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    Magic Spoon & Exo: Gabi Lewis and Greg Sewitz

    The cereal industry needs to create healthier and more modern options to cater to today's consumers while still providing the nostalgic experience they crave.

    enFebruary 12, 2024

    About this Episode

    Gabi Lewis and Greg Sewitz founded Magic Spoon to create a sugary breakfast cereal without the sugar. If that sounds daunting, consider their first business: protein bars made with cricket flour. Riffing on an idea that began as a college assignment, the founders ordered live crickets to roast at home, and worked with a top-rated chef to perfect their recipes. The only problem: getting people to eat a snack made of ground-up bugs. When Exo protein bars eventually stalled, the pair pivoted to another ambitious idea: breakfast cereal that tasted like the Fruit Loops and Cocoa Puffs of childhood–but minus the sugar and grains. Drawing on their roller-coaster experience with Exo, Gabi and Greg revisited winning strategies, and scrapped the plays that didn’t work, eventually building Magic Spoon into a nationwide brand.


    This episode was produced by J.C. Howard, with music by Ramtin Arablouei

    Edited by Neva Grant, with research help from Sam Paulson.


    You can follow HIBT on Twitter & Instagram, and email us at hibt@id.wondery.com.

    See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

    🔑 Key Takeaways

    • Entrepreneurs are meeting consumer demand for healthier options by creating nostalgic favorites like cereal without sugar, grains, and carbs. Failure can lead to valuable lessons for future success.
    • Success in the protein bar industry comes from experimenting with ingredients, finding the right formula, and introducing unconventional sources like crickets as a sustainable protein option.
    • Embracing unconventional ideas can open up new opportunities for success, even in industries with psychological hurdles to overcome.
    • Cricket flour, made by drying and grinding crickets, has a neutral taste with a slightly nutty and toasted flavor. It began as an experiment in college and led to the creation of a successful company.
    • By cleverly positioning their cricket protein bars as a more familiar and sustainable protein source, Gabi Lewis and Greg Sewitz were able to capture attention, gain media coverage, and raise significant funding.
    • Transforming an innovative concept into a profitable venture necessitates determination, flexibility, and effective troubleshooting abilities.
    • Despite facing skepticism and initial doubts, Gabi and Greg's determination and willingness to seek help allowed them to refine their idea, prove its potential with a successful Kickstarter campaign, and secure $300,000 in seed funding.
    • The enthusiastic support of influential figures can help entrepreneurs overcome rejections and propel their business forward, highlighting the potential impact of passionate supporters.
    • A reliable and accessible supply chain is crucial for the success of a product, as it allows for expansion, cost reduction, and the ability to establish a new market.
    • Failure is a part of entrepreneurship, but it doesn't define you. Reflect on setbacks, pivot quickly, and find opportunities in untapped markets for success.
    • The cereal industry needs to create healthier and more modern options to cater to today's consumers while still providing the nostalgic experience they crave.
    • Gabi Lewis and Greg Sewitz aimed to develop a nutritious cereal with high protein, low carbs, and no sugar, catering to a wide range of consumers and dietary restrictions.
    • Gabi and Greg revolutionized the cereal industry by creating a nutritious cereal for health-conscious adults, drawing on innovative ingredients and nostalgic flavors.
    • Magic Spoon cereal uses allulose, a natural sugar, to provide a delicious and healthy option without spiking blood sugar levels or compromising taste. A perfect choice for health-conscious individuals seeking high protein, low carb, and high fiber options.
    • Stay true to your vision, identify a niche market, create a unique selling point, and build a positive brand to overcome resistance and attract customers in a competitive market.
    • Magic Spoon's focus on nostalgia and joy in their branding, along with their direct-to-consumer strategy, has led to impressive success, challenging the notion that founders need contrasting skill sets.
    • Strategic use of influencer investors, online advertising, and direct-to-consumer sales can drive brand visibility and success, emphasizing the significance of careful planning and preparation in scaling up production and expanding distribution channels.
    • By adapting quickly to consumer demand and maintaining a direct line of communication with customers, this cereal brand has created a strong and resilient brand that is positioned for long-term success.
    • Success in business is not solely determined by hard work and determination. External factors like timing and luck can also play a significant role in achieving mainstream success.
    • Learn from the triumphs and challenges of successful entrepreneurs while gaining practical tools for personal growth and making a positive impact in the world.

