How I Built This with Guy Raz - Mary's Gone Crackers: Mary Waldner

Episode Date: July 10, 2023

While working as a psychologist in the Bay Area helping people with their problems, Mary Waldner discovered one of her own; at the age of 43, she was diagnosed with celiac disease. The foods she’d been eating all her life had been making her sick, so Mary came up with a solution. She decided to create a healthy gluten-free snack cracker that she could make at home, and eat in restaurants when her friends were eating bread. As it turns out, lots of people loved Mary’s crackers and they encouraged her to start her own company, which Mary turned into a multi-million dollar business.This episode was produced by Kerry Thompson, with music by Ramtin Arablouei.Edited by Casey Herman, with research help from Sam Paulson.You can follow HIBT on Twitter & Instagram, and email us at [e-mail] 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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Check out my interview with Seth Myers over on my other podcast. It's called The Great Creators. Just search for the Great Creators with Guy Raz wherever you listen to podcasts or go to the great creators.com. And now on to today's show. I was in a women's healing circle. And so I went to my group and I said, you know, we need a name. And one of the women said, it should have your name in it.

And it should be something like Mary's cracking up or something like that, which we thought was funny. And then my other friend said, yeah, Mary's gone crackers. And that was it. The angels started singing. The sky opened up. And that was clearly the name. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, Mary Waldner solved her gluten sensitivity by creating a cracker she could eat and others would love and grew it into a snack food worth millions.

Two of the greatest entrepreneurs in history were older than you might think. Sam Walton was 44 when he launched Walmart. Ray Kroc was 52 when he stumbled across a hamburger stand and turned McDonald's in. to a global powerhouse. Experience matters, and the research bears this out. A Harvard Business Review study found that when you measure for growth, most successful businesses were started by people with the average age of 45. Mary Waldner wasn't just older when she started her business in her 50s, but she was also an accidental entrepreneur, someone who really didn't ever think about starting a brand. For 20 years, Mary worked as a psychotherapist in the Bay Area. That was a

her job. But Mary also had a problem. A lifelong struggle with her health, especially her digestion. So she had to change her diet and the things she baked. And one of those things were crackers, basically a mixture of seeds and gluten-free grains. And as these stories go, her friends wanted them, and then their friends wanted them, and then, well, a business was founded. Mary called it Mary's gone crackers. And today, it's sold in tens of thousands of stories. across the U.S., including Walmart and Target. And the idea for the crackers only came about because of a diagnosis later in life.

As a child, Mary was always in pain, especially after meals. My mother decided that it was emotional because doctors couldn't figure out what was wrong. So that was kind of what they did, you know? They couldn't find anything wrong, so it must be in my head. I did have a lot of allergies, so they gave me allergy shots.

But I wasn't, this isn't an allergy, so it didn't show up on any tests. And back then, at least where I was living, doctors didn't think about celiac disease. Right. So it wasn't until you were 43 years old that you were diagnosed with celiac. Yeah, finally, yeah. And when you got that diagnosis, it must have been like, a relief, like a validation of everything that happened. Oh, God.

Yeah. It was wonderful. I mean, it's funny because I've met a lot of people since then who get diagnosed and they're really bummed out, you know. And not, that wasn't the case for me. I was ecstatic to have something specific that I could do to make myself feel better, which was pretty quick, too. Because you, presumably, were consuming bread and weed.

Oh, yeah. Yeah, I mean, you just ate those things. It's everywhere, yeah. And so when you got that diagnosis, you must have thought, my God, 43 years of not knowing this thing. And I cannot. So I have to assume immediately you changed your diet and your lifestyle. Yeah.

What's interesting is that the diagnosis came from, my chiropractor. Again, doctors never figured it out. A lot of my symptoms were structural, so my back would go out, and I would never, it would be really hard to hold a chiropractic adjustment. So, like, because I had muscle weakness. And I also was seeing an acupuncturist, and she and her whole family had celiac disease. So when I discovered this, I had this incredible resource that most people don't have, which was amazing. So I just, you know, went home and emptied out my kitchen and started to learn about ingredients. And through my acupuncturist, I learned that there was a there was actually a celiac disease association. And so, you know, I got the newsletter. I just,

you know, went gung-ho and started learning about. different ingredients and, you know, the joke I said was that I could live without bread, but I couldn't live without my Auntie Nid's brownies. So that was the first thing I made that was gluten-free. So you, the moment you went gluten-free, how quickly do you remember feeling the effects on your health? It was, I would say maybe three to six months, I was noticeably different. I remember going out to lunch with somebody who I hadn't seen in a few years, actually. And she took one look at me and said she almost didn't recognize me because I looked so different. So I started getting that kind of response from people.

You know, you look at yourself in the mirror every day. You don't see any changes. But when people who I hadn't seen in a while saw me, they were stunned. So pretty soon after you were diagnosed, you started to like mess around with recipes for things that you could eat. Right. Right. What were you making? Well, like I said, brownies, sweets, because that was my issue. Brownies, cookies. I started playing with different flowers to make a blend that would work. Were you always a baker, a home baker? Yeah, me and my grandmother. Yeah. And so baking was a big part of.

Your life? Yeah. Yeah. Wow. So flour, like wheat flour was like a part of your life. That's right. Definitely. And all of a sudden you could not use wheat flour or rye flour.

