07 Apr Living the Sweet Life with Stuff’n Mallows
I had the pleasure of interviewing James Schrack, co-founder and CEO of Stuff’n Mallows founded in Fort Collins, CO this week. Here are some excerpts from our conversation about the past four years as a food business entrepreneur.
In 2012, three CSU students, Tyler Krenzelok, Paul Jenkins and James Schrack had a class project to complete for their Intro to Entrepreneurship class. Initially the three came up with an idea that they soon realized it was already on the market and someone else was doing it better than they could. So, they went back to the drawing board and Tyler mentioned that when he goes camping he likes to bring a chocolate bar and marshmallows to create the quintessential camping treat. What if they mixed the chocolate in with the marshmallow so they melt at the same time? It seemed like an easy “A” for the presentation since everyone loves food. So they went about looking for a marshmallow recipes online and created their product (yes, you can make your own marshmallows and they are so much better than the commercial meant to last for the next millennia; try this recipe).
After a successful presentation, they were prodded along by their fellow students with the question “are you really going to do this”. The three decided that yes, this is the time to try something like this, and moved ahead. The trio got lucky in a few ways, CSU was beginning a 16-week accelerator program at the Institute for Entrepreneurship in the CSU College of Business the next semester and Stuff’n Mallows was accepted. At the end of the program there was a business pitch competition and they won second place which came with a small cash prize and a spot in the CSU Hatchery business incubator at the Innosphere in Fort Collins for a year which also included a year of free office space. This was the moment they planted the flag and said we are doing this. They turned down the “real” jobs they had been offered after graduation and let their friends and family know their direction, to some dismayed looks.
“There is no question it would have taken us longer to get up and running without the intensive support CSU and Innsophere gave us,” Schrack told me in our interview. “We also weren’t shy to ask for help and were fortunate with the resources we had access to.” The trio graduated in Mid May of 2013 and had our product on the shelf at a local kitchen store on June 13, 2013 with a nice write up about three CSU grads and their marshmallows in the local paper.
Doing everything themselves, they set about getting their product in other stores. “We went with the shotgun approach, which I don’t necessarily recommend,” Schrack said. At the end of two and half years they had their product in 500 independent stores across Colorado, which seems like a success, but they realized that by scaling back on store count (of which they were doing direct delivery to all of them) and focusing on stores that moved the most amount of product they would be more successful and sustainable. About this time, they completed the year and a half process of getting their marshmallows into Whole Foods Market, first the local Fort Collins store, and then regionally and retailer Bed Bath and Beyond. “We focused on stores that moved at least 12 cases per week which lowered our store count to a more manageable 60 stores,” explained Schrack. It was very time consuming to get into each store; each store or company has their own process and you just have to ask up front what that process is Schrack said.
The biggest shift recently for the company has been going to online sales. E-commerce is now brining in the most sales and Shrack said if he knew then what he knows now, he would have flipped the process to start small with online sales and then approach stores for retail space.
As the company grows in sales, so does production. Not having their own commercial kitchen space, the company relied on working out of commissary kitchens. They bounced around from a few local spaces, but as they increased production they realized they needed a better solution. It is a three day process that includes a production day, drying day and packaging day. Making marshmallows is also a messy business and requires a lot of storage for the passive drying day. A solution came from another local start-up, The Food Corridor. This is an online platform that connects food businesses with commercial kitchens of all kinds to meet their needs across the United States. Through The Food Corridor, the company was able to move their operations to the giant kitchen at Weld County School District with plenty of storage and two 60 quart mixers; it is a true win-win for education and entrepreneurship (more on this in a future post).
I asked Schrack what he wishes someone had told him to do or not do from the start. He recognizes that the process of learning every piece of the business is invaluable and something he will take with him as a serial entrepreneur. His one piece of advice is that he wishes they would have developed a distributor relationship early on in the process. Schrack laughed “instead of going to grad school and getting an MBA, I am earning the same experience by learning and doing everything in our business.” That said, the company relied on help to build their website (they have a new one launching in May) and a staffing service to provide labor in the beginning. They now employ three part-time folks to help with sales, demos and packaging. Ultimately, their goal is to continue the growth in sales and market share and be able to hand over their venture to a larger food company. Until then, we will continue to enjoy the sweet rewards of the Stuff’n Mallows co-founders’ hard work toasted over the open flame of a campfire this summer.
Some takeaways from my interview:
Ask for help and seek out experts – starting a business on your own is daunting; starting a food business is that times 10. Spend the time and money to get the right answers the first time whether starting up or scaling up.
Build in accountability – having a group like an accelerator or other incubator programs keeps your business moving along at a steady pace with others rooting for you. Don’t start your business in a vacuum if you want to get to market quickly.
Be open to changing course – reviewing your sales strategy to determine if it is effective and whether there are new or different markets you should pivot to is key (and back it up with numbers).
At Cultivate, we specialize in helping food businesses move from concept to market fast. Looking for your own accelerator program like Stuff’n Mallows went through? We can help.
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