“ Entrepreneurship is an iterative path ”
The recent acquisition of the chocolate maker Paléo Hu Master Holdings by Mondelēz was widely seen as a natural initiative by a leader in the snacking market to refine its innovation engine, while remaining vigilant on emerging consumer trends.
Cookie maker Oreo, which previously had a minority stake in Hu before taking full ownership, not only created SnackFutures to unlock growth opportunities in CPG, but also recently unveiled “CoLab” under its capital arm. -risk to help develop wellness snack brands through a 12 week program.
Similar to brands that were recently swallowed up by Mondelēz, including Tate’s Bake Shop and Perfect Snacks, Hu is now expected to leverage the snacking powerhouse’s distribution network and supply chain to move from the natural and specialty channel to mass retailers, such as Target.
Hu’s co-founders and executives recently shared their wisdom on entrepreneurship and how their acquisition journey could be harder and more unexpected than most people imagine.
“We were crazy to go into chocolate because it was saturated with so many brands,” recently told me Jordan Brown, who co-founded Hu alongside his sister Jessica (Brown) Karp, and Jason Karp via Zoom.
As a former real estate developer with little experience in the food industry before launching Hu, Brown notes that the team just wanted to open a restaurant in New York City, which would later become Hu Kitchen, which mainly offers alternative diets. that could benefit humans. body.
“We were thinking ahead of the curve,” he said, “and in our case, we were gluten-free and we held onto the anti-inflammatory concept.”
However, it was the need to create paleo chocolate for Hu Kitchen’s already robust line of baked goods that really laid the groundwork for what shelf-stable Hu Chocolate is today. At the time, five different paleo chocolates were served in the restaurant, with almond butter and the puffed quinoa variety being the most popular flavor.
Hu’s team attributed their early success to sourcing only high-quality, healthy ingredients, including organic cocoa and unrefined coconut sugar – a principle they adhere to even when Hu branched out into chocolate bites and crackers over time.
This strategy also allowed Hu to stand out in the increasingly popular artisanal chocolate market, where the hype at the time was centered on sourcing single-origin cocoa beans.
When Hu’s chocolate products were finally introduced to Whole Foods
“By the end of the year we were in 40 stores, and the next year 85. It just kept taking off until we realized it was something legitimate and real. , and we had to spend more resources and time to scale it up. “
Since Hu was booted from the start with a clear vision and growth path, seeking help from outside investors early in his business could be disruptive, Karp told me.
He explained, “We have expressed such a strong vision not to sell too early, and sometimes VC has to sell sooner than the brand should, because funds are only paid when they sell. We had a very firm vision that we had to do things our own way, where trust and integrity could never be compromised.
But when Hu Chocolate finally lifted his Series A, led by the two investment firms, Sonoma Brands and Bullish, in addition to several other people, Karp noted how the wisdom and strategic advice of these investors outweighed. on their money.
Hu’s continued growth over time has helped expand his team with Mark Ramadan, who co-founded Sir Kensington’s with Scott Norton, and sold the condiments business to Unilever, becoming the company’s CEO in 2019 – the same year. where Mondelēz bought a minority stake in the chocolate company. .
“When a very large state-owned company takes a minority position, the acquisition is obviously a potential option in the future,” Karp said, “but [the deal] came together much faster than we expected. No matter how much we raised, we probably couldn’t have duplicated the many features and benefits Mondelēz brings. So that was really the spirit of our first contract.
Following the success of Hu Chocolate, Karp recently ventured into his new venture, an organic pizza bites business called Snow Days, to capitalize on the nearly US $ 37 billion frozen food category.
Then COVID hit in 2020, forcing Hu Kitchen to shut down permanently after operating for nearly eight years, while allowing the team to laser focus on its CPG business.
Ramadan notes that the main philosophy behind building Hu is to “bring it to market slowly and deliberately,” which means that instead of increasing the number of stores in a short period of time, the company aims for constant improvement and renovation. , because some of its products have recently been certified 100% organic.
Hu’s short-term plans include launching new chocolate bar flavors and increasing online sales of his crackers, and he plans to add new snack formats as part of his ongoing entrepreneurial journey. founding team.
“Entrepreneurship is an iterative path, and you have to try a lot of things, kiss a lot of frogs,” Karp said, “You fail over and over again, and you have to get up.”