How I Built This with Guy Raz - Live From The HIBT Summit: Stacy Madison of Stacy's Pita Chips

Episode Date: March 12, 2020

Our ninth episode from the 2019 How I Built This Summit features Stacy Madison, co-founder of Stacy's Pita Chips. In this live conversation with Guy, Stacy explains how pita chips became a passion--even though they didn't start out that way. We'll be releasing one more episode from the Summit in the next few weeks, so keep checking your podcast feed.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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psychologists one social worker and a few pounds of day-old pita bread the answer of course is stacey's pita chips one of one of of the businesses we featured at How I Built this Summit last fall. Now, if you remember a Stacey's story from the podcast, she was a social worker who teamed up with her brother David and her then-husband Mark, both of whom were psychologists. In other words, they knew nothing about the food industry when they built a multi-million dollar snack company. And the whole thing began almost by accident when Stacey and Mark ran a sandwich cart on the streets of Boston. They would take leftover PETA, cut it up and bake it into these crunchy little triangles, which at first they gave

away for free, until it became clear that people were willing to pay for them. Anyway, when Stacey and I sat down live on stage in San Francisco, I asked her what was going through her head at the time. Do you remember thinking even once you kind of moved into making PETA chips that this would grow into a massive brand? No, no idea. And no intention? Absolutely.

None never started the company with an exit strategy. Didn't know what an exit strategy was when we started. Didn't know what a business plan was. What do you think it was that fueled the growth? I mean, was it something that you were doing? Or do you think in some ways the growth found you? Because it was sort of a wave, right, that you started to ride. Bread and Circus in Boston, which now is Whole Foods.

And there was more interest in sort of simpler and wholesome natural foods. Yeah, it started as a wave. And then it kind of went to a hockey. stick. Yeah. So, you know, we learned the value of being able to control your growth, which is a skill in itself, you know, because we were doing our own manufacturing. And with the growth, we got into gourmet food stores, and people were paying about $6 a bag. Has anybody here ever had the pita chips? Yeah. Has anybody had the pita chips? Are you kidding me? Well, you know what? I used to ask that when I would go speak somewhere. There'd be like five hands in the audience,

and I'd start explaining, well, a peanut chip, we take some bread, and we season it, we cut it. Anyway, I'm glad I don't have to go back that far anymore. But we started in gourmet food stores. From there, we were in natural food stores, and we always just had pure ingredients. We didn't, you know, the whole natural food boom, and we were just automatically natural. I mean, there was really nothing in it. There were like three or four ingredients. So we didn't actually have to do anything when all these other companies were trying to make themselves,

natural. We were like, hey, we already are. There was a point pretty early on, because at the beginning, Mark was cutting the PETA into chips by hand. I told you had a really big right bicep, right? Yeah. And eventually, to just kind of grow it, it wasn't like you went out to a bunch of private equity companies. You didn't really raise money, right? You were just kind of funding the business through the sale of Pita chips. Through the sale of Pita chips and running up our credit cards, you know, begs, steal, borrow, driving a crappy car or whatever it is you had to do it. How did you do that? I was talking to some attendees earlier and they were same story. You know, how do I grow this thing? I don't, you know, I'm also worried

that, you know, when I put my product down the world, a bigger company will see it and just replicate it and crush me. That could have happened so easily. Peta chips are pretty easy to replicate. You can't patent them, right? You can't patent them and they're not that easy. Okay, sorry. I'm sorry. But I mean, you can imagine that a Frito Le or one of these, like, you know, a huge company could figure out, you know, some kind of competitive product, right? And you didn't have a whole lot of money. So how are you doing that? How are you investing in equipment?

How did you even have a place to make them? Was the rent cheap? I think you were in like Lynn, Massachusetts or something like that? Yeah, and Randolph Mass. And the factory's still there. But initially we started off borrowing some space from a woman. who made pretzels. And it was when we started having to install some of our own equipment that we had to then

find a bigger space. So we found a space in a construction type building, super nice landlords. And he sectioned off, you know, 5,000 square feet. And then we were growing bigger. And he was on the other side. And he's like, well, I can just move the wall over. And he moved the wall over. We took 10,000 square feet.

And then he's like, well, I can just. move out and then we took 20,000 square feet. And then when we started growing even further, that's when we looked literally one driveway over was this mattress factory for sale. And you took a loan, right? A bank loan for that. Yes. We had a bank loan for that. And I said, well, can I get half a million because we have to move? And they initially said, no, not without equity. And then I went out and I got accounts and got letters from airlines and things like that and use that. Airlines, you said we want to, we're going to hand out Stacey's Peta chips, yeah.

Yeah, if you can make them, like, will you write that down? Yeah, and that's how you were able to secure the loans. Yeah. Yeah. Because, I mean, did you, I mean, now, of course, you know, the lure is to go out and seek capital and to raise money and at that time, was that even something you and Mark considered doing? We did. We considered raising capital.

It takes a lot of time and effort, and I don't have a business. and I don't have a business background, and one of us did. And you were a social worker. I was a social worker. They were psychologists. Anytime I have to do math, I go to my sister because she's got an MBA, and I'm like, you know. So we were just about to take on financing, which is when we landed the Trader Joe's account. And so we started doing higher volume, and it's such a nice company.

