Money Rehab with Nicole Lapin - How to Get Paid for Doing What You Love

Episode Date: July 24, 2024

Nicole sits down with Candace Nelson, co-founder of Sprinkles (the world’s first cupcake bakery), and Pizzana (a chain of Neo-Neapolitan pizzerias). Chef’s kiss! Nicole and Candace talk about how founders can carve out space for their companies in the food industry, and what lessons from Candaces’ cupcake MBA we can apply to any business.     You can find Candace's book here: https://candace-nelson.com/sweet-success/  All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Public Investing offers a High-Yield Cash Account where funds from this account are automatically deposited into partner banks where they earn interest and are eligible for FDIC insurance; Public Investing is not a bank. Brokerage services for alternative assets are offered by Dalmore Group, LLC, member FINRA & SIPC. Brokerage services for treasury accounts offering 6-month T-Bills are offered by Jiko Securities, Inc., member FINRA & SIPC. Banking services are offered by Jiko Bank, a division of Mid-Central National Bank. Securities investments: Not FDIC Insured; No Bank Guarantee; May Lose Value.  Brokerage services for Regulation A securities are offered through Dalmore Group, LLC, member FINRA & SIPC. Risks at public.com/disclosures/alts-risk-and-conflict-of-interest-disclosure See public.com/#disclosures-main for more information.

One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that

I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime. Feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details.

I love hosting on Airbnb. It's a great way to bring in some extra cash, but I totally get it that it might sound overwhelming to start or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your

reservations, messaging your guests, giving support at the property, or even create your listing for you. I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at Airbnb.com slash host. Hey guys, are you ready for some money rehab? Wall Street has been completely upended by an unlikely player. GameStop. And should I have a 401k?

You don't do it? No, I never do it. You think the whole world revolves around you and your money. Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg.

The only financial expert you don't need a dictionary to understand. Nicole Lappin. I know you're going to love this episode because today we are going to be talking about cupcakes. And who does not love cupcakes? My guest today is Candice Nelson, co-founder of Sprinkles, the world's first cupcake bakery, and Pisana, a chain of neo-neapolitan pizzerias that is delicioso. Today, we talk about how founders can carve space for their companies in the food industry and what lessons from Candice's cupcake MBA we can apply to any business. Well, Candice, I'm so excited to say welcome

to Money Rehab. I am delighted to say thank you for having me on Money Rehab. You have an awesome new book coming out in November. It's called Sweet Success, A Simple Recipe to Turn Your Passion into Profit. And I'd love to talk about some of the lessons that you discuss in the book. First, you talk about landing your perfect idea and testing it for traction. This is so, so important, and I am so glad we're starting here. In your various ventures, what have you done for product testing? Oh, product testing. Well, you have to start by being your own best product taste tester. And I have done a great job of that. I had to join a gym in the early days of sprinkles for the first time ever because I was doing a little bit too much recipe development.

I think in terms of landing an idea, it sounds so intimidating to come up with that big idea that you're going to go all in on and start that company of your dreams. But you don't have to reinvent the wheel with your idea. You don't have to be a category creator. I mean, obviously, you're going to get a lot of benefit from being a category creator if you think of companies like Spanx or Airbnb. Obviously, they have had some great returns on that. But Sprinkles was just an update or a reinvention on something that everybody in the country already loved, which was a cupcake. And we just repackaged it in a way that allowed consumers to see it through new eyes. So I think when landing an idea, it's probably easiest when you come from a place of industry expertise, because you can really see what's missing in the market. But it can also just as easily come from

a frustration. So many great companies have come from aspiring entrepreneurs or people just bumping their heads up against a wall and being like, I wish there was X, Y, or Z, and then getting up off the couch and making it happen. So as optimistic as I like to think entrepreneurs are, and I think in general, we're an optimistic bunch because we're sort of dreaming the impossible into reality. I think that there's a lot of benefit from leaning into your frustrations. Absolutely. So there's kind of a bucket of a zhuzh, which is one of my new favorite words, or refresh of different products or categories, and then a total disruption. And it's totally cool to be in one or the other, even if it's like really

