Grab your spoon and a carton of milk because today on Found we’re talking to Magic Spoon co-founder and CEO Gabi Lewis. Magic Spoon creates cereal flavors that play on our nostalgia for Fruit Loops and Cocoa Puffs with a grown-up high-protein twist. Dom and Becca talk with Gabi about how he and his co-founder prioritized product-market fit and found investors who didn’t think cereal was dead
Grab your spoon and a carton of milk because today on Found we’re talking to Magic Spoon co-founder and CEO Gabi Lewis. Magic Spoon creates cereal flavors that play on our nostalgia for Fruit Loops and Cocoa Puffs with a grown-up high-protein twist. Dom and Becca talk with Gabi about how he and his co-founder prioritized product-market fit and found investors who didn’t think cereal was dead. They also talked about:
(0:00) Welcome Gabi Lewis
(1:45) Magic Spoon TLDR
(3:38) Innovating in the food industry
(11:40) Managing DTC and IRL retail
(24:00) Acquisitions and competition
(28:15) Entrepreneurship, product development, and leadership evolution
(35:32) Outro with Becca and Dom
Becca Szkutak 0:02
Hello and welcome to found TechCrunch his podcasts that brings you the stories behind the startups from the folks that are building them. It's me your host BeBlocky Tech, and I'm joined as always by the lovely
Dom Davis 0:12
Dominic Midori Davis.
Becca Szkutak 0:13
Hey, Tom, how's it going?
Dom Davis 0:14
I'm doing good. How are you?
Becca Szkutak 0:16
I'm doing well. Did you eat breakfast yet? Today?
Dom Davis 0:19
I had a banana which I'm starting to realize bananas go brown very fast. I just bought these things on Monday. Oh
Becca Szkutak 0:25
my god, I love this me and my son ones that they like whisper that they're right. But like three in the morning and then by the time you're up, they're like, Well, not anymore. Literally
Dom Davis 0:33
blink dead. I have to just chuck them all now. I love that. I guess the
Becca Szkutak 0:41
reason we're talking about breakfast super relevant for today's show is because today we have on Gabby Lewis, the co founder and CEO of magic spoon, which is a previously DTC but now available in retail locations across the country cereal company based on the nostalgic, old cereal flavors we all know and love. And before
Dom Davis 1:01
we jump into the conversation, we are going to do a two truths and a lie. All right, so listen carefully see which one is the lie and we'll talk about it after the conversation. So one magic spoon had to get lawyers involved to make sure they could still call it cereal, even though there are no cereal grains, or is the lie that they're available in stores in the UK? Or is the lie that the characters on the boxes are based on big brand cereal characters?
Becca Szkutak 1:25
Well, well, listeners, you'll just have to keep listening to find out and here is our conversation with GAVI.
Hey Gabby, how's it gone?
Gabi Lewis 1:39
Very well. How are you?
Becca Szkutak 1:41
I'm doing well. I saw you guys are based in Brooklyn whereabouts?
Gabi Lewis 1:45
We are actually based in Manhattan. So our office is in
Becca Szkutak 1:48
Tribeca, ah, crossed to the dark side. I know. I know. Well, Dom also lives in the dark side. So she probably wouldn't call.
Dom Davis 1:56
Yes,
Gabi Lewis 1:57
we're about to you.
Dom Davis 1:58
I am uptown which I had a founder say was Siberia, because it's so far, I guess. But hey, Uptown Manhattan. Uptown
Gabi Lewis 2:07
is nice. I mean, very pleasant. Very nice. Thank you. Thank you.
Becca Szkutak 2:13
Well, now that we are very validated, we live. I think a good place to dive in would be why don't you just start by telling us a bit about magic spoon.
Gabi Lewis 2:22
Yeah, of course, magic spoon reimagines your favorite breakfast cereal with more protein, less sugar, less carbs. So imagine the favorite breakfast Do you grew up with as a kid Lucky Charms for lips, whatever it might be. And we basically tried to recreate that same taste and texture with none of the junk ingredients we launched in 2019. So we've been in business coming up in the five years now, the first few years were entirely direct to consumer. And then about a year and a half ago, we launched into retail, and that's about half of our business.
Becca Szkutak 2:52
And just taking a step back before we dive into what Magic's been looks like today. I'm curious a bit about your background, because I know magic spoon is not only not the first startup that you have co founder but you also previously came from a career more in the financial sector. So I'm curious how exactly do you go from Bridgewater to crickets to cereal? Well,
Gabi Lewis 3:10
the Bridgewater piece was extremely brief. But that was what I was orienting myself towards. So I studied philosophy and economics in college from Scotland originally came to the US studied philosophy in economics, really, really was passionate about philosophy. But my parents insisted, if I only studied philosophy, I would never get a real job. So I studied economics as well. Turns out, I only had a real job for a few months, and then started my private business, which was extra protein. And so the idea with that business was that insect protein, as crazy as it sounds, to a lot of people is an incredibly good food source, not only for an individual from a health perspective, but also for the world from an environmental perspective. So to raise insects, or cricket, specifically as a protein source requires less feed less water, less space compared to conventional proteins. And so we had this idea of if only we could convince Americans to adopt this protein source, that seems weird, it could have massive implications for the food system. And so we came up with a line of protein bars and incorporated cricket protein as a way to sort of introduce Americans to this idea that seemed weird, but protein bars with this kind of introductory vehicle to ease people into it. And so we had these protein bars with the recipes developed by three Michelin starred chef, and we sold those online and Whole Foods and Equinox gyms ran that business for about five years before selling it and then starting this one,
Becca Szkutak 4:32
and I'm curious on both the idea behind Expo and then of course, the idea behind magic spin as well. How did you land on these ideas? Especially because it's interesting that they're both in the same category as well? How did you come to those ideas in the first place?
