Cynthia Tice started Lily’s Sweets at the age of 60 and sold it to Hersey’s 11 years later for $400 Million. Wow!

Dave Young:

Welcome to The Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom-and-pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So, here’s one of those.

[Seaside Plumbing Ad]

Dave Young:

Welcome to The Empire Builders Podcast. I’m Dave Young, that guy next to me is Stephen Semple, and we’re talking about empires. We’re talking about businesses that started with nothing and grew to be huge, as we say. And today, Stephen whispered in my ear the topic and I’ve never heard of it. No idea.

Stephen Semple:

Yay, finally stumped. It doesn’t stump Dave very often.

Dave Young:

Thanks for listening to The Empire Builders Podcast. That’s all we’ve got for you today. Oh, no, wait.

Stephen Semple:

Because clearly if Dave-

Dave Young:

Oh, wait.

Stephen Semple:

Because clearly if Dave’s not heard about it, it’s not interesting.

Dave Young:

Wait a minute. I forgot to have you tell me about them, so go ahead. Go ahead with your little story there, Stephen.

Stephen Semple:

Yeah, so it’s a company called Lily’s Sweets. Now, they’re a chocolate company and they make sugar-free chocolate. And I’m not surprised that you haven’t heard of them, but here’s the reason why I think they’re worth talking about, is 11 years after the business started by Cynthia Tice, it was sold to Hershey’s for $400 million.

Dave Young:

That’s a nice little getaway.

Stephen Semple:

Yeah, that’s worth talking about. Don’t you think?

Dave Young:

So it’s owned by Hershey’s now.

Stephen Semple:

It’s owned by Hershey’s now.

Dave Young:

Do they still operate under the name Lily’s Sweets or is it all just a-

Stephen Semple:

Yes, they do.

Dave Young:

… Hershey’s conglomerated candy corporation.

Stephen Semple:

The bar is called Lily’s Sweets, so you can still get Lily’s Sweets bars. They’re made by Hershey’s. And as I said, Cynthia sold it to the company after 11 years for-

Dave Young:

11 years?

Stephen Semple:

… $400 million. Yes.

Dave Young:

That’s brilliant.

Stephen Semple:

Now, here’s the other thing is she started the company at the fine young age of 60.

Dave Young:

I love this story.

Stephen Semple:

Right? Now you understand why I wanted to share this story.

Dave Young:

There may yet be hope.

Stephen Semple:

And so they do these sugar-free chocolates, and the goal for her was always to make a good, enjoyable chocolate product. Because we go back to early days of the sugar-free products, they were marketed to people who are diabetic and who are trying to lose weight, and they really didn’t taste good. But the anti-sugar movement triggered something that was bigger because people started to discover that sugar’s tied in inflammation, and there’s been this explosion in these products. To give you an idea, in 2024, the no-sugar chocolate area as a category doubled. That’s how much the growth is.

Dave Young:

2004?

Stephen Semple:

2024. So still even today-

Dave Young:

2024. Doubled in ’24?

Stephen Semple:

Still even today, yes, the growth is really rapid. But this is what Cynthia saw, so let’s go back to 2008 in Philadelphia. Cynthia Tice is a food consultant and a graduate of Temple University. And Temple University is actually a big presence in Philadelphia. I had a chance to speak at Temple and it’s in downtown Philly, and downtown Philly’s pretty neat. And look, if you’re ever in Philadelphia, you have to go do the Rocky statue, right?

Dave Young:

Oh, yeah.

Stephen Semple:

And it’s amazing today that there’s still a lineup to take a picture at that statue.

Dave Young:

My dad went to Temple.

Stephen Semple:

Oh, did he really? Cool.

Dave Young:

He didn’t go to college there. After World War II, he had dropped out to join the Navy. And so after World War II, he got his GED at Temple before heading off to University of Wyoming.

Stephen Semple:

Oh, that’s cool.

Dave Young:

He’s a South Jersey guy, so Temple’s just a few miles away.

Stephen Semple:

Yeah, that’s cool.

Dave Young:

Yeah.

Stephen Semple:

Cool.

Dave Young:

So I love that personal connection to Temple.

Stephen Semple:

There you are.

So back to Cynthia. So around this time, Stevia got approved and she had set up this consulting business to help companies find organic products because she had always had an interest in more organic foods. And growing up, she felt sick all the time. One day when she was eating lunch, a random person told her, “Look, if you’re not feeling well, it’s probably what you’re eating and how you’re eating.” And this hit her to the bone.