leaning into the zhuzh, which you did. Not your mama's cupcakes, not your mama's pizza. In your book, you also talk about positioning your company within the market to break through all of the noise and all of the competition out there. I think that's especially relevant to folks who are interested in particularly competitive spaces and industries. We actually just did an interview with the woman who's behind Girl With No Job, who is starting a sparkling beverage brand, which is a super, super crowded space. So what can brands do to break through the noise? Or if they're intimidated by the competition that's out there, what would you suggest to them? It is a competitive market out there. And I think that's why it's so important to be a student of the competition. Know exactly who you're going

up against and how you are going to, in turn, differentiate yourself. Are you competing on price? Not something I typically recommend in this Amazon world of ours. But how are you coming at this space through a different lens, from a different angle? How are you going to make people sit up and pay attention? And it doesn't sound like the most groundbreaking advice to know the players in your market space. But I'm always amazed when I see pitch decks now from the perspective of being an angel investor in early stage companies, from the perspective of being an angel investor in early stage companies, their competition slides are not always very complete.

They're not so good. They're kind of missing a few competitors on the slide. And it's not usually even an oversight. It's just that these founders are not exactly aware about all the other companies in their industry. And I think that just puts you at such a disadvantage. I mean, I made myself like I gave myself a stomachache going around and tasting all the competition. But it's it's absolutely critical to being able to rise above the noise and and have a specific point of view and make people start talking about you. Yeah, I love an MBA and the school of cupcakes.

start talking about you. Yeah, I love an MBA in the school of cupcakes. I also want to talk about marketing. Of course, you are so great at it. In your book, you give readers tips for harnessing the power of organic marketing. Can you first define organic marketing for us? Absolutely. Organic marketing is marketing that you are not paying for. People are just talking about you out there in the wilderness. And it's because they love you. It's that organic word of mouth. And it is the holy grail of marketing. People spend, as you know, companies spend millions of dollars on marketing.

But when you can get people talking about your product without having to spend too much money, and then that's developing a sort of a virality to it. That is what you want. And that is a lot of times when you know you've found that product market fit if you're kind of just starting a company and start building a new product. I actually found out about sprinkles from some of my big vegan friends who were telling me about the vegan cupcake. And so I didn't know anything about sprinkles, but then I knew I had to get the vegan cupcake from being vegan for so long and struggling to find edible, delicious cupcakes. So I was actually part of maybe intentional or unintentional organic marketing strategy

with sprinkles. Were you hoping that something like that would happen to make sprinkles what it ultimately became? Well, absolutely. Thank you for helping be one of our brand ambassadors out there, Nicole. Oh, thank you for feeding me so well. One of the things, obviously, that makes it easy to find that sort of organic marketing and that word of mouth is obviously a great product. I mean, if you bite into an amazing vegan cupcake and you haven't had one that tasted quite so good before, or the same goes for pizza, you're going to talk about it. So start with a really great product, obviously, or not obviously, because some people just rely

on the marketing part. But I think then there's also when people really love a product, they crave a deeper connection to the brand than just the product itself. Yeah, I definitely love this lesson of you can't market your way out of a bad product. At the end of the day, you know, when people say, well, how do you get on all these shows or how do you, you know, get billboards or whatever else you can have all of that. And that's great. But it's an and not an or to having a core good product, because when all of that and that's great, but it's an and not an or to having a core good product. Because when all of that dies down, you really do rely on food of mouth.