Gabi Lewis 4:45
Yeah, so I think for EQT so we kind of stumbled into it. It was an idea that that made sense to us. We liked the potential huge impact that idea if you can convince people to be insects, you know, it can be massively impactful for the food system. And that was an idea that sort of like intellectually engaging, we thought it would be an amazing marketing challenge to think about how do you convince people to this thing? That is kind of weird. But how do you make a cooler aspiration? Oh, we love the idea of looking at all these prior case studies of foods that were once weird and then became mainstream. So you can look at sushi is a fascinating example where, you know, 3040 years ago, in the US, the idea of real fish was a little bit gross to most people. And then the way it became mainstream was that a chef in California basically created the California rule. And they kind of hid the raw fish inside the seaweed with the rice. And they started selling it to celebrities in California. And then it kind of spread outward from there. Or you can look at lobster, for example, which was a, you know, used to be peasant food, and actually in May, and it's illegal today to feed lobster to prisoners. Because decades ago, prisoners rebelled that they were being fed lobster every day. And they thought it was just like being fed vermin at the sea. And so there's all these interesting intellectual case studies of how you take something that's weird, and you make a normal, and we thought insect protein kind of deserve that treatment, because logically, it's so good for you so sustainable. And so that was more like an intellectual idea that made sense to us seemed like an interesting business challenge. And so we went for it. Fast forward five years after doing that for a few years, I think we underestimated how hard it is to not only convince an entire country to eat something they think is little bit strange, but also building up a supply chain from scratch. So there was no supply chain, essentially, for crickets. When we started, there were a few farms dotted around the country, primarily actually, for fishing baits and reptile feed, we had to work with farms to create, you know, human grade cricket protein farms from scratch. We actually lived in Thailand for six months working with farmers there because there's a long tradition of cricket, farming and Thailand, tremendously difficult business, both on the supply side and the demand side. And so then when we sold them, we were thinking what's next, we really wanted to have kind of the opposite experience of Exxon. So we wanted to go after a category that was a huge category that nobody had really innovated in in a long time, we should have had this list of criteria. And we were looking for a very large category, something that was ripe for disruption and hadn't seen much innovation in decades, something that lended itself, the direct to consumer business model, meaning we wanted something that was consumed habitually something that was liked, easy to ship, and we started just narrowing down options, and eventually came to cereal as this huge category that nobody really innovated in for many years, there was granola, there's slightly lower sugar options. But really, if you look at the cereal aisle a decade ago, it looks the same as it did 3040 years ago. And so it seems like a really exciting product to launch category to go into not to mention the fact that I like most people grew up just loving breakfast cereal. And so from my personal perspective, as well, the idea of kind of reinventing cereal for a modern consumer was really exciting. Something I
Becca Szkutak 7:45
am curious about because it seems like this was a thread between both of the companies you worked on in some regard is this DTC element because DTC has kind of gone in and out of favor with investors in the startup community over the last decade. And I'm curious why when you guys went out, especially to found magic spoon, why you were trying to find an idea that fit in that DTC category or lended? Well, to it
Gabi Lewis 8:05
great question we intended to launch DTC because that was what we knew our last business was primarily due to see this was also five, six years ago. And so the need to see model wasn't as effective as it was 1015 years ago, but it was far more effective than it is today. And you still could build a business on you know, paid social ads. That was what we knew. And that was where most of our experience was. And so that was one of many criteria. At the time, we viewed that as only how we were going to launch the business, we didn't think that we were going to be entirely direct to consumer for three, four years, which is what ended up happening. We thought we'd launched DTC do that for a few months get interest from retailers and six months after launching be a predominantly retail business. As it so happens, we grew far bigger, far faster than we expected. And in general, we're always trying to remain pretty narrowly focused. And so because DTC was working so well, for so long, we just kept being focused on that. We also did a little bit differently from other brands DTC for us, especially in the early days, it wasn't a game of just paid social. We had a lot of influencers as investors that we actually got on board pre launch to enable us to reach huge audiences without running paid social ads to them. So we have a lot of health and wellness influencers in our cap table with a wearable to kind of lunch us to their audiences. And we invested in those channels as well as podcast TV variety of acquisition channels beyond just paid social, which has obviously had a harder time in recent years
Becca Szkutak 9:28
definitely and it's so interesting that you guys did ended up changing the timeline as much as you did with getting into retail I know people who have listened this podcast know I'm really interested in grocery stores logistics supply chain, I think it's really fascinating line of business and know how hard it is it can be to get new products, shelf space, and I'm curious how did that rollout go? Because it sounds like it was fairly recently but it now makes up a big part of the business. If you want to talk about kind of like when you guys knew it was the time because it was different from your original timeline. How did that end up going for you guys? Yeah,
Gabi Lewis 10:00
so we launched in retail about 18 months ago. So it was the summer before last. And we initially launched with target nationwide Target has a long history of launching previously direct to consumer brands into retail. So if you look at the Warby is the Harry's of the world, a lot of them launched with target first. And so we've been getting to know them for some time, they approached us quite early on and we thought you were an amazing partner, eventually, we're not ready. And after a couple of years of playing that game, and we eventually decided that it was time, you know, we could definitely see that DTC was getting harder not only for ourselves, but for a lot of our peers. So we decided to launch into retail and that target was a very natural fit, given their proven history of taking brands like ours to retail, so we launched it first with them. That went incredibly well. And so three months later, we launched with sprouts and all of their stores, and then three months after that, which was January of 2023. So a year ago, we then took that early success and proof points of being a target and our velocities being strong there. And we launched essentially nationwide in Walmart, Kroger, Safeway Albertsons. Now, a year later, we just actually last week expanded into Costco as well. So we're in probably about 12,000 stores right now spanning most major retailers in the country, and retail is quickly caught up with our DTC business to be a meaningful portion of our overall business. And we're now truly an omni channel business, which two years ago, we were entirely online.