So you had to switch to rice flour or potato flowers. Rice, tapioca, potato, yeah. And how are the results of like the brownies? Well, you know, if you put enough eggs and butter in something. And sugar, you're good to go. And sugar. It's not bad. But trying to bake things where you rely on gluten, things just fall apart. You know, they're just puddles. So there was a lot of just disasters for a long time. And this is when, I mean, the mid-90s, like gluten freeze. I mean, now it doesn't exist. It's not a thing. So you really had to make your own stuff. And so tell me what were some of the challenges that you faced when you knew that you could not eat bread anymore?

And you were living in a world where everyone around you was eating bread. Yeah. And pizza and stuff. So imagine going to a restaurant and they bring you a basket of bread and you're hungry and everybody's diving in and filling themselves up and you can't eat any of it. And so many times when I would be sitting in. restaurants hungry and then order a bunch of appetizers or try and fill up. It was a really unpleasant experience. So that's when I thought, I really want to make something that I can bring when everybody's eating bread and butter to have something. Because so I'm not starving.

So, yeah. Yeah. So what did you do? So that was when I started. And again, remember, I'm a a hippie food nut. So I wanted something whole grain. I wanted something healthy. So I had the idea for the, for the ingredients, but it wasn't going to be a cracker in my mind. It was going to be some kind of a biscuit or something chewy, you know, so. Yeah, like more bready. Yeah, more bread. Like like Ezekiel bread or something. Yeah, or like a, like a biscotty kind of. of thing too. Okay. I wanted something really, you know, I'm hungry. I want something to chew on. Like a gluten-free breadstick. Yeah. Wouldn't that be good? Yeah. Yeah. So that's what I started to play with brown rice, quinoa, flax seeds. Flax seeds were really big then and sesame seeds. Yeah. And you would take,

you would take like brown rice flour or like cooked brown rice? No, it had to be whole grain. You took brown rice, you cooked it until it was soft. Cooked the quinoa. Cooked the keonwa. Cooked Kinoa, okay. Put it together with these seeds. And like a gloopy gloop like I'm thinking. Exactly. You like mashed it with a masher? You just mixed it around?

I put it, eventually I put it in a food processor. Okay. Yeah. I'm giving away secrets here. It's not a huge leap to figure this out. Okay. The food processor part part, but I got you. Yeah.

And then I wanted, then I would make it, you know, bake it, try to bake it. Wait, so you would take this. you would just take these whole grains, the cooked whole grains, and then the quinoa and rice, and then throw some flax seeds and sesame seeds and put in the cuisine art, right? I got it.

And then you would just spread it on a cookie, like a cooking sheet? Well, no, I tried to make it into little blobs. Oh, okay, like little dot, like you would do it cookies, like drop cookies. Or a little bigger, like a little, like a roll size. Okay, I got you. And of course, that didn't work at all.

What happened? Well, the outside. would get done and the inside would be raw. Right. Because it was, so eventually what happened is I just kept flattening them and flattening them and flattening them to the point where I had a very thin. And that was the only way they would bake through. You would basically take, so you would still drop them on because like a meringue or something, but you would just, or a cookie, but you would just push them down into a disc. Yeah.

And, but these, these were just like sticky. I imagine this would be super sticky. Well, okay, so here's another trade secret. So what I did was I got, yeah, they're very sticky. It's like, you know, it's like glue. Yeah. And so I got a glass that had a flat bottom on it. Yeah.

And I put a piece of saran wrap over it. Yeah. And then I put, I had a paper top. with some oil on it, and I wiped the bottom of the glass on some oil, and then I flattened the blobs into crackers with that. Okay. And it didn't stick. And then I'd wipe it on the paper towel each time, and that's how I was able to make it into a cracker. All right.

So it's like a smash burger, except for a cracker. Yeah. Yeah. That's how I make my smash burgers. Not with a glass. Very labor intensive. intensive. You got to take the whole sheet pan and each, you know, a tablespoon of this gluey stuff and you would just put, and then you would bake them and they came out like

crackers. Yeah. They would release from the pan because it was amazing. All right. So this is 98 and this is like a little fun kind of thing that you've come up with. And you what? You started to just like bring them with you wherever you went? Yeah. I had them in little back. So that when I went to restaurants or parties, I had something to eat. Yeah. And, yeah, it worked. All right.

So you're making these crackers. This is not, there's no, nothing in the horizon that's saying this is going to be a business. This is going to be. Right. But let me just pause and ask you for a moment. Why you were, why you had your practice? Because running a psychotherapy practice is a business. I mean, you had to do accounting.

You had to do accounts payable and you had to pay your quarterly tax, whatever it was. Right. You're running a business. Did you ever have any visions or daydream about maybe starting a business at some point in your life? None, ever, ever, ever. No, you had not a single entrepreneurial bone in your body. Well, not other than being a therapist, no. Yeah.

That you thought you, you didn't think you did. No. Yeah. It was like you were content. Yeah. Being a therapist. That this was. Yeah.

It was what I imagined myself doing my. life for my life. Yeah. And financially, were you struggling or were you making it perfectly fine living? I was doing okay. It wasn't great, but, uh, but, you know, having a kid and I wasn't getting much support, financial support. From your son's father. From his, yeah. So, uh, it wasn't, I did okay, but it wasn't great. Yeah. Um, all right. So no thought. at all about a business, but you're making these crackers. And I guess eventually there are other people who try them or friends of yours who try them and like them. Well, that's what happened.

