(Don’t) BEHAVE Yourself: Mayssa Chehata with Scott Hartley
Mayssa Chehata, founder and CEO of BEHAVE chats with Scott Hartley, General Partner of Everywhere Ventures on episode 124: (Don't) Behave Yourself.
In episode 124 of Venture Everywhere, Scott Hartley, a General Partner at Everywhere Ventures, talks with Mayssa Chehata, founder and CEO of BEHAVE Candy — the first-ever better-for-you confectionery brand making low-sugar gummies without artificial sweeteners. Mayssa shares how her dad’s diabetes and her own sugar addiction drove her to prove that candy doesn’t need artificial sweeteners or sugar alcohols to taste good and stay blood-sugar-friendly. She discusses BEHAVE’s vision to build the healthy candy aisle of the future — where taste, accessibility, and clean ingredients all come together.
In this episode, you will hear:
Reformulating BEHAVE’s recipe to cut sugar without artificial sweeteners
Landing Erewhon as an early anchor retailer to build credibility
Rebuilding the supply chain to lower COGS and find a co-packer
Building a following on TikTok that ultimately doubled revenue
Pricing BEHAVE for accessibility while protecting margin
If you liked this episode, please give us a rating wherever you found us. To learn more about our work, visit Everywhere.vc and subscribe to our Founders Everywhere Substack. You can also follow us on YouTube, LinkedIn and Twitter for regular updates and news.
Transcript:
00:00:04 VO: Everywhere Podcast Network.
00:00:14 Jenny Fielding: Hi, and welcome to the Everywhere podcast. We’re a global community of founders and operators who’ve come together to support the next generation of builders. So the premise of the podcast is just that, founders interviewing other founders about the trials and tribulations of building a company. Hope you enjoy the episode.
00:00:32 Scott: Hi, everybody. Welcome to the podcast. I’m Scott Hartley, co-founder of Everywhere Ventures. I’m super excited to be here today with Mayssa Chehata, founder and CEO of BEHAVE Candy, the first ever, better for you confectionery brand.
00:00:45 Scott: I think of you guys as the healthy Haribo. The gummy bears that have significantly less sugar, no artificial ingredients, taste amazing. I love the sweet and sour different versions that I pick up at point of sale.
00:00:58 Scott: But Mayssa’s got an amazing background as a former BD and marketing leader. You were at Uber, you were at Daily Harvest, SoulCycle. I know you’ve had a journey with BEHAVE.
00:01:08 Scott: And we’ll get into all the ups and the downs and the crazy moments that you experienced as a CEO who was bootstrapped and then raised capital and has grown to scale through a TikTok shop into traditional retailers such as Target, Erewhon, Urban Outfitters.
00:01:24 Scott: But really, really happy to have you here today with us, building one of the leading consumer brands in a rare part of our portfolio.
00:01:31 Scott: We don’t have a ton of consumer brands, but those that we have like BEHAVE, Fishwife, some of the others are really outliers in the space and we often contemplate, “Hey, should we be doing more deals like this?” Because you guys are truly incredible. Welcome to the podcast.
00:01:45 Mayssa: I love it. Thank you so much for having me.
00:01:47 Scott: Absolutely. Walk us through this journey. 2019, prior to BEHAVE, you were at a number of big brands. What inspired you to take that leap and gave you that confidence to jump ship into the wild west of being a startup CEO?
00:02:01 Mayssa: I feel like in my career, I kept going smaller and smaller in terms of company size. I started very corporate at a huge legacy business, the NFL. Almost as corporate as it gets.
00:02:12 Mayssa: I love that experience, but I always had this very entrepreneurial itch. I felt like the little piece of the business that I touched or even the executives that I sat under always felt very restricted in a big company. And I love the thought of being able to impact an entire business.
00:02:28 Mayssa: After the NFL, I joined Uber. Uber at the time was much smaller than it is now. It wasn’t tiny, but we were maybe like a thousand employees. Pretty early days still. And there, I felt there was so much ownership.
00:02:43 Mayssa: If you didn’t do something, it wasn’t getting done. If you had an idea, you went and ran with it. And I loved that. And then, I had an opportunity to join an even smaller company, which was Daily Harvest.