Becca Szkutak 11:24
So I'm always interested about to is because I know one of the struggles that comes with going into retail stores as the supply chain is different. How you do inventory is different, like it's just so different from selling on DTC, how did you guys prepare to launch in the stores? And especially when it does sound like it is almost 5050? How do you manage the different demands and supply and stuff like that on both sides of the house?
Gabi Lewis 11:48
It's definitely hard. And especially when you oriented your entire business to be best in class D to C across every part of the business, right? Not only the growth marketers who of course don't know very much about in store shopper marketing, but even the logistics people in our team who have spent three years optimizing, you know, how do we ship four boxes to someone's house as cheaply and quickly as possible, then now working with truckloads to Costco warehouse is just an entirely different thing entirely. So you have to strike the balance of bringing in people who have been there and done that with coaching the amazing people you have, right. And that's always a tricky thing to balance, but something we strive for. So unlike DTC, which is sometimes a little bit of the wild, wild west, you know, there's always new tactics, always new channels, retail, there really is a playbook. And so we brought in some of the people who know that playbook, whether it's on the logistics and operations and supply chain side, or on the shopper, marketing and trade marketing sides, as well as a couple of senior hires. We brought in people who have taken brands nationwide to target Walmart, understand the intricacies and the politics of working with some of these retailers and even things that I would have never thought about, like how does target perceive your pricing at Kroger and how it is running a promotion in one retailer affects the feelings of a buyer at another retailer and what's the call you're gonna get the next day after you change your pricing somewhere. And so all of these small things that I've personally never gone through, and we've run people who understand what's around the corner, and know what to expect retail there, and are also able to, you know, Coach our existing team to make sure they can transition to being experts in DTC to truly understanding omni channel, whether that's in a marketing sense or logistics or something else.
Becca Szkutak 13:27
And something that's so interesting, too, about the DTC space, like I mentioned a little bit earlier, the market has viewed DTC in and out of favor over the past couple of years, investor sentiment has swung pretty far in both directions. It seems like the space interest there ebbs and flows. And I'm curious what investor interest has been like for you guys, I know you guys have obviously raised a pretty good amount of venture capital, especially you're raised in 2022, which was in a tougher fundraising market to what has investor reception been like to this where people are really happy about the move into retail Did you find some people weren't super entity to see people were? What has the feedback been? Like?
Gabi Lewis 14:04
I think it's not that people are into DTC or into retail necessarily. They're into business fundamentals, right. So if you're running a purely DTC business that's acquiring customers sustainably and profitably, and you've cracked channels that are going to be hard for other companies. I think even though it's true that today on average interest in DTC businesses is lower than it was. If one had a DC business that worked, then that generalization would no longer hold true. And so, for us, we've always been focused on building a business that makes sense. We never viewed DTC as our innovation, we viewed our product as our innovation right. So the earliest DTC brands, selling to the customer online like was the thing they were selling something that you could get anywhere else. There was no real product innovation, their innovation was cutting out costs from the retailer and sell it to someone differently. For us, our innovation was taking Syrio getting rid of the sugar and the carbs, adding in protein like reimagining the product, DTC. He happened to be how we got the product to people for the first couple of years. But we never viewed that as like what our innovation was or what was special about us as a business, what our innovation was, what's special about us is kind of cracking the code on how do you make something that, you know, looks and tastes like sugary cereal actually be good for you. And so that sort of stayed true throughout the years. And as long as our business fundamentals have looked good, which they have, you know, we've had more than enough interest when investors and as you mentioned, we've raised a little over $100 million over the course of the years from investors that range from VCs and private equity firms, to a eclectic group of celebrities like Amy Schumer, and Nick Jonas, and Shakira, and several health and wellness influencers as well.
