Table of contents
- Founders - Jake Karls, Lezlie Karls, Nick Sakltarelli
- Company - Mid-Day Squares
- Location - Montreal, Quebec, Canada
- Started in 2018
- 6 figures revenue
- In 7000 stores across Canada & USA
- Sold over 25 million bars
- $17 million raised to scale the business
So Jake, what's your backstory?
My high school days were filled with academic struggles which led me to adopt the role of a class clown. I loved being my authentic self, playing pranks, and messing around. However, when I didn’t graduate with my class in Montreal, I decided to shift gears and focus on academics. I went to college to become an actuary, just to prove that I was not the class clown anymore.
But during my third year at university, while I was struggling to secure a summer job in banking, I had an epiphany watching Shark Tank. This guy on the screen, with mortgages and responsibilities, seemed so happy and passionate about his dream. Meanwhile, I was sulking on my parents' couch, jobless but free of any real responsibilities.
It was then that I decided to dive into entrepreneurship. I started with outdoor fitness boot camps in Montreal, making a good chunk of cash and having a blast. But after two and a half years, my passion for fitness dwindled. My entrepreneurial spirit, however, remained strong. I then launched a clothing brand, organizing parties on college campuses to build the brand. It became popular, but I lost a ton of money and went bankrupt. That’s when my sister and brother-in-law came to me with an exciting idea: Midday Squares, a functional chocolate bar company.
They needed me to build the brand, while they handled the operations. Finally, I could focus on my strengths rather than my weaknesses. So, in August 2018, we launched Midday Squares with the goal of building the next big chocolate snacking company in the better-for-you space, all while being true to ourselves and sharing our journey from zero to, hopefully, a unicorn business.
What is Mid-Day Squares and how did you come up with the idea?
Midday Squares is exactly what it sounds like – a midday afternoon snack, shaped like a square. The idea was born out of a need my sister identified; my brother-in-law, Nick, was addicted to chocolate and was eating unhealthy versions full of sugar, palm oil, and other junk. This led to him feeling tired, experiencing crashes, and feeling bloated.
Being a food enthusiast, my sister believed she could create something healthier using real food ingredients, dark chocolate, and incorporating protein and fibre for an energy boost. She made this snack for Nick for about two and a half years before we even thought of it as a business. It was simply a healthier alternative that satisfied his chocolate cravings and kept him full for a few hours.
However, after closing her fashion company and with Nick selling his software company, they both were keen on working together on a new project, particularly in the food space which they were both passionate about. While exploring different ideas, Nick found a report highlighting the rapid growth of dark chocolate and vegan plant-based proteins, despite being saturated markets.
He realized that the chocolate square my sister had been making was essentially a combination of these two growing categories, indicating a potential product-market fit. This realization led to the decision to commercialize the product, a process which took about eight months.
In June or July of 2018, they approached me to be their third partner and help launch the business. They had the operations, R&D, and manufacturing expertise, but needed help with storytelling. I was aware of the challenges; there are 30,000 to 40,000 products on a supermarket shelf, and we didn't have the budget of big players like Hershey's or Mars for store real estate or marketing materials.
However, I believed that social media could be our secret weapon. If we could turn our customers into fans and make them feel connected to us, it would feel like they were buying from a friend, family, or neighbour when they saw our product in the store.
So, we built a chocolate bar company with a product that fit the market and told a unique story. We documented and shared everything about building the business – the good, the bad, and the ugly. It was this human connection that drove us forward. We launched in August 2018, and the rest, as they say, is history.
How did you get your first 10 customers?
Our initial customers were actually from our close circle - family and friends. We had been sharing our chocolate bars with them even before we officially launched, so naturally, they became our first customers. But to attract customers outside our immediate circle, we devised a unique strategy. We were confident that once people tried our midday squares, they would love it and come back for more.
So, we initiated an online sample program where for just $0.25, anyone could order a sample bar. We charged a nominal amount to ensure that we got serious samplers, not just freeloaders. We were almost certain that once they tried our chocolate, they would come back and purchase a six-pack at full price, which was $3.79 per bar at that time.