00:02:52 Mayssa: That was where I really got this appetite. I worked directly with the CEO and founder there. Very early days. I think I was in the first 10 employees. Really rapidly scaling CPG health food business.
00:03:04 Mayssa: I loved the space. I loved that we were making products that you could actually touch and feel, which was very different from tech and sports before that. The impact that we were having on our customers.
00:03:13 Mayssa: Everyone was doing everything. So we would see customer emails, people who were now feeding their families with these healthier, better products and the convenience of it. And so, I loved the space. I loved that it felt like we were putting something good out into the world.
00:03:27 Mayssa: And then, I loved the size of the team. I loved knowing that like anything that needed to get done, we just would strap up and do it. I loved working so closely with a founder. And I think that’s where I felt like, “Oh, I would love to be in that seat one day.”
00:03:40 Mayssa: I maybe didn’t realize that I would also eventually be getting into food or that it would be so soon. I had another role after that, which was SoulCycle, which was a bigger company.
00:03:50 Mayssa: I had had the idea for BEHAVE while I was at Daily Harvest. That’s where I was really looking to scratch this itch to start something from scratch. And again, that health food space got me really, really excited and really curious.
00:04:02 Scott: Talking to Alex Abelin from PlantBaby and his journey on building that company, this drive to want to create something physical in a very digitized world. But obviously, it comes with massive challenges around inventory, ingredients, the basic beginning building blocks of production.
00:04:20 Scott: How do you go from idea through that very first iteration? How did you get off the launch pad? Because I think a lot of people have some idea and they say, “Gosh, I have no idea how to take this from zero to one.” And you did that through really bootstrapping the business.
00:04:34 Mayssa: What I realized afterwards is I was at Daily Harvest at a very early stage, but we had passed one. I’d missed the zero to one when it comes to manufacturing and product development.
00:04:44 Mayssa: by the time I joined Daily Harvest, our manufacturers were in place, our supply chain was pretty much secure. We had teams and ops teams and people that were putting out fires.
00:04:53 Mayssa: We’re dealing with crises. We’re obviously always iterating and improving, but our supply chain was not broken. Zero to one on a physical product, especially a food product, everything is broken. Everything is a fire.
00:05:04 Mayssa: Obviously, there’s exceptions. You have these industry veterans who have done this a hundred times and sold multiple food businesses and they get into it and they know exactly the right people to hire. They know all the red flags with the wrong manufacturers to look out for.
00:05:17 Mayssa: That just wasn’t the case for me. I had been in a CPG food business, but I was on the marketing side of that business and we had already passed a stage where ops issues were directly touching me.
00:05:26 Mayssa: I came into starting BEHAVE from an ops and a product perspective a little bit delusional. I was like, “Oh, you just create a formula. You go to your co-packer. They start making it for you and you’re off to the races,” because that was my experience at Daily Harvest.
00:05:38 Mayssa: I missed zero to one. I like have to give so much credit to our founder because there’s always the tip of the iceberg and then there’s everything underneath in food and CPG businesses, even in the story that gets told after exit or after the company has blown up.
00:05:52 Mayssa: It’s a little bit because of founder PTSD. I think we wipe our memories sometimes once we get past it. That story of zero to one doesn’t always get told and I think it’s missing sometimes.
00:06:02 Mayssa: To answer your question… the idea I had was clean candy with low sugar that would actually pass the bar for a diabetic. My dad’s diabetic. I learned how to read labels and ingredient lists really young.
00:06:15 Mayssa: We ate super healthy at home. I understood what net carbs were. Like, I knew all of that from a pretty young age. I wanted to make a candy that would pass the check for my dad, which doesn’t spike blood sugar, without replacing sugar with artificial sweeteners like aspartame or sugar alcohols like erythritol and maltitol.
00:06:31 Mayssa: That was the question: can we make a gummy candy that would pass all of these checks? The starting point for me was I decided I wanted to reach out to a chef. That was a model that had been successful for us at Daily Harvest.
00:06:43 Mayssa: Our founder had hired Michelin-trained chefs to create all the early smoothie recipes. The thing is they tasted amazing because we got a lot of press and marketing from that and I had picked up on that.
00:06:54 Mayssa: So I was like, “Oh, a chef kills two birds with one stone.” Your stuff is going to actually taste really good and you have this marketing lever, which is, “Hey, we didn’t just develop this in a lab with a food scientist,” which is the way a lot of food gets developed.