They would pay before they even got the product. Yeah. Yeah. Trader Joe's unusual that way. Yeah. Yeah. They pay really quickly. And so I ended up all of a sudden we were getting money and we were kind of used and the chips were really selling.

So we used the money that we got in from Trader Joe's to really fund the business and help us grow. So we never ended up taking on any extra outside money. Which was a very fortunate decision. I remember on the podcast you said something to me that really resonated. You said by the mid-2000s you had your daughters. And you said the business really started to run you. I have talked to so many people who've been on the show that say, if you think you're going to run this business,

understand the business is going to run you. I think Angie and Dan Bastion of Boom Chikapop also said a version of that. What was that period like? I mean, that was when you, I guess, started to think about maybe I don't want to do this anymore. Yeah. I think at the time I still would have done it. But I think Mark was, like there was all these things that he didn't get to. do that he wanted to do. He wanted to go off and he wanted to travel and he wanted to do all these

things and yet we're still growing really quickly and we had been approached by five of the largest food conglomerates that there are in the world asking us to sell and it was a lot. It was, you know, I'm breastfeeding in the closet. I got the, and yeah. It was, and so the business really started to dictate our lives. versus us doing what we love to do and making a living at it. And so that's when we decided, well, I think maybe we should think about selling. You know, I'm really interested in this idea of passion, right? We're told, we're often, we often hear follow your passion,

which is not actually possible for many people, you know, follow your passion. Well, your passion may not be able to afford you a sustainable life. Were PETA chips, was that a passion? I mean, were you and Mark really following that passion, or did it become a passion once you started to really pursue it? It wasn't the pita chips per se. It was just like we were in the food business where we both wanted to be. But I feel like it becomes more of a passion when other people start to believe in you.

When it transitions from, you know, this crazy idea and you guys have graduate degrees and you've got loans and when all of a sudden, when it starts selling and other people start. believing in you and then you start to develop your team and other people start like wanting to work for you and quitting their jobs and then you're responsible for them making a living and that all is like then it really becomes a you know passion you know i'm i'm interested in in you have a new company that you started you obviously sold stacy's you're not involved with the company formally anymore um you you've got the this new company called b-bold energy bars you've got a juice bar Anita, Massachusetts, near to where you live.

This is a startup all over again. Obviously, the stakes are different because you are financially secure. It's not a make or break. But, of course, you want it to work and you want it to be successful. Do you have some of that same kind of anxiety and energy you did when you were starting, Stacey's now with B-Bold? Is there some overlap in that feeling? Yes. You know, I'm at my juice bar, and I'm selling all of these bars, you know,

handmade in the back with the mixer. Once again, you know, it's, I didn't start anything big. We got a mixer going in the back, and, you know, we mix press and package. And I have to say it's no less nerve-wracking starting another company, especially now, like, now people expect something from us. The pressure's on. Yeah, the pressure's on. And when we reached out to some of the people that worked with us at the Pita Chip Company and said, you know, do you want to become a part of the team? And we started to get people.

Now our C-O-O, she was, with Quaker and then with Jim Beam and now she, we called her up and we said, well, we're starting this company and said, think about it, take a week. She talked to your husband. Two days later, she called us back and she said, amen. Wow. And when she, I mean, like, that's a real job. Like, I keep thinking a real job and she's quitting her real job to come with us and, you know, and do this. And you're nervous about that. Nervous about it. And not only that, but it's like, hey, you know what? It gave us this other sense, this additional sense of confidence and belief that, you know, we can do this and we can do

this again. And even when my brother came on board and he's just sitting in the juice bar watching these people buying these bars and buying these bars, he's my number one believer. So be bold, how big do you want, do you want it to be? Do you want it to be? I'm doing what I love to do now again. So again, there is no exit strategy. Yeah. We just want to have a, you know, it's a refrigerator, bar and I almost felt remiss just selling it in my local juice bar and having so many people love it and then not putting it out on the market because everybody's going to love it. They are called Be Bold Bars. This is Stacey Madison. She is the founder of Stacey's Pita Chips. Thank you so much for being here. We appreciate it so much. It's been great having you.

Thank you so much. Do I get that walk-off music? Yeah, and a round of applause. Another round of applause. Thank you. That's Stacey Madison. She's the co-founder of Stacey's Pita Chips and founder of Be Bold Energy Bars. Stacey joined me live on stage at the How I Built This Summit, which happened in October at Yerba Buena Center for the Arts in San Francisco. We've got one more of my conversations from the summit left,

and it will be in your feed in just a few weeks, so keep checking for updates. Thanks to J.C. Howard, who produced this episode, and Reptine Arablewey, who wrote the music. I'm Guy Raz, and you're listening to How I Built This. This is NPR. I listen to Bullseye because Jesse always has really good questions. What did John Malkovich wear when he was 20? I don't know how to describe it.

Bullseye. Interviews with creators you love and creators you need to know. From Maximumfund.org and NPR.