Episode #29

Jake Karls from Midday Squares

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In this episode, Jake Karls, co-founder of Mid-Day Squares, a better-for-you chocolate bar company, shares his insights on building a brand that's authentic and relatable. He emphasizes the importance of storytelling, authenticity, and product-market fit in building a loyal fanbase.

Karls also talks about the challenges of running a business with family members and how in-house therapy sessions have been essential to maintaining healthy partnerships and scaling the business. He explains that therapy allows them to have difficult conversations in a safe zone and work through deep issues they have with each other or the business. The cost of in-house therapy sessions is around $50-70k per year, but Karls believes it's worth the investment.

He shares the story of the Hershey's lawsuit, which threatened to sue Mid-Day Squares for using the color orange on their packaging. Instead of backing down, Mid-Day Squares used their strength in storytelling to create a music video and show the irony of Big Chocolate going after a small company. This boldness ended up rewarding them as the video went viral, and they received lots of press, and their consumers loved it.

Karls believes that authenticity creates relatability, which in turn creates trust. He advises businesses to invest in creators, editors, and videographers to build a media team within their organization. He encourages everyone to share their story and not be scared to do so. Everyone has a story, and being authentic and relatable is what builds a community that's a fan of your story.

Karls also talks about the importance of building a strong executive team to scale the business. Mid-Day Squares is currently in the process of building out their executive team to scale to the $100 million mark in revenue over the next three years.

Overall, this episode provides valuable insights into building a successful business that's authentic, relatable, and focused on product-market fit. It highlights the importance of storytelling, authenticity, and therapy in building healthy partnerships and scaling a successful business.

Show Notes

  • (00:00) Introduction
  • (01:15) Jake's background and Mid-Day Squares
  • (03:23) Building a brand that's authentic and relatable
  • (05:36) Importance of product-market fit
  • (07:22) Challenges of running a business with family members
  • (09:57) Benefits of in-house therapy sessions
  • (12:39) Hershey's lawsuit and using storytelling to respond
  • (16:23) Advice for businesses with limited marketing budgets
  • (18:21) Building a media team within your organization
  • (20:39) Mid-Day Squares' future plans
  • (23:22) Building a strong executive team
  • (25:05) Jake's inclusion in Forbes 30 Under 30
  • (26:00) Outro and where to learn more about Mid-Day Squares

Read the transcript:

Sam (00:01): Jake, welcome to Beyond the Inbox. Thank you so much for taking the time to join us.

Jake (00:05): Ah, fired up. It's early morning. It's 7:00 AM where I am in Montreal, Canada. It's like a good morning. So I'm excited to get into a good chat with you and thanks for having me on the podcast.

Sam (00:15): My pleasure. Jake, I want to start by taking us back a few years. You were studying to become an actuary at Western University. One day you experienced an epiphany, you're sat in your apartment on your couch, you're watching Shark Tank. Tell me about that epiphany.

Jake (00:30): So you know what it is. Me, growing up I followed society's rules. And what I mean by that is I think that we as a world, we kind of narrow people into a certain path that basically is get a job, have a family, and live your life. And that's all. And when I was sitting on my couch, I was struggling in school, I was struggling with the actuarial stuff I did actuary to prove to people that I'm smart. That was the real reason. I wanted to say that, hey, I can get a great job, do deep stats in math and show that I'm actually well-educated and get a great job in investment banking or insurance. And I was struggling with the grades. I was doing horrible. I was getting like fifties, sixties and barely getting that. I was trying hard and I couldn't get past that. So one day I'm sitting on that couch and I'm watching Shark Tank and I see this entrepreneur on stage or pitching the sharks and he's so happy, he's so free.

(01:23): He has so much spirit and joy in him, yet he has a mortgage, two mortgages on his house. He has three kids. He has so much responsibility. And me, I'm 22 years old or something or 21 years old sitting on a couch with no responsibilities, but I'm miserable. I feel like I'm caged in this mental prison. And that was the moment I realized that I'm done with following the rules and I'm going to go try whatever this guy's on. That meant entrepreneurship at the time. And I want that freedom. I want to be able to do what I want to do. I don't want to do what society wants me to do in quotations. And it's not for everybody that, but I said, you know what? I want to see above this wall. I want to see past the trees and see what's next, even if it meant sacrificing everything. And that was the moment I launched my first business. That's summer and it was a fitness business and I haven't looked back since.