00:07:06 Mayssa: And that’s also why a lot of health food doesn’t taste that good. You’re backing into a formula on a spreadsheet of how do I get the sugar down? Oh, I’ll just swap this for this as a percentage. We actually went ground up. We bought all the ingredients.
00:07:19 Mayssa: So I met a celebrity chef, which again would lend to like having someone with a public persona involved in the business. Elizabeth Falkner, who’s incredible, who’s still involved in the business.
00:07:29 Mayssa: I truly cold emailed a bunch of celebrity chefs and she was one of the people who replied. So we started true product development in her kitchen. It’s how we started out, off of a cold email.
00:07:39 Mayssa: And then, once we had that formula to a place that we were excited about, we brought in a food scientist to help scale the formula up for commercial scale manufacturing. We found our first co-packer and then we went into our first commercial production run.
00:07:53 Mayssa: There were problems like the fiber content was too high. We heard from customers on those early formulas, this is too much fiber for one serving. I’m getting gassy, stomach stuff.
00:08:04 Scott: I remember in the early days, the stickiness was an issue,
00:08:07 Mayssa: Totally. And now we say we blend the magic of chefs with the science of food scientists because you have to have both. Stickiness for a product like ours comes from bricks, water activity. You have to have pH levels balanced. Our products have sweeteners and then acids. And some of these things draw in water. Some of these things exude water.
00:08:26 Mayssa: So much that I’ve learned. I didn’t know any of this in the beginning. I just thought a gummy. You just mix something on the stove and then you pour them into molds and you put it in the fridge. You have a gummy.
00:08:35 Mayssa: We brought people in. Like we hired a consulting food scientist for that first scale up, but they maybe didn’t have that specific gummy experience. This is just the stuff that you learn. I just thought food scientists would understand across categories.
00:08:49 Mayssa: We were also creating a category. Even food scientists that had worked in candy before, almost none of them had worked with the natural sweeteners that we were using, like monk fruit and allulose. That has a huge impact on water activity. That contributes to why our candy was sometimes becoming sticky, whereas a regular sugar candy would not.
00:09:07 Mayssa: So, we now have an incredible food scientist on our team who’s very well versed. We’ve been learning some of this stuff together because these products don’t exist. There is not a rule book on how to remove 95% of sugar from a product that typically is anywhere from 60 up to 85% sugar content.
00:09:25 Mayssa: We’ve learned a lot. We’ve stumbled a lot, but now we’re definitely in a place where we’ve built a supply chain that can scale the business.
00:09:33 Mayssa: For the first couple of years, our supply chain wasn’t there and we were constantly out of stock, constantly producing product that either wasn’t sellable or we’d sell discounted or trying to get it off our hands.
00:09:44 Mayssa: That kills the momentum of the business. That was really, really hard. That was probably the first three years of the company.
00:09:50 Scott: I mean, one of the most amazing things about the category is the shelf stability of the candy. Landing in Munich or Frankfurt and you go to the candy aisle in a German airport and you’ve got about 100 SKUs of Haribo.
00:10:02 Scott: And I would love the future world where I walk into an aisle at Target and I have 100 SKUs of BEHAVE that’s all healthy candy that tastes delicious in all the different form factors and flavors.
00:10:13 Scott: And I think that’s part of the vision, building a healthy candy aisle that, to your point, can not spike blood sugar, can actually give you some vitamins, can give you some fiber content, not an overload of sugar.
00:10:26 Scott: On this journey of the ups and the downs, I know that there were a couple moments where it was existential. You got to the point where you’re at the brink. And what we see perennially with great founders is this irrational exuberance, this ability to push through those moments when a lot of people want to throw in a towel.
00:10:43 Scott: How did you get through those moments and what were some of the ways that you were able to navigate out of those corners?
00:10:49 Mayssa: I love the irrational exuberance because when you said it, all I could think was I wish it felt like exuberance in the moment. It felt a lot more like stubbornness because I was so burned out. I didn’t feel exuberant at all.
00:11:03 Mayssa: But there was some part of me definitely that was like, “We have to keep going.” But you have to think about three years where like, every production run feels like the product’s not where I want it to be.