You know, that's the other piece of information is that I love feeding people. I always have. So I would never just make enough for me. I would always, I just kept making them and I would bring them and people would taste them. and yeah, everywhere I went. And the response was just kind of unusual to me. What do you mean? Well, people just loved them.

It wasn't like, oh, these are good. But they would go, oh, my God, these are amazing. Where did you get these? Oh, my God. Give me more, give me more. So I started, you know, it got to be a joke where I was just, working and making crackers. That was kind of became my life because they were, it took me a long time to make the crackers. Like I said, they were very labor intensive. I bought a new oven

so that I could have six racks in the oven instead of the normal two or three. And the most I could make were like 240 crackers at a time. But, but that's what I was doing because everybody I knew wanted them. You were doing like just like multiple sheet pans in your oven of the crackers. And I have to imagine, I think you probably cook, I'm a baker too. You, uh, you cooked it on a low temperature for like a long time. Yeah. Yeah. I mean, making them for people and, um, you know, people responding to them and then crossing the Rubicon, so to speak, to saying, well, maybe I should sell these. And, um, I mean, making them. is, of course, it's a moment. Not everyone gets to, but tell me how you even got to the moment

where you start to think about that. Well, it was, this is another kind of typical experience in my life where I just woke up with a very clear voice in my head that said, I have to manufacture these crackers. I mean, it was just so clear that everyone loved them. I think what happened was I went to my cousin's house for dinner, and she had a friend who had a two-year-old there. And all the adults loved the crackers.

But when the two-year-old loved them, that sort of did it for me. When we come back in just a moment, Mary realizes that lots more people would love her crackers if she could only figure out how to make them on a much bigger scale. Stay with us. I'm Guy Raz and you're listening to How I Built This. One more thing before we get back to the show, please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And it's totally free. Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1999 and Mary Waldner is living in the Bay Area with her husband Dale. And she's discovered that her gluten-free crackers are a hit. And that gives her an idea. I went to Dale and I said, you know, I think we have to manufacture these.

And he said, okay. I mean, it's great because if he hadn't done that, obviously nothing would have happened or would have taken a long time. But also because neither one of us had a clue what that meant. Dale was, I think he had a job as a general contractor. He built homes mainly. He was really the unlawful. entrepreneur. He grew up. His dad was a, uh, had a lumber yard and they build fences. And so he grew up, um, doing that. And he became a general contractor. And he worked for himself a lot. He also started,

um, a data, uh, business. It's called, he called it profit information services where he collected data. This was again, very beginning of, of the internet. And, of technology and he put together construction data and then would sell it to people in the building trades that wanted data, new construction data. So he was very entrepreneurial. But how did you test out, I mean, I know your friends liked it. Yeah. But how did you even test, you know, prototype the idea, you know, beta test the idea that maybe these would sell in a store. Did you at least make some and bring them to a store to sell to see if people would buy them? that's what ended up happening. This friend of mine owned the local health food store, and I brought her a bag just personally to taste them to see what she thought. And instead of eating them, what she did,

she opened up the bag and put them on the counter by the register. And I went shopping in the store, and then I hear all this hubbub, and people are eating them at the register going, oh my God, where can I get these? I want some. And by the end of, you know, that half hour or whatever I was in the store, an hour, she came to me kind of sheepishly and said, you have to bring me more of these. And so that's how that got started. So then I was making bags. We, you know, handmade, we had, I bought a bunch of coffee bag, brown coffee bags with the window in them. And I made the, and I made the, them by hand and brought them to the store and she sold them. Yep. And so she kept running out and she would call me every few days and say, they're gone.

You have to, you know. So this is, this was nuts because then I was making, literally doing nothing but making crackers and working. Just working at the clinic with patients and then making crackers. Yeah. And obviously the name, Mary's Con Crackers, it's a little bit of a nod to what you did professionally. Was it kind of? Yes. Well, I was in a women's group that I started, and I was having a hard time coming up with a name.

And Dale said, you know, you have to find a name. You have to find a name. It doesn't matter. And I said, oh, no, it matters a lot. And so I went to my group and I said, you know, we need a name. And one of the women said, it should have your name in it. And it should be something like Mary's cracking up or something like that, which we thought was funny. And then my other friend said, yeah, Mary's gone crackers.

And that was it. The angels started singing. The sky opened up. And that was clearly the name. Wow. All right. So you are selling them at this little health food store in Lafayette. And clearly people are buying them.

You are working full time with your patients as a psychotherapist. But you and Dale have decided to pursue this as kind of a side project. Right. He's still doing general contracting. You're still doing working with patients. And the idea was to figure out how to mass produce this recipe you came up with and then get into the food business, I guess. And initially, did you guys think, well, maybe we can just license the recipe to another company or something? I thought of that.

I thought of putting the recipe in a cookbook. I thought of a lot of things. first of all, I knew nobody would make them. It was too hard. If I gave you the recipe, you wouldn't do it. And the same thing for licensing, because there were a few gluten-free companies by then, but not really.