Sam (02:14): That's a great segue into my next question. Your second business was a startup catering to college parties and it was here where you learned the value of storytelling for brand development. Can you tell us more about that experience and how it informed Midday square's bronze strategy?

Jake (02:32): Yeah, dude, so great segue. So after doing the fitness business, I made some money. I was basically training people outdoors and outdoor bootcamps. I had hundreds of clients. I was actually on fire from a financial perspective, but then I lost passion for that and I closed that business. And every entrepreneur, once you lose passion, it's time to move on. And I went on to this next venture, which was basically throwing parties all over campuses across Canada by using Snapchat and Instagram to excite people and get the students fired up. So basically I would tell the stories of the students, bring them all together, throw a party and then try to sell them clothing that had a logo on it to make money, right? The problem with me was I'm not a good business operator. I'm definitely not a good manager. And I start to realize that that was my weakness.

(03:17): I didn't like running a business, I didn't like doing the admin work, the accounting, the legal, the manufacturing, the margin, everything that has to do with running a business. I hated what I was really good and passionate about was the ability to build community or story tell. And it worked. When I was doing it, I looked like my brand was killing. I looked like I was an all-star brand, but yet the business on the backend was failing dramatically. And I ended up going bankrupt. After a couple of years, we lost like 80 plus thousand dollars and I had to shut the business. That led me to my next venture, which my sister, my brother-in-law approached me with this beautiful chocolate bar idea, healthy chocolate bar that was functional and it was ready to launch. They've been developing it for a very long time and they're like, Hey, we watched you build a brand out of basically nothing with no business operation, but you just had this a massive community that was so fired up.

(04:08): We need you to do that exact same thing with a chocolate bar company, but you don't have to worry about the operations. We love ops. We'll deal with all the ops, you deal with the brand and the story. And in that moment I was like, I'm not a foodie, but I'm like, if I at least have something that if I have people that are good at what I'm bad at and I get to do what I'm good at every day, I will be able to thrive. And that's when we launched Midday Squares was August, 2018. And the goal was simple. Tell a great fucking story. Tell a story that emotionally connects to consumers, make them feel something deeply about the brand. How did we do that? We basically created a reality show on entrepreneurship and used social media as the vessel to tell that story. And what that did was it separated us from the other 40,000 products in the grocery store without having to spend more money. What we did was we created a deeper connection, which when the consumer went to the store, they didn't just see the chocolate bar in the refrigerator. What they did was they saw a brand that they cared about, people that they cared about, and a story that was relatable and powerful to them.

Sam (05:11): I have so many follow up questions I think I'll start with, tell me about the story that you're telling today.

Jake (05:17): So the story was simple. I love Shark Tank. I loved watching Keeping Up the Kardashians at the time, and I actually admired how Elon Musk built his social media following by building out loud and being unapologetically himself. So what I did was I said to my partners, I said, Hey, if we just combine the three of these shows or characters, we could win. And what that meant was use the drama from family business like the Kardashians, take the idea of entrepreneurship from Shark Tank, but go way deeper than just raising money. Let's show them the good, the bad, the ugly of how we build a business. And I'm talking like therapy sessions, breakdowns, milestones, firing legal battles, raising money, everything you've never see in a company, we're going to show it except for our trade secrets. And then the third thing was is we have three characters. Me, my brother-in-law, my sister, we are all different. We all have different love passions, interests in life. If we just show our characters and be ourselves, it will relate to certain individuals and if that relateability kicks in, they'll become a fan of the brand. So I just embodied that whole thing as into one basically reality show on social media and it started to work. So every day we just tell the story of how we build this business, hopefully to a billion dollar business and show you that you could do it by being yourself.

Sam (06:32): What are some of the ways that you're doing this across each channel? I know you have a podcast and know you have a YouTube channel. I know you have a very large following on Instagram. What are some of the ways that you're telling the story on different channels?