00:11:16 Mayssa: Then we get some momentum. I remember one time we got on the Today Show. We had production scheduled that was going to bring us the inventory. We needed to fulfill all the orders that we knew were going to come in from the Today Show.
00:11:27 Mayssa: Something went wrong in that production so we were not able to fulfill like, thousands of orders from this Today Show segment, or it took us over a month. You finally get this momentum and you lose it all. It’s like… already being a founder in good conditions is hard.
00:11:42 Mayssa: I felt like I was trying to push this boulder uphill. And so, really taxing mentally. And this stage also, you’re… small business. You don’t really have a team. Me and my co-founder, we had an employee at one point. When she left, we didn’t replace her for budget reasons.
00:11:58 Mayssa: So it was really just the two of us. We didn’t live in the same place. So we were just working on our own. I mean, together, obviously working closely every day. But it’s a very lonely time, those early days and it’s the hardest time.
00:12:08 Mayssa: So I think some of the stuff that got me through… for one, I think that vision that you just mentioned, Scott, I so appreciate you. You’re a great investor because you have tapped into my vision as well. We’re seeing the same future.
00:12:21 Mayssa: From the very beginning, I always saw that. The more things that went wrong, the more I felt like someone has to push this disruption forward because this is the worst category in the grocery store in terms of artificial ingredients, in terms of sugar content, in terms of dyes, things that are really, really harmful to us, extremely toxic – and as far as a category that is marketed primarily to children.
00:12:46 Mayssa: Part of why I started this company, too, I mentioned my dad’s diabetic but I have a huge sweet tooth. Especially over the years of building this business, I’ve thought a lot about this and I’m in this space. I have a sugar addiction, truly.
00:12:57 Mayssa: I’m the type of person where like, if I have a little bit of sugar, I will then for days be thinking about sugar nonstop, eating it like I can’t really stop myself. It is some dopamine loop that I get stuck in.
00:13:10 Mayssa: I just realized I picked this up as a kid. So when you get people into a dopamine sugar addiction loop as children, which is obviously the intention, they will eat and be addicted to sugar for the rest of their lives.
00:13:21 Mayssa: Sugar creates so many of the deepest, most expansive health issues that we’re facing now as a country and just globally – diabetes, obesity, cancer. Sugar’s an attractant for tumors, autoimmune disease, PCOS, hormone imbalance, all connected to sugar intake.
00:13:37 Mayssa: And the solution and mitigation for the symptoms of these illnesses, often, is to cut out sugar if you can. It’s hard to cut something out that you have a psychological addiction to.
00:13:47 Mayssa: Not to go on a tirade and a TED Talk about sugar. But this is just to say that like the deeper I got, the more conviction I almost came into in why we should exist or why at least someone doing what we were trying to do should exist. And so, we just doubled and tripled down.
00:14:02 Mayssa: I think the other thing that kept us going, honestly, is my co-founder. Huge shout out to Emily. My co-founder joined me actually after we launched the business. I hired her as our COO.
00:14:11 Mayssa: She immediately stepped into like, much more of a co-founder type role. And she has that title now. I can think of twice where I literally called her and said, “I think we’re actually done.”
00:14:21 Mayssa: I mean, a hundred times where I called her and needed to be talked off a ledge. But twice, the cash is running out. I don’t know if the math works where we’re even going to make it to, let’s say, 60 days.
00:14:32 Mayssa: You can’t get to day zero because you have people you need to pay back. There’s wind down costs. So let’s say, 60 days out twice. She was like, “We’re not done. I have a plan. Or we’re going to sit together and put the plan together.”
00:14:43 Mayssa: Huge shout out to her, too. I think sometimes as the founder, you’re out of steam, too. I know for some people, it’s their partner who’s like, “Hell no. You’re not going to quit.” For some people, it’s a parent or a great coach.
00:14:54 Mayssa: I think working with coaches in this role is amazing. Or I’ve become so spiritual through all of this too, Scott. I started asking the universe for signs. A hawk landed on my fire escape in New York city.
00:15:07 Mayssa: I was having the worst day. I was like, what are we going to do? And a hawk – a hawk is huge. I thought that a cloud had blocked the sun because my apartment became dark. And there was a hawk sitting outside my window.