    📝 Podcast Summary

    Innovating the Natural Foods Industry: Low Sugar, Low Carb, High Protein

    The natural and organic food industry is evolving, with a new focus on low sugar, low carb, and high protein options. Entrepreneurs like Gabi Lewis and Greg Seitz are now trying to create versions of beloved foods without sugar, grains, and carbs. However, replicating the flavors of nostalgic favorites like Cocoa Puffs and Fruit Loops without these ingredients is a challenge. Despite this, Magic Spoon, their high protein grain-free sugar-free, low-carb breakfast cereal, has gained success by raising millions of dollars from investors. Interestingly, Gabi and Greg's previous venture, a protein bar made of cricket flour, failed, but they learned from that experience and applied it to their current venture. Overall, the natural foods industry is constantly innovating and adapting to consumer demands for healthier options.

    Starting a protein bar business from scratch: From kitchen experiments to unconventional ingredients.

    Developing a protein bar business can start small, even in your own kitchen. Gabi Lewis, the founder of a protein bar company, started by experimenting with ingredients and creating basic versions of protein bars. This is a common story among successful bar companies like Lara Bars and Cliff Bars. The key is to mix ingredients together and try different iterations until you find the right formula. Additionally, the story highlights the potential of introducing unconventional ingredients like crickets into protein bars. By encasing protein powder in nut butters and other delicious ingredients, companies like Exo attempted to normalize the idea of eating bugs as a sustainable protein source. Although eating insects is not traditional in America, these efforts have increased awareness and acceptance of alternative protein sources like cricket protein.

    From Skepticism to Success: The Journey of Embracing Crickets as a Protein Source

    Gabi and Greg were initially skeptical and even disgusted by the idea of using crickets as a protein source. However, as they learned more about it, they became intrigued and passionate about the concept. They recognized the logical sense behind it and saw it as an incredible marketing challenge to overcome the psychological hurdle associated with consuming insects. The challenge they faced was finding a reliable source of crickets since the industry primarily served pet stores and reptile feed. Despite this, they took the bold step of ordering crickets online and had to figure out how to properly handle them. This experience shows that sometimes, unconventional ideas can lead to unexpected opportunities and success.

    Cricket Flour: A Surprisingly Tasty and Nutritious Ingredient

    Cricket flour, made from roasted crickets, can actually be a tasty and nutritious ingredient. Despite initially seeming crazy, Greg and Gabi experimented with drying out and grinding crickets to create a coarse cricket protein powder. They were unsure of how it would affect taste, but discovered that it was quite neutral with a slightly nutty and toasted flavor. They even started giving samples to friends, some of whom were initially hesitant but ended up enjoying the product. This exploration into cricket flour began during their senior year of college, leading them to consider pursuing it further and eventually launching their own company.

    The Power of Marketing and Positioning: How Gabi Lewis and Greg Sewitz Successfully Introduced Cricket Protein Bars to Americans

    Gabi Lewis and Greg Sewitz were able to generate excitement and interest in their cricket protein bar idea by understanding the power of marketing and positioning. They recognized the potential challenge of introducing Americans to the concept of eating bugs but drew inspiration from the history of other foods that were once viewed as strange but eventually became mainstream, like sushi. They cleverly used their protein bar as a "California roll" of sorts, reimagining it for a more familiar and palatable experience. By combining their innovative product with the larger cultural conversation around sustainable and alternative protein sources, they were able to capture attention, gain media coverage, and successfully raise over $60,000 through Kickstarter. Their understanding of marketing and timing played a crucial role in their early success.

    Overcoming Challenges to Bring Bug Protein Bars to Market

    Gabi Lewis and Greg Sewitz faced multiple challenges in bringing their bug-based protein bar idea to life. They realized that in order to convince people to eat bugs, they had to focus not only on the intellectual benefits but also on making the bars taste good and meet nutritional needs. Despite raising 60 grand through a Kickstarter campaign, they had to quickly shift gears to figure out how to produce tens of thousands of bars, instead of the dozens they were making in their home kitchen. They struggled to find a manufacturer due to the allergen overlap between crickets and shellfish, but eventually found one willing to produce the bars. However, this decision would cost them a significant amount of money. Another challenge was sourcing a sufficient quantity of crickets, which led them to establish a special cricket-raising room at a farm in Louisiana. Overall, the key takeaway is that turning a creative idea into a successful business requires perseverance, adaptability, and problem-solving skills.

