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We put a launch date for December of 2015. Come second weekend to December. They call me and they say, hey, we are not going to let you use this recipe, this formula. You can use another formula with Chikari root fiber as the bulging agent. And immediately I knew what they were telling me was, we're going to give you a recipe that's actually not digestible. That's going to blow up people's stomachs. That manufacturer took the recipe and ended up going on to launch a product themselves.
Welcome to How I Built This, a show about innovators, entrepreneurs, idealists and the stories behind the movements they built. I'm Guy Raaz and on the show today, how Terabash built and sold her $360 million business smartsweets in just five years.
So I'm just going to come out and say it. I have a bias against young founders on this show. And wait, wait, wait, wait, wait. Before you take that pitchfork out and yell, okay, Boomer, just know that I love young founders. I love their energy and spirit and hustle. And yes, I know Alexander the Great was just 20 when he became king of Macedon and conquered the biggest empire known to man by age 30. I know that. But this show isn't just about how someone built something from nothing.
It's also about life and the hard one lessons you learn simply by living life. So generally, even with founders who cashed out at 21 or 22, I still prefer to catch up with them once they've reached at least 35 or 40. But then of course, like all annoying rules, there are exceptions. Like today's founder, Terabash.
Terab started her company smartsweets when she was just 21. She had very little money. She had no experience in food or candy making or entrepreneurship. And she was about to drop out of college in Vancouver. So not someone you'd necessarily bet on. And yet, five years later, at age 26, she sold a majority stake in her brand for a whopping $360 million.
So this story is almost like a remarkable how to guide for anyone who doubts they have what it takes. Because Terab didn't come from money. She didn't have connections. And she truly didn't know what she was doing. But she had an idea and she was determined to make it work. And it started by buying gummy bear molds on Amazon and looking up recipe ideas on YouTube. She wanted to create gummy candy that was low in sugar, but still delicious. Terab grew up an only child in Vancouver in Canada.
She says her drive to become an entrepreneur started when she was a kid, especially because she watched her mom deal with financial insecurity. So when I was 12, is when my dad left the picture and my mom really kind of having her security and self worth that was so tied to that marriage swept under from her.
Fortunately, she got into a abusive relationship. So it's me, mom, then this abusive person living in this home. So when I was 13, I went and got a job at McDonald's. I was like an illegal worker at the time for a year because I saw really how her having dependence on someone else impacted her so greatly. It's illegal because I think that the working ages 14, right in Canada. Yes, it is. It was illegal for a year.
And then also shortly thereafter, it's got a job at Domino's. So work really became my life. I really wasn't athletic. I wasn't academic. I felt lonely a lot of the time. And at the same time, I became obsessed with the idea of entrepreneurship through watching Shark Tank and Dragon's Den. This is in the early, I guess, mid to 2000s, right? I mean, you were basically teenager in the 2010s. Yes.
And so you were going to school at teenager high school, but working at fast food places basically. Yeah, fast food places first and then the coffee shop. I'd go open the coffee shop at 4 a.m. before school. Go to school. And then go at that time work at a bakery afterwards. Did you have a lot of friends as a teenager? I had a couple close friends as a whole. I really just felt like a misfit who people thought was kind of a dud going nowhere in life.
And I mean, you kind of raised yourself watching Shark Tank and Dragon's Den. I mean, I love those shows. So, you know, the drama and the way they sort of edit them and it's super entertaining. Like, what was it about those shows that you that seem to resonate so much with you that you loved? I felt in my teenage years so trapped by such negative energy in the situation I was living in. And so for me, I think it was just seeing like, wow, these people have such a deep sense of purpose.
I did it. They had this courage that was so mystical and inspiring to me because I was so insecure and had such low self esteem. And just seeing people do that was so wildly inspiring to me. So you get to university, I guess in 2012. And I mean, even though you were inspired by these entrepreneurs, it sounds like still at that point, you didn't think this was something maybe you could do.
Maybe you would go and work somewhere one day. I guess while you were in college, you got a job at like a supplements store, like a chain, right? Yes. And at that time, were you yourself getting into like fitness and nutrition? Yes. So my boss hired me because she saw I had McDonald's on my resume. And she became really aside from my grandmother, the first figure in my life that helped me to see that food is not something that you have to have a tumultuous relationship with.
It can be something that can really nourish your body and your soul and just finding those smarter choices. So for me, I began making gummy bears at home, then I was eating those every day and I felt good about it. And so that replaced the candy. Tell me a little bit about your relationship with food a bit more. I mean, what kind of effects did it did it have on you?
Yeah, I think, especially as a kid, I think I had pretty severe body dysmorphia. So I remember when I was eight years old standing in the junior Jacobs change room, trying on pants and the salesperson was like, come on out, let's see the pants. And I remember thinking, I can't come out. I don't want her to see how big I am, which I wasn't big at all. But I grew up in a family where my grandmother was always pretty overweight and people would make comments in public that I'd hear.
And we loved enjoying all sorts of amazing foods together. She's German, so very hearty food. It's a lot of carbs. And so at a young age, I think I really adopted the thought that, oh, food means something that isn't just food that you feed your body with. It means something about your identity, your weight, all these kind of complex things around it.
Yes, at a certain point, grandma, did she, at one point in her life, said to you, she really regretted the amount of sugar she ate. Did she ever develop diabetes or any conditions connected to sugar? Yeah, she, it was related to her whole life. It really felt like to her, I think, a fight between her body and food and herself.
And just the weight that she had that impacted her because she wasn't able to walk very well anymore. But I really think it just kept her in this place of feeling poorly about herself. And so we're sitting down at her table one day and she knew how much I loved candy. We enjoyed it so much together. It was just such an emotional thing for us.
And she, yeah, I shared with me like, you know, over the years I regret having so much sugar because now at my age, I feel so limited in what I can do mobility wise. I still feel poorly about myself. And I just wish I had done things differently and had developed a relationship that was a peaceful one with food. So that was shocking to me at the time because I thought magically you grow up and all of a sudden just have a harmonious relationship with food and yourself and all the things.