00:15:18 Mayssa: And I just was like, “Okay. I don’t know what specifically what this means. It has to mean something. So let me like double down right now.” Get wonky with some of it, but we’re still here now. So there’s a reason for that.
00:15:30 Scott: There is. It’s funny because I think it’s really having a partner in battle. Jenny and I with Everywhere, we’ve had our ups and downs in the yin-yang dynamic of who’s up, who’s down, who’s confident, who’s having a challenging day. It’s really helpful to have that partner in crime that keeps you honest and keeps you moving forward.
00:15:48 Scott: When you kind of went through one of these downturns, I know one of the things that you turned to was TikTok. You guys have done an incredible job generating content and really building a business off of short form video.
00:15:59 Scott: Was that always part of the journey? Was that something you guys A/B tested and experimented with and then found, “Hey, our customer acquisition cost is low. This is a really interesting channel. Let’s double down on that.”
00:16:10 Mayssa: Much less scientific than that. 2020, I was one of those people that was chronically on TikTok during COVID. I think for our age group, I was a pretty early adopter on TikTok and was pretty active as a scroller.
00:16:23 Mayssa: I knew the power of the platform early for a founder, just millennial age group. From when we launched initially in 2020, I always had an intern or someone on the team just posting. We were always aiming for one post a day, because that consistency really does pay off on that platform.
00:16:40 Mayssa: But it was never really translating. We were in 300 view jail for years. Then what actually happened is a funny path to it. It was the third year of the business when like… we realized we had to reset a lot of things.
00:16:53 Mayssa: We had to fix our formulas. We had to find a new co-packer. We had to change our pricing structure and our COG structure. Like, we actually ended up winding down, forward-facing operations. We were still selling through existing inventory, but we weren’t doing any new production while we reset.
00:17:08 Mayssa: There’s a lot of waiting in a CPG business, You’re like waiting for your next formula. You’re waiting for the co-packer to respond. You’re waiting for a contract.
00:17:17 Mayssa: In that time, I decided that I needed to learn TikTok myself. But I think I was so burned out on the business. I was like, I’m not going to force myself to make TikToks about BEHAVE, but I have to post a TikTok every day.
00:17:29 Mayssa: That’s going to be like one thing that I’m going to challenge myself to do. There’s a little more downtime right now. I started posting TikToks. Initially, I think I was talking about dating. It was the last World Cup at the time. I posted a few videos about the World Cup that got 30,000 views, 50,000 views. And I just kept that ball rolling.
00:17:44 Mayssa: And then, after a year, when we were ready to relaunch the brand, I had gained a following on TikTok. I really enjoyed it. I had learned how to edit video, how to create content. Like, it just had this ripple effect.
00:17:57 Mayssa: And then I still, at that time, did not start translating that newfound skill to the business yet because then we needed to relaunch the business. And then, things picked up and I got busy again.
00:18:08 Mayssa: We picked TikTok up in a serious way for the business was one of those phone calls to Emily when I said, “I think we’re like, 60 days out and we might need to talk about winding down.” And then she was like, “No, let’s sit and get together.”
00:18:18 Mayssa: And the reason we ended up saying we’re gonna go all in on TikTok is it was the only thing we felt, it could turn our business around in 60 days. You can’t get a new retailer in 60 days, not a big one. We were like, “One viral video could theoretically turn our business around 60 days.”
00:18:33 Mayssa: And I had been on TikTok now for a year. So me and her, we were like, I’m just gonna turn all my focus to making TikTok videos for 30 days. We’ll see if anything happens. And in two weeks into that, we had a video that went viral and it doubled our business overnight.
00:18:47 Mayssa: We did as much revenue as we had done the previous month. So that was a complete trajectory chain. Literally saved the business. Immediate cash in also. Like TikTok pays out pretty quickly.
00:18:57 Mayssa: Honestly, it was a survival decision. We figured out this formula that was working, that was making these videos go viral. And we just kept pouring fuel on that fire over and over. It was not as scientific as testing.
00:19:08 Mayssa: And then, we just started cranking as much content out as we could for that 30 day period that we thought could potentially go viral.
00:19:15 Scott: And then when you had those viral hits, did that consumer facing success lead back to some of the B2B relationships where you were able to unlock the Target relationship or unlock Erewhon or some of these others?