    Overcoming Doubt and Building Credibility: The Inspiring Story of Gabi and Greg's Cricket Protein Bar Startup.

    Gabi and Greg faced skepticism and doubt when they initially pitched their cricket protein bar idea. People were unsure about the viability of their business and whether they would follow through. However, they were able to overcome these initial doubts and obstacles by reaching out for help and building credibility. They connected with a chef from the fine dining world who saw the potential in their idea and helped them refine their recipes. Additionally, their successful Kickstarter campaign and having the chef on board served as proof of concept, allowing them to raise $300,000 in seed funding. Despite receiving many rejections, their determination and perseverance ultimately led to their success.

    Harnessing the Power of Passionate Support

    The power of passionate yeses can help overcome the endless nos in business. Gabi Lewis and his team experienced numerous rejections from investors, but the enthusiastic support they received from influential figures drove them to move forward and ignore the setbacks. By leveraging the support of renowned names in the paleo world, they were able to launch their product, cricket protein bars, directly to consumers online. This strategy not only generated free coverage and media attention but also attracted early adopters within specific communities. However, expanding beyond this circle and convincing mainstream America to embrace insect-based food proved to be a challenge. Nevertheless, the initial success and investments of $5 million highlight the potential impact of passionate supporters in propelling a business forward.

    The Importance of a Strong Supply Chain for Product Success

    The success of a product is heavily dependent on the availability and reliability of its supply chain. The founders of the cricket protein company faced numerous challenges in developing a market for their product. While they initially gained some retail presence and sold their protein bars online, they struggled with supply chain issues that prevented them from expanding and lowering costs. To overcome these challenges, they went to Thailand where cricket farming was more established. However, the costs of producing other cricket-based products were still too high. Ultimately, the lack of a robust supply chain hindered the company's ability to make insect protein a mainstream food source. This highlights the importance of a well-developed supply chain for the success and viability of a product.

    Embracing Failure and Adapting for Success

    Failure is a natural part of the entrepreneurial journey. Greg and Gabi's experience with their cricket bar business taught them that even though they didn't achieve their initial mission, it didn't define them as failures. It's important to reflect on setbacks and losses, but not let them linger for too long. Instead, they dusted themselves off and quickly pivoted to the next opportunity. They recognized the value of their experience and used it as an education in building a food business. When searching for their next venture, they aimed to find a large category in need of innovation, rather than pushing a niche idea into the mainstream. This highlights the importance of adaptability and finding opportunities in untapped markets.

    A call for innovation in the stagnant cereal industry

    The cereal industry has lacked innovation for years, with no one stepping in to create a healthier, more modern version of cereal. While some categories, like ice cream and candy, have seen successful innovation with low sugar or high protein options, cereal has remained stagnant. Despite the decline in overall cereal consumption, the size of the category is still enormous, standing at around $11 billion. The reason for this decline is that current cereal products do not resonate with today's consumers. However, there is a strong emotional attachment to iconic cereal brands, and there is pent-up demand for a product that can replicate the nostalgic experience while catering to the modern consumer.

    Creating a Healthy Cereal for Everyone

    Gabi Lewis and Greg Sewitz wanted to create a healthy cereal that resembled childhood favorites but with more protein, fewer carbs, and zero sugar. They aimed to cater to a wide range of consumers, from workout enthusiasts to parents looking for a nutritious option for their kids, as well as those with dietary restrictions like being gluten-free or grain-free. Their development goals included having over 10 grams of protein, five grams or less of net carbs, and minimal sugar content. They had to navigate the challenges of creating a cereal without grains or nuts, leading them to experiment with various ingredients and collaborate with flavor suppliers. Ultimately, they sought a manufacturing partner that could produce high-protein, low-carb cereal options.

    Modernizing the Cereal Industry with High Protein, No Sugar Options

    Gabi and Greg saw an opportunity to modernize the cereal industry by creating high protein, no sugar cereal for adults. They realized that every other category in the grocery store had evolved to meet the needs of the modern consumer, except for cereal, which was still stuck in the old paradigm of carbs, sugar, and unhealthy ingredients. With the goal of upgrading this category, they raised $1 million pre-launch and focused on research and development to develop the right flavors and perfect the recipe. By using ingredients like whey protein, tapioca starch, chicory root fiber, and allulose, they were able to create a crispy cereal loop that appealed to the 20, 30, and 40 somethings. This unique approach and positioning allowed them to stand out and capture the market of health-conscious adults seeking a nostalgic cereal experience without sacrificing nutrition.