Yeah, it's, and I mean, the thing is is that sugar, right, as delicious as it is, refined sugar is it's connected to increasingly connected to diabetes, cancer, heart disease, even Alzheimer's over the long term. And most people in certainly in the Western world consume so much of it.
Yeah, 100% I think the like keyword for me is like, excess sugar consumption and just really going down that rabbit hole after that conversation with her to exactly what you're saying where I was really became aware of like, wow, excess sugar consumption is this silent epidemic happening. It was shocking to me just how intentionally it's happening. And so that really ignited the passion within me to think, hmm, this silent epidemic is happening. And why can't you feel good about candy?
All right, this is around 2013, 14 and it's still around the time, you know, more people are adopting paleo diets and keto diets. And so there's more awareness growing around sugar. I think it's much, much bigger today. And you are at the time a student at UBC. And how was your student life? I mean, did you, did you find anything about university appealing at all?
So really the gift, I think of university for me was really just finding out more things that I wasn't passionate about. However, I began to have this confidence that I could act in an idea. And it was called the Cald Out. It was vinyl and chalkboard wall decals for students and home renters. Decaled out. Like a decal.
Yeah, yeah, exactly. So it was vinyl and chalkboard wall decals for vinyl, like a chalkboard, but like a decal. You know, vinyl that you could put on the wall and write chalkboard on instead of, okay, got you, all right? Yeah, basically for students and home renters who didn't want to damage their walls. And so that's a good idea. And, but it seems like something you could just buy an Amazon like, you know, or like, Alibaba.
So there were more kind of generalized things available. They are was doing really specific ones with different quotes and things like that. So I would design them. And then I found a manufacturer in China. And then just started selling them directly to students and had a little site. And what do they say on them? Because you said there are quotes. They were, yeah, there are all these quotes that I found really inspiring and an uplifting.
I know one of them was like a Steve Jobs quote. It was like, have the courage to follow your heart and intuition for it already knows what you want to become. Things like that. You'd go, you'd go door to door like dorm room to dorm room or apartment to a party. I don't know, maybe people just go to people's houses. I would do a fair at UBC. And then I'd reach out to all the different student groups and connect with them. But it really, it really didn't resonate and really get traction.
And so ended up I was living with my grandmother at the time. And it up having her apartment filled with all these vinyl and chalkboard decals. And inspiring quotes. And did you, was it, was it, was it expensive to start this up? I mean, I'm assuming you were, you were saving money because you'd been working since you were 13. Yeah, I was super scrappy. I just put 800 bucks into it. And then just like what I made reinvested margins were insane.
Because the decals would cost me less than a dollar than it'd be selling them for like 30 to 50 dollars. So I just put the money back in and and just really kept this crappy. Why did it fail? I think I really didn't pause to think, hmm, what is the real value here that I'm creating for the consumer? I was really creating a product for a problem that I wanted to solve for myself and made the assumption that it was the same problem other people were having.
But that, it seems like that really gave you some confidence maybe to keep going to try something different. Yes, it was the biggest blessing because the failure of that all of the little golden nuggets that I collected from why it didn't work were really the stepping stones that allowed me to have the confidence and insight for my next idea, which was about two months after I made the decision to shut that down.
At this point, it's 2015. The summer is coming up. I would be going into my third year university in the fall. At this point, I'm practically failing out of university anyways because I had just started to take German classes. So I was like at the very least I'll speak German with my grandma there. If nothing else works here with uni.
So you are right at that time. What was your, did you have a job? Because you mentioned you had a job at a supplement store. Were you working at that store at the time? Yes, I was and it was coming up on the summer and one of the jobs I had as well. I worked at the border for Canadian customs on the commercial side. And so I, it was really, it was like $18 an hour, which was like an amazing wage. You were just, just working in our office there?
Yeah, yeah. So someone wants to import anything into Canada. I would be the person collecting the fees and and validating the fees on what they wanted to import. So all sorts of things, whether they wanted to bring in kangaroos, dogs, kangaroos, commercial shipments from Sephora and stuff. Okay. All right. So you have this job on the border doing the in customs for $18 an hour, Canadian dollars, but still pretty good. That's, that's not bad.
Yeah. So I remember specifically a phone call where they had called and asked if I want to come back and called my grandmother and I'm telling her about this and she's like, you should do it. That's such a stable and reliable source of income. It'd be a really great thing for you to do. And at the same time, I just had this conversation with her where she had shared with me.
And that you're going to have me so much access sugar and something was stirring in me and the idea for smartsweets was really beginning to bubble up to feel like something I was basically pulled to. So I remember having the call with her and then sending the email and declining that job and feeling like, I'm going to act on this thing.
You declined the job because you wanted to spend as much time as you could working on this idea. Yeah, I declined the job because it was the first time in my life. I felt like I had a purpose. I felt like I was being pulled viscerally by something larger than myself towards this idea. And just after going down that rabbit hole on sugar, I really, really felt that, wow, if I can bring to life this.
I'm going to kick sugar and keep candy that at a larger scale on a global level, we can help move the needle in the sugar reduction movement. And to me, it was shocking that this didn't already exist in different verticals in the grocery store. Almost every vertical by then, there had been innovation. In the ice cream aisle, Halo top creamery was was blowing up at that time and chips. There were all sorts of things, but nobody was innovating candy.
It was the same thing that we were enjoying that our grandparents were in the 1930s when all the brands were created. So you start to get go down this rabbit hole when you decide to basically stop working and you decide to drop out of college as you mentioned, you decide you're not going to go back to college. Yes, you're probably what 2221 21 yes, I had the you know in the worst case scenario could I go back to college sure at the same time I was on the brink of feeling out anyways.