In the beginning, we would hand deliver the orders in Montreal, our local city. Each package would include a Polaroid picture taken that day, with a handwritten custom message from the three of us. We would look up the recipient on social media and personalize the message even further, like mentioning their dog if we saw one in their pictures. This level of personalization, along with the founders hand delivering the product, created a memorable experience for the customers.
Word of mouth spread quickly, and our social media started blowing up. People were amazed by the entire experience and started sharing it online. Due to the increasing demand, we had to gradually increase the sample price from $0.25 to $0.50, then $1, and eventually, we had to stop the sample program as it was no longer cost-effective.
However, the sample program served its purpose by getting the wheels turning and attracting the right people. We still include a Polaroid picture with a custom message in our packages, but now my mom writes them. To date, we have shipped over 700,000 Polaroid pictures.
Our storytelling on Instagram, showcasing the behind-the-scenes of building the business, sparked curiosity and attracted a lot of people. They became fans of our brand even before trying our product, and once they did, they fell in love with it. This strong connection with our customers has been a crucial factor in keeping our brand thriving.
What steps did you take to get your bars right for your customers?
To ensure our product met the needs of our target market, we relied on data indicating a growing demand for plant-based proteins and dark chocolate. Our product, essentially a dark chocolate indulgence with functional benefits, was perfectly aligned with these trends. We were confident it would be well-received once customers had the opportunity to try it. However, our unique and innovative product posed significant challenges when it came to scaling and manufacturing.
In the food and beverage industry, most companies co-manufacture their products by outsourcing to third-party manufacturers. We initially pursued this route, approaching 26 different co-manufacturers to produce our product. Unfortunately, none of them could manufacture our product as we envisioned. They all wanted to modify the ingredients or textures, which would have altered the product's uniqueness.
Faced with a critical decision, we had two options: change the product to accommodate co-manufacturing or invest in building our own factory with custom machinery. This latter option would be costly, requiring us to take on debt, but it would allow us to maintain control over our innovation and manufacturing process. After careful deliberation, we decided to preserve the product's uniqueness by building our own factory.
Scaling the manufacturing process was a monumental task that took three years to complete. Even now, after five years, the process is not perfect, although it is almost fully automated (90%). Nevertheless, our margin profile has significantly increased and is well above the industry average, which is typically impacted by the lower margins associated with co-manufacturing. Our innovative product stands out in the market, and despite the challenges, building our own factory has enabled mass growth and numerous successes.
It has been a challenging journey, and we continue to face daily challenges with the factory. However, we are grateful for the path we chose as it has ultimately positioned us for success in a competitive market.
How did you reach and acquire your first 100 customers? Which platforms or methods did you use to connect with them and promote your bars?
Acquiring our first 100 customers involved a blend of unique strategies. Firstly, we leveraged Instagram, the most popular social media platform at that time, to share our journey in an unusual way, compared to other food and beverage companies. We didn't just showcase the finished product but took our audience behind the scenes of building our business. It was a mix of Shark Tank, Keeping Up with the Kardashians, and Elon Musk, minus the Kardashians' lavish lifestyle.
Being a family business with its fair share of drama, we knew that showing the human side of our journey would resonate with people. People are always curious about the lives of entrepreneurs, so we revealed everything – the good, the bad, and the ugly. This approach, inspired by Elon Musk's unapologetic authenticity, helped us build a dedicated fan base. We documented everything from therapy sessions to milestones, wins, and losses, using our iPhones. It was like a reality show centered around entrepreneurship, and this unique approach grabbed a lot of attention from our first 100 customers.
Additionally, we introduced an online free 25-cent sample program, allowing potential customers to try our products at a minimal cost, thereby lowering the barrier to entry. This initiative was well-received and contributed significantly to our initial customer base.
Another key factor was the level of personalization and human connection we infused into our interactions. In the beginning, we personally delivered products and included custom messaged Polaroid pictures with the customer's name. This personalized touch made our customers feel valued and created a strong attachment to our brand.