So in the last year of college, she graduated in ’74, she got into natural foods and she became a real zealot to the degree where she would take her own food to family dinners. And she wanted to do a natural food store, and her dad lent her the money. She found a location. She started up this 400-square-foot store. And her dad helping her out was a big deal because growing up, her dad had some clothing stores in the area, and her younger brother went into the business, but the belief in the family was women should not do business. And she was also the first woman in her family to get an education, so this was a big deal.

Dave Young:

This is.

Stephen Semple:

So she opens a store, and then a friend has a store, they join, they make this bigger store, and they never really made any money. She was single. She lived in a little place in the bad part of town, but she didn’t really care about money. She was on this mission. She was happy. She was able to support herself. She loved helping other people because she really wanted to bring this idea of healthier food.

Then in 1989, there was a real turning point in the food space, but still it was very, very niche. And it was this whole idea of Alar on apples. It became a big deal. Meryl Streep spoke about it.

Dave Young:

Yeah, I remember that.

Stephen Semple:

Right. And when Meryl Streep spoke about it, all of a sudden it put things very much more mainstream. And this drove a lot of first timers into organic stores, and this created an opportunity to turn people. And what started to happen is more larger format, organic stores started to pop up and traditional stores started to take a look at organics.

But while this growth was happening, she was starting to get burned out. She had been at this for 20 years and not really making-

Dave Young:

Oh, wow.

Stephen Semple:

… a lot of money at it. And at the same time that she started to see consumers looking for organic products, she was at a conference at the Food Marketing Institute, and presenting was Whole Foods.

Dave Young:

Oh, wow. Okay.

Stephen Semple:

Now, this was in the infancy of Whole Foods. Now, the supermarket retailers in the audience asked Whole Foods this question. “Is your customer base large enough?” Whole Foods’ reply was, “We’re after your customers.” This was a light bulb moment for Cynthia. Traditional retailers are now worried, and she realized there was an opportunity to help stores make the transition.

And now, she made a lot of money. She opened up this consulting business that helped traditional stores do the transition to organics-

Dave Young:

Oh, wow.

Stephen Semple:

… and all this other stuff. And lots of people approached her saying, “Hey, you should create a brand around this.” And she didn’t want to do it because she understood what it would actually take to build a brand, even though she had all these relationships with these buyers.

But she met this woman, Elizabeth Fisher, and they started to work on a product together, and the idea was a natural soda in 2007. Now, right around the time they’re ready to launch the soda, Coke and Pepsi announced they’re entering the space with a natural soda and they went, “Oh my god, there’s no way we can compete with Coke and Pepsi.” So they decide to do chocolate because, again, they were wanting to avoid sugar and they wanted to build a product, because what they’re finding is companies were using used momenta, variations of it, and the chocolate did not taste good. Then Stevia entered and it was approved. Now, Stevia is natural. It’s from a leaf. It doesn’t spike blood sugar. And they tried several recipes and nothing worked. And they even tried contacting some chocolatiers and it didn’t work, and it was terrible in chocolate. And during that time, they had a falling out, so Cynthia went out on her own.

But Cynthia then discovered someone who had developed a bulk chocolate that actually worked, that actually tasted good, and it came in these wafers and it tasted great. And what they did was they used other sweeteners to mitigate the flavor issues. So she reached out, asked for some modifications, and started to build a chocolate bar. And also around 2011, diets like paleo were becoming a vogue, and there was still no chocolate in this space. And she really wanted to believe that there was people who would want a sugar-free chocolate and would want something that tasted good.

So, she ended up bringing on a partner, Chuck Gennardi, who also owned a little store and hated it. And he shut his store and he had a little bit of money that he could finance the development of this chocolate. And they worked together, developing it and creating the packaging. They found a manufacturer, because here’s things she was good at. She was good at pricing. She was good at sales strategy. And what I love is when they came up with the name Lily’s Sweets.

Dave Young:

Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.

[Empire Builders Ad]

Dave Young:

Let’s pick up our story where we left off. And trust me, you haven’t missed a thing.

Stephen Semple:

And what I love is when they came up with the name Lily’s Sweets, because Chuck had a niece who was seven years old and was diagnosed with brain cancer. And she goes to treatment, was in hospital a long time.