So if I hadn't dropped out, I may have failed out. Right. Okay. How much money do you think you had saved at that by that point? I had probably at that point around $8,000 from just saving since I was starting at McDonald's back when I was in my early teen years. So pretty good. I mean, you as a 21 year old, you could live off that for a while. Yeah, I felt like I had a good little nest there.
All right. So at this point, you decide I really want to figure this thing out and like candy was the thing that you wanted to try and tackle. Yes. Because sugar sugar was the thing, right? And you could go in a million directions, you go to beverages, you could go to cookies, you could go to bagels. And that was clear to you. It was candy was the thing that you wanted to try and figure out.
Yeah, it was, you know, that show extreme makeover home edition. I watched that as a kid and I would always be like, my dream is to have a Willy Wonka candy room. Any projects I had at school, I'd be doing the, we had to make a map of the world map in something creative. I did candy land world map. Candy was just my thing. I had so much joy in it. So same with my Oma and so candy was the thing that I wanted to be able to feel good about.
And in your mind, did you had a kind of candy you wanted to do? Yeah. So originally in my mind, I was like, okay, gummy bears. Everyone at some point in their life has known and loved gummy bears. It's a pretty universal. Yep. And this was me probably going back a little bit to finding what resonates for all consumers and August yourself. Nobody was doing a snackable marshmallow at the time. So I thought, hey, marshmallow is in a snackable format.
Could be interesting. So it was gummy bears and marshmallows. So as you started to kind of try and understand how gummy bears are made, what do you then do? Like, do you like buy a mold of gummy bear? I think I've seen YouTube videos on this before. But like, you know, gummy bears are basically a form of jello, but like a hardened jello. Yeah. Kind of. I'm oversimplifying it. But how did you start to like go about the process of seeing if you could make them?
So the tricky thing about candy is really that it's 99% sugar and 1% everything else, flavoring and coloring. And so when you're looking at, okay, how do I take out 99% of what something is? You're really, really starting from zero. So I was looking at, you know, what are the alternatives to bulking ingredients that exist? What high potency sweetens is that we can, can we use that don't have an aftertaste? What exists for natural flavoring that is actually truly natural?
What kinds of ingredients were you talking about? All sorts of bulking agents. So all sorts of different fibers. When you say a bulking agent, the agent that would turn it into a gummy form? Yeah. So when you think of corn syrup, corn syrup is really what makes up the viscosity of candy, what really makes up the bulk of what candy is. And in this sugar side, I mean, by this point, stevia was a sweetener you were going to land on? Yeah. There was stevia. There was monk fruit.
Stevia worked really, really well in creating the mouth feel and the sweetness without that aftertaste. When it comes to stevia, there's like hundreds of variations of stevia. And so when you get into like the rabbit hole of an ingredient and the variations of it and how that impacts all of the things in the candy making process, that's where the raw material suppliers were really helpful.
All right. So take me into your apartment kitchen. You were like cooking up all these ingredients, you were heating them up, dissolving all the things, all the powders and fibers in a pot, maybe with some water or whatever liquid you were using. And adding extracts of flavors and then what like, is that what you were doing?
Yeah, exactly. I had my candy thermometer because Cooktemp is really important for candy. Cooktempure has a really high cook temperature. So at one point, there would be steam going outside my basement unit and my landlords thought I was cooking weed gummies or something illegal.
How high, how, like what is a temperature like over 200 degrees? Oh, yeah, the soft and hard boiling point. It's beyond a regular boil point of let's say you want to boil potatoes in water or something like that. It's very, very high. And then there's different boil points for soft candy versus if you want a hard candy boil.
And then as soon as it reaches that point, you have to remove it right away. I would use my eyedropper, put it in the molds and then let it set at room temperature over to kind of let it naturally cure. And then 72 hours later, I would see how it had set. I'd see, you know, is this, is this even staying together? Is it coming out? Is it moldy? Sometimes it'd be like jello. Sometimes they'd be hard or they'd have a jello like inside, but they'd form this harder crust on the outside.
They really didn't come out in any shape or form that looked like a promising candy until hundreds of recipes down. And while you were doing this, I mean, were you talking about what you were trying to do with anybody? A few of my closest friends I shared at a high level the idea with really the only person other than my boyfriend at the time that I shared with on an in-depth level was my grandmother.
To which her response was, you know, you're crazy. Why are you throwing away university to be making candy in your kitchen? Have you gone nights? Have you gone out of the rail? What's wrong with you? You know, they're really just German direct because for her, she never had the opportunity to go to university. So for me to throw that away to her was just kind of unfathomable. But at that point in my life, I had gotten pretty used, I think, to feeling underestimated or misunderstood.
So I pretty easily discarded the thoughts and opinions of others that that didn't serve me well. My grandmother's words, I always took it to heart though, so I know I remember being like, you know, one day she's going to understand and she's going to get it and I'm going to do right by her and she's going to be proud. When we come back in just a moment, how Tara gets her homemade gummies out of her kitchen and onto a few store shelves.
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Hey, welcome back to how I built this. I'm Guy Roz. So it's 2015 and Tara's testing candy recipes and educating herself on how to be an entrepreneur. But she still needs investors and a business plan.
I didn't have a timeline, I'm not sure if this is when this is going to launch on shelves so much as I had clarity of vision. So from day one in my kitchen recipe testing, I truly remember having such clarity in my mind that you know smart sweets was the global leader in revolutionism candy. It's all happened. And now I'm just reverse executing on it. Okay, step one need to get a product.
So help me like understand you are every day all day doing research, cooking up batches for like several months. Yeah, this becomes my life equally so I became so aware from different podcasts like opus super so Sunday on YouTube how I built this your podcast had just launched and became like like Sarah Blakely's episode I listened to.
So at least 30 times. Wow, like I just really immersed myself. There's certain books I would like rip out the page from and just read it over and over. So just as much time as I spent in my kitchen. I spent on like immersing myself with the mindset of people who had built something that I aspired to go down a similar path because I could get so paralyzed and fear in my own thoughts and being like who am I to do this.