Becca Szkutak 15:43
And now we're going to take a quick break, but we'll be right back in a second.
Dom Davis 15:52
What was it like initially pitching your company? Like, how do you approach an investor and say, like, hey, I want to disrupt the cereal market? What was it like initially?
Gabi Lewis 16:00
Oh, it's funny, because at the time theory, oh, was almost a bit of a dirty word, which seems silly, like now that it's working. But when we first pitched this idea to investors, especially food and beverage investors in this industry, they would say, why would you ever get into cereal, the cereal market has been declining every year for the past, however many years, millennials are lazy, they don't want to pour a bowl of cereal anymore cereals off trend. And they just like it seems like a bad category to go into when we pitched it initially. We had one investor actually said to us, it's an okay idea. But don't use the word serial, use the word clusters because no investor is going to back serial business because it's this like old stale cat cluster. Yeah, when we looked at the industry, and we saw it declining year over year, our conclusion wasn't nobody wants cereal. Our conclusion was, nobody wants sugary junky cereal, but everyone still loves cereal. And so if you could create a scenario that looked and tasted like that, but was actually fun, and really good for you, and had protein and didn't have the sugar, everybody would take that over some other healthy breakfast, like when we were talking to some investors, and they'd say, nobody's eating cereal anymore. They're eating Greek yogurt, they're having a green juice, they're drinking a smoothie, they're grabbing a protein bar on the way out the door. My intuition was, nobody wants that, right. Like very few people enjoy their green juice or want to grab a stale protein bars, they walk out the door, they want to be having a bowl of Froot Loops or Lucky Charms, but they feel like they shouldn't because it's full of crap. And so we didn't quite buy that line of reasoning. But that was what people said to us. In the early days, we were pitching it luckily made some investors from our last business that sort of believed in us as operators and founders. And so we were able to raise the first round from you know, investors that does previously and even if they were perhaps skeptical of the whole cereal thing, they trusted our intuition on it.
Dom Davis 17:45
And you spoke about the ingredients like millennials and younger consumers want more healthier cereal options. It wasn't hard sourcing the the ingredients to make cereal healthier, sourcing
Gabi Lewis 17:57
the ingredients wasn't necessarily hard, but formulating the right taste and texture was hard. So cereal is you know, usually grains and sugar basically. And we wanted to create that texture using no grains, literally no cereal grains, right. And we even had to speak to lawyers in the early days to see can we call this cereal because there was no any cereal grains in it. And when you try to turn protein powder into the texture of cereal, typically what comes out the other end is something that's like very hard, and doesn't have that light airy texture that you want. We spent several months running hundreds of variations in a formulation to create just the unflavored bass theory or loop using mostly protein to have that correct texture that you want from cereal. So that was gonna step one that was quite difficult. And then once you have that unflavored bass, then sort of question is okay, how do you sweeten that and flavor that while using only natural flavorings, you know, natural sweeteners, no sugar to approximate the taste of all the sugary zeros. And so then it was several weeks of figuring out in what ratios do we use certain natural sweeteners knowing that we want to stay away from you know, every artificial sweetener, we also want to stay away from cane sugar from coconut sugar from a very long list of ingredients. Then also how do we replicate? What in some instances are very unnatural flavors using natural flavoring right? So how do you replicate the flavor of Froot Loops, which is not a real thing that exists in nature with natural flavors. So that also took a lot of time. And I think that is our innovation and that is like what our business is is having created a product that looks and tastes close enough to sugary cereal but isn't sugary cereal.
Dom Davis 19:36
Wait I have an insane question then this might not even be a real thing when you're trying to like copy the flavoring of other popular cereals do these companies have their flavoring copyrighted in some way? Why should
Gabi Lewis 19:47
we clear we're not necessarily copying other flavors and cereals you know we're we're taking his inspiration, your favorite childhood scenario and recreating it in a better way. But we have an idea that we want to create a chocolate he's scenario. So we'll work with the flavor house to try dozens of different chocolaty flavorings and then we'll get feedback, you know, we'll say, okay, version 3.2 was not quite milky enough, let's like combine the milkiness of another sample you gave us with like the bitter chocolate notes of this other sample. And so it's like an iterative process of getting feedback on various like tasting notes, or aromas and things like that. And getting to the right balance of flavors that creates that nostalgia we want someone to have when they open the box, smell it, eat it, even things as simple as our very first version of chocolate didn't make the milk chocolatey, like it didn't fall off the cereal. And we got feedback early on, people loved that flavor. But they didn't feel nostalgia because their milk didn't get chocolatey. And so that was sort of v2 of our chocolate flavor was how do we create a flavoring system that over the course of two or three minutes, half of it kind of like falls off the cereal to infuse your milk or chocolate. And so every element of this sort of like taste process is considered like that as well.
Becca Szkutak 21:03
And something else has always stood out to me about magic spoon is the branding on the boxes and the marketing and how these boxes do look when you come across them and target and how the website looks. And you guys have like a very distinct style and very distinct, like design structure for your products. And I'm curious how you guys came to pick that because it definitely stands out when you walk down the cereal aisle, but it looks very different from what everything else looks like. So I'm curious, like, why you guys landed on this strategy?