Dave Young:

Wow.

Stephen Semple:

Things worked out well for her. But at one point she said to her mom, “Mommy, I want to raise money. Kids get sad, they can’t eat together. There’s not enough wheelchairs. We need to have a fundraiser.” And so they decided to call the chocolate Lily in her honor.

Dave Young:

Nice. I love that.

Stephen Semple:

Isn’t that nice?

Dave Young:

That’s just so sweet.

Stephen Semple:

Isn’t it great?

So in 2011, they took the product to Whole Foods and they’re presenting it to grocery buyers because, again, she had relationships with head of merchandising. And here’s the thing that she decided to do that I also thought was really smart, is that she started with familiar flavors. She looked at what were the best-selling flavors of chocolate and go down that line. Because here’s what her thought was. If it’s a different flavor and it’s sugar-free, that’s too much of a departure for the consumer.

Dave Young:

Yeah, lean on the familiar.

Stephen Semple:

Exactly. Innovate inside something that’s familiar. That was her whole idea. Start there. Innovate with something that’s familiar.

So, she presents it to Whole Foods. And she decides at this point, she’s been, again, slogging away at this for a while, she decides at this point that if it doesn’t work out with Whole Foods, she’s just going to shut this thing down. So she go home and she waits and she gets picked. And not only that, she gets picked in November as a national brand and they launch in March of 2012.

Dave Young:

Wow. Okay.

Stephen Semple:

Yeah. Now, lost money in the first year, but it was profitable every year after that.

Dave Young:

That’s pretty cool.

Stephen Semple:

So, they did almost a million dollars in year one. So think about this, in 2012, they do almost a million dollars. In 2014, they do $5 million in sales. And one of the other things that she got to do, they did a lot of promotional trials in the store and they did the analysis later, and one of the things that they found was price was not really important. So in 2017, she surpasses her wildest dreams. She’s in her sixties. She’s got four employees. They’re doing $20 million in sales and-

Dave Young:

Wait. Four employees doing $20 million in sales?

Stephen Semple:

Yes.

Dave Young:

Okay. Don’t you just love that?

Stephen Semple:

Isn’t that amazing? And their run rate is $40 million in sales.

Now, she then hits the wall on this because she’s not a delegator. There’s no succession plan. The kids don’t want in. She decides she needs to do something, so she reaches out to private equity, reaches out to them, and they do a bunch of due diligence. And they not only invest, but they also help her hire a CEO. Within a month, they moved to Boulder, Colorado. They hire 40 people. Took time to figure out her role because she still wanted to work. 18 months later, they’re at $118 million in sales. Look at the growth rate, eh?

Dave Young:

Yeah. That’s amazing.

Stephen Semple:

And then June 2021, Hershey’s comes along. $425 million.

Dave Young:

That’s a happy story for her.

Stephen Semple:

Isn’t that a happy story?

Dave Young:

But the private equity guys has got a probably good chunk of that 400, but that’s okay. It’s a good exit.

Stephen Semple:

That’s okay because… Well, and the other part that she recognized, this was actually one of these ones where private equity not only helped with some investment money, but also helped with the whole hiring of the CEO. She had hit her wall. She knew she could go no further.

Dave Young:

Sure.

Stephen Semple:

She was like, “This is going to go no further.” So this is actually one of these-

Dave Young:

And that’s an important moment for an entrepreneur.

Stephen Semple:

It is. And this is one of these happy stories of private equity where they came in, not only gave her money, gave her structure, and helped them go to the next level, which is what they really are supposed to be doing.

Dave Young:

That’s what they say they want to do, yeah.

Stephen Semple:

And in this case, they did. But the part I found the funniest in this whole thing was lots of people saying to her, “Hey, you should do a brand.” And she’s like, “I’m not going to do that. I know how much it takes.”

Dave Young:

Well, the choice of Lily is a beautiful story. I’ve probably seen these. I sat here on my phone and Googled images of it, and I’ve probably seen them on the shelves. They’re in a lot of stores near me. It’s not just a Whole Foods thing. But in the early days of the sugar-free candies, I remember my mom was a Type 2 diabetic and she would always have these Russell Stover chocolates that were sugar-free, but man, if you ate four or five of them, you’re in for some trouble a few hours later in the bathroom.