Jake (06:44): So yeah, so Instagram is our first channel. We use it as a day-to-day storytelling. So we basically show the stories of day-to-day funny stuff, drama that's happening at the company. TikTok, we put a lot more viral videos, so they basically show a little bit longer format actually that shows a theme that happened. Let's say a machine broke down, here's what happened. We have the largest following on there. We get in the last seven months, we've got 40 plus million views organically through 40 videos. Not just one viral, but everyone going above typically 150,000 to 10 million views each video. And then YouTube is something that we're going to do in the longterm to build the docuseries on there. And we use email marketing, we use use our podcast, which is great. And then I think what is most unique about us is we do a lot of physical things in person. We basically go out as if the three of us are running a political campaign. And what I mean by that is we act as if we're getting, we're trying to get elected to presidency. And how we do that is we go give speeches, keynotes, pump up literally massive rallies about entrepreneurship, about certain topics to get people pumped up. And what it does is it creates this deeper fandom. So when you combine all of this together, you're building a media company and a chocolate manufacturer, not just a chocolate manufacturer.

Sam (08:07): I love that. Tell me more about some of the ways that you are showing up outside of what you're already doing online. You talked about physicality and being present. What are some of the ways that you're doing that? I'm imagining going on podcasts is one of the ways that you're doing that.

Jake (08:27): Yeah, we're here right now. We're on a podcast. That's definitely a way to get the voice out there, build a fan, even if it's one fan from the show, that's unbelievable because a fan can take you a long way. I call these fans, super fans, and what they do is they go to their dinner tables and they share the brand. They go, you got to see this brand, you got to try this product. Sometimes they even bring product to the dinner table. They acquire us customers at a very inexpensive cost. That's number one. Number two is we show up to keynotes that have nothing to do with food and beverage. They could be finance keynotes, they could be showing up to colleges across the United States is typically in Canada. What we do, we could basically go to inspire that next generation to be bold and to try things.

(09:05): Just like when I had that epiphany in college. I hope to get people that epiphany to realize they got to do what they love in life because that's the only way to go. And then the last thing is we go on tv, we go on radio and we literally campaign. It's literally as if we're trying to get your vote and we bring an energy that is unparalleled to other entrepreneurs, I believe, because we don't give a shit in terms of selling you product. That's not what we're trying to do. We're trying to make you feel something deeply inside. We're trying to get you excited about what we're doing or the people that we are. That way when we have you excited, we get you into the rabbit hole of watching our content, falling in love with the brand. And then if you want to support, you can go buy the product at any grocery store or you could buy it on our website just like a band, a rock band does. They produce great music and then people can support by going to their concerts, listening to 'em on Spotify or whatever, apple, iTunes, whatever you want to call it, or buying merchandise at their concert. That is how we are doing it. But except we are selling chocolates, not records.

Sam (10:08): You mentioned email marketing. What are some of the ways that you're using email to drive more sales and build brand loyalty?

Jake (10:14): I think with email we're not doing it typically the way that everyone else does it. We're doing it. We're basically just telling you the story over in a different format of our story of how we build the business on email. So basically we're creating some basic bold emails that go out, I think once a week or so or once every couple days that basically talk about the brand. It doesn't talk about features of the product, it doesn't talk about benefits of the product. It's again, it's like a moment that we had a drama moment or a massive success. And what it does, it's not to get you to buy on the spot, to get you to fall more in love with the brand, to get you, it's to keep you of our journey so that when you are talking about our brand, what's going on, when you want to share our brand, the moments, the drama, the excitements that's going on currently. And then sometimes we'll throw in some discounts. Sometimes we'll throw in some new flavor launches, sometimes we'll throw in new retailers, but most of the time it has nothing to do with selling. It has mostly to do with can we bring you part of our journey? How do we bring you in through the drama or through the success of the company?

Sam (11:13): How do you think more e-commerce brands could build super funds into their businesses?

Jake (11:19): I think the key is to be authentic. And it sounds cheesy. I know this has buzzwords going on in the world right now, but authenticity creates relatability and relatability creates trust. If you have trust with the consumer, you have the chance to sell them on anything. Now here's the kicker of the whole thing. If you don't have product market fit, and this should be a standard across any business, forget about the storytelling product. Market fit is the number one important thing about a business. If your product's not fuck yeah or good, you're in trouble. You're in trouble because people need to come back. You could be a celebrity and have the biggest following, the biggest social media and you post and everyone buys your product because they're excited. But what happens in two months when they need to buy it again and they don't like it, they're not going to buy it again.