At what point did you feel like you would be able to start to go to people to raise money because you had to raise money you'd have to have a decent product and a good enough recipe but then you need a manufactured. Did you do were you even thinking that far ahead yet.
I was still just thinking product but what I did know that I needed was I knew that I wanted to find people who had brought to life product in the CPG world before and then I could talk to you and get golden nuggets from so I began googling and linkedinng people who I really admired and just being really clear and being like hey really admired journey.
This is what I'm doing 10 minutes of your time like would be infinitely grateful and I was actually shocked how many people responded and shortly after that I found an accelerator program for young entrepreneurs called the next big thing from Ryan Holmes at Hootsuite. It was an incubator that Ryan Holmes had created to help early stage entrepreneurs get connected and get mentorship and maybe even gives you a little bit of money too I think.
Yes so like you got to if you were accepted you got to work out of their offices with all the different people in your cohort and they had different fires I chats and things like that. So you got it and did you was it based somewhere in particular or could you do it from Vancouver. Yeah so I remember the very first day of the incubator it was all tech and beauty companies and then I was the girl recipe testing gummies in my kitchen and I remember just walking in and just.
And then posture syndrome is being like who am I to be here like I don't belong and having to like go in the washroom and pull out my phone with the quotes audit I'm just like you are capable you are deserving that all the different quotes the cheesy ones that I had ran down.
All right so you start in this incubator and which is awesome because now all of a sudden you've got these connections to people but meantime how long did it take you in your kitchen to get to a recipe where you were like huh I think I think I might have gotten it I think I might have nailed it.
Yeah really wasn't until about three months after I started intensely recipe testing where I was like okay at a bench top level I have verified and validated that this can exist and that this actually tastes good and has. It was a two week long shelf life this validates it now I need to find a manufacturer that I can scale to launch this with. And what what was it I mean how did you know that it was right.
It was at that point really just doing taste tests mainly with my peers in the accelerator program I bring these little bags with all the different gummy bears and like a be a little gummy dealer around.
The office and get everyone to be to be the guinea pigs and thankfully they were all happily willing and what kind of feedback were you getting it was really that like wow yeah this actually satisfies the the craving that I have for candy which felt validating there was a whole slew of you know the texture is like a little bit too chewy this sweetness doesn't really come through after like the first five seconds of me chewing the gummy.
The sour coatings a little bit too tired or a little bit too bitter but what I heard through that all was the baseline of yes this actually is satisfying my craving for candy and so all the other stuff I knew I could iterate on. So at a certain point you were confident enough to feel like you could make a batch of this stuff and for the first production run how many bags of candy did you want to make.
There's all guestimates you know of how much do you make and and that sort of thing making these forecasts that were just me throwing guesses at a wall of numbers and that sort of thing.
And based on my estimates in my mind the very first run I wanted to make 13,000 bags of each flavor so these would be like a little snack bags that would sell you know by the register something yeah in the candy aisle by the register that the kind of concept was one bag one serving because with candy I would always eat the whole bag and then turn the bag around and be like oh that was 2.5
servings well that contributes to how I feel about having eaten that whole bag now so each bag would be one serving yeah got it and 13,000 bags how much was that going to cost for the first kind of run and then packaging my estimate was that I was going to need around 100 grand to be able to do that. Okay so you had the name Stevie that this point Stevie sweets right yes and then you had a logo or design did how did you do that did you get somebody else to do that.
So I wanted to feel kind of whimsical and evoke the motions of joy that candy brings in nostalgia so I found a local graphic designer and then was kind of just like this is what I'm able to pay are you able to do it at that point I was pulling from the savings I had in my bank account.
And she said yes and so we met coffee drop and she had true the logo and we iterated on that and that became the Stevie sweets at that time logo and does it look similar to what smart sweets looks like today it's the exact same logo yeah just the words are different yeah okay so you had a logo and and and in in terms of finding a manufacture how do you how did you find one how
did you get in the one there was two main things that I realized quickly one was that all candy manufacturers their machinery needs sugar in order for the products to be able to be made because sugar is 99% of what is candy for it to run on the machine. The other thing that I learned quickly was that the minimum runs and the quantities were were very significant for what would peak the manufacturer's interest so I really focused on sharing the vision of what smart
sweets will be what's in it for them and this is happening in the candy industry whether you move on it or not and there is one manufacturer that said yes so we put a launch date for December of 2015 come second weekend to December they call me and they say hey we are not going to let you use this recipe
this formula you can use another formula with Chiquiri root fiber as the bulking agent and immediately I knew what they were telling me was we're going to give you a recipe that's actually not digestible that's going to blow up people's stomachs that manufacture took the recipe and ended up going on to launch a product themselves so at that time pretty much overnight I was like oh my gosh I need to find another manufacturer launch this product
went back to another manufacturer that had said no and went to them in person this time and really focused on specifically sharing the vision specifically painting for them my forecasts that I had made up and had no idea what those actually would be you find this new manufacturer by going to Toronto yes and presumably you had enough money for their minimum right I did not know you did not how much how much money did you need
so the for for this manufacturers minimum I was going their payment terms were also different so they needed the money upfront their minimums were higher and I was going to need 105 K upfront to be able to just move forward with them to pay them that
upfront even before you sold one bag of candy yeah I ended up working with them on the terms and so I was able to kind of show me it down from that but yeah how did you get the money so what I did at this point this is like just before Christmas in December of 2015 and I realized okay I'm going to need to raise money I don't have this saved up start linkedin in cold emailing investors on LinkedIn and thankfully graciously
a few of them did reply nobody was interested in trying the product because of the name Stevie sweets and the negative connotation at that time to the negative aftertaste of stevia yeah but it was the biggest blessing because it caused me to pies and be like oh Stevie sweet is not the name and that's what gave me the smart
sweet evolution how did you come up with that name I was just spitballing in my mind different names and that sort of thing in this concept of just like smarter choices in my own journey with food and it's just smarter choices really resonated with me and I also wanted a name where you could read the name and you could get the new