00:19:27 Mayssa: Absolutely. I mean, retailers now are really looking for brands who can bring people into the store. I think the retail game has changed significantly since COVID. Foot traffic is down for a lot of the major retailers. So they need you actually to like drive that shopper into their store to be looking for your brand.
00:19:45 Mayssa: When you’re a small unknown brand, you’re not gonna do that. We did one or two retail partnerships in the early years that were maybe like a little bigger than we were ready for. We were never performing terribly, but we were never outperforming.
00:19:58 Mayssa: We knew that our brand was too small, not enough people knew who we were. When we have viral videos getting three, five, seven million views, now suddenly you have this whole new audience of people who’ve seen you before.
00:20:09 Mayssa: The first time I was in a Target and I just saw a woman buying BEHAVE by chance, it was the only thing she was buying. She had come into Target, I guess, specifically to buy it. And she was like, “Oh, I’d seen it on TikTok.”
00:20:19 Mayssa: Also now, buyers are looking at TikTok. So candy buyers are going on TikTok and seeing what brands are viral. We had inbound business, too. Like our Sam’s Club business, that was an inbound.
00:20:28 Mayssa: We had an inbound opportunity from another like gigantic retailer that we’ll be launching in…. date not yet confirmed, but coming soon, I hope. The buyers also have their eyes on that platform, at least for the candy industry. And it just brought us so much leverage.
00:20:42 Mayssa: We used to beg these retailers to even answer an email or consider taking a meeting or even to send them samples. And it was crickets. Suddenly, it was almost overnight, our emails started getting answered.
00:20:54 Scott: One of the rollout playbooks that Katie Hunt, founder of Oh Norman! – she was at Showfields, was early employee at Warby Parker, also co-founder of Everywhere Ventures with us – was, building an online brands in the way that you can control. So your website, direct to consumer.
00:21:09 Scott: Then moving to online distribution platforms. So in her case with pet food, moving to the chewy.com. And then only as layer three, moving to physical retail, because then you have all the complexity around inventory and discounts and all that stuff.
00:21:25 Mayssa: Did you think about that rollout of let’s really like refine the unit economics on CAC and LTV and understand price point and all that stuff on the D2C side, then expanding out into maybe online digital retail where inventory is slightly less complex and then moving into physical retail.
00:21:43 Scott: Beggars can’t be choosers. You go where the market pulls you. But is that something that you’ve thought about in the rollout strategy?
00:21:49 Mayssa: Now that you’re saying it, Scott, it’s almost like that is how it played out, I don’t want to take credit that I was as genius and masterful and intentional as Katie probably has been with her business.
00:22:00 Mayssa: Honestly, I think with all the supply chain issues we were running into with cash constraints, we were a little bit more in a beggar situation for many years of the business. Thankfully, I think we’re getting out of that now.
00:22:11 Mayssa: That’s just how it played out. We launched in August of 2020, there was no retail. They were still buying only essentials, basically. Not bringing on new brands, for sure. So we launched D2C. That allowed us to build some online community.
00:22:23 Mayssa: We did a few small retail partnerships after one year of being online. That’s when we launched at Erewhon. Erewhon’s been an incredible partner for us. It’s always been great just to have this anchor at Erewhon where we know people discover us.
00:22:35 Mayssa: We know that’s like a influencer retailer, which means other retailers look to that retailer for what they’re bringing in. In the health food space, too. If you’ve had your ingredients approved by Erewhon, a lot of other health food stores take it as a check of approval that you have a truly clean product. So that was really helpful.
00:22:54 Mayssa: We did start turning on some of the online retailers, including Amazon and some places like SnackMagic, which they sell into corporate offices. There’s a few others that we greenlit.
00:23:04 Mayssa: And then, TikTok Shop, obviously with that big TikTok push. And then that led us into some of this bigger retail expansion. The big one this year being Target. It just takes such a huge supply chain pivot to be able to supply retailers at that scale.
00:23:20 Mayssa: I do wanna say the strategy holds for marketing, for sure. That’s exactly what it is. You build your audience, then you hit the shelf at Target and you have people to actually send to Target who want to buy your product.