You're making me like that term. No, it's true. And, you know, as much sort of buzz as Sprinkles had initially, which was, again, completely organic and, again, I think also fueled by this scarcity, right? So when we opened our doors, I had baked through the night. I had painstakingly filled the display case with all these different cupcakes. They were beautiful. They were perfect. And they were just enough or so I thought to get us through the day. And it was just cupcake mania from the moment we opened our doors. And by noon, our display was bare. So our line turned into an angry mob. But I think part of that scarcity also got people talking, right? It's like, wait, you went to a cupcake place and they

actually didn't have cupcakes for you and they're charging $3? What is this place? Whether or not you wanted a cupcake or not, the story was too intriguing not to take notice. So yeah. So we had this initial buzz. And so those were all of our tastemakers, right? And the tastemakers you need because everybody listens to the tastemakers. They're telling everybody what's cool and what's hot. But ultimately, you need also your mass audience because those tastemakers are going to be on to their next hot thing. And so we knew we had this great flock of fabulous, like the who's who around town filling our store. But we also knew that if we weren't delivering on a great product and a great experience, it wouldn't matter because they would ultimately leave us and then there wouldn't be anybody left behind. But they brought their friends with us and their friends

stayed. That's so interesting because I guess like the diehards and especially in the food industry, the foodies probably are gung-ho about it and then they move on. With that move on, probably during a time when a lot of cupcake brands were out and trying to do their thing, they went by the wayside, but Sprinkles continued. So how do you think Sprinkles was able to make it over that finicky, sort of foodie fickleness? I love alliteration, but I love alliteration. No, that's a really interesting thought. And you're right. I think foodies in general, and I'll use that term in quotes because I so overuse these days, but these sort of true foodies that seek out unique food experiences and love like sort of the discovery part of the process, right? So it's like the sandwich shop that's only open from two to five until they sell out that nobody's heard of, right? This is what gives those traditional foodies a high. But then

I also have a goal of scaling them because I feel like, you know, sprinkles or pizzana can exist in lots of cities around the country. But foodies don't always like that. Foodies don't always like it when then you're two locations, then you're big, quote unquote, big business. So but I think that even then we were able to turn around those true foodies because we were consistent, right? I mean, at the end of the day, the food business is about consistency. And I don't remember the exact stat,

but I guess there's a stat that says that if your food is average, but you're at least consistent, you have a higher likelihood of sticking around than food that's superlative that doesn't always deliver. And it makes sense. People want to walk into a restaurant and know what they're getting. So I think we really we surprised and delighted them in the beginning. But then we stayed consistent and true to our brand mission. And so people knew what to expect. And they and they kept loving us. I'm so fascinated by the food business in general, because I think that there are a

lot of entrepreneurs who never thought they would be entrepreneurs, but you get food. It's visceral. It's nostalgic. It's all sorts of things that, you know, our people think they can do that, too. So selling food products seems like a really tough industry to break into. Has that been your experience? Well, I think it's, to your point, like something that seems anyone can do. It's kind of easy to break into, but hard to succeed. Because if you think about what I did, I mean, I literally did what anyone could do. I made a company out of a cupcake. My kids can bake cupcakes. I wasn't creating some sort of high-end technology. I wasn't a tech savant. I wasn't an engineer. I literally made a cupcake, which people around the country do every day,

but built a business out of it. So the fact that it's a really actually easy entry, right? Because people can start in their kitchens. And more so even today than back in the day. Like when I was baking out of my kitchen and selling out of my kitchen, I wasn't really allowed. Now we have like cottage food laws that allow for people of a certain scale to bake out of their kitchen and be on the up and up. So you can start, but it's hard to scale. And it's hard to reach that And it's hard to reach that. It's hard to break through the noise, right? Because everybody's got their applesauce that people think is great.

Or everybody's got their brownie that the family loves. And why don't you build a business on your brownies? But I think it's easy to get into. But because of that, a lot of people falter because they're not really thinking about it like an actual business, which it is. It's business just like anything else. And the same principles apply. Entrepreneurship is not recklessness. It's not leaping off a cliff. It is certainly taking a risk. But what isn't these days, right? I mean, people are getting their job offers revoked.

People are losing their jobs at tech companies that we thought were, you know, superpowers. Hold on to your wallets, boys and girls. Money Rehab will be right back. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN.