wants that they're trying to do something better but also that it doesn't lean so far that it feels like it's like health niche so once that name came that's when I was like okay I'm not going to get money from investors at this point in time I'm going to need to get dead financing yeah I mean investors were not going to give you money
because you had no product to show for and you had no track record yet like they probably would have wanted you to make the batches on your own and sell them and see how they worked but yeah nobody was going to give you anything so you had to get debt financing but you're 22 you have no assets how are you going to get dead financing
yeah so I have one asset a 2009 Honda fit hatchback nice 10,000 12 or 15,000 bucks yeah that's a gracious probably valuation for it and so I applied through one program called future Prenuer and BDC the bank development of Canada and then at the same time I approached another lender there a bank called Van City so I went to the one bank and said hey I'm
talking to this other bank went back to that being said hey I've progressed in the conversation with this bank in the mean wide share them updates like hey I'm talking to this retailer and this retailer doesn't remember Jackson and just really focus on the vision and just really being like if you take a chance on me now I promise you that like I will not
squander this opportunity and it worked they both said yes both these banks both these banks said yes yeah and were they were a debt financing was alone that's tied to a government program like the Canadian government encourages loans to small startups yeah so future
Prenuer is a program that's kind of has that ethos around it and so the thing that I had to do was to put up my Honda fit and had to take out life insurance and so the loan was tied to me personally of course and they gave you the money needed the hundred thousand Canadian dollars 105 yeah wow and in the meantime were you also calling retailers asking if they would carry the product because you were going to have what 13,000 bags of this stuff yeah so
there were basically two things that were the the front of my priorities every single day to wake up with my like bull horns and run at one was the the debt financing to sort the manufacturing stuff the second was get the distribution get the access that consumers can actually reach this product with so I always felt clear that
ecom I think for us was going to be a surprise and delight but that candies and impulse purchase and people are going to want to have a sweet tooth and pick up the bag in store how did you know that I think it was really just probably from listening to other people's journeys and how they think about navigating creating value for the consumer and like honing in on who is she because our consumer was female primarily and where is she going in her day to day life and very quickly
I realize like oh she's not going to be having the fourth thought to buy this online two weeks in advance for her sweet tooth that's going to come two weeks later all right so you get the money to make the first batch of these and you've got some stores that are committed to they've agreed to carry it when when they're ready yeah so by the time we're in the kind of spring of
2016 of being down the doors and got the the first few yeses for stores and they were primarily in the natural channel in Vancouver yeah and we are going to launch at the same time in my mind social media and just the power of at that time Instagram was really powerful so I had the hypothesis that you know it's actually going to be less
frustrating for consumers if we launch and create accessibility at a national level then if we launch regionally because now a social media we can reach people all across the country in such an effective way so it's going to be more frustrating for them if they know about us but they can't reach us so my true goal was to find a national partner that we could launch
with so how did you I mean even getting into a regional market right the stakes really high you put a hundred thousand dollars of debt into making these so I have to imagine that every time you would you know cold call and then get a meeting with one of these retailers is kind of terrifying because there's a lot on the line there like you needed them to agree to sell your
product definitely there was a lot on the line I think the minute that I step into the room with the retailer the phone call with the retailer I stepped almost into a different version of myself where I spoke with such conviction and always focused on what's in it for them and for the retailer I focused on you know we're higher ring per bag they're going to make more money on smart
sweets than they are traditional sugar penny candy in a bag because the price points higher and the margins are higher they take is higher exactly yeah it's like two to 300 percent in an increase from traditional candy on their shelves because people your bet was healthy consumers would be willing to pay a little bit more for an indulgent treat that wouldn't spike their blood sugar yeah exactly higher precision to consumers as you know traditional candy is an
occasional treat with smart sweets we're creating the ability for candy to become an everyday snack if people so choose for it to be got it OK and I guess around this time you manage to get to Canadian stores chains one one one's called choices the one was bed bath and beyond which of course is is not just in Canada but but the one in Canada they
agreed to to put your products on their shelves but they wanted it fast and like a couple of months and I guess you needed like you were still on your own you need to you needed somebody to help you and I guess it was around that time where you hired your first employee right yeah Beth Richie all right so you hire Beth but I mean you were
spending all you have to spend all the money making candy to fulfill this order how did you how are you going to pay Beth I basically wasn't for the first year and then I paid her 30 grand and gave her equity and when you finally got the products and you were ready to launch in July how are you going to promote it what was your I mean again you had no market no marketing budget no money what did you do we didn't have money but I
really didn't feel like we needed money to create brand awareness I really felt like through this crapiness and just the blessing that existed with social media that through the sheer grant work and just hammering it out on our phones we could do it so what that looked like really was sat down and thought you know okay like who is this product creating the most radical value for focusing on that niche and then expanding through niches
and that was the kind of hypothesis I adopted for what we were going to do so what did you do how are you going to reach that even that small tribe of people initially yeah so one of the first communities that I was like okay this is going to create the most radical value proposition for our people who can't have candy yeah because of diet choice because of
whatever it may be they haven't had candy in years and so focused on those groups at the time I changed my Instagram name to smart sweets founder I would message people from that account really authentically it wasn't a part of the messages copy and paste but it was really authentic and being like hey like I think that you actually might really like this
product can I send you some and that worked and so slowly I remember with the wait watchers community as an example within three months smart sweet seemed like a huge brand to that community so I mean this is like a very methodical strategy you're going person by person and hoping that they would then promote the product on their social media pages yeah and then coupled with that at the same time we were