00:23:32 Mayssa: But with that said, because food is a low margin CPG business, it’s not like beauty or, some of these other businesses like you’re pushing 80, 90% margin sometimes. That’s not how food works. So the other thing you have to do in food is figure out how to scale your production so you can lower your COGS and improve your margin pretty quickly.
00:23:52 Mayssa: I do also understand it’s easy to tell someone like, “Don’t go into Walmart too soon or don’t go into Target too soon.” But if you can get like a 15% COGS savings by taking a big business like that, I think that’s where sometimes the push and pull really is there.
00:24:07 Mayssa: We’re feeling it now too. Like now we’re very lucky. We have a ton of retail interests coming in, especially on the back of a successful launch at Target. And so, there’s always the part of us that’s like, take everything.
00:24:18 Mayssa: We’re pretty solid on COGS now, but there’s probably still another 5% to 8% to capture as we scale up the business. Maybe I would say 5% to 10%. We want that volume. But as a small team, how many new retailers can you open in one year?
00:24:32 Mayssa: Each of these retailers requires a massive amount of support. So much of the marketing for us as content. So I’m literally going into stores, creating video content. We have a few celebrity investors. We take them into the stores to create video.
00:24:45 Mayssa: We can only do that with so many retailers, with so many doors at a time. So how do you balance that, I think, is always the push and pull with a food brand. Because you do wanna take the volume. And at some point, you have to.
00:24:57 Mayssa: Otherwise, your production costs are just gonna remain too high and you’ll never capture any margin and be able to grow your gross margin as a business to a point where you could actually become profitable.
00:25:06 Scott: I know we’re wrapping up on time, but one question just in the early days on pricing, you have comparable companies and price points in the aisle. How do you think about that? In the early days, like when you need to pick that first price point, because it is an anchor of are you a premium product? How did you navigate that?
00:25:24 Mayssa: I think you start with a cost plus always. And then if you want to like pad your margin, you can always go higher than whatever your cost plus is. And so for us, we went with a stronger margin out the gate.
00:25:37 Mayssa: Stronger margin on paper, if everything goes according to plan, which again, in the first few years, it doesn’t. We were stocked out probably six months of the year for the first three years of the company. There’s so much other hidden loss that’s happening that having a little bit of padding on your margin will help.
00:25:53 Mayssa: But our initial price point was $4.99 when we were initially launching completely D2C. I also ran an ad test. I love doing this, like run a Meta test, A/B test, two things side by side, put $100 on the campaign and see what wins.
00:26:06 Mayssa: And I remember testing, because we had an investor that was like, “We think you should be at $3.99.” We ran this A-B test and actually $4.99 outperformed $3.99. Because I think $3.99 and $4.99 both put you in a premium price category. And then that price insensitive customer, the more expensive almost becomes the more appealing.
00:26:23 Mayssa: And so we ended up with a mentality, which was until we can get closer to $2.99, we’d rather be $4.99. $3.99 felt like this middle ground where we were losing margin, but not actually getting the incremental of that customer that’s going to shop under $3.50 or $3.
00:26:38 Mayssa: The Erewhon customer is completely price insensitive, so forget that. But then we started opening some other different types of retailers. And we did start to feel that price had become a constraint.
00:26:47 Mayssa: And then, we ran a big customer insight survey around that time when we were going to relaunch and reformulate and just really trying to learn about the business. The number one reason people didn’t repurchase had been price.
00:26:57 Mayssa: So that gave us the insight where we were like, “Okay, we need to actually get down.” $3.99 didn’t feel like a price break point for us. So we tried to get down to $3.49 and we rebuilt our entire supply chain in order to reduce our COGS enough to get there. And we did it.
00:27:12 Mayssa: But we had already been in market for three years. That gave us the ability to even go through that exercise to get our COGS down. We couldn’t get our COGS down when we were just starting out because we were producing at such small quantities.
00:27:24 Mayssa: Everything is connected. We had more leverage going into that rebuilding period where we were able to drop the price and improve our COGS. We had more leverage. We had more information. We knew our business better. We knew our formula better.
00:27:37 Mayssa: So all of that really helped and allowed for that. All these things are always art and science. And I almost sometimes lean a little more art and a little more intuition. Theoretically, you’d think $3.99 would sell more than $4.99. I just pushed back because I just felt we should be $4.99 when we launched.