(11:57): Even if they love you, they might buy it one more time just for support, but eventually it's going to die off. So for me, any business starts with product market fit, a great product. Once you have that, the story and authenticity can actually scale you. Now, authenticity is something that we as humans have craved forever. As long as we have been human, we've craved the ability to connect with other people. The only way we connect is if we feel like the other person is being genuine, is being real and is telling a story. Stories again, have been around for 10,000 years. It's just they change on different channels. Now, whether it's through dialogue or through TikTok or through YouTube or through podcasting. In the past it used to be when we used to hunt and gather as a society, we would sit by a fire share food, tell our stories of our hunting. That was the stories that actually helped us evolve and connect deeper as a society. So storytelling, authenticity is the easiest way that brands can actually build fandom and it's not going to happen overnight. I think that we need to get over this idea of virality and building fast build foundation and the foundation will take you and reward you over the long term.

Sam (13:04): Speaking of foundations, one of the things that I found when I was researching for this episode that really fascinated me, this is a quote from another interview with assistance from a therapist, the trio that is you and the co-founders navigates the complexities of running a successful business alongside the sibling. Drama and relationship challenges inherent in their multi-dimensional connection in-house therapy is part of the company's organizational structure. My question for you is how has your company benefited from providing in-house therapy sessions and how do you measure the return on investment of this practice if even possible?

Jake (13:39): So we're spending about 50 to $70,000 a year on therapy. And I say that proudly because it's the only reason why the business is here today. So the return on investment is simply the business won't exist. And the reason being is partnerships are extremely hard. My sister, my brother-in-law or my partners, they're married. And this is a difficult to scale a business and build it to hopefully one day a unicorn. There's a lot of pressure, there's a lot of problems, there's a lot of drama. So for us, the therapist, what it allows us to do as the business coach is he actually allows us to have very hard conversations in a safe zone. And he allows us to work through deep issues or deep, deep problems we have with each other or with the business. And it just gives it another outside perspective that's professional to guide conversation.

(14:27): And we go typically once or twice a week. And without him, Dr. James Gavin, I don't think we'd be here today. And I think a lot of people don't realize that a lot of businesses fail not because of bad product or not because of bad marketing, because of founder conflicts or partnership conflicts. And that's just because people build up animosity. And once you build that up, you're done. You're basically, you hate the person you work with, you don't want to show up every day. You start to do things that are irrational because you want to get back at them or you want to ignore them. And that's when the business is over. And I think that that's something that we made sure at the beginning was we got to leave this business still as family, even if it fails or if it goes wrong or if it's for huge success. If we're not family after it and love each other, then it wasn't worth it.

Sam (15:19): I understand the private nature of therapy, but is there an example of a challenge that maybe you can mention that you were able to overcome having gone through this process?

Jake (15:27): I'll give you an example of my two partners. So they're married, right? And two years ago, the business was going through immense amount of pressure and stress, and I think we were raising money at the time, and my sister, my brother-in-law were not getting along and they were two weeks away from getting divorced and that would implicate the company because so they were so close, but we worked through the therapy and I had to sit there and watch because they're my partners and my family and I had to watch them do the comeback. And what they did was they spent two weeks straight every day going to therapy and I would watch, and what they would do is work on that. They both want the big vision, the same big vision of their life and the business. They actually are aligned very much. They just need to feel like how they were communicating during these extreme stressful times and pressure on how to understand each other better.

(16:21): How do we want to work together? How do we bring up conflict? How do we work through signs to tell us how we're feeling before we download on each other or before we come at each other? And it was really inspiring to see them come back from it. And it was scary because I had to worry about the business and my sister and my brother-in-law. And I think that the only reason why they got through it was because of the deep therapy, the hours of time put into the idea that they're both committed to this larger vision of their relationship of love, but also the business of midday squares and how that came full circle and figuring out little tools and tips to deal with certain things as they get high in pressure, high in stress. And I think that there's been many moments that we've gone through therapy on emergency calls where they've been at 9:00 PM at night when we're blowing up the three of us in a fight and we need to have him as a guidance or as a tool to walk us through this difficult conversation. And yeah, I'm grateful for him and I'm grateful for therapy as a whole. And I think it's something that everybody should look at. You don't have to be sad or depressed to go. You want to improve. And what therapy does is it just makes you a better person.