Gabi Lewis 21:31
Yeah, it's interesting. We took inspiration from all the cereals of the past, right? So we wanted to nod to classic cereal branding, which by the way, is incredible, right? Like cereal branding isn't the most iconic branding of the past several decades, and it sticks with you. And one of the interesting things about the cereal category is that even though it's typically products that are very good for you, people have very positive associations with it in contrast to other categories, right. So if you ask someone about like soda, for example, they often view like big soda as as evil thing. They think that some of those big soda companies like are terrible for the planet cereal, they don't think that right? Even though they might it's just a sugar, it's just as bad few people have a very positive connotation, typically with cereal in their childhood. And that's a testament to the amazing branding of the cereal companies that had in the marketing they've done. And so we wanted to play into that to not to that and so we created this line of characters that are slightly grown up slightly psychedelic versions of cereal characters. And we wanted to bring in lots of color and really bring people back to their childhoods and stand in contrast to other healthy cereals, which are typically branded as very boring, plain, muted, minimalist, it's kind of interested in the aisle because our cereal is often beside the healthy cereals, which have very boring plain white branding, but it looks kind of similar to the junky cereals in the sense that it's very colorful with our characters on it. And what we wanted to save the consumer is that you don't have to make this false choice between boring, healthy, you know, minimalist packaging cereal, you know, it's gonna taste like cardboard, and then fun, colorful junky sugary cereal, you can actually have a product we're giving it to you, which is fun, colorful, makes you feel amazing. But it's actually really good for you as well. And so tell people, they don't need to compromise anymore.
Becca Szkutak 23:19
And I'm curious how you guys think about scale here as well, because obviously, in the five years, you guys have been around you expanded into retail. So you have multiple distribution channels now and I know from ordering on the website that you guys don't have treats so little like not granola bars, but like some thing that you would grab, you'd grab when you want to ignore you'd grab a tree. And I'm curious how you think about scale and sort of expanding from here. Do you think about more distribution channels, different types of products, more cereal flavors? Like you're in a category where it's like cereal lung, there's a ton of flavor options, tons of potential and stuff. But of course those adjacent categories also have opportunity to like how do you guys think about scaling from here,
Gabi Lewis 23:57
we generally want to be as narrowly focused as we can be. And cereal is such an enormous category, that we've been able to stay strictly focused on cereal and grow quite large quite quickly. I think if we were in a smaller category, you probably would have had to expand beyond our core sooner. That being said, there are some very obvious JSON categories that make sense for our brand to extend into. And for the past few years, they've been a few product lines that people have been continually asking us for and or making themselves with our products. And so the treats that we just launched recently, which are going to our take on a classic West Krispie Treats are something that people were attacking us on for years making their own tweets from our scenario, they were asking us for years for a version of magic spin on the go. And our brand obviously, you know, perfectly fits that kind of product category. Also, if you look at that section of the store, there's very little innovation in it as well. So we're kind of straddling the line between like a protein bar and a rice krispie treat type product with the fun and the format and the texture of a rice krispies treat type product with a nutrition of a protein bar. And so that's something we launched a couple of months ago. And the reception has been tremendously positive. It's interesting because the kind of bar aisle is very different. The cereal aisle in the cereal aisle is dominated by two or three companies, very little innovation. You look at the bar aisle, you've got protein bars, energy bars, and all these different subcategories of bars, dozens of startups as a new one every week. And so it's actually kind of an interesting dynamic for us. And our answer are very different, the CEO dynamic, but you know, the core principles are what we stand for in the product to the same, you know, we're bringing fun and deliciousness and better texture to a large category that's kind of lacking in that. So most of the most popular bars and have been around for the past few years, no one really likes eating them. They're incredibly chewy, you know, you're sacrificing something. And so again, like we did the CRL, we wanted to say to people, we're going to bring you a product that doesn't involve that kind of sacrifice. It functions like a hardcore protein bar in terms of the macronutrients. But from an enjoyment perspective, it's more similar to a rice krispie treat type product.
Dom Davis 25:58
Have you seen any interests from other big cereal companies and possibly just acquiring your company or possibly just copying what you do already, they
Gabi Lewis 26:08
actually created similar versions, far sooner than we thought. So probably a couple of years into his luncheon that we saw the first one, and actually a new one came out last week. So at this point, there are three or four, you know, similar products that be brought to market by large cereal companies, General Mills has one called WonderWorks. Kellogg's Just launched one called Eat your mouth off posts as one called incredible, you know, especially in retail, the data is public, right? So when we launch to retail, and our velocity was as strong as it was, it's very easy for them to see that there's something they're missing here. And so you know, they quickly go to work and and launched products that have similar attributes in the sense that they're higher protein, lower sugar. And so now there's several brands that have the same kind of high level value proposition, we definitely stand by ours is the best product. And I think the results and the retail velocity definitely speaks to that as well. And from my perspective, it's a huge compliment, honestly, to see these brands turn around, you know, their versions of we're doing so quickly, and I think speaks to their acknowledgement of how big the potential market for this is, which nobody saw a few years ago, right. Even though you can look at these other categories, like ice cream, for example, when Halo top came in and took 5% of that giant market by creating a better version for whatever reason, people were skeptical that could happen and cereal, and now it is happening. And they caught on. But it's been exciting to see.