Stephen Semple:

Yeah, some of them actually did create… Yes, some of them actually did create real digestive issues. No question. So Stevia was a big game-changer, but it took them a long time to figure out how to make it work in chocolate. For whatever reason, chocolate was the challenging one.

But the part I found interesting is, so not only her resistance on building a brand, but this recognition that there was this change in this marketplace and it created this opportunity to change it. Because sugar-free chocolate had been around, but the only people eating it were diabetics and people trying to lose weight because it didn’t taste all that great. It had these digestive issues. And she really believed that this sugar-free trend was going to go mainstream, and did go mainstream, and that people would want a good-tasting chocolate that was sugar-free.

Dave Young:

That’s amazing. Yeah, I love the story.

Stephen Semple:

Yeah.

Dave Young:

It’s got all the things that people wanted. It’s that leaning into the familiar.

Stephen Semple:

Yes.

Dave Young:

Right. It’s like when you have a favorite restaurant or a new restaurant and you find a dish that you like, and then you think, well, man, I’m going to chase this. Maybe I’ll try something that I didn’t try before, because I picked that one because I figured I’d probably like it really well. And when you chase it and you find two or three other dishes that you are like, “Nah, that’s not really what I was expecting,” you go back to the familiar. You just say, “Well, I’m getting that because I know what I’m going to get.”

I had a restaurant in Tucson that was a little Mexican seafood place that made this dish called Shrimp Culichi, and it was amazing. It was amazing. And I’d try a couple other things from them, and then it’s like, nope, I will never order anything from this place except the Shrimp Culichi because it’s that good. But it’s familiar. I know exactly what I’m getting. That’s why we go back to fast food places. We go to the familiar. We know if we’re in a different city than ours or a different country than ours, we can walk into a McDonald’s and have something that’s familiar.

Stephen Semple:

Using your restaurant analogy, I’d even use the argument that if you’re going to a restaurant you’ve never gone to for the first time and you look up the menu, if there was nothing on the menu that you recognized, that would be a tough call.

Dave Young:

Yeah. You’re like, “Aw.”

Stephen Semple:

Right now, and now the interesting thing is when you get there, you may even order something different, but there’s, “Okay, well, there’s two or three things here that I know would work for me, so let’s go.”

Dave Young:

Yeah. And often this has nothing to do with the empire that Sylvia-

Stephen Semple:

Cynthia.

Dave Young:

Cynthia. Cynthia and Lily, and I probably just combined those two in my head. But we look for familiar and we actually seek it out. You’re a whiskey somm. I’m a whiskey somm. And what you do when you sniff some whiskey is you’re looking for something familiar.

Stephen Semple:

Yes.

Dave Young:

Right? You’re seeking it out. So if you can do something that’s familiar, and if you… The best advice you can give to a bartender is, “Well, I like this and I like that and I like that.” And they’ll say, “Oh, well, then you should try this.” Or at a restaurant, “I like this and this and this at other places. What do you have that would feel familiar to me?” You’ll probably come away really happy with that.

Stephen Semple:

And there’d be a strong temptation if you’re creating a new chocolate bar in a space to create a new flavor to try to stand out. But then what she was recognizing was that’s two levels of innovation. That’s too much for people. So in other words, you’re better off doing a mint chocolate bar, a sugar-free mint chocolate bar.

Dave Young:

When I Googled the images for candies, I saw one, it was with the peanut butter cups.

Stephen Semple:

Right. Yeah, [inaudible 00:19:47].

Dave Young:

Right. We all know peanut butter cups. These are sugar-free peanut butter cups.

Stephen Semple:

There you go.

Dave Young:

I think I might try one of those because I like peanut butter cups.

Stephen Semple:

Right.

Dave Young:

And so that’s just smart.

Stephen Semple:

Yeah. So I thought that was brilliant, and that was very much part of their launch strategy.

Dave Young:

Well, I’m going to put you on hold now because I got to go to the store, Stephen.

Stephen Semple:

All right, we’ll see you later.

Dave Young:

I’m heading over to the H-E-B.

Stephen Semple:

Get some Lily’s Sweets.

Dave Young:

Thank you for the story of Lily’s Sweets.

Stephen Semple:

All right, thanks, David.

Dave Young: Thanks for listening to the podcast. Please share us, subscribe on your favorite podcast app, and leave us a big fat juicy five-star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute empire-building session, you can do it at EmpireBuildingProgram.com.