And, yeah, I knew it wasn't going to happen. And again, we learned enough. I don't remember the order of things, but we knew that most food is co-manufactured, right? Yeah, most food is not made by, the companies, well, except for the huge, big companies, but most things you see at Whole Foods are not made by brand. It's made in a co-packing facility that makes tons of things for other people. Yeah. And so you give somebody the recipe and, you know, you supervise that process,

but somebody else has the equipment, somebody else has the expertise, all of that. And I, you know, this was a big point of contention in the beginning because Dale thought that we had to manufacture them ourselves, and I kept saying, no, that's impossible. We don't. Expensive, right? Yeah, we don't know what we're doing, neither one of us. And he said, well, then, find me a, because I bought, there was a book about, you know, with a list of co-packers, and of course, nothing was gluten-free.

But you contacted these manufacturers. Yeah. And you called them and you would say what? You'd say, hey, I've got this recipe, but would you gluten-free? Like, what would you say? Yeah, well, also, what kind of equipment is even going to make these? We didn't know. So that was part of the process, too. Just calling and asking questions and trying to figure it out. Yeah, what kind of equipment do you have? Most cracker places use a pretty standard dough machine that rolls out the crackers and cuts them, and that wasn't going to work.

Right, because it's too gluey. Yeah. So, I mean, what ended up happening is I took... Now, in the Bay Area, there were a couple of food manufacture facilities, and I took big bowls of dough to a couple places. Because there's another process that's like a form and fill where they would put the dough into these molds and, you know, drop it out onto the tray. But again, nothing's going to drop. Right. Yeah, exactly. Yeah.

So one guy helped me, and he was a really. a real equipment, a specialist. This is a guy in the Bay Area? Yeah, and I gave him a bowl of dough, and he said, let me play with this for a while. And he worked on it and decided that one of the machines that's a cookie depositor could be adapted to at least get the blobs onto the pan. And then what ended up happening is we had to invent.

a machine that would flatten them because that was the challenge. So we got the blobs on the pan, but then we had to create our own piece of equipment that flatten them. All right. So you start this process of trying to find a way to make these. And this is going to take, I think, roughly five years, more or less. And while you're doing this, because you're still running your business and, you know, you're meeting with patients and Dale's doing his work. Did you have any money at all to finance this? How were you? I mean, I guess it, you know, he was just taking trips to these factories, but you get to buy equipment, how were you going to do that? Did you? Well, so I was, I was working more on this, on the manufacturing side of things and Dale was working on the business plan. Yeah. We were both thinking about who to start approaching for money. How much money did you think you would,

need to get this off the ground? Well, our original raise was 750,000. And we thought, it's just the whole thing is so funny when I think about it, but we thought that would be enough, that that's all we would need. And how did you approach people? Who did you go to? Did you go to friends? Well, again, remember now, everyone in their brother has tasted these crackers and everyone loves them. One of my close friends who was in my women's group, her cousin loved them. And she was married to a very high-level person at Bechtel Corporation. This was where Dale got a PhD in business, in business plan writing, and in finance. And so this guy was not going to put a penny into it until that business plan was perfect and until he could sell it to his friends. So he ended up becoming a lead investor and he

brought in a lot of, a few other Bechtel people and other people that he knew, he brought in half the money. Wow. Did you, I mean, in that business plan that Dale wrote, was he also talking about the growth of the gluten-free sector? Because we're now talking about the early 2000s. And this is just as it's starting to really, right? It's not going to blow up just yet, but it's on the cusp. Right, exactly. We were on the wave, and it was so hard to see, obviously, we had no idea how huge it was going to be, but we knew something was happening.

And Dale, I remember one point him saying, you know, we're going to miss the window, we're going to miss the window, because everything took so much longer than we thought it take. But we knew that there was, there were something like 400 celiac support groups all over the country that we knew about. We knew they were, like me, they were very loyal to food that you find that you can eat. They read the labels. They also go to the stores and make sure if there's a product they want, that store will carry it. You know, they're, they're huge advocates for themselves, because they have to be. So we knew that existed.

So as you're really diving into all this, I mean, you're meeting with potential manufacturers, you're doing all this research. At what point, because this really starts in 1999, how are you able to manage your day job? And how was Dale able to manage his day job? Were you just, was it like a slow creep of like reducing your hours and reducing your hours?

Well, no, it was the year before we started the actual manufacturing that Dale quit his job. And I was still working because I had more flexibility. But otherwise, up until then, yeah, we were both working and doing this. All right. So you're trying to figure out how to get this done. But really, I mean, it seems like. Like the ultimate goal, really, Dale was really focused on making it yourself. He was still committed to, you know, this idea that you guys would manufacture the crackers yourselves and not work with a copacker.

But to get this off the ground, was that even possible? No, I didn't think so. And so what this is where what ended up happening was, like I said, I had gone through all the co-packers. and nobody could do that. And then I started pulling products from my cabinet and my freezer to look at who was making gluten-free food and where were they? And could they help us? And that's when I found this company that was making this rice crust pizza.

And they were in California. They were in Chico. I told them what I was doing. And I asked if they had room and if they were interested. And they said, yeah, they thought they could probably do it. And they were making rice crust pizzas. Pizza, right. Frozen rice crust pizzas.

And they were game for working with you somehow. But you presumably would have to supply the equipment. Well, when we went up there, we saw that they had one piece of equipment that we needed, which was this huge rice cooker thing. It's hard to describe. And it was kind of the combination of the food processor and the rice cooker and everything. that would make the dough. So what else did you need to get to the next step?