finding other brands like Halo top I remember when Halo top respond to us and we had a call with the director of marketing we were like oh my gosh I can't believe this is happening he just hopped on a call with you just a courtesy and we we had message them about like partnering together to like push out a giveaway and with their email lists and social and yeah they were they responded to us we would often not message the brands pages or the founders but we
would message like the director of marketing the director of finance director of art easier to get yeah just less noise to move through the sea it's so smart and scrappy and and so that starts to create awareness right because most people going to the check out
that bad bath me on might see smart sweets and not know although on the package I think from the beginning it did say just three grams of sugar to whatever it had right yeah that was inspired by Halo top packaging like the notion of you know three seconds or last consumers have to understand what you're doing and be compelled enough to pick it up off shelf were you worried and you know that you're not just a person that that your first potential co manufacture that didn't work out they were
launching their own competing brand were you worried about that as a brand that could really hurt you guys I always tried to not operate out of fear but to balance that with the dance of running like hell knowing that yes and that other people are going to be running at that to and so it kind of used as like a motivator to just like continue to like run like hell but to not get stuck in the fear of looking backwards at what they're doing in
year one you sold roughly roughly a million US dollars in revenue in Canada and sales which is pretty great were you profitable in year one or was will you just all the money that all your sales going right back
into making more product year one we were like pretty much almost at break even but wow we were not technically profitable and so I never planned for what if things go really well and things went really well and so I realized there's going to need more cash to do a larger manufacturing run to
continue that the train and keep the momentum it maxed out on the debt financing available to us at the time so I was like okay shoot now I actually am going to really need investors and Beth was doing demos at a choices markets and met this woman her name's Shelley and right away she was like I get it I want to be involved I met with her the next day at this restaurant and then kind of like in the cheesiest way possible she wrote on a napkin that she was going to give me 80 grand and her she
signed the napkin I signed the napkin and we agreed we would sort out the terms at a later date and so that was a huge blessing to get us to our next run that same year 2017 you applied for and got selected to go on dragons then the show you watched as a kid as a teenager the Canadian shark tank
which actually started before shark tank and that was going to presumably be huge because all of a sudden you'd be exposed to a national audience instantly yeah I had applied back when I was resisting in my kitchen but hadn't heard anything and then one of the producers kind of
serendipitously ate the product or something and so they had reached out and we're like could you come to Toronto next week and I was like absolutely I'm planning to be there actually anyway which I was not of course so you go on shark tank and I read that they you got all the sharks
wanted to invest they all wanted to invest you think you get 10% of the company for a hundred grand and so you get offers from all of them and what what happens did you close a deal they all offered a deal at double the valuation I had gone in there for on ariad accepted a deal
off air chose not to not to go through with it just because it didn't make sense anymore but I was like so grateful that they all saw what I saw in terms of vision and potential and it got you a lot of attention it did yes and I think it led to whole foods coming approaching
you about selling your products so it was a couple of months after that producer from Fox Business in New York reached out to me on Instagram and she was like hey I'd love to do a feature on your story in smartsweets would you like to come to New York and go to New York film the
segment the segment errors and three minutes after the segment errors I get an email from the global candy buyer at Whole Foods saying hey would you be interested in the global candy launch in New York and I call back and I'm like I just got a spam email but that would be amazing if that
was real can you imagine if that was real that would have been so cool reply to him fully thinking this is spam and it's not spam and we ended up doing a global it was our entrance to the USA national from day one about eight months after that well when we come back
in just a moment has smartsweets growth starts to explode after Whole Foods picks it up and why Tara starts to question whether she should even be running the company at all stay with us I'm Guy Raaz and you're listening to how I built this
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Hi guys this is Zach well I'm from Brooklyn New York I'm a student at Columbia Business School and a huge fan of the show my favorite episode of how I built this is with Jim Cook founder of Samuel Adams as a former consultant and avid beer lover myself hearing Mr. Cook's journey to launch Sam Adams in the craft beer movement was eye opening I even showed the episode with my strategy class Mr. Cook's journey of drive humility having the courage and the desire to find his life's purpose
all told with his humor is full of wisdom love the show and thank you so much for all that you and your team do if you want to share your favorite episode of how I built this record a short voice memo on your phone telling us your name
where you're from what your favorite episode is and why a lot like the voice memo you just heard and email it to us at hibt at id.wondery.com and we'll share your favorites right here in the ad breaks and future episodes and thanks so much we love you guys you're the best and now back to the show
hey welcome back to how I built this I'm Guy Roz so it's 2018 and Tara has the whole food deal but immediately hits a few obstacles for starters she needs more cash to make more product she's also got manufacturing problems and she has to make the launch of the product in the US work so you're now in the US and and of course nothing against Canada I love Canada my wife and children or Canadian but if you want to be a really scaled company you got against the US
market yeah totally like just population wise it's it the whole population of Canada I think is less than the population in California yeah right and so yeah when when whole foods when we're like okay we're doing a national launch with them
simultaneously at the same time the first manufacture that we had sketchy things start happening there's metal that's starting to be found in some bags there's I get a call from the place that was packaging our product because at that point was manufactured one place package in the next saying
hey someone just came in here with a GoPro camera filming our facility and then they ran into a getaway minivan and sped off and I learned that was the manufacturer wait what are they the manufacturer is filming uh-huh trying to
get the intel to figure out how they could set up packaging in their own facility oh I see okay wow so I realized okay we have seven months to like find a new manufacturer change and evolve our our branding to be able to meet this national launch with Whole Foods but how did you resolve this the
challenges of like metal being found in the bags how did that even happen the the manufacturer and their QA protocols were not what they really presented them to be their quality assurance protocols yeah did any of those bags get to Whole Foods those bags did not so I knew I needed to find a new manufacturer I was like okay I'm just gonna go show up at this small town manufacturer would been running the business for generations and so the dad the grand
father sit down and I'm talking with them and they get the vision and they say they'll take a chance and that ends up being the manufacturing partner that we launch our Whole Foods with and that takes us through to scale.