00:27:52 Mayssa: What we’ve stated as our mission is to reduce the amount of sugar in the food system so we are pushing for accessibility. At every COGS break, we’ve lowered our price. And we plan to continue to do that.
00:28:02 Mayssa: If I could sell my candy for $1.99, I would tomorrow. So we are not trying to hold a luxury positioning. We are not trying to preserve a luxury brand identity.
00:28:14 Mayssa: We want accessibility. We want the entire candy aisle to start looking more like products like ours. Less like sugar-filled cartoon character dye-filled candy for kids. We want that accessibility. But you have to build your business and build your way up to that.
00:28:30 Scott: At the end of the podcast, we always do a lightning round. What podcast, other than Venture Everywhere, or book are you currently reading or finding useful?
00:28:38 Mayssa: I just picked up a book that… I guess, I can’t say if it’s useful yet or not, but it’s just been recommended to me a million times, which is called the Celestine Prophecy. But people compare it to the Alchemist. So I will say that that is my very useful book.
00:28:50 Mayssa: I mean, you can get through the Alchemist in two days. It’s so quick. The Alchemist, people think it’s cheesy, I’m sure. But it’s this hero’s journey, and it’s all about the signs and being on your mission and your path in life and that the things you need will find you and random things will appear that help you.
00:29:05 Mayssa: And every time I’ve read the Alchemist… it’s very strange. It’s almost like some weird unlock will happen right after. I feel like there’s some weird magic in the book.
00:29:15 Scott: I may know the answer to this question, but if you didn’t live in New York City, where in the world would you choose to live?
00:29:19 Mayssa: Oh, man. We were talking about this before, but I’m gonna give a plot twist answer. It would be Puerto Escondido, a small town in Mexico, remote, a little hard to get to.
00:29:32 Mayssa: I’ve spent a good amount of time in Mexico City. That would probably be my second answer. But if I could be a little more offline and off the grid, I’d love to just be a beach bum somewhere.
00:29:40 Scott: Puerto Escondido sounds like a good spot for that. Finally, where can listeners find you online?
00:29:45 Mayssa: We’re EatBehave on, I think, almost all platforms. So TikTok and Instagram. Just E-A-T B-E-H-A-V-E. Where you can also find us, and I wanna offer some free candy to your listeners, is on Target stores and on target.com. But we’re running a rebate right now.
00:30:01 Mayssa: If you order two bags of BEHAVE, either on target.com or you buy it at a Target store, we ask that you leave us a review. But even if you don’t leave us a review, it’s okay. We’ll rebate either way. Just email us your receipt to hi, H-I, hi@eatbehave.com.
00:30:18 Mayssa: Just write Target rebate in the subject line, and we will Venmo you back for two bags of BEHAVE and you guys can give it a try.
00:30:26 Scott: Amazing. Well, Mayssa, thank you so much for being with us. We’ve been super happy to be on the journey with you, all the ups and the downs. I’m a huge fan of BEHAVE. Love the candy, love the brand.
00:30:36 Scott: For those that don’t know the logo, look up the website. Incredible what you’ve been able to create. Hats off to you for having the grit to stick with it for five years. And I think you’re on the precipice of really big growth in the category. Congratulations and thank you for being with us.
00:30:51 Mayssa: I really appreciate it. And just in case people don’t know, I think in our very first fundraising round, Scott and his team put in a check, which means so much to me. Everyone that believed in this when I don’t think we had even launched yet.
00:31:02 Mayssa: And then have stuck with us also through a lot of ups and downs, have remained supportive, have always offered words of encouragement when I was in those low moments. So that also means so much to me, Scott. I’m very grateful.
00:31:13 Scott: Thanks, Mayssa.
00:31:14 Mayssa: Thanks.
00:31:16 Scott Hartley: Thanks for joining us and hope you enjoyed today’s episode. For those of you listening, you might also be interested to learn more about Everywhere. We’re a first check pre-seed fund that does exactly that, invests everywhere. We’re a community of 500 founders and operators and we’ve invested in over 250 companies around the globe. Find us at our website, everywhere.vc, on LinkedIn, and through our regular founder spotlights on Substack. Be sure to subscribe and we’ll catch you on the next episode.