Because you get the dough, but then you've got to actually get some machine to automate it so you can make them quickly. Right. So how do you get the dough out of that, that, that into these cookie depositor things? And there was nobody who could answer that question, right? Because nobody was making anything like this. No wonder it took you five years to figure this out. Okay. So how did you solve that problem?

And who had the answer to that? Well, this was, again, a lot of experimenting. They had experience with this hot, gooey dough. And when they followed the proportions of my recipe, the dough would get stuck in the machine because it wouldn't flow through the stainless steel tubing. And that my recipe wouldn't, it wouldn't flow. It was too dry. And they kept saying, you have to add more water. And I kept saying, no. because that's not my recipe. This went on quite a while. And eventually, what I did was I said, okay, we'll make some your way with more water and see what happens. So anyway, we made a batch with more water

and then we did a blind taste test. And everybody liked the ones with more water better than my handmade ones. So that's what did it. That's what allowed me to add more water to my recipe. So when you, when you, I mean, when you were ready to go, and while you were doing the sort of laying the groundwork, right, because you were focused on figuring out how to make these at scale. And Dale was focused on the business plan. But there are other things to do too.

I mean, there's branding. Right. Packaging, design. Packaging, design. And then where to sell them, right? So were you, did you start to go to food conference conventions and things? We did that before, yeah. We had started going to food shows.

And you would just, what were you, you were looking for presumably connections to stores? Well, there was so much to learn. I was looking for packaging equipment, what kind of boxes did we want. We spent a lot of time in grocery stores, buying cookies and crackers, and looking at packaging and calling lots of cold calls. So I have all the people that I was making cold calls to, you know, for packaging, for ingredients supply, for design. We found a graphic designer before we got our money,

which was just a huge boost to have somebody like that who was amazing. And she designed the logo and the look for Mary's contractors? Yeah. Yeah. She helped. It was the two of us. You know, she and I were a great team. And she made us look so much more together than we were. So how did you find, I mean, even before you did your first production run, did you have a store that was on, like, ready to go on deck to sell them? No. You know, in the food business, it's you don't sell to stores. You see. to distributors. And there was one distributor at the time that specialized in gluten-free stuff.

So, but our strategy was different. We wanted to get the crackers into people's mouths because we knew, obviously, by that time that anytime anybody ate them, they would love them. For example, the gluten-free distributor, we gave them little sample packs and they gave them to, to their truck drivers. And so the truck drivers would taste them and they would, they would deliver them with whatever they were delivering. And so again, we knew these crackers were going to get into the hands of the buyers, which is what we wanted. We sent out our samples to those 400 celiac support groups for the same reason. We got the list of, you know, UNFI is the largest natural food distributor. Back then, it was divided by regions.

Now it's all one all over the country. But we got their top 100 stores. And we sent a package of our crackers and a letter from me to in a nice box because we had a great logo and we had great packaging. And we sent them to all the grocery buyers of those top 100 stores. So we were just going directly to the people that we knew would love these crackers and would want them. In those first two years, where was your product sold? What markets? Well, this was mostly little independent co-ops, independent health food stores.

Those were the guys that liked us. And how did you get people to find out about it? Because, you know, you go to a health food store, there's hundreds, thousands of products in there. Well, we did have, we did demos. It was all, you know, we tried everything. It was really, there were events, like outdoor events where we would set up a booth. It was a lot, a lot, a lot, a lot of sampling. Tell me, in that first sort of first two years after launch, I've read you talking about

you were stressed out, super stressed out about money. You guys were in debt and some serious debt, personal debt yourselves. Right. By the way, why were you in personal debt? I mean, you had taken on $750,000 and... Well, we spent a lot of money before we raised that money to get there. To get equipment, to get... Well, to do everything we had to do to get to raise money even.

So we didn't have, we weren't, we didn't buy equipment on our own, but, you know, the graphic designer or going to trade shows or, you know, all the things that we were doing, you know, we were probably, probably about $150,000 in debt. And meaning you took a loan out? No, we just were using credit cards. I see, okay. Yeah. And did that make you nervous? Yeah, it made me nervous. Dale and I would talk a lot about if this didn't work, how long would it take us to pay this off?

And could we do it? And yeah. Yeah. So you've got this initial funding. And I have to assume you were still majority shareholders, even with the seed money you raised. Yes. But you get to the point, I think, about two years in, where you need more money. Right.

And this is around 2007, and you guys decide to seek that money out. First of all, tell me, is that true, like you needed more money to expand? Well, okay. So in 2006, we moved up there. You moved up to Chico. Yeah. So that's when I closed my money. my practice and we moved up to in that area because we opened up our we moved out of that

co-packer and opened and got our own space because we were growing really quickly yeah so you own now you owned the the right well not the building but everything in it yeah so we needed more money to do that um that was with with our original investors we raised more money that was another a whole other stress because, mostly because they didn't understand the food business and they were engineers, a lot of them, and they thought we should be profitable by now. And so they were giving us a lot of pressure and telling us we were a failing company. These are the friends and family round that you did. Yeah, a lot of the Bechtel engineers. They were saying, hey, why aren't you profitable? This is failing. We should, you should, you should wind up, close down the business. The food,

The food world was telling us we were an incredible phenomenon and that nothing happens like this in the food world. And our board was telling us, you know, shut it down. Why were they saying shut it down? Because you were, you were... We weren't profitable. We were, you know, because we were growing so fast. And the more you grow, which I didn't understand,

I don't think Dale did either, that you need more cash because you have more, more product, you know, in the pipeline, and you're not getting your money back as quickly, and, you know, you just need more and more cash as you get bigger and bigger. And then on top of that, we had to move into our own space. We never could have grown at the rate that we needed to grow in the copaccar. We almost went out of business with them because they just didn't, they just really didn't care, and they were very sloppy, and we needed to take over.