Sam (17:30): You mentioned some of the stresses the business has gone through over the years. I wanted to ask you about the chocolate Gone crazy N F T project and her she's lawsuit. Can you talk more on that?

Jake (17:42): Yeah. So we ended up not doing the N F T project and I'll tell you why it was perfect timing. But basically what happened was in 2021 or 2022, I can't remember the exact date, Hershey's wanted to purchase Midday Squares and they loved our product, they loved our brand. And I'm actually a big fan of Hershey's. I think they built a legacy iconic brand and kudos to them. They're massive. Do I love their products? No, but I think the brand is very powerful. And basically after multiple conversations that went very well, we decided not to go through with the purchase and two months later, I believe it was, they decided to come at us for our color orange. And basically they threatened to sue us with a season assist letter basically saying that we cannot use the color orange anymore on our packaging. And our peanut butter flavor, which was the color of package, was orange.

(18:32): It was not the same as Reese's, but they believed that we couldn't use it. And if we were to go to court, we actually could potentially have would've worn that case, but it would've been dragged out for five years, would've costed millions of dollars. We didn't have the money we a startup. So what we did was we decided to basically use our strength and our strength was not legal or money, it was storytelling. And what we did is because we film everything, we had the irony of conversation, everything going smooth and everyone being okay with everything to then coming at us after not getting their way with their strength and basically asking, basically forcing us to change the package. And what we did was we did change the package slightly and we told that story. And what we did was we showed the David versus Goliath chocolate gone crazy big chocolate versus small chocolate.

(19:15): And our consumers loved it. They were like, wow, this is crazy. This is like, are they scared of midday squares? A small little company that was doing like $9 million at the time in sales. And we basically then went even a step further because we got so much press. It was so exciting. Everyone was laughing, it was irony, it was hilarious. And we ended up making a music video called Chocolate Gone Crazy, and it was a disc track. We decided to spend the 70 K to build this music video, learn how to sing seven months of it to basically show that we are midday squares. We don't want to be you Hershey's and you can't do this. You might be able to come at us legally, but you can't go make a music video with your team and show this energy and this relatability to the consumer.

(19:57): And it blew up even more. It went viral. And again, media picked it up. Retailers picked us up, everyone was fired up and Hershey's say anything because they realized that storytelling is what's at the heart of the consumer and people don't like people pushing smaller companies around that are trying to do great things. So in the end, there was no other conversation after and the N F T project was going to be this whole moment of it. But then we ended up making peace with them when I spoke on a panel with their head of m and a and he just told me, he's like, Hey, we love that music video. It was so cool. And I just shook his hand. I said, we're big fans of your brand. Just don't come at us with this bullshit legal stuff and we'll continue to be fans of your brand and we look up to you guys. And it was in that moment, we canceled everything. And yeah, it was a fun time in history. And the lesson from it is for any brand is you don't always have to just silence yourself and sign a contract and move on. You can have fun with it, but you got to be ready to take on the consequences of having fun with it that everything could get fucked up and you could lose your company. For us, the boldness ended up rewarding us, but sometimes that boldness might not reward you, so just be careful and cautious.

Sam (21:07): It sounds like all the storytelling that you had been doing up until that moment really served you in the long term.

Jake (21:13): Well, yes, because we knew how to do it. So we had all the content, we had all the videos, we had all the ability to actually tell that story, and we weren't scared to tell. We have a media team that it's all videographers editors. We could have created that good content, but not everybody has that. So I think that everyone today should invest in creators, editors, and videographers into the company, into the marketing team. I think that that's a mandatory thing to have because outsourcing all the content is very difficult because the authenticity is not fully there. It could get there somehow, but you can't get it every day. For here, our team can capture everything that's happening in a very authentic manner. They can go through quick moments that happen with the snap of a finger. So I think everyone in the next decade, if you want to win in every industry, build a media team within your organization,

Sam (22:01): What would you say to anyone that's listening to this now that is maybe on a small team or has a limited marketing budget? How would you advise them to get started with content so they can start telling their brand story?

