091: How The Cookie Crumbles: The Truth About Leading a New Industry and Building a Brand

1. Remember the power of humble beginnings.

Starting out, you may have several years that aren’t profitable, but that doesn’t mean you aren’t successful. Real success takes patience. And the more successful you are, the more your brand resonates, handling those demands might set you back at first.

2. There’s power in community.

You need to have someone to talk to who is in the trenches with you and knows what you’re going through. For leaders, you need to meet in person with other leaders as often as you can. Solve problems together and don’t just communicate from afar.

3. The team experience is equally as important as the customer experience.

If your team is happy, your customer will be able to sense that in their interactions. That only helps their customer experience, reflects well on your company, and builds your brand.

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Tiff’s Treats

(03:55) What are some of the highlights/lowlights of running the business as a married couple?

(07:55) Tiff and Leon talk about their story starting Tiff’s Treats 22 years ago and building it to what it is today.

(13:11) Tiff and Leon took it one day at a time, one decision at a time, during those early years.

(14:24) Starting out, you may have several years that aren’t profitable, but that doesn’t mean you aren’t successful.

(17:55) Investing in growth will limit profit initially.

(19:10) Balancing growth with culture and “warmth.”

(22:50) The team experience is equally as important as the customer experience.

(24:23) Tiff and Leon talk about their core values and how they’ve helped serve the business.

(30:46) Tiff and Leon explain their philosophy around fundraising, and how they’ve been able to do that without giving up their vision and direction.

(40:48) This week’s next step: We encourage you to go download Tiff and Leon’s new book, It’s Not Just Cookies: Stories and Recipes from the Tiff’s Treats Kitchen.

Tiffany Chen:

That was never our big goal was to come out with tons of profits. I mean, we wanted to know that we had a healthy business at the store level. But at the same time, we would reinvest into expansion and then-

Leon Chen:

Software. Yeah.

Tiffany Chen:

… Software is a big one. Things that we wanted to make it so that our business was ready to grow to the next level. If you want to decide, “Okay, I’m going to stop growing and we’re never going to grow again, then yeah. Then becoming profitable I think is largely important. But if you’re trying to grow there are trade offs you have to make.

Ryan Fitzgerald :

Welcome to One Next Step, the most practical business podcast in the world. You’re now one simple tip, practical tool and small step away from growing your business. One Next Step is brought to you by BELAY, the incredible 100% remote organization, revolutionizing productivity with virtual assistance, bookkeepers and social media managers. Accomplish more, juggle less, modern staffing from BELAY. And now to your hosts.

Ryan Fitzgerald :

Welcome to One Next Step the practical business podcast that helps you run your business so it stops running you. I’m Ryan.

Lisa Zeeveld:

And I’m LZ.

Ryan Fitzgerald :

Today, you’re going to hear from the co-founders of Tiff’s Treats, Tiffany and Leon Chen. They recently sat down with our CEO, Tricia Sciortino for an amazing conversation about how to build a brand, raise money and lead an industry.

Lisa Zeeveld:

Tiffany and Leon have built Tiff’s Treats from scratch… No pun intended, starting in 1999 from a college apartment in Austin, Texas and growing today to 75 stores and more than 1700 employees across the country. They’ve raised capital along the way and have become a national brand and industry leader in cookie delivery. And they have a brand new book of recipes and stories from their adventures as married entrepreneurs. And that’s why we’re so excited to have them on One Next Step, today.

Ryan Fitzgerald :

And just a little inside baseball, if you make it all the way to the end of the episode, you may just find a discount code for you to be able to get some cookies yourself. But before we dive into the conversation and I’m sure find all of ourselves hungry, I do want to take a quick moment to tell our listeners about BELAY. With modern staffing from BELAY, businesses and leaders can focus on growth without the unnecessary overhead or learning curves associated with hiring and onboarding full-time employees. BELAY is the incredible, 100% remote organization, revolutionizing productivity with our virtual assistance bookkeepers and social media managers. Accomplish more, juggle less and get back to what only you can do, growing your business with modern staffing from BELAY. And now enjoy Tricia’s conversation with Tiffany and Leon of Tiff’s Treats.

Tricia Sciortino:

Tiffany and Leon. Thank you guys for joining us, I’m so excited. Welcome. I’m so glad you’re here. It’s a pleasure to meet you.

Tiffany Chen:

Well, thanks for having us.

Leon Chen:

Yes. Thank you. We’re excited to be here.

Tricia Sciortino:

Awesome. So I love that you guys are a husband and wife, couple owning a business. I’m sure that has so many joys and challenges. As a fun little kickoff icebreaker question, I’d love to know, have there been any highlights or moments that have been just pivotal experiences for you running a business as spouses?