So in 2006, we moved up there. I closed my practice and did that. But you did raise additional money, but not from everybody. Some of them dropped out. So half of the people were our friends, and they were always supportive. And the people who were on the board were the larger investors. and they did help us raise money. They did invest, but they gave us a really hard time about it

and kind of made us wait until we were, you know, terrified that we wouldn't be able to continue. It was just very stressful. So you needed to raise, like, significant cash, right? Yeah. In the millions. And how much did you think you needed to raise? Well, I don't know how much.

we thought we needed to raise, but once we moved up there, we wanted to raise a million. A million, okay. And you needed institutional money for that or some venture money for that? We probably didn't need to, but that's what we thought, yeah. That's who was courting us. Let me put it that way. And what a particular venture firm was courting you that had heard about you, had met you at a trade show? They'd been watching us for a while, yeah. Okay. And this is a venture group that I think specializes in. investing in food startups. Right.

All right. And so you took a meeting with these investors, this venture, this VC group. And so how much did you end up raising from them? We did get a million from them. And more, I have to say, more than that they were going to give us some money is that they were going to help us grow and be at the level that, you know, we were in over our heads. by that time, you know, to be our own manufacturing facility, to be this incredible fast-growing company, there was so much, the learning curve was so steep, and to meet people who had done this before, who had been very successful in a variety of fields, who knew everybody and could,

you know, we wanted some partners is really what we wanted. Yeah. With your new partners, and they, did they buy a majority share of the company? No, God, thank God, no. 14%, actually, it wasn't a significant share, or we would have lost the company. All right, so 14%. And were they helpful? Maybe for a minute, but no, not really.

Well, what happened? They had a very different agenda. I think it maybe took about three months where, you know, we had a little bit of a honeymoon phase where they did connect us with a better sales force and better manufacturing expertise and things like that. But it was very soon that it became clear that what they wanted was to take over the company. When we come back in just a moment, Mary draws on years of experience as a psychotherapist to try and keep her company from going off the rails. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

Hey, welcome back to How I Built This. I'm Guy Raz. So it's around 2007, and Mary and Dale have partnered with a venture capital group to help grow the company. But that investment has come with an unexpected burden. Neither Dale or I in the beginning had a clue that this is what it meant to take money from a VC. They started undermining, especially Dale, questioning everything. accusing him of things. It started to get hostile, and then Dale started to study what it meant,

what VCs, you know, what their dynamic was, especially back then, and started looking at how they had treated other companies, and it became very clear. We were so naive. What did they want you to do? They wanted you to, I mean, presumably, I'm just,

I don't know, obviously, it wasn't in the room, but I have to assume they're making recommendations based on what they think will be best for the health of the business. They said, just don't worry about the money. Don't worry about the money. Just grow. But what that meant was, the faster we grew, the more money we needed. And they had set it up that we couldn't get more money beyond a certain amount without their approval. And so they would, they, they, almost did it. They didn't do it because Dale was smarter than them. They wanted us to be dependent so that the money would cost us more and more. In other words, you would, you would lose more and more equity in the business. And more and more board seats, which is more important to them. They wanted more board seats because they wanted, you felt that they wanted to eventually take over and control the business. Absolutely. So, so when you, started to, to, when the tension began, well, what did that mean? Did you, did you stop to

stop communicating with them? What, what started to happen? No, we never stopped communicating with them. They just had this kind of party line that, um, that everything we were doing was wrong. So the first thing they did was, so Dale and I had always been co-whatever, CEOs, co-presidents, partners in every way. The first thing they did was they said Dale had to be CEO because someone had to be financially responsible, right? So they made Dale CEO and what did they want me to do? You can be whatever you want. You can call yourself whatever you want.

So it was very demeaning. They were really demeaning to me. And that was this kind of divide and conquer mentality of. So they would question Dale. mental health at one point, they just undermined everything. I'm confused. I'm confused. How did they even have that kind of power? If they had 14% of business. Because we trusted them. These are really experienced business people. I don't remember the details of their contract, but they were the preferred, you know, shareholders and everybody

else was common. So that gave them certain privileges. I see. So they had the right under the agreement to make certain demands of you guys. Like we had to become a Delaware corporation instead of the LLC that we had been. You know, they started changing the structure. That's not abnormal. That happens. Right. And obviously there's, you know, there are conditions that come with taking outside money. But it doesn't sound like they did anything that. that was out of the ordinary from what VCs tend to do. I mean, they want to see quick growth. They want to see fast growth.

