16Guy Raz?

  And you thought they would be good partners. I mean, you didn't know yet, but you thought, I mean, they were in alcohol, it was a different, completely different business, but you thought, look, they built two great brands. They might be good to work with me.

• 54:27Speaker 01

  Absolutely. I saw a lot of similarities. I saw their brand, they came out, they were much more expensive than the competition. We were more expensive than the competition, not to that extent, but we were more expensive. They invented the bottle that you could look through the window and see the image on the back. So they had this innovative packaging. I just was like, these guys know a lot about branding and they've had tremendous success. They've been down that road as entrepreneurs. So I called and said, you know, I really want to come meet with you guys. I had just had my first child. And they go, come, come, we'll give you a few minutes. And in their minds, it was, they were just doing this PR guy a favor. There was no real thought of that anything would come from this.

• 55:12Speaker 01

  But I went there and I sat down in their offices and I was very intimidated at the time. I'm sitting there's a massive office and they come walking in, in this huge boardroom table and sat down and they're like, all right, you got a few minutes, tell us what you're thinking. And for some reason, they thought it was a retail concept and they were not interested in retail. But then I explained to them, no, this is wholesale. This is wholesale and this is what we're doing. And they're like, ah, we like it. Then I had brought product with me and I had them taste it and they loved it. They thought it was amazing. They loved the pack and they said, make us a proposal.

• 55:46Guy Raz?

  And I guess they ended up putting in a million bucks into the business.

• 55:50Speaker 01

  Yeah, there was like, we needed to sign some, get some bank loans or line of credit or things like that. So their, their balance sheets helped with getting approvals on those things. And so, but yeah, they put in money and they bought out all of my original storefront investors.

• 56:08Guy Raz?

  When we come back after a quick break, how this fresh investment marked a new phase of Josh's business and eventually lead to a phone call from one of the biggest consumer products companies in the world. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 56:35Speaker 04

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• 57:11Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So in 2007, Josh brings in two seasoned entrepreneurs, Steve Gill and Eddie Phillips, as investors in Talenti. And at first, the idea was that the pair would simply be passive investors and board advisors, but soon that arrangement would change.

• 57:32Speaker 01

  I think it became clear pretty quickly that it would be much better if Steve got involved in operations. It didn't take long to figure that out, mainly because I think he's an incredible operator. He really knows how to build and run businesses. He became like a business mentor for me. And he, he was just a natural at leading and a lot of marketing and sales as well as finance. He's very, very strong in those areas.

• 58:01Guy Raz?

  All right. You brought in that money fortuitously because we're about to enter a dark period in the, you know, starting in 2008 with a financial crisis that would last at least two years. How were you affected by this significant downturn in the economy?

• 58:18Speaker 01

  Oh, it was horrible for us. A few things had happened. There was a large sale that was made to a distributor. The understanding was that would then go to these different customers. What wasn't realized was had it not been sold to those customers, we'd get it all back. So we got that sent back to us and you can't then resell it. So that was trash. So that was a hard one. Steve really took over most. I would go with him, but he was heading up VP of Sales, managing sales. I really dedicated most of my time to product and manufacturing and more of the trade. And so we lost money. We lost considerable money that year, a lot of bad debt. And there was no more money out there. By the end of 08.

• 59:03Guy Raz?

  It dried up.

• 59:05Speaker 01

  There was nothing left.

• 59:06Guy Raz?

  And so you were, you were making more product because you were growing, but you couldn't finance it.

• 59:11Speaker 01

  Right.

• 59:11Guy Raz?

  So by 2009, I mean, now, again, Steve and Eddie, these guys had made money, a lot of money, selling Belvedere and Chopin vodka. So now, I'm assuming they become the bank in 2009?

• 59:25Speaker 01

  Absolutely. So the end of 08 till through 09, let's call it. And that was the period of needing to live to see another day. And those two gentlemen, for the most part, funding that.

• 59:39Guy Raz?

  What was it that about this that, I mean, I mean, I'd have to ask them, but why did they believe in this business so much? I mean, it's vodka makes sense to me. It's shelf-stable. They're not, I mean, it's complicated. You're dealing with, it's a highly regulated business and industry. But, you know, you don't have to deal with putting it in cold storage and it going bad and shelf life. And once it clicks, you're good to go. Ice cream is tough business. I mean, it is, and these are, these are smart guys. What attracted them to this thing?