When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener

by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime feels like progress. Banking services and debit card provided by the Bank Corp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details. I love hosting on Airbnb. It's a great way to bring in some extra cash, but I totally get it that it might sound overwhelming to start, or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full time in San Francisco and you can't go to

Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your reservations, messaging your guests, giving support at the property, or even create your listing for you. I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look

guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at Airbnb.com slash host. Now for some more money rehab. I suppose you also have to define what success is for that business, though. Do you want the brownies to be the next McDonald's or do you want to just have an artisanal brownie shop in Brooklyn and, you know, be able to pay the bills and be cool with that? Because I think that as you go along this entrepreneurial journey and you've seen the goalposts constantly changes for what success is. So it never feels like potentially you get your brain

to the other side of it unless you stay steadfast to really what the goal is from the outset. It's also very easy, especially on social media, to be like, oh, I'm not doing anything with my life compared to so-and-so. But then it's a really good reminder to be like, well, was the thing that so-and-so posted, you know, with their franchises or whatever? Was that a part of what my success definition was or not? And if not, maybe move on. I think that's so true. And by the way, no one is immune to the compare and despair, such as anyone who's listening out there. If you do that, we all do it. I do it too. Yeah. And I think one of the reasons why the book goes from ideation to sale, because, you know,

eight years after with eight years in 2012, my husband and I sold the majority of sprinkles to private equity. So I saw from bootstrapping out of my little kitchen to selling a national business and brand to private equity company. But that's not going to apply to everyone. And I realized that and I obviously go into that in my book that everyone has different goals. And what does success mean to you? But I think it's important to envision what could be your end goal, whether it's selling, whether it's continuing to operate as a CEO for the remainder of your years, whatever that is, and kind of working backwards because that will

help guide your choices in terms of the investment you make, the foundation that you're building. Do you need a foundation to scale? And I think people also think for food products, to scale, right? And I think people also think for food products, general consumer products are high margin businesses, but then restaurants, which people also want to go in, even if they don't have other entrepreneurial dreams or endeavors because of that nostalgia, are traditionally low margin businesses. So what are the pros and cons of doing a brick and mortar food business versus just direct to consumer e-commerce? Great question. And I get this question a lot where people ask about the food business, but as you so aptly pointed out, the food business really spans a lot. So it's very different to be starting a CPG business, direct-to-consumer, for example,

like my friend Lisa Odenweller, who has Chroma Wellness, which is this great reset, versus opening Pizzana. And I think there's some pros and cons. Absolutely. One of the cons, as you mentioned, the margins are real thin when it comes to restaurants. And the only way to make up for that is with volume. You've got to make up for it with volume. I mean, thank goodness people order pizza to go, right? Thank goodness people come into Sprinkles and buy not just one or two cupcakes, but two dozen. It makes a really, really big difference. But the pros are that, first of all, people need to eat every day. That's the great thing about going into the food business and particularly the restaurant business.

It's like people got to eat and they're fickle and they want to mix it up and they want to go to new places. And definitely on the heels of the pandemic, they're interested in getting inside restaurants again. And because of that, you're able to control the customer experience. So there's nothing quite like getting a pizza fresh out of a wood-burning oven, right? It's so just ooey and gooey and craveable. And so you're able to really elicit this response from people that makes them crave it and come back. Unlike something you might pick up at the grocery store or get in the mail and you open and it's packaged good, delicious, sure, but not the same as that just like hot, freshly made food.