They want to see a return on their investment. They usually want to see a 10-X return. And, you know, they're putting in a million bucks. Right. But we didn't know any of that. We didn't understand that. That's not what they told us. There was nothing verbalized ever about what their agenda was or what their plan was

other than to help us grow and to partner with us. But, again, I mean, I don't know the, the circumstance, I don't know the people who are involved and they're not here to defend themselves. But, I mean, it can't just be a story of the evil VCs versus the pure founders here. I mean, you guys did take the money and they were making an investment. And, you know, in their defense, that means you want to return on that investment and you want to get it as quickly as possible. Well, see, the quickly as possible we didn't know, the return on investment was fine. We were a hugely successful, fast-growing company. I still to this day think that if they had really partnered with us and had helped us grow instead of battling us, which is all they did, really, they really never helped us grow, that we all would have made out much better than what ended up. happening, but they were so desperate to just get rid of us and do it the way they thought

it had to be done. Forget for a moment about wanting to get rid of you guys, but was there a difference in view on branding and where to sell the product? No. No, that was all, you are all lined there. No, we had great conversations about the vision of the company, and they really had their recipe, and we were not allowing them to do that. And then it became a battle between them and us personally where they just hated us because we kept beating them at this game.

Beating them at what game? Well, the game of trying to get rid of us. They were, you know, we were older. We weren't in our 20s because of our friends, not because of us by that time, but because of our friends, we still had a majority share of the business because they voted with us anytime. we asked them to. And so basically, I mean, I have to imagine that, you know, three months into to getting this money, you guys realized it was a mistake from your perspective to take the money because these were not the partners that you wanted. Right. They probably realized maybe they had made a mistake because you were not the founders that they wanted.

And so I have to imagine, you know, this is going to last for a long time. You guys were still going to be in the same business together for a while. We asked them if we could buy them out. They refused. They would not take it. Okay. No. They didn't even accept an offer.

They wouldn't even. No, that's why I say. I think it felt like personal by that time, you know. So while this is going on, I mean, you're juggling running a business and trying to grow the business. and also this like constant, you know, sort of low hum of legal issues in the background, always. How are you just personally doing? I mean, you are a therapist, so your job is to help other people figure out how to cope. How are you doing?

Let's see. So when we moved up to Paradise, which is near Chico, the first two years, so between 2006 and 2008, So we took the money in 2007. And so now we're running the factory full time. Dale's up at 4 in the morning, and he's on the factory floor. I'm there pretty much right behind him. But my body starts to give out. And by 2008, I decided that we now have a toddler business on our hands,

not an infant business. And with toddlers, you can start high school. Hiring babysitters, you know? So at this point, you could start hiring other people, yep. Yeah. So I decided that I was going to, I had to take care of myself. And I decided not to go in first thing every morning. I would not go into the office until, you know, 10, 11, even 12 sometimes.

So that I would have time in the morning to do yoga, to walk, to breathe, you know, to feed myself, all the things that I had stopped doing. Yeah. So I'm good at that because I had learned what I needed and I'm good at that. Dale, not so much. He's just really good at pushing and that's what he kept doing. He was working, working, working. Yeah.

And dealing with the illegal issues. Right. But despite all this, you're growing, I think, by 2012. And this is like, you know, you're still in the midst of legal battle. with these investors. And at the same time, you guys were growing, I think, about 40% year over a year. I think by 2012 you had like 250 or so employees. Yeah.

Yeah. I think we were at $30 million as a company then. Wow. And you were in every Whole Foods by that point and even supermarket chain. So you really, I mean, the product had really kind of just grown and sold itself because by that point, you're everywhere. You're $4.30 plus million in revenue. but still have this thing hanging over your head, these investors.

And so were you constantly thinking, were you and Dale constantly thinking, how can we get rid of them? How can we get, how can we figure out a way to get them out? They really wanted us to sell the company because that was the only way that they could make a profit. They could get out, that they were willing to get out. We, like I said, we asked if we could buy them out earlier and they refused. so it was us holding on as long as we could and them pressuring us to sell.

And a couple of years before that, we had been approached by this Japanese company that wanted to buy us way before we were ready. But they, being the Japanese, they're very patient. Time is not the same for them as it is for U.S. companies. and they hung around. And they, this is a company called Kameda.

Kameda, right. And they are, I think, the biggest, like, they, like, sort of own the Japanese ricecracker market. Yes, they're the largest rice cracker manufacturer in Japan, yeah. And they have a U.S. subsidiary. And that subsidiary made an offer that you guys accepted at the end of 2012. Right. And so in the end, they bought, I think, a little less than,

80% of the company for around around 45 million dollars. And basically, at that point, everyone's off the cap table. It's just you and the remaining shares you and Dale owned, right? And so what did that, I mean, presumably that was, you know, both a relief, but maybe a bit bittersweet. I mean, on the one hand,

you don't have to deal with those investors anymore. Now you've got this massive multinational huge company. Yeah, and they knew how to manufacture for the first time we were going to, well, they already, you know, the first two years they were there, they brought people from Japan, their manufacturing experts right away to clean up our, I mean, there was so much room for improvement. But they also made the commitment to, we needed an automated line. Yeah. And they were willing to do that. And so you and Dale both had, to your commitment, you would become chairman. But I think not too long after the acquisition, your marriage with Dale ended, right?

Let's see. He moved out around the same time that two-year period was up. So it was probably about a year after the acquisition. Yeah. I mean, things had obviously, the issues were there all along, but it was really clear. to me after a year that he couldn't stop. You know, I was ready to celebrate. I wanted to relax.