• 1:00:10Speaker 01

  Again, you would have to ask them, but my best understanding from just having spoken to them about it is they liked the size of the category a lot. It had been boring for so long. Nothing had happened in that category forever.

• 1:00:24Guy Raz?

  It was Haagen-Dazs and Ben & Jerry's.

• 1:00:25Speaker 01

  Yeah, forever. So it was exciting to come and disrupt and then start taking away enough market share to just completely become a nuisance to them until they have to buy us. And so they had been through it. They had been wildly successful and they thought that they would be able to, together with me, repeat that series of events.

• 1:00:48Guy Raz?

  That eventually they could sell it to a bigger brand.

• 1:00:50Speaker 01

  Yes.

• 1:00:51Guy Raz?

  So, okay, so they're excited about this category. They see potential and they see the possibility of one day maybe selling it to one of these bigger companies. But in the meantime, you've got to finance the business. What was the playbook here? Okay, so you've got the financial crisis, but you've got to grow. And so you have to invest in factory equipment, automation. You can't hand pack this stuff because I think you were still hand packing it in 2008.

• 1:01:20Speaker 01

  There was an evolution of the packing. You know, we went from packing with a spatula to where we were moved to what's called a continuous freezer and it would actually flow out as if it were coming out of a hose, which made it easier to pack, but still was not automated. We did not automate.

• 1:01:38Guy Raz?

  Oh, you had to hold the hose yourself?

• 1:01:40Speaker 01

  You had to hold the cup underneath the spigot. It was like in the kitchen faucet and fill and then put the lid on it and then keep doing that one by one, by one by one.

• 1:01:49Guy Raz?

  Wow.

• 1:01:49Speaker 01

  Yes. And we had multiple of these machines, so we were not doing one at a time, but each machine would do one at a time. And we didn't really automate to fillers until pretty much 2012.

• 1:02:02Guy Raz?

  So, okay, so 2008, the money dries up from the banks. You've got 2009, and that year, based on the numbers I've seen, you go from to 6.8 million in sales.

• 1:02:13Speaker 01

  That's right.

• 1:02:14Guy Raz?

  So that's significant. Did it still feel scary? Or were you feeling more confident, like, okay, we're turning a corner here despite the financial crisis?

• 1:02:23Speaker 01

  I would say it was either the end of '09 or 2010 when it was feeling really good. The big turning point of '09. Was that we really wanted to get into Publix, which is a chain in Florida. Yeah. Why'd you want to get into Publix? Publix, it's looked at as a leader in the industry. People focus on what they're doing. They're trendsetters. It also is in Florida and Florida helps offset the seasonality of the business. Whereas it's always, people always eat an ice cream. And especially, you know, they get the snowbirds. They get a lot of people in the winter when we don't have much going on elsewhere. So that's a huge plus. They have a ton of locations. They had, they own Florida.

• 1:03:07Speaker 01

  So you had the ability to do tremendous business with them.

• 1:03:12Speaker 01

  And we wanted to be able to show a win at a big chain. What ended up happening was we went and pitched to them. We get a phone call from the broker and he said, I got bad news. Unfortunately, they decided not to go with you. This was in the very beginning of oh nine and we said, no, no, no, no, no, no, cannot be, cannot be. So Steve said, call the buyer and tell him, I just want 30 minutes with the guy. Any 30 minutes he wants. I just want to talk to him face to face. Get me a meeting. So he calls us back and he says, you got your meeting. That's the good news. The bad news is it's tomorrow morning, like eight 30 in the morning. And we're sitting in Dallas, Texas. It's five something in the afternoon.

• 1:03:53Speaker 01

  So I'm like, oh my God, go to the airport, go to the airport. So he just gets in his car. So driving to airport. At the time you could not go into Publix without wearing a suit and tie. So I call his wife and we're saying, grab a suit, grab a tie, stick it into a, an envelope and a FedEx. Go to a FedEx location and within a short period of time, I will have an address for you. So we find some little motel hotel inside the road, have her overnight it first thing delivery by seven AM. He get catches the flight, gets there, puts on a suit, makes it to the meeting. Tells the guys, you've got to give us a chance. You have to let us in. We are going to make you look good. We're going to sell well. And it will be good for your career. So he says, well, how are you going to do that?

