Digest

This episode of "How I Built This" features Cynthia Tyson, the founder of Lily's Sweets, a $400 million sugar-free chocolate brand. The episode explores Cynthia's journey from her early life and career to the creation and growth of Lily's Sweets, culminating in its acquisition by Hershey's in 2021. The episode begins by discussing the rise of sugar alternatives and the growing awareness of sugar's negative health impacts. Cynthia's entrepreneurial journey is then explored, starting with her family's background in natural foods and her initial reluctance to join the family business. She eventually opened a natural food store with her father's support, but struggled with managing finances due to her lack of business experience. The A-lar scare in 1989 significantly increased consumer interest in natural foods, leading to a shift in the industry and creating opportunities for brands like Lily's Sweets. Cynthia transitioned from owning a natural food store to consulting for conventional grocery chains, which ultimately led to her decision to start her own brand. The development of Lily's Sweets involved numerous challenges, including finding a palatable recipe for sugar-free chocolate and securing funding. Cynthia's partnership with Chuck Genardi, who provided the initial funding, was crucial to the company's success. They faced initial skepticism surrounding the market for sugar-free chocolate, but Cynthia's marketing strategies, including sampling and promotions, helped to stimulate consumer trial. Lily's Sweets experienced rapid growth and profitability, despite initial losses. The company expanded its product lines and eventually attracted the attention of VMG, a San Francisco-based CPG investment firm. VMG's majority investment in Lily's Sweets led to the hiring of Jane Miller as CEO and the company's relocation to Boulder, Colorado. Cynthia transitioned to a brand ambassador role, while Lily's Sweets continued to grow under VMG's leadership, reaching $110 million in sales just 18 months after the investment. The episode concludes with the acquisition of Lily's Sweets by Hershey's in 2021 for $425 million. Cynthia reflects on her journey as a late-blooming entrepreneur, emphasizing the importance of passion, hard work, and recognizing the role of luck in achieving success. She attributes her success to a combination of experience, hard work, and luck, acknowledging the importance of timing and the growing awareness of sugar's negative health impacts.

Outlines

00:00:00

The Rise of Sugar-Free Chocolate

This episode explores the story of Cynthia Tyson, who founded Lily's Sweets, a $400 million sugar-free chocolate brand, at an age when many people are planning to retire. The episode discusses the growing awareness of sugar's negative health impacts and the subsequent rise of sugar alternatives like stevia, erythritol, and alulose. It also explores Cynthia's early life and career, including her family's entrepreneurial background, her initial reluctance to join the family business, and her early experiences with natural foods.

00:00:55

Cynthia's Entrepreneurial Journey

This segment discusses Cynthia's decision to open a natural food store with her father's support, highlighting her lack of business experience and her initial struggles with managing finances. It also explores the impact of the A-lar scare in 1989 on the natural foods industry and Cynthia's transition from owning a natural food store to consulting for conventional grocery chains.

00:15:39

The Birth of Lily's Sweets

This segment discusses Cynthia's decision to start her own brand, Lily's Sweets, and the challenges she faced in developing a palatable sugar-free chocolate recipe. It explores her partnership with Elizabeth Fisher and their initial attempt to create a sugar-free soda, leading to their decision to pivot to chocolate and the eventual dissolution of their partnership.

00:30:16

Finding the Right Recipe and Partner

This segment explores Cynthia's discovery of a stevia-sweetened chocolate wafer recipe and her subsequent collaboration with a manufacturer to create the raw ingredients for Lily's Sweets. It also discusses her belief in the potential for a sugar-free chocolate bar that tastes good and her decision to partner with Chuck Genardi to launch Lily's Sweets.

00:33:43

Securing Funding and Launching Lily's Sweets

This segment discusses Cynthia's partnership with Chuck Genardi, who provided the initial funding for Lily's Sweets, highlighting their complementary skills and the importance of finding a compatible partner. It also explores the story behind the name "Lily's Sweets" and the roles and responsibilities of Cynthia and Chuck in the early days of the company.

00:40:48

Early Growth and Expansion

This segment discusses Cynthia's first meeting with Whole Foods to pitch Lily's Sweets and the initial lukewarm response from the buyers. It explores her decision to focus on Whole Foods as the primary retailer for Lily's Sweets and the subsequent national rollout in March 2012. It also discusses the initial skepticism surrounding the target market for sugar-free chocolate in 2012 and Cynthia's strategies for stimulating consumer trial through sampling and promotions.

00:50:32

Challenges and Growth

This segment discusses the expansion of Lily's Sweets product lines and Chuck's departure as CEO in 2014, leading to Cynthia's decision to raise funds from friends and family to buy out Chuck's shares. It also explores the lawsuit filed by Cynthia's former partner, Elizabeth Fisher, in 2015, highlighting the stress and emotional toll it took on Cynthia and the company.

01:00:14

Investment and Acquisition

This segment discusses Cynthia's experience of managing the lawsuit while growing Lily's Sweets, highlighting her resilience and the importance of focusing on the business despite personal challenges. It explores her victory in the lawsuit in 2017 and her realization that she needed to bring in outside investors to scale the business. It also discusses her process of seeking investment for Lily's Sweets, leading to her partnership with VMG, a San Francisco-based CPG investment firm known for its founder-friendly approach.

01:06:57

Reflections and Legacy

This segment discusses VMG's majority investment in Lily's Sweets, the hiring of Jane Miller as CEO, and the company's relocation to Boulder, Colorado. It explores Cynthia's transition to a brand ambassador role after VMG's investment and the challenges of defining her role. It also discusses Lily's Sweets' continued growth under VMG's leadership, reaching $110 million in sales just 18 months after the investment, and its subsequent acquisition by Hershey's in 2021 for $425 million. Cynthia reflects on her journey as a late-blooming entrepreneur, emphasizing the importance of passion, hard work, and recognizing the role of luck in achieving success. She attributes her success to a combination of experience, hard work, and luck, acknowledging the importance of timing and the growing awareness of sugar's negative health impacts. The segment concludes with a discussion of Lily's Sweets' legacy, highlighting its impact on the sugar-free chocolate market and its continued growth under Hershey's ownership.

Keywords

Q&A

• What were some of the challenges Cynthia faced in the early days of Lily's Sweets?

  Cynthia faced challenges in finding a palatable recipe for her sugar-free chocolate, managing finances with limited experience, and navigating the initial skepticism surrounding the market for sugar-free chocolate.

• How did Cynthia's experience in the natural foods industry contribute to her success with Lily's Sweets?

  Cynthia's experience in the natural foods industry provided her with valuable insights into consumer preferences, product sourcing, and the importance of educating consumers about the benefits of natural products.

• What was the significance of the A-lar scare in 1989 for the natural foods industry?

  The A-lar scare significantly increased consumer interest in natural foods, leading to a shift in the industry and creating opportunities for brands like Lily's Sweets that focused on natural and organic products.

• How did Cynthia's partnership with Chuck Genardi contribute to the success of Lily's Sweets?

  Chuck provided the initial funding for Lily's Sweets and brought complementary skills to the partnership, allowing Cynthia to focus on her strengths in business strategy and product development.

• What were some of the key factors that contributed to Lily's Sweets' rapid growth and eventual acquisition by Hershey's?

  Lily's Sweets' rapid growth was driven by its innovative sugar-free chocolate recipe, its successful launch at Whole Foods, and its effective marketing strategies, including sampling and promotions. The company's strong performance attracted the attention of Hershey's, leading to its acquisition in 2021.

Show Notes