I wanted to stop traveling as much. We didn't have to do what we did up until that point. And he didn't want to. He wanted to keep going. And we were on very different paths by that time. I mean, I imagine just the toll of the business, too, is going to have an impact on your relationship. Yeah, you know, I guess it was fun.

because Dale used to say when I would ask him to stop, you know, to take some time off. And he always felt like he was in way over his head, which we both were. But he was on the front line way more than me. And I understand that. But I also know that you can only do so much and taking some time to yourself would only make things better. And his, he would say things like, you know, if this business business fails, our marriage won't work. You know, he would, that was his big fear. And that was not my fear, but, but the irony, which was that when it succeeded, it was when it failed, our marriage failed, because he couldn't get off of that, that married around.

I think he enjoyed it on some level, or he was hooked on it or whatever. So he fulfilled his to-year commitment and left and was able to sell his shares. You fulfilled your to-your commitment, but then you signed on for another four years. They wanted me to stay, yeah. And as a consultant and sort of slash brand ambassador? Well, in the beginning, when I was still full-time, I became a consultant the last two years, but there were two more years in there that I was full-time and I was there. I was still in that area.

but I wanted to make new products. I had a lot of ideas. And that was really why I stayed. You left, I think, in 2018, finally. And there's something that you said in an interview a couple years ago, and it's interesting. You said, I want to read this to you. You said, when I look back on this journey, this was not a job. generally joyous experience for me to do this business.

There was very little joy on a day-to-day basis. That sounds like part of me is like, God, was it worth it? You know, like when I hear that, when you hear you say that. Well, what was joyful for me was how many people loved my product and how many times I would go out into the, more of the public domain and be told that not only do they love my product but they love me because of how the product saved their lives. And so that made it worth it to me because I understand that. It saved my life too. And I was surprised by the response, but I shouldn't

have been because it was it was what I was going through. So that brought me and still brings me incredible satisfaction to know that, um, that I helped a lot of people and, and still do. And all that went into, I mean, five years of just R&D and uncertainty over money and, and, and, and then the, you know, the, the, another, you know, seven years of, of, of challenges, legal issues, growing the business, but travel, trying to get it on store shelves, dealing with people who were not always straightforward, still worth it? Yeah, I would say yes. I think, I mean, I'm obviously a different person.

There was a point in there where I said to myself and I said to God, you know, why am I having to learn this in my 50s? you know, why am I having to deal with people who lie and look you straight in the face and lie and lie and want to steal? And, you know, I, my other joke is that I never dealt with crazier people at, and as a therapist, I stopped, you know, until I stopped being a therapist and went and started this business, you know. So, and I wondered, you know, why I lived all these years without having to deal with people like this. why am I doing this now? And I don't exactly have the answer.

I think part of it is this kind of venue where I get to talk about it and where I get to, you know, I've spoken a lot over the years where I get to warn people about starting businesses and what to look out for. And I'm not sure about what my development, you know, like I said,

I put everything in the context of my own growth in my own development and obviously I'm a different person having gone through this. Yeah. When you think back on this journey that you took, you know, and you were a therapist until you were, you know, really into your mid-50s, and that was your career. And then you kind of go on this quicksotic adventure, which turned out to be a good call, starting this brand, which is available everywhere. You can get at Walmart, Kroger, I mean, Mary's Gone Crackers are available everywhere.

It's your name is on it. It's like we had Stacey Madison, Stacy's Pita Chips on the show a few years ago. And, you know, it doesn't matter. She can go to a Costco or Walmart, wherever she goes. And she's going to see her name on a bag of chips in a shopping cart somewhere. She just knows. It's her. And you're going to see that.

And you probably still see that. How much of your story and what happened to you do you attribute to how hard you worked and just the way you approach this and how much do you think had to do with luck? The way I look at it is that when you get a message from the spirit world or whatever you want to call it, you hear a voice, you have an idea that really touches to your core, whatever language you want to use. And you don't honor that, that that's a mistake. Because when you honor it, the universe works with you and supports you. And yes, we worked really hard, but there was a lot of magic involved.

There were so many moments when it could have gone the wrong way and it didn't. And so I don't think of, I don't think luck is, is the word that I would use. I would think, I would say that we dove in 100%, and we made that commitment and the universe supported us. And it's always a team effort between what we do in this physical world and making sure that the message that we're sending to the other realm is that we really want this,

we're really committed to it, and we're going to do whatever it takes to make it happen. Because when you do that, the rest of the world, the other, the invisible realm lines up behind you to make it happen. That's Mary Waldner,

founder of Mary's Gone Crackers. By the way, whenever Mary sees her crackers out in the wild, It's fun. I saw a guy in the grocery store the other day, and he was standing in line behind me carrying like four boxes of my crackers. I said, oh, you're buying a lot of those. He said, oh, yeah, they're on sale. I didn't say anything, but it was just fun, you know. Hey, thanks so much for listening to the show this week. Please be sure to follow how I built this. Just click the follow button on your podcast app. It's usually a plus sign right at the top. So you never miss a new episode. and it's totally free. If you want to contact our team,

our email address is hibt at ID.wondry.com. This episode was produced by Carrie Thompson with music composed by Rumtin Arablui. It was edited by Casey Herman with research help from Sam Paulson. Our production staff also includes J.C. Howard, Niba Grant, Elaine Coates,

John Isabella, Chris Messini, Carla Estevez, and Liz Metzker. I'm Guy Raz, and you've been listening to How I Built This.