• 1:04:36Speaker 01

  And he says, well, you know, I have done this before, but we're going to do it. And he goes, no, I want to know how. And so Steve just goes, radio. And then he goes, really? Radio? He goes, yeah, radio. He said, well, how much are you going to spend on the radio? He says, $500,000. So we ended up getting the business after that meeting and Steve calls me and he says, Good news, bad news. Good news is, I got us in. And I'm like, oh, amazing, amazing. He goes, bad news is, we've got to come up with $500,000 to pay for radio. I just guaranteed them.

• 1:05:03Guy Raz?

  Wait, wait. Basically, Steve's pitch then was, take our product and we'll go and sell it with radio ads?

• 1:05:09Speaker 01

  Exactly.

• 1:05:10Guy Raz?

  And what would the ad, what did the ad say? Like, because it's a visual thing. You see the ad, you want to taste it. But what did the, the radio ad say?

• 1:05:18Speaker 01

  I think I still have them. I'm going to send them to you, but they're really funny. The ads themselves talked about that there was a clear jar on the aisle. So it talked about the pack and it talked about the brand.

• 1:05:30Speaker 05

  People ask why Talenti Gelato and Sorbeto come in a clear jar instead of a typical carton. Well, we're showing off. We want you to see nothing except the finest all-natural ingredients sourced from all over the world.

• 1:05:42Speaker 01

  And it played over and over until that buyer called us and said, you weren't kidding about your spend. I can't get to work in the morning without hearing your ad on the, on the radio.

• 1:05:51Speaker 05

  Look for Talenti Gelato and Sorbeto at your local public supermarket where shopping is a pleasure.

• 1:05:56Guy Raz?

  And, and did it have an impact?

• 1:05:58Speaker 01

  I think it did. I mean, our sales were great. We, we, we came out of the gates just blazing. And it just kept going up and up and up.

• 1:06:06Guy Raz?

  All right. So 2010 really is when you start to see the light now. You're, you're, you're really growing. I think by 2011, you're doing 26 million in sales. And I imagine it's really supercharged by the Publix in Florida.

• 1:06:21Speaker 01

  Yeah. We took that success and went around to all different chains. Kroger's the biggest. And we started gaining distribution just across the country and a lot of sales. People were buying it.

• 1:06:35Guy Raz?

  So clearly this playbook is working and people are discovering this ice cream. I think you hit $95 million in 2013 and the team is just exploding, right? And, and are you, were you technically or officially the CEO of the business?

• 1:06:55Speaker 01

  So I think for a while it was Steve was CEO and I was president, basically running it together. Eventually, as we hired more C-suite on, I took on the title of founder. But until the very, very, very end, it was Steve and I running that business.

• 1:07:12Guy Raz?

  And did you like, it sounds like that was a better arrangement for you. Like you had been doing operations and payroll and admin for so long on a smaller scale, but it's a grind.

• 1:07:24Speaker 01

  Yeah, I came to the conclusion that there was a concept where there's certain people that like to do businesses on their own, and I don't like that. I like having a partner because both in the hard times and in the good times, I like being able to share those times with someone who knows every single detail of them, that there's nothing that you have to explain.

• 1:07:41Guy Raz?

  So traditionally, once a brand reaches 100 million in sales, it really starts to get the attention of the big players, right? Because it's growing and it's not, maybe not yet a threat, but it is certainly a competitor now. And you guys reach almost 100 million in sales in 2013, and I imagine that's when you start to see maybe interest from outside companies, or maybe you guys start to approach or hire like a law firm to see if there might be any interest?

• 1:08:14Speaker 01

  So we hadn't approached anyone. The business at that time was owned by three people, it was me, Steve, and Eddie's son had inherited his shares.

• 1:08:26Guy Raz?

  And Eddie Phillips had unfortunately passed away in 2011, and his son had taken over, a guy named Dean, Dean Phillips, who actually became a congressman and then briefly ran for president.

• 1:08:39Speaker 01

  That's right, Dean Phillips.