All right so back to the timeline you now are in Whole Foods in the United States and all over Canada and I think in this year 2018 but you get you applied for a fellowship and got it this this is the famous Peter Teal Fellowship the obviously one of the founders of PayPal he created a fellowship
many years ago that basically said hey if you're under 23 and you drop out of college and you are starting a business I'll give you a hundred grand a string attached you get this in 2018 you get this fellowship tell me a little bit about it and why you wanted to do that at that point you were already kind of
starting the crush it. Yeah I think really through that just like mindset of like you don't know unless you try you know even if never no million years I think I would actually get that and the reason why I wanted to try was because it's strings free cash at the end of the day wait when you're
start up you can always use strings free cash and and mentorship from Peter Teal to yeah and mentorship and Peter deal and the most powerful thing about that was the peer group similar to the first accelerator I was in all of a sudden I was around these people where I was like just so wildly inspired and just like it really feeling my feeling my mind to even be more expansive and be like truly anything is possible and it really helped me
to level up my mindset for the next step in the journey. So that year you also really raised significant cash at least for the first time I think you raised $3 million in 2018 and I have to imagine by that point you're two years in it was a little bit easier and you could probably raise money on really
the terms. Yeah I was interesting because it didn't feel easier I was still getting they weren't necessarily outright knows but there were no's in the sense of it was a yes with okay I need this preferred share I needed to be structured this way I need this valuation which made it a note to
me because I was very clear in my philosophy of what felt congruent for me and what was honoring team and how I wanted our cap table to be structured I had the blessing of meeting two people who became my two formal advisors and so once they supported me we closed the round in two weeks well and had a really clear philosophy about this is common shares so there was never any preferred shares and that was it and we didn't share financials or anything beyond just
like the four-page deck that we had well that year a year and a half after you launch you sold 11 and a half million US dollars worth of product so you are well on your way to building a really significant brand at that point I think some other competitors start to come out of the woodwork
earlier you mentioned that you weren't it wasn't that you were looking at the competitors worried but that it did set like light of fire under you to accelerate to keep moving fast because your competitive advantage would be your brand name right especially if like Hershey's or Nestle or a big company you know all of a sudden decided to do the same thing which they could have done very easily yeah there were kind of two filters that I always had and one was
just being obsessed with are we always out exceeding the value proposition for the consumer the answer was always no and so I never felt the need to dig further and then secondly the other filter was are we creating a customer experience that can't be replicated so we were obsessed with making sure that our consumers felt like our friends how did you do that when it was just Beth and I it was easy for us to have quick response times and as we scaled it had to be
really intentional so across the board we always had a 12 hour response time for social media whether it's DM in our comments hashtags posting photos of smart suites when we came to emails it was 24 hours we were obsessed with making sure that our friends we called them our friends felt seen and
understood at the end of the day by ice and it sounds like such a simple thing but as we scaled maintaining those KPIs became really hard to do and so as you are you know hitting 2019 that year you're growing to like 30 people
did you I mean it started with just you and Beth right who were the kinds of people you were hiring and and more importantly you had never before that time been a supervisor right you'd already always worked in fast who places or in shops or you'd always been working and then you started to sing on
your own how did you learn how to to do the management side and to be a boss of people in the beginning it was really just finding people that could wear all the hats so that were really generalized like we had our first five were like a marketing sales ops and finance and it was really people who got the vision who like left their ego at the door and most importantly I think we made sure to be really clear about the what's in it for them so everyone had equity
in the company but those first five people they all had at least one percent to your point of never being a supervisor and that sort of thing I was really really good at inspiring people but I wasn't that great at knowing how to keep people engaged and inspired and motivate them weekly one-on-ones and that sort of thing drain my soul to its core yeah not because I didn't care but because it just wasn't a strength that I had so you you realize that your strength was you had a vision
it was creating a vision it was coming up with this inspiring idea and that could inspire people but where you weren't strong was in sort of building and maintaining a company culture that wasn't a strong suit of yours yeah I think always applying the filter in like a non-deprecating way what do I suck at yeah and then how may I be holding the business up and where do I serve best and combining those three answers to kind of like indicate where I best show up and that Abden flowed
throughout the the business in different stages that's such an important point because I think a lot of people and I've talked about this too focus on culture that culture you know obviously there's a famous quote culture eat strategy for
us but culture building and culture maintenance is a full-time job very few CEO founders can do be that and also maintain the culture on their own oftentimes it you do need a COO or somebody else who is the keeper of culture and I think that that that is a very self-aware thing that you had and have
which is you knew you weren't it wasn't a core strength of yours yeah I think not having any attachment to my role in the business just to having a really strong attachment to the mission and just how I best served I think was really helpful and as you started to bring in some outside money and your
revenue started to grow because I think by 2019 you hit close of 40 million US dollars and sales within a couple months you got the pandemic of 2020 many companies like yours actually had incredible banner years because all of a sudden people are at home stuck looking at their computer screens and being bombarded with ads and social media ads and things like that I have to assume that you're direct to consumer side just kind of really took off that year
totally yeah and I think candy is such an emotional source of joy and comfort yeah in that those times and so smart suites became something that was a really an emotional support for some people through that time period that is also a pivotal year because it was announced it towards the end of the
year that you sold a majority stake of the company to TPG big private equity company tell me about about that decision I mean of course it was a lot of money was like over three hundred fifty million dollars for a majority share
you still kept a minority stake and I think you're still the largest single shareholder it's an incredible amount of money obviously to get but also what did that in your mind instead of just staying independent and turning it into a billion dollar company on your own why did this make sense
at that point for you yeah I think from day one like I had clarity of the vision which was to be like a global company revolution is in candy and to be the go to candy brand that are grandchildren are enjoying and I always felt like at some point in our growth it would make sense to tap into a
