Hey Folks 👋, 

Happy Q3 of 2021 and belated fourth of July to those of you in the US. Yesterday, I published our first ever Monthly Public Update, diving deep into all the numbers and stats from last month.

Ali Abouelatta @abouelatta_ali

First Ever First1000 Public Update Watch the June Public update 👇🏽 vimeo.com/571376069June Public Update.mp4This is “June Public Update.mp4” by First1000 on Vimeo, the home for high quality videos and the people who love them.vimeo.com

July 5th 2021

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Now to the fun stuff 🤩, this week’s case study is on Mid-Day Squares, the second ever Canadian company we cover (first being Shopify). To tell you all about Mid-day Squares I invited Amil Naik from Scaled and Failed. Amil is a Venture Fellow @ Unshackled Ventures (which I love) and writes amazing pieces on Scaled and Failed( which I also love) contrasting two very similar ideas that had very contrasting outcomes.

Amil…take it away.

Mid-Day Squares presents itself as the “first functional chocolate bar”; protein-packed, gluten-free, vegan, dairy-free, and organic are just some of those awesome functions. The signature Mid-Day Square chocolate was inspired by the bad eating habits of one of the founders, Nick Saltarelli. Nick and his now-wife, Lezlie Karls (AKA the CEO of Mid-Day Squares) were living together in Montreal back in 2018 while working on their own projects. He was a former Internet entrepreneur used to chowing down on whatever craving foods he could get his hands on when he had a break (think chocolate bars, pasta, and pancakes drowning in syrup). Lezlie got sick of listening to him complain about how bad the unhealthy food he ate was and took action to create an alternative for his afternoon munchies. 

With lots of recipe trial and error, she was able to design a great prototype afternoon bite for Nick. While a bit different from the MDS products they sell today, it was plant-based, filling, and had a great macronutrient profile compared to the average chocolate bar. It quickly became Nick’s go-to snack when he needed something quick. For a while, that was all MDS was: the couple’s afternoon snack. Lezlie and Nick both had business experience under their belt and were set on starting a company together, but it took a while for the right idea to hit them. In the birthplace of all great ideas (AKA the shower 🛁), Nick realized that they’d been eating the right idea for months. 

In that span of time, Nick and Lezlie had tied the knot and were off celebrating. Once they’d decided on going forward with Mid-Day Squares, they couldn’t contain their excitement and determination. Rushing home from their honeymoon early, the duo got ready to go heads down on building the company from their condo. While Lezlie honed the recipe ahead of the official launch of MDS to the world, Nick worked on persuading Lezlie’s brother, Jake Karls, to join the team as the marketing mastermind to get the product out there. Jake wasn’t much of a chocolate guy, so it was a tough sell; Nick spent months trying every trick in the book to convince Jake before he finally caved just 3 weeks prior to the launch. Two newlyweds, a directionless brother, and a kickass homemade chocolate bar 👊; that was Mid-Day Squares at the start, ready to take on Canada late in 2018. 

The First 1,000 Customers 📈

#1- Growth on the ‘Gram 🎉

Jake was a born hype-man that had spent time working in brand-building before, so he did what he knew best. To get people fired up about Mid-Day Squares, he decided to turn the founding story into the strongest tool for marketing they had via a company Instagram 📷. 

The cameras were rolling 24/7 as the founding team faced the struggles of entrepreneurship, creating a uniquely authentic connection to the audience that owned up to how damn hard it is to start a CPG company. Instagram essentially served as the launch point for the MDS reality show, broadcasting the startup’s story in real-time with just as much juicy drama and chaos packed in as 10 episodes of “Keeping Up with the Kardashians”. It’s not hard to find challenges at a startup running out of someone’s cramped condo, after all. Jake was betting that the down-to-earth nature of the brand would make customers much more receptive to MDS.

Judging from the outpouring of positive vibes on their early posts and the many demands for delivery and retail locations across Canada, the strategy resonated with its audience. MDS amassed a sizable following leading up to launch and in the years after, garnering 10,000 followers just a few months after their IG debut. With a lot of noise online, the company had hungry eyes on it.

#2- Not So Free Samples 💰

After getting people to know their brand, they had to get chocolate into everyone’s hands. Customer acquisition is especially tough for CPGs in the beginning, but samples tend to alleviate some of the barriers to that first bite. At launch, MDS offered sample bars for 25 cents directly from their website; the decision to add a small cost was one to give a sense of commitment to the buyer and make them more likely to be retained as a customer. Sounds a bit similar to the 

Ben Franklin Effect (get someone to give you something and they’ll like you more), and it worked for MDS; thousands of their bars ended up in the hands of customers in just a few weeks. With a strong start, it was now the gain and retain game.

#3- Hand-Delivery and Hands-On Research 📦

Mid-Day Squares was hell-bent on differentiating its brand on the basis of more than product and turning the company story into one shared by its community of customers. If they felt like a part of the story, they’d keep buying MDS chocolate. Of course, that’s easier said than done. In the spirit of doing things that don’t scale in the early days of a startup, the founders decided to personally deliver each bar ordered nearby in the evenings after spending the whole day doing production. On top of that, they wrote personalized messages, dressed up in some… interesting outfits, and took Polaroid photos for several hours each night to package with the deliveries. 

One of many questionable fashion choices…

People were elated to meet the founders delivering them their chocolate: they posted deliveries to their IG stories, filmed mukbangs and reviews, and chatted with the team about what they liked and what they didn’t. The direct feedback was valuable for product development, and the viral exposure helped growth become a wildfire. I mean, how could you not like someone showing up at your door with chocolate, motivational messages, and ridiculous photos? And then how could you not post that online? The flashy nature of the whole ritual was perfect for social media content with consumers doing the heavy lifting on marketing for MDS.

Sold Out, Scaled Up, and Canadian Conquest! 🍁

How It Started: 8 Bars an Hour

Within two months of the launch, growth was getting out of hand for the trio of chocolatiers and their condo operation. Not only were individuals ordering from Mid-Day Squares, but dozens of retail locations were now offering their bars. Demand was outpacing production capability and there were no more hours in the week for the team to put in. It was time for a real production facility, tons of employees across numerous business functions, and more products for people to buy. The new place was no Master Chef’s Kitchen, but it sure beats what they had before.

With added staff in production, sales, distribution, and media, 2019 was a year of accelerating momentum for Mid-Day Squares. The machine wasn’t well-oiled, but it was running. A full launch across Canada, the first funding round 💸, and thousands more customers were counterbalanced by ingredient shortages, mold infestations, broken appliances, and personal tragedies. The next year was marked by another move, further growth, and steps towards automated production (using that sweet VC money) while navigating the challenges of the pandemic. MDS also launched a 

kickass podcast diving deep into their journey and lessons learned (seriously, it’s a great listen if you love raw, pointed banter and hate the glorification of grind culture in entrepreneurship). 

How It’s Going: 90,000 Bars a Day

Most importantly, 2021 has seen the launch of MDS in US retail locations. After indulging in 4 or 5 (for research 😋), I can attest that the taste lives up to the hype. They also raised a Series B, turned down an acquisition offer from Hershey this year, and passed $10M in revenue, all of which are slightly less cool than access to chocolate. The road ahead is long for MDS, but the opportunity is immense given the size of the US health food market. If the company can win here, the founders’ dreams of an IPO in the footsteps of giants like Oatly may come to fruition.

This is it for today 😉,
See you next week