• 1:08:40Guy Raz?

  Yep, yep.

• 1:08:41Speaker 01

  So we weren't actively looking to sell the business. In fact, we felt as though it was still growing really strongly.

• 1:08:48Guy Raz?

  And no serious competitors yet. I think Haagen-Dazs was starting to launch its own gelato and Breyer's, but right, there wasn't any head-to-head competitor yet.

• 1:08:58Speaker 01

  Yeah, and it's hard to come out and be behind the original authentic one. But, so no, we weren't, but then Unilever actually came to us. They came to us in 13, said, this is the call you've been waiting for, and said, we want to buy your business. And we're like, well, it's not for sale. We're not selling.

• 1:09:16Guy Raz?

  Wow.

• 1:09:17Speaker 01

  And that started this, at least, I think it was a year and a half. Back and forth with those guys. We just didn't feel like we were ready to sell yet.

• 1:09:27Guy Raz?

  Why not?

• 1:09:28Speaker 01

  You know, I think you start thinking to yourself, is this a business I want to run for a very long time? And bring my children into it and make it a family?

• 1:09:41Guy Raz?

  Right, because you're forty, you're like forty, forty-one at this point.

• 1:09:44Speaker 01

  Yeah.

• 1:09:44Guy Raz?

  Yep.

• 1:09:45Speaker 01

  And I was having children. Do I want this to continue and then expand it into different novelties? Or what have you, other products? And bring my sons in and make this kind of my life's journey? Or do I want to be more of that serial entrepreneur? And so that was a lot of the thinking. My father had a lot of influence on me. And he thought it was a good idea to take some chips off the table.

• 1:10:11Guy Raz?

  Yeah.

• 1:10:11Speaker 01

  Although the company was very profitable. But we just kept pouring it all back, right back into the business to.

• 1:10:16Guy Raz?

  But you were making a decent salary probably by that point.

• 1:10:18Speaker 01

  Yeah, yeah, I had a nice salary that was be able to, you know, go out for dinner and, uh, but in any case, um, and my father said, look, I don't care what you're worth. It doesn't matter to me if you have money. He says, I just think that to be able to sleep well at night, it's nice to have a nest egg that you can depend on. And I'm just proud of you because you're a good person. And that meant the world to me and that helped me get over that.

• 1:10:43Guy Raz?

  So you decided, let's investigate this sale.

• 1:10:46Speaker 01

  Yes, that wasn't just me alone, but yes, we, it was a lot of back and forth. We kept thinking, oh, we're gonna, this time we'll get there. This time we'll get there. And we were too far apart. So it took almost a year and a half, I think, before we were able to finally say, okay, we're ready to do this.

• 1:11:07Guy Raz?

  Right. I think in December of 2014, you know, Lever announces that they've acquired, they will acquire Talenti. The acquisition figure is was is undisclosed, but it was a lot of money. And you had some incentives to stay on, I think, for roughly two years.

• 1:11:25Speaker 01

  That's right.

• 1:11:26Guy Raz?

  First of all, coming into, you know, now you're, I mean, you're forty-one and and have enough money to stop working at this point. How did that change your life?

• 1:11:40Guy Raz?

  Did you buy a bigger house or did you were you able to, you know, you were able to do those things, for example?

• 1:11:45Speaker 01

  Was able to be more charitable in my giving. That was something I'm proud of. Ended up buying a ranch, so some land.

• 1:11:55Guy Raz?

  Outside of Dallas?

• 1:11:56Speaker 01

  Yeah, kind of like a nice place for the family to get away on the weekends here or there, play sports, fish, that sort of thing. So I guess that would be a material difference. But my wife said to me, go buy something. You just did this, go buy something.

• 1:12:14Guy Raz?

  Go buy yourself a watch.

• 1:12:15Speaker 01

  Go buy yourself something. And I said, I don't know, what am I gonna buy? And she goes, just figure it out. You gotta, I insist, you buy something. So that last night when we sold the business to Unilever, we had gone out, the investment bankers were ordering Macallan 25.

• 1:12:32Guy Raz?

  That's an expensive scotch.