larger multinational companies manufacturing and distribution systems and to execute with a faster pace on that vision and coming up on 2020 we crossed over the hundred million mark in revenue and really just begin to felt like a different stage of less than four years in you crossing a hundred million dollars sales unbelievable yeah just when we entered into that fourth year it was the first time that I was like I don't have that same gut instinct that I
feel like I have had so far unlike what do we need to do and what is around the bends to navigate that next stage of growth to get from one hundred to two hundred to three hundred and then to grow outside of North America at the same time there were the low sugar space began to really grow and
become something that was it was exciting so I was like this the vision is being validated like low sugar is here to stay but a lot more competition yes and I was like we need to be pouring fuel on the fire to really actualize that vision of being the global leader yeah and so that was really what informed okay this makes sense timing wise to bring on a partner and so we began that process and and started that journey at the same time my grandmother who was the
reason I started my company and my why my whole life yeah she was starting to go through her end of life and she had the fortune of seeing the journey through but because I was so intensely in building I really wasn't showing up for her in the way that I wanted to time and energy wise but I really didn't feel like I would be doing her and my relationship right if I didn't honor the freedom of time and energy to show up for her the way she showed up for
me my entire life so that was also a factor in timing to where I was like you know I need to show up for my own and now so you at that point you step down a CEO but what did it mean for your role with a company and you kept a board seat but did you really day-to-day operationally you were 2020 you were going to start to wind down yeah so originally that really wasn't the intent originally I was I was going to be still in like a full-time capacity and like
one week after I signed the papers slowly slowly slowly over the course the next few months my health starts to decline pretty rapidly what what was going on I didn't know I thought you know adrenaline fatigue burn out is real I had gone to naturopaths we validated this had been in the hospital from severe chest pains and then six months after that I find out that I'm not slowly dying but I'm six months pregnant and I'm going to have a baby in three months and so
that was why I took a larger step back originally than I had intended to from being operational pretty quickly after the transaction happened so here you are now a couple years later I know you're still sort of an ambassador
for the company and still shareholder so you and you still retain a board seat right yeah yeah and I think today smart switches the number one selling sugar low sugar candy in North America tell me about your life now and and so I mean you started this so young you had such a smart and I think lucky
vision already in your teens and you really pursued it and here you are you know in your late twenties at this point in this position where you are extremely wealthy and it's public like people are aware of this this is not a secret tell me a little bit about what that's meant for your ability to I don't know to make friends or to trust people or to because I think you're a single mom right yeah if I'm not mistaken does it complicate parts of your personal
life just just even knowing who to trust when it comes to trusting people and so to think yeah I've gone through a lot of navigating for sure that has I think been a practice to not taints the inherent belief I have of like people
are good I think what it just means is that just like I really try and just root down in the gut feeling about like is someone being authentic and then when that's famous saying of like when someone shows you who they are believe them and trying to just always ground back down to like the gratitude
and I have such gratitude for like the exact same feeling I had when I got the idea for smart sweet of like how am I so lucky to somehow have this idea to be in service of others in this way how am I so lucky to have freedom of
time and energy to be able to create whatever impact I am able to and so I'm grounded in such gratitude for that and I don't know where I meant to serve next and I trust in the universe and whatever that path that leads me to do when you think about the journey you took and you know I mean for some
people there's a million ways to read the story wow you know regs to riches and three and a half years or you know something like that it's obviously an oversimplification but it was it is remarkable I mean you know started in 2016 and you got a big buyout in 2020 how much of where you got to and
where you you are do you attribute to to the hard work you put in and what about what about luck is a factor how much how much is luck I truly feel like it's like the mishmash of like the right timing the right idea the saying you know the harder you work the luck you get but above that all the
serendipity was like a swear jar world when we're building because there's you so much now use the word God but that like there is something bigger than us out there and if we let ourselves listen to that whisper in our hearts it will
guide us to where we're meant to go that's terabash founder of smart sweets by the way terabas all kinds of candy but if you were to ask her what her favorite is oh my goodness I love sour candy I love those live I don't know in the States that they're called live wires but they're like kind of like
licorice that are infused with white cream I don't think we have those you don't have those not we might put some nuance between Canada and US cat candy you know I guess have those honeycomb violet crumbles oh I love those yeah so good
manufacturers they'd always asked me to bring down ketchup chips and coffee crisp for them coffee that's the other thing oh so good yeah whoo my blood sugars is rising talking I know I know going up hey thanks so much for listening to the show this week please make sure to click the follow button on
your podcast apps you never miss a new episode and as always it's free and don't forget to sign up for my free newsletter at gyros dot com it's full of insights and ideas from some of the world's greatest entrepreneurs this was produced by Carla Estevez with music composed by Routin Arableui it was
edited by Andrea Bruce with research help from Malia Aguadello an audio engineering by Gilly Moon and Maggie Luther our production staff also includes Casey Herman JC Howard Neva Grant Alex Chung Catherine Cipher John Isabella Sam Paulson Elaine Coates Kerry Thompson and Chris Messini and Guy
Ross and you've been listening to how I built this if you like how I built this you can listen early and add free right now by joining Wondry plus in the Wondry app or on Apple podcasts prime members can listen add free on Amazon music before you go tell us about yourself by filling out a short survey at Wondery dot com slash survey my name is Georgia King and I am thrilled to be the host of and away we go a brand new travel podcast on Wondry plus where we'll
be whisked away on a massive adventures all around the world where we go what we do what we eat drink and listen to will all be up to my very special guests we've got Ben Schwartz taking us on a whirlwind trip around Disneyland will eat a bowl of life changing pasta with Jimi O'Yang in Tuscany Italy and how do you feel about a spot of sugaring off with Emily Hampshire in Montreal underway we go with a mercy in some of the wonders of the world we're gonna be
seeing some yellows and vibrant oranges and the shoes clicking against the cobblestone if you're looking to get somebody in the mood have a look at the Chicago skyline you can listen to underway we go excalusively with Wondry plus join Wondry plus in the Wondry app or on Apple podcasts Georgia do you do what joy sounds like I think I'm hearing it right now