Dom Davis 27:33
And magic spoon is also sold in the UK, right? Or it ships to the UK, we ship
Gabi Lewis 27:38
to the UK. That's where I grew up. And my grandma would never forgive me if she wasn't able to order some to her house. In terms of retail just in the US.
Dom Davis 27:46
I was gonna ask if the big cereal in the UK is the same as big cereal here in the US. It's similar,
Gabi Lewis 27:52
some of the ownership is slightly different. And they kind of license brands to each other depending on where they have the strongest distribution, but it's similar. There's a couple we don't have over there, or at least we didn't when I was growing up there. 15 years ago, Lucky Charms didn't exist for me when I was growing up. It's possible it's in the UK today, but it wasn't 1520 years ago. So there's there's a few key differences. But we definitely still love our sugary cereal over there, General. And Chris,
Becca Szkutak 28:15
especially where you guys are now in this journey, you're about five years in with magic spoon. And Fred about five years is when you guys decided to sell your last company. And of course, there's a lot of similarities between Expo and magic spoon as well as of course differences. And what would you say is one thing you guys did while building Expo that you have done the same with magic spoon and maybe what's one thing you kind of learned from from building extra that you're doing differently now with magic spoon, somebody
Gabi Lewis 28:43
we've done the same is trying to do as little of our marketing ourselves and try to get lots of endorsers of the product. So with Expo we relied very heavily on influencers, which at the time were paleo influencers, it was the heyday of the Paleo diet, CrossFit influencers, even our sales channels we sold in like CrossFit gyms and Equinox gyms. And so really tried to, especially for a product like cricket protein we knew is going to be better if someone else was saying, Hey, you should try cricket protein for these reasons than this random brand. Nobody had ever heard over the time saying eat bugs, right. And so that was something we leaned into very heavily with Expo and with magic spoon. Similarly, we raised our first few $100,000 from influencers. We knew that a little known brand launching wouldn't have much credibility if we just ran an ad saying try this new cereal that tastes like the CEO you grew up with but it gets zero sugar. That sounds almost unbelievable. It sounds too good to be true. So getting people on board whether it's podcasters or health, wellness influencers or YouTubers to actually say that for us as investors are partnering with them on a paid basis and affiliate basis. That's been key to strategy of both companies. I think the biggest thing we've done differently is at a fundamental level with magic spoon we took more time off Want to make sure we were creating a product that people actually wanted? Right? Like, nobody wants a cricket bars, we were saying it makes sense for cricket protein to exist. A bar is an interesting way to get it to people. And let us now try and convince you why you should eat that. Whereas with magic spoon, if you say to anybody in the street, do you love cereal? They'd say yes. And if you say you're trying to eat a little bit less sugar, or maybe a bit more protein, most people say yes. And so it's a far easier sell. And it was a clear gap in the market. Rather than us trying to create a market. That's been the biggest difference. I think a lot of like young founders think that they can push their way through any idea. And if you're a good entrepreneurs to you, you can take any idea and just make it work through sheer will. I believe that at a time with magic spoon is very clear to me how important product market fit is, which seems obvious, but it is so much easier when there's that fit, which we have here. And so getting that right at the beginning has made this journey infinitely smoother. And
Becca Szkutak 31:01
five years in, I assume you guys eat quite a lot of cereal while building this company. Do you still love it as much as you did when you got started? I
Gabi Lewis 31:09
do. I mean, thankfully, we come out with a lot of flavors all the time. So we typically launch a new flavor every four to six weeks. So that keeps it varied. For me. I'm also now eating the new treats most days. So those have replaced my daily cereal habit. And so the mixing up there
Dom Davis 31:25
and over the years, how would you say you have evolved as I guess a leader as well?
Gabi Lewis 31:29
That's a great question. Obviously, you just have to become more and more removed from things that you're either not actually an expert in, even though you might feel like you are or things that you feel you want to get super involved in or micromanage that, you know, you shouldn't. And so I think in the early days, we obviously touched every part of branding, every part of marketing, we were obsessive around packaging, I still have that instinct, whenever we're seeing an early version of a new product package, I still want to kind of micromanager or suggest Well, what if we change the size of the font to this? Or what if we did this thing there. So there's infinite examples of things like that every day where I think as a leader of a larger company with more experts on board, you have to kind of stop yourself. So that's been a constant effort on my part to kind of not get too involved in many of those day to day decisions that ultimately don't matter. And so I think learning to, you know, empower the team more and more learning to bring on experts, especially for areas where there is a playbook. I think for some of the early DTC acquisition, for example, there's not a great playbook for bringing on influencers, as investors in your business and then activating them. So that scenario where it made a ton of sense for me to lean in and manage on myself. Whereas No, when you know, the equivalent strategic initiative is how do we maximize a launch into Costco? There is a playbook for that. And so understanding which things there isn't isn't a playbook for and then bringing on the experts for all the things where there is a playbook for I think is also an important evolution. Just
Dom Davis 32:58
following up on that. Is there a specific way you and your co founder divided leadership responsibilities? Was there any drama? Or did everyone kind of know what they were going to do?