• 1:12:34Speaker 01

  It was something like, God, I don't know, $250 per ounce that they were drinking. Anyway, so they're passing it around, like, everyone smell it, don't drink it, just smell it, because it's too expensive, can't drink it. So then they down it and next thing you know, everyone's laughing and they bought everyone a round of this scotch, which I was never able to afford before that, I'd never tasted it. So I said, you know, that was such a fun night, I would like to go buy a bottle of that and hold it for special occasions. And so that's what I did, I bought a bottle of that, that was how I celebrated. And whenever I open it, whether that be a birthday or a big milestone in someone's life, we always write down on the bottle why I'm having a sip of it, to celebrate the date and the event.

• 1:13:13Guy Raz?

  That's a nice tradition, buy a $2,000 bottle of scotch and then write down every time you take a little sip of it?

• 1:13:19Speaker 01

  Yeah, exactly.

• 1:13:22Guy Raz?

  So you end up, now you become an employee of Unilever for at least two years. And imagine they just had you run in Dallas, right? You don't like move to Hoboken or London or Rotterdam or wherever their, you know, their offices are, do you?

• 1:13:38Speaker 01

  No, and part of the negotiation, so Steve had been through the whole Belvedere experience and they wanted him to live in Paris and then they, they were like counting his days of vacation and so like he didn't want to feel like he was going back inside some sort of cage. So. The negotiation involved a lot of freedom on our part. However, they knew that we were incredibly motivated to see this through.

• 1:14:03Guy Raz?

  Because you had incentives.

• 1:14:04Speaker 01

  Big time incentives. So we were incredibly motivated to work very, very hard and make sure that they were left with a beautiful business. And so by the end of 2016, we had hit 245 million in sales and it was extremely profitable and they got what they paid for.

• 1:14:21Guy Raz?

  And at that point, you were like, okay, this is fun, but I really don't want to work for a big company.

• 1:14:26Speaker 01

  Right. I stayed on for three years as a consultant with a number, a handful, maybe a week or two a year, I would be involved with them. And they were great. They were a very, very stand-up, impressive organization and company. So I'm very happy about that. It makes, it made me very proud that the person who took over what was like my baby was a company that makes me proud.

• 1:14:48Guy Raz?

  We didn't talk, we talked a little bit about your personal life. You got married and raised a family throughout this whole building, this business, but I think you now have, what, five children?

• 1:14:58Speaker 01

  Yeah, five kids, yeah. Three boys and two girls.

• 1:15:01Guy Raz?

  All under the age of?

• 1:15:02Speaker 01

  The oldest is 17.

• 1:15:04Guy Raz?

  Right. So the oldest really was on that journey, kind of with you, right? And some of them were probably born after the acquisition.

• 1:15:12Speaker 01

  Yes, for sure. The youngest two, both girls, were born after.

• 1:15:16Guy Raz?

  And how did you, just as a dad, manage that? I mean, I believe that your, your wife was sort of manning the home front for a lot of that, but, you know, I imagine you didn't want to be away from your kids. So how did you manage being a dad and, and having, you know, the responsibilities of raising a family while also running a business and trying to get this off the ground?

• 1:15:41Speaker 01

  So there's nothing more important to me than family. And I am incredibly involved in my, in my children's lives and together with my wife. But I definitely was a workaholic for a long time. And it was about February of 2006 when my wife and I decided that we would start keeping Shabbos, which is-

• 1:16:02Guy Raz?

  The Jewish Sabbath.

• 1:16:03Speaker 01

  The Sabbath, yeah.

• 1:16:04Guy Raz?

  Which means you do not use electricity, you don't answer the phones, you don't drive?

• 1:16:09Speaker 01

  Correct, yeah. All of the above.

• 1:16:11Guy Raz?

  That's, so you started this in 2006 when you were not in a secure position in the business at all.

• 1:16:18Speaker 01

  I was terrified. I left, I remember leaving that Friday. And thinking to myself, you know, what happens? You know, how is this going to work? Like, what happens if there's, God forbid, a fire? You know, it's an important day of the week, Saturdays.

• 1:16:31Guy Raz?

  Yeah.