Lastly, having a great product-market fit was crucial. Our product addressed a specific need in the market, and this, combined with our unique approach to customer engagement, helped us acquire our first 100 customers.
What distribution channels did you try that didn’t work?
We experimented with a few different channels that, unfortunately, didn't yield the results we had hoped for. One such channel was Twitter. We initially tried using it as a business, but it didn’t prove to be as impactful as we thought. My partner, Nick, is quite active on Twitter, so he pivoted to building our brand through his personal brand storytelling on the platform.
While we didn’t end up using Twitter directly for our business, it might be something we consider in the future. Another channel that didn’t work for us was YouTube. We made an early attempt to share our content there, but it just wasn't resonating with the audience. However, we do plan to revisit this platform in the future because we have a lot of long-format content that we believe would be incredibly valuable for people to see.
These were just a couple of channels that didn't work well for us, but the experience taught us an important lesson: not to spread ourselves too thin. At the beginning, we tried to establish a presence on multiple channels simultaneously, and it just didn’t work.
So, we refocused our efforts on Instagram, and started building our presence there. Now, we are also building on TikTok and LinkedIn, and these platforms are working really well for us. Additionally, my partners and I have been working on building our own personal brands, which has been successful in driving a significant amount of revenue and attention to our brand, Midday Squares.
What specific tools, software, or resources have been most helpful in growing your business?
The most crucial tool for us has been the ability to build our own tools internally. Having an in-house software engineering team that can develop programs to streamline our processes has been key. This is especially true for our manufacturing processes and how we analyze data. An important external tool in the food and beverage industry is purchasing data from stores or requesting data from retailers.
This data is invaluable for making significant decisions. Additionally, SPINS data and Nielsen data are essential for guiding decision-making on where to allocate resources. These tools and resources have been fundamental in our growth journey.
How did you make the transition from a side hustle to full-time entrepreneurship?
I never really had a side hustle. I was all in from the start. When I failed to secure a job in investment banking, I was left with no choice but to generate some capital, and that's why I started my own fitness business, which actually worked out.
While I can't offer advice from personal experience about transitioning from a side hustle, what I can suggest is this: if you truly believe in what you are doing, give it everything you have, 150%. I'm not someone who can juggle multiple things at once. Even now, I find it difficult to balance my personal and business life, so I can only imagine how hard it would be to balance a job with the entrepreneurial journey.
Entrepreneurship is a pressure cooker. The one who can endure the most pressure and stay resilient, usually succeeds, provided they have a good product or business model. However, I can't really advise on transitioning because I haven't experienced it myself. What I can say is if you believe in it, go all in. There's nothing like the freedom that comes with doing what you love, being yourself every day, and building something you truly believe in.
Now, as for the steps I took to become an entrepreneur, I didn’t have a choice because I couldn't get a job, so I had to find a way to make money. During this process, I quickly realized my strengths and weaknesses. Entrepreneurship taught me what I was really good at and what I wasn't. I learned that I am not a great operator or manager, but I excel at storytelling, evoking deep feelings in people, and spreading positivity.
This is what I do every day as I build the network and community. Initially, I took on the role of CMO because I was an owner and wanted a title, but I quickly realized within the first six months that it wasn't for me. Understanding this was crucial.
What drives you to do what you do?
There are two primary forces that drive me to do what I do. First and foremost, I am driven by the freedom that comes from being unapologetically myself every single day. To me, freedom is the most valuable thing in the world, and feeling free empowers me to feel great. Secondly, I am motivated by a desire to disrupt an industry that has remained undisturbed for far too long.
The chocolate industry, for instance, has been controlled by a handful of brands—maybe five to seven—over the past century, and I believe no one has truly challenged it at the level we intend to. There's something incredibly powerful about embracing the uncertainty of not knowing whether we can do it, coupled with the determination to give it our all. Those are the two things that drive me.