Jake (22:12): Yeah, step one is to not be scared to share your story. So everybody has a story. And when I go give some keynotes and stuff like that and people ask, well, I don't have a story, I'm not interesting. I say, that's incorrect. You don't think you're interesting because you live your story 24 7. That doesn't mean I don't find you interesting. I don't know your story. So it's like people just need to be able to share that. And I'm not saying go share therapy sessions and breakdowns and all that jazz. You don't have to do that. What I'm saying is fine with everything's authentic to you and share that story, share it every day. Because eventually if you stay consistent, people will start to relate. You'll start to build a community that's fans of your story and they will support whatever you're doing. Nothing happens in 10 seconds. Nothing happens in 10 days. It might take years, but at least if you stay consistent, you will get there. I can promise you, you'll give yourself your best chance at winning. It doesn't mean guarantee, but you're at least your best chance.

Sam (23:09): Where do you see the brand in the next three to five years?

Jake (23:13): Yeah, we want to be a household better-for-you chocolate bar company worldwide. So that doesn't even just mean North America. That means in the uk, in the Middle East, in Asia, in Europe, in Mexico, in the next 10 years, I believe we go global in the next five years, I think we'll be dominating North America more. Right now we're doing very well in North America, Canada and United States, but we still don't have three years to continue to build out the United States and become that number one player in that refrigerated fresh chocolate snacking set. But yeah, we want to be a global brand that's a chocolate bar company just like Hershey's built, but a different style of that.

Sam (23:50): Can you share any exciting projects that you have upcoming?

Jake (23:54): So yeah, so we just launched a new flavor called Cookie Dough. It's on fire. Everyone's got to try that, but right now we're really working on, our whole thing is building out our executive team right now. So I know it's not as exciting for the consumer, but it's exciting for the brand to scale to make sure that this company could scale to the way it scales and be around for the next 20, 30 years. So we just hired a VP of ops. We are hiring a bunch more in the executive team over the next couple of months, and I think that that will help us scale to the a hundred million dollars mark in revenue over the next three years if we get this team right. If we don't, I don't believe this company will be around.

Sam (24:24): I want to close this interview by coming full circle. You were recently featured in Forbes 2023 edition of Foodie into 30. That must have felt like quite an achievement.

Jake (24:35): Yeah, dude, that was a dream come true for the last 10 years. So it was cool because I represented the entire food and beverage category in North America. I led it and it was a dream because it's not that it's just the magazine, you're on a cover of magazine and all that and the hype and all that stuff. It's actually because it shows that I wasn't good at school, I wasn't good at all these things, and you could still do things and get recognized not just from your family and friends, but from organizations worldwide because they recognize me being myself. And I think that that's the power of where the future is going is people being themselves are going to be the winners in life. Because if you are yourself every day, yes, you have faults, but at the end of the day, that Unapologeticness is relatable.

(25:17): It's real. It allows you to be your best version, even if it means you're a whack job, you're weird, you're quirky. That's what people want to see. And not everyone's going to like you, but when you are yourself, people that do respect, that are going to love you, they're going to be diehard. And I think that what Forbes 30 or 30 was cool about was it recognized me being myself and actually rewarding me for being myself. And I think that that says the lot to the next generation of entrepreneurs or amazing individuals to just go out there and be themselves and be proud of it. Even if there's some weird shit about you, embrace it because that's what makes you,

Sam (25:54): I think that's a great place to start wrapping up, Jake, where can our listeners go to learn more about Midday Squares?

Jake (26:00): Check us out on LinkedIn, midday Squares, on TikTok, midday Squares, Instagram, midday Squares, and soon YouTube. If you want to buy the product, wwe.middaysquares.com, you can get on our website or you can go into stores. We're in 4,500 stores across North America. Target Whole Foods, sprouts, Walmart, Canada, all over the place. All you got to do is go in our store locator. But the kicker is the product lives in the refrigerated section. It doesn't live where the bars are. It lives in the refrigerated section. And yeah, just follow our journey. You'll have fun, I promise. It's definitely different than any other C p G company.

Sam (26:31): Well, Jake, I've really enjoyed speaking to you today. Thanks again for taking the time to join us and all the best in the future with Midday Squares.

Jake (26:39): Thanks for giving us a chance, brother.