Gabi Lewis 33:07
Generally, I manage sales, marketing, fundraising, he manages product operations, legal, never really drama, I would say, branding in the early days is the most fun part for both of us. And so even though that technically falls under marketing, which is technically my purview, we should have shared branding in the early days. And I would say not quite drama, but that that was sort of like the compromise, right? Like, I'm gonna get marketing, which is more fun in general, but branding and packaging, specifically in the early days. We'll do that together. And
Becca Szkutak 33:39
I think we just have time for one last question. But we can't wrap this up without knowing which cereal flavor is your favorite?
Gabi Lewis 33:46
I'm gonna say two flavors mixed together. My favorite is mixing the cocoa with peanut butter. Oh, I
Becca Szkutak 33:53
love that you have like all of the say, in like what you guys make and you are mixing them together. Couldn't you make one? That's just a combination of two?
Gabi Lewis 34:02
Yeah, it's a great point. We actually did is a limited edition flavor, and we'll probably bring it back again.
Becca Szkutak 34:08
Okay, good.
Gabi Lewis 34:09
It's funny. We actually, we did at one point lunch, one that was cocoa, peanut butter, kind of because I loved it so much. That was just cocoa and peanut butter combined. And before we launched it, we did a teaser on social media saying we're about to launch this flavor like cocoa peanut butter, get ready. And a few of the comments were like, is this just going to be cocoa and peanut butter combined, mixed together? And a bunch of people came to what he thought was our defense. And they were like, No, that's so lazy. Magix would never do that. They wouldn't just mix two flavors in a new box. And that actually is what we did for the limit edition flavor. And we felt so bad and we felt like we like betrayed our customers. And so that's the story of Coco peanut butter, like existing and why it doesn't exist in the same way. No, but I mixed it myself. Still. We were we were shamed from just combining them.
Dom Davis 34:54
Oh my gosh, that's so funny.
Becca Szkutak 34:55
Oh, that's too funny. Well, I guess that's something to look forward to the new cocoa peanut butter.
Gabi Lewis 35:00
Yeah, we also have new treats flavors launching in a couple of weeks. So that so it's getting me excited to very
Becca Szkutak 35:05
exciting. We are right about at time. So thank you so much for coming on the show. This has been super fun. And now I'm very hungry. Awesome.
Gabi Lewis 35:14
Well, thank you very much
Becca Szkutak 35:21
and that was our conversation with Gabby, Dawn, before we dive in,
Dom Davis 35:25
what was the lie? The lie? The lie is that magic Spence is not available in stores in the UK, but you can still order it online. Oh, well,
Becca Szkutak 35:33
that is good news for all of our UK listeners who heard that at the top of the episode and we're like, whoa, that's not the lie. So that's good. But don't what else did I tell you from this conversation?
Dom Davis 35:43
I mean, like little things like the fact that there is scientists that determine what can be cereal like when he was talking about the ingredients I didn't know that cereal was like an ingredient like cereal grains I didn't know that was a thing. No, it's
Becca Szkutak 35:57
so funny to think about that because like the only category that I like knew those parameters for is like beer like certain countries like Germany have clarifications of what can be considered a beer it has to have like certain ingredients and and stuff like that but like I guess I like of course should assume that is a for other industries. I just like forgot that cereal would be like that regulated in like a terminology and stuff like that.
Dom Davis 36:19
It dawned on me that I don't know what cereal is like I have no idea what is in cereal? Like
Becca Szkutak 36:25
I guess they would have to define it if like people were going to consistency and stuff
Dom Davis 36:30
I guess I have no idea what this is. But magic spoon seems cool. You've had magic spoon I
Becca Szkutak 36:36
have Yeah, I ordered it it's funny that we had this episode now because I ordered them not that long ago for the first time and like I've been getting their ads forever and I've had some friends who also have ordered them in the past but like we just ordered the first box maybe in like October or November and overall my boyfriend I really liked it. We definitely like some flavors more than others. The thing with me is that I know they do a lot of not all their marketing by any means but like a lot of the factors that Gabby kept talking about are like the salsa my parents didn't let me eat that stuff when I was younger so like I don't have nostalgia for like Cocoa Puffs because like I never eat them so it's like I was interested in like the boring I was like Oh Honey Nut love it like you're not roping me in with like cocoa puffs and stuff like that
Dom Davis 37:21
not Honey Nut Wow should the Cocoa Puffs you don't even know you don't even know I guess not so what you ordered it online you didn't go to a store
Becca Szkutak 37:31
Yeah, which it definitely felt weird to like order cereal online.
Dom Davis 37:34
That's really interesting because he spoke a little bit about his DTC to in store online versus in store strategy.