    Allulose: The Key Ingredient in Magic Spoon Cereal for Tasty and Nutritious Eating.

    A key ingredient called allulose allows Magic Spoon cereal to be a tasty and nutritious option. Unlike other sugars, allulose doesn't spike blood sugar and has no bitter or strange aftertaste. It functions like regular sugar in recipes and can coat the cereal just like traditional sweeteners. Allulose is a naturally occurring sugar found in raisins, figs, corn, and sugarcane. Magic Spoon initially had a different name, disco, but realized it didn't align with the brand's focus on health and wellness. They eventually settled on the name Magic Spoon because people were amazed by the taste and couldn't believe it had no sugar. Despite some pushback, Magic Spoon targeted the high protein, low carb, high fiber audience, who typically avoid sugary options.

    Overcoming Resistance and Building a Successful Brand in a Competitive Market

    When introducing a new product or idea, there may be pushback from established players in the market. However, it is important to stay true to the vision and find a unique selling point that appeals to a specific target audience. In the case of Gabi Lewis and Greg Sewitz, they faced resistance when introducing a healthier alternative to traditional cereal. Some investors even suggested rebranding to avoid using the word "serial." Despite this, they identified a niche market of health-conscious individuals who desired a delicious, colorful cereal that provided protein and healthy fats. By focusing on creating a positive and optimistic brand while ensuring their product was vastly healthier, they were able to generate excitement and attract customers. Additionally, their previous experience and the desire for a different company building process drove them to raise a significant amount of capital quickly and establish their brand from the start, preparing for potential competition from larger companies.

    Evoking Nostalgia and Delight: The Success of Magic Spoon's Branding and Packaging

    Magic Spoon's success stems from their focus on evoking nostalgia and joy through their branding and packaging. Despite the practicality of using a resealable standup pouch, they chose a cardboard cereal box to create a feeling of nostalgia and delight. The co-CEOs, Gabi Lewis and Greg Sewitz, have a similar approach and have never had a major disagreement, challenging the idea that founders need contrasting skill sets. Their direct-to-consumer strategy, which they previously used with their Exo brand, proved successful, surpassing revenue expectations and attracting investors including celebrities and influencers. Additionally, Magic Spoon leveraged the marketing power of these investors by creating an equity pool based on the revenue they drove through their platforms.

    Leveraging influencers and paid social ads for effective customer acquisition

    The strategy of utilizing influencer investors and running paid social ads proved to be highly effective in customer acquisition for Magic Spoon. This approach helped them reach wider audiences and generate buzz around their product. Interestingly, many of their celebrity investors also promoted the product organically, further boosting its visibility. Additionally, Magic Spoon recognized the power of online customers and realized they could focus on direct-to-consumer sales before pursuing retail partnerships. Taking their time to build the brand and perfect their supply chain played a crucial role in their success. This highlights the importance of careful planning and preparation before scaling up production and expanding into new distribution channels.

    Rapid Adaptation and Direct-to-Consumer Communication Drive Success for Cereal Brand.

    The success of this cereal brand lies in its ability to adapt and iterate rapidly based on consumer demand. By maintaining a large direct-to-consumer fan base, the company can communicate directly with customers and make improvements to its products. The brand's unique funding model, raising over a hundred million dollars, has allowed them to create a brand that can't easily be toppled. However, this large amount of capital is necessary for a capital-intensive industry like cereal manufacturing, which requires massive machinery and operates at a larger scale. While the brand has made its way into major retailers like Target and Walmart, they are not currently sold in Whole Foods due to the store's restriction on products containing Allulose. Overall, this new product is still in its early stages, and its future success may span over a 10-year timeline.

    Timing and Luck: A Recipe for Business Success

    Timing and a bit of luck play a significant role in the success of a business. Gabi Lewis and Greg Sewitz, the co-founders of Magic Spoon, experienced this firsthand. Despite doing many of the same things they did with their previous venture, XO, Magic Spoon has seen much greater success. This can be attributed to various factors, including their learning from past mistakes, having a stronger product market fit, and being in the right place at the right time. While hard work and determination are important, it's essential to recognize the external factors that can contribute to success. Ultimately, choosing the right path for your goals and adapting along the way can lead to a mainstream bestselling brand.

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