What is the funniest/weirdest thing that has happened to you since starting Mid-Day Squares?
One hilarious yet bizarre incident since starting Midday Squares was when I discovered the power of dancing in the business world. I once had to hand deliver our product to an office because we couldn't afford shipping. The atmosphere in that office was incredibly dull and lifeless – it was as if the place was drained of all energy.
Determined to change this, I decided to bring a boom box on my next delivery and play a classic song, "Hey, hey baby." As the music played, I started dancing and throwing chocolate bars around. At first, everyone just stared awkwardly, but eventually, they all joined in and started dancing too. We even filmed the whole thing and posted it online.
To my surprise, I started getting requests from various corporations, big and small, to replicate this scene in their offices. It was an eye-opener for me, as it made me realize that people are yearning for a bit of fun and a chance to feel like a kid again. This unexpected incident eventually turned into a side gig for me, where I performed at conferences, colleges, and offices, spreading joy and fun wherever I went.
It made me understand the universal need for dancing and lightheartedness in our lives. So, yeah, that's how dancing became a part of my job at Midday Squares, and I continue to do it with great enthusiasm to this day.
How do you see Mid-Day Squares in 5 years time?
Our vision for Mid-Day Squares in the next five years is to build the biggest chocolate snacking company out there. Dominating the afternoon snacking and chocolate markets is a key focus for us. This involves not only continuing our domination in North America but also potentially entering international markets, such as the UK and Mexico.
Ultimately, our goal is to become a modern-day Hershey's in the better food space. We want our brand to be recognized and become a staple for people's afternoon snacking in every country. Our vision includes achieving over $150 million in annual revenue over the next five years, and then hopefully increasing that even more.
What advice do you have for founders in the earlier stage of their journey?
There are two pieces of advice I'd like to offer. First, block out the noise and stop comparing yourself to others. This is a dangerous path to go down because it distracts you from your own goals and prevents you from being your best self. Second, trust your gut and always be unapologetically yourself.
This is crucial because what sets you apart is your uniqueness. Embracing and leaning into that is what gives you the best chance at success. So, in summary, block out external noise, stop comparing yourself to others, and be unapologetically yourself while trusting your instincts.
What is something interesting about you that people don't know?
Something interesting that many people might not know about me is my passion for collecting Funko pop toys. My office in my condo is home to a collection of about 500 Funko pop toys, featuring a range of different characters, including some really old-school ones. It's my biggest spending expense and, honestly, I'm addicted. Really addicted. On another note, I'm actually allergic to my own product. I have a peanut and nut allergy, and unfortunately, our products contain peanuts and nuts. It's a bit sad because I've never been able to try three of our four flavors of midday squares.
Any books, podcasts, websites or people we can look up, to learn about growing a business?
You wanna grow your business and get some fresh perspectives? Man, you've gotta check out three people who've been game changers for me. First up, Elon Musk. This guy's not just a tech guru; he's a storytelling machine. Watch him, and I mean very carefully. The man knows how to market and "build out loud," as I like to call it.
Next, you can't miss Seth Godin's blog. The guy is a marketing whiz, sure, but he also dives deep into life stuff that'll just make you sit back and think. Seriously, his insights can shift your perspective on more than just business.
Last but not least, Tim Denning over on Medium. Now, not every article's a winner—some can be a bit cheesy, to be honest. But most of it? Gold. Tim tackles some real interesting life perspectives that are just a joy to read.
And hey, mentors aren't just people you meet for coffee. You can learn loads from folks by following them on social media, reading their books, or whatever. The key? Find your people and learn from 'em. Don't straight-up copy what they do, but let their work inspire bits and pieces of your own journey. Stay true to you, and you can't go wrong.
Any quotes you live by?
Initially, I was inclined to say, "Always step in zones of discomfort," but on second thoughts, don’t use that one. The quote that truly resonates with me is, "Always be unapologetically yourself no matter what." Additionally, another saying that guides me is, "Be really comfortable with getting uncomfortable because those are the times when greatness happens."