Becca Szkutak 37:41
And it's so interesting to think about cereal as DTC when he start talking about the transition into obviously they still sell online but transition into having suffered retail stores as like well I know how hard it is to get products into retail but this definitely lends better to retail because I haven't ordered it since just because I just don't have space in my apartment have like four to five boxes of cereal at a time but I'm sure if I saw it at a store if I walked by it I'd be like Oh yeah, that was good. Like I'm gonna pick that up so it's like DTC for like food if you're like ordering everything else elsewhere is interesting, but they sounds like they were pretty successful at it too. So I guess retail with being like a quote unquote easier way to like catch up customers I have not surprised it's become like such a big part of their business so quickly. Yeah,
Dom Davis 38:25
imagine millennial shopping habits is really online and also probably the pandemic helped a lot because everyone was buying things online. Yeah, it's like oh, you can get cereal online and just have it delivered.
Becca Szkutak 38:37
That's fair because like I still don't order my groceries online. I know we talked about a little bit with when we had misfit markets on and even just like the behavior change of buying stuff like that online like I never did that during COVID either, but I already feel insane because I'm like we get these things at key foods these things at Trader Joe's this specific thing I can't mark it and this Apollo so it's like adding on like an online components that feels crazy, but I guess I mean, what more the merrier. I guess. Well,
Dom Davis 39:02
I've said this before I buy all of my groceries online, even though I live next door to to grocery stores. It's awful. And it's sad, and I shouldn't do it. I do it anyway. But if I see magic spoon, maybe I'll pick it up and try it. I'm really interested now because I loved cereal growing up. I still love cereal, even though I don't own cereal at the moment and habits since I've started living alone. But when I was a kid, I loved cereal. Yeah, I'm interested definitely in the health consciousness. It's really interesting to see how all of these kind of I guess millennial targeted health brands that are leaning in on nostalgia, and they're supposed to be better for our health. And I find that interesting because not to bring big industry into this but I do think that probably millennials and Gen Z is it's kind of like this is our way to kind of go against the sugar Enos and all of our food that's clearly killing us.
Becca Szkutak 39:53
It is crazy to think about too because obviously healthier cereals do exist but like they're all like brand, this brand that and it's Like he was so right to be like, there's really no middle ground. That's like, we want this to taste good and like be good for you. But it's so crazy like to think about them getting this product market fit and obviously being able to expand and grow and things like that off of the stereo concept. Because Gabby's first startup did not really find that product market fit, which is funny now, because now that I've tried, I remember when people started building these all protein startups with crickets and stuff like that. And I was like, Yeah, I got people eat that, but like, maybe not my journey. But then I was in Mexico City last year, and I ate crickets for the first time. And I was like, these are good. So like, I'm like, actually, I get the whole concept of like, well, if you got people to try it, they're gonna realize it's fine. And like, I just had them fried, like in a bar or something with like, other flavors. Like I'm like, Yeah, I would have bought that now. But I probably wouldn't have literally when he was building it. Crickets.
Dom Davis 40:47
Yeah, I'm sure it tastes lovely. And I'm sure it's all good for you. I could not see myself just willingly trying it like if he would have to disguise it or something. I don't know. Maybe I would eat cricket fried cricket. Does it tastes like what does it tastes like kind
Becca Szkutak 41:04
of like jerky, just like really salty. We found that the key was we would put them in our hands and then look away and then eat them. Oh, and I forget that that's what we're eating. And then it'd be like, Oh, this is good. But it's like, funny to think about going from that company to like magic spoon where it's like, even if we don't eat it actively. Like we've literally everyone said surreal. So it's like, total opposite problems.
Dom Davis 41:26
I love how he was like, let's not build a new market. Let's go disrupt an existing market because cricket might be a hard thing for I don't know the Americans do we not speak for all Americans? But I feel like when it comes to bug food, I do feel like we we lean away from that a lot. We
Becca Szkutak 41:42
do. But who knows that space is really interesting. It'd be funny to like think about if he had done the reverse and like launch the cereal back in like what would have been the heyday of DTC and then like launched that Expo now like I'm not I'm not going to think about how they would have built turned out a food like done the other way around. Well, you
Dom Davis 42:02
know what I wanted to bring up but didn't I wanted to say he should make a cricket cereal. Oh, yeah. Or something. A cricket protein cereal? Yeah.
Becca Szkutak 42:10
Especially because they're trying to make everything super high protein. Maybe there's cricket already in it. And he just didn't tell us okay, I'm totally kidding. He wouldn't. He probably would have told us that conspiracy.
Dom Davis 42:17
Conspiracy. Maybe there's cricket already in the cereal. And we just don't know
Becca Szkutak 42:24
it. And I guess we don't care. Okay. Good. See
Dom Davis 42:27
and see. Like I was saying the sky's the end people will eat it. Maybe we just launched a new flavor for him.
Becca Szkutak 42:33
I think we did. Found is hosted by myself. TechCrunch Senior Reporter Becca Skuta. Alongside Senior Reporter Dominic Midori Davis found is produced by Maggie Stamets with editing by Cal our Illustrator is Bryce Durban, phones, audience development and social media is managed by Morgan Liddell Alisa stringer and Natalie Kreisman TechCrunch is audio products are managed by Henry pic of it. Thanks for listening, and we'll be back next week.
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