And the same can be said for sprinkles. People at the time were not used to getting cupcakes that were so freshly baked. And there's something completely irresistible about a freshly baked cupcake. I am fanatical when people say they're going to save it to the next day. I'm like, no, no, there's no point. You have to eat it freshly baked. Great willpower. There you go. I also, it's easy for me to say because I had a lot of access to it. But so I think there's this credibility. And also when you erect this restaurant or retail bakery or whatever it is, that's your marketing. That's your billboard. And as we all know, for people who are duking it out online right now, boy, is it hard to get eyeballs. Boy, is it hard to stand out in the world of digital advertising and expensive right

now. So people are going back to traditional advertising and with good reason. And so when you build a beautiful restaurant, that's your billboard. People drive by it every day. People walk in and out. They can really experience it exactly the way you want it to. So you own that customer experience. You're not handing off a box to UPS and hoping it doesn't get smashed. So I really am passionate about delivering not just an elevated product, but an elevated experience. And so it's really important to me to own my channel. Now, having said that, I do believe in brand extensions, utilizing other channels, in particular for national brand awareness. So we are, for example, Pizzano,

we're shipping via GoldBelly right now, our pizzas. And with Sprinkles, we sold a cupcake mix through Williams-Sonoma. Why did we do that? We weren't making money. We did it because we were planning to go into these other markets across the U.S., but it takes a long time to build brick-and-mortar stores. So by the time we got there, we hoped that these mixes would bring some brand awareness for our company. Very smart. Good advice, obviously. This is Money Rehab, of course. Can you tell us, Candice, about a time that you needed money rehab or if there was a time that you had some sort of money related hiccup or snafu and how you navigated it? Oh, my God, this is ridiculous. And I know, first of all, thank you. Thank God there are people like you in the world that are helping us all to be more savvy when it

comes to money and women in particular. I needed you. I needed you at the time. In college, they would set up, I'm sure they still do those tables where they're like, you know, giving out these credit cards like, you know, candy. And I didn't understand how credit card worked. I was at like one of the top colleges in the United States. I was an economics major. And I did not understand that if you did not pay off your bill in full, that you were getting screwed. I literally didn't even get it. And nobody thought to tell me. So that's embarrassing. And yeah, I think, you know, we really need to do a better job of educating our kids, even high school, college kids.

I mean, my liberal arts college didn't even offer an accounting class. I was like, hey, guys, you have investment banks recruiting here. I'm going to be a financial analyst. It'd be helpful to have an accounting class here. And they sent me to the local community college. Oh, my gosh. Wow. Okay. I think we're, you know, in the name of higher education, we are somehow like, you know, asleep at the wheel on real practical life education and financial literacy.

And I do sense that that's changing. And I do hope that it will change. But I certainly, it caught me by surprise. That's wild. Thank you for sharing that. Yeah, as an economics major, or even I mean, I don't never know why I'm invited to go talk to business schools. I'm like, I didn't go to business school. I didn't work at a bank. Like, why do you have me here? Shouldn't you already know this basic budget stuff? No, they don't. They don't. A travesty. And that's obviously why I do what I do. But the financial literacy issue is prevalent. And thank you for telling us to at the college level, we talk about it not being taught at schools. You know, what are we

going to use geometry for or whatever? You're probably looking at this being a mom now. But yeah, it's at every level. Well, thank you for keeping it real and reminding people that even if you got an econ degree from an awesome school and even if you worked in banking, there are still things that you don't know. And it's OK because we're all learning and growing. Rinse and repeat. Thank you so much, Nicole. This is really fun.

For today's tip, you can take straight to the bank. If you're interested in starting a business, focus on research to that specific industry. If you're an aspiring founder, you might want to read Steve Jobs's biography, for sure. But that might not help you a ton if your business is outside the tech sphere. As Candice mentions, the food industry, the restaurant industry specifically, tends to be low margin. So you have to focus on volume in order to turn a profit. But not all industries, of course, are like that.

You're going to want to spend time researching how to turn your customers into repeat customers if you're in an industry like wedding planning, for example, right? If all goes according to plan, those customers are going to be one and done shoppers. So it's important to understand how you'll need to build your business model to the specs of your industry. Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson.

Our mascots are Penny and Mimsy. Huge thanks to OG Money Rehab team Michelle Lanz for her development work, Catherine Law for her production and writing magic, and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.