• 1:16:32Speaker 01

  It took a very long time to get over this. I'm not going to work for that day. I'm done working. I'm gonna, I will have faith in God that the business will be okay for 25 hours. Um, and, uh, it really helped our, our home life tremendously because as my wife used to joke, she's like, I thank God for Shabbos. I wouldn't get to see you otherwise. So she knows she has me that timeframe together with the kids with uninterrupted, uh, completely focused on, on, uh, you know, our faith and, and our family.

• 1:17:04Guy Raz?

  And this is the thing, like, there, you, there's so much research around this, right? People who take a day off or, you know, who meditate or who just unplug. And lots of people do this, whether they're religious or not. And it sounds like you credit that with, even though I'm sure it was, you were anxious at the beginning, right? Oh, what's going on? It's, I can't manage my phone. But I'm sure over time it became like this really meditative day of rest, which is what, you know, right? God created the world in six days and then the seventh he rested. So there's a reason behind that.

• 1:17:37Speaker 01

  Yeah, it's hard for me now to imagine any other way. Completely look forward to it. Uh, kind of resets everything, perspective and on life and et cetera. So, yeah, now, I mean, once you get past the initial fear and can have real trust and faith and you move on and you, and you learn to, to love it and live it and enjoy it. So it plays a huge role for us and for our children and for the way that we raise our family.

• 1:18:03Guy Raz?

  So basically every time you, you know, from starting in 2006, whenever you, you'd work with somebody or even when these partners came on 2007, it was very clear, like, listen, you need to know, I don't work on Saturday. I don't answer the phone. I don't use electricity. It's non-negotiable. You could say that at the front and sort of set expectations, I guess.

• 1:18:22Speaker 01

  Yeah, yeah, it was, uh, well, Eddie Phillips was Jewish. So he, he understood a lot of, of what I, what was important to me. Steve has enjoyed the, the kind of learning about this and being involved and speaking to me about it, et cetera. And funny enough, um, during Passover, there's certain rules. You're not allowed to own certain things, one of them being. Food that you're not allowed to eat during that period. So I would, I would have to sell him the business and he would have to give me $20 and have a handshake and you know, the, the rabbis would have to see that this was happening with the handshake through a picture. And so after a number of years, he said to me, is this real or you just want $20 from me every year? What's going on? What's going on? But so we've had fun with it. We've had fun with it.

• 1:19:07Guy Raz?

  Josh, when you think about this journey, right? Starting this thing and really came out of, of not having a job at Bank of Boston. And all those years, I mean, it took you a long time. Start this in 2002, opened up a shop in 2003 and it really doesn't start to fight its legs until 2010. So it's not, it's a long journey. When you think about that, how much of it do you attribute to luck and how much do you think has to do with the, the hard work you put in?

• 1:19:35Speaker 01

  I don't attribute to luck. I do think I've been blessed, very, very blessed. And I think it's a team effort, but you know, I, I feel extremely fortunate to God, you know, for, for the blessings in my life. And there's been this common thing that people like to call it an overnight success, but I say, yeah, it was a 15 year overnight success because it wasn't just from one day to the next. Like you said, there was a tremendous amount of hard work. It was a roller coaster ride and it was scary. And I think that's how a lot of these entrepreneurial businesses go. There's, it's just so different from being an employee that you expect to get a check every two weeks.

• 1:20:18Speaker 01

  When you go home and you worry about, could there be a fire or you know, is there, I don't, can't get robbed. There's just a different set of concerns that you have when you own. And starting a business is hard and it takes tremendous amounts of work and a lot of good fortune.

• 1:20:35Guy Raz?

  That's Josh Hochschild, founder of Talenti. By the way, since selling to Unilever, Josh and his business partner Steve have been involved in a few other food-based ventures. But then during COVID, Josh got really into gardening as a hobby. So today he's working with Steve and Steve's brother Mark on a business in a totally new industry. It's called Green Acres Nursery and Supply.

• 1:21:02Guy 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, please sign up for my newsletter at guyraz.com or on Substack. This episode was researched by Kerry Thompson and produced by Casey Herman, with music composed by Ramtin Arablouei. It was edited by Kevin Leahy. Our engineers were Patrick Murray and Robert Rodriguez. Our production staff also includes Alex Chung, J.C. Howard, Chris Messini, Carla Estevez, Sam Paulson, Andrea Bruce, and Elaine Coats. I'm Guy Raz, and you've been listening to How I Built This.