Leon Chen:

Now these are highlights, not the lowlights, right?

Tiffany Chen:

I Think lowlights.

Tricia Sciortino:

Either or. I mean, I don’t know.

Tiffany Chen:

I think the lowlights are as important as the highlights because when you ask that question, what immediately comes to my mind, honestly, are the lows because you have that moment together with somebody else. So what’s coming to my mind is so many years ago we built a little location and we sort of built it from scratch. We painted it ourselves, we spent all of our extra time at Home Depot. And after midnight, we were just sitting on the floor of Home Depot, just exhausted and kind of almost crying of just everything was so overwhelming, things weren’t going great building this spot. We already had other locations we were already trying to run as well. And those are the kind of moments that I think of in terms of husband and wife just those times when you’re sitting side by side and totally failing.

Leon Chen:

For me, the highlight is all of those memories of those low lights, because truly you have to experience all of that together, knowing that the other person knows exactly what you’ve gone through. And I know exactly the blood, sweat and tears that went into the business on her end, literal blood, little sweat, and little tears, metaphorically as well. And it’s a bond that’s truly amazing that we have with each other because now I can say, “I’ve seen her go through it all.” And we don’t know if we would recommend it for everybody, but the fact that we’ve been fortunate enough to come out of the other side of it, it really is an amazing bond that I feel like a few couples have that have gone through the same thing we have.

Tiffany Chen:

And I think the lows are important so that you can actually appreciate the highs, because if it’s all high, then it’s like this every other day. But one thing that’s coming to my mind, funny enough is Valentine’s Day of 2020, which makes people think that was during COVID, but actually that was pre, that was right before everything happened.

Tricia Sciortino:

Oh, yes, right before.

Tiffany Chen:

And we talk in our book a little bit about some of the Valentine’s Day’s past that we have done and Valentine’s is our biggest single day of the year. So it’s like our Super Bowl and we prep and prep and prep and prep and some years it goes off swimmingly and other years it just totally collapses. And Valentine’s Day of 2020 was one of those years where we just dominated in terms of like fulfilling the orders on time, having happy customers, operations were swimming and everything was great. I just still remember getting pizza at the end of that night and just being on such a high. And part of what makes me think about that too, is because right after that, everything in the world just totally changed. And that was like the last big memory I have of just being like, “This is awesome!”

Tricia Sciortino:

Yes. And it must be a treasure to really. I just think of entrepreneurs in general or just business owners to be able to experience all of that and have somebody that’s there with you, even if it’s just the sound, somebody that literally knows exactly what you’re going through is such a rarity. And I can imagine of course the highs and the lows of it, but the positivity of being able truly share the experience with another person, truly a partner with you going through that. I can absolutely see the benefits of that, but I love that you also don’t ignore the fact that it’s really, really hard. It’s hard work.

Leon Chen:

Oh yeah.

Tricia Sciortino:

Where you got today is definitely not overnight success story.

Leon Chen:

Just celebrated our 23rd year, so it-

Tricia Sciortino:

Wow!

Leon Chen:

… really, really isn’t an overnight success.

Tiffany Chen:

Whatever kind of story it is, it wasn’t overnight.

Leon Chen:

… Yeah.

Tricia Sciortino:

It never really is. I mean, people like to say those things, it’s never an overnight success, right? Well, so tell us a little bit about your story. It’s been 22 crazy years, you have such fascinating beginnings. You took really big risks, you jumped in both feet to do a lot of things that nobody’s ever done before. So I think it’s a very compelling story for people who are maybe risk adverse or scared to take a chance or, “Oh, that’s a crazy idea, I shouldn’t.” But those things didn’t stop you. So tell us about your story.

Leon Chen:

Yeah, absolutely. This whole thing started when we were 19 years old and we were sophomores in college and she is my wife now, but back then, I just wanted to go on a date with her and she was my girlfriend, but she stood me up on a date. And so that’s how this whole thing got started.

Tiffany Chen:

So yeah. I missed the plans that we had together. I was ice skating and I didn’t have a cell phone, it was 1999. And so I overpassed our meeting time and my mom said I should apologize. So I baked cookies for fun. And so I baked him a set of cookies, drove him over to his house and not even thinking anything about it. The cookies were still warm when we got there and immediately he just had this… I guess you would call it a warm cookie moment, the first of many to come.

Tricia Sciortino:

Yes.

Tiffany Chen:

And he just had this moment, he was like, “We should do this as a business. We should bake cookies and deliver them to people while they’re still warm.”

Leon Chen:

Yeah. And of course she said no to that too. And which I think is really funny. And thinking back on that, I would’ve let it go. At that point, it was just an idea, one of many silly ideas I had. And I could have let it go forever, but she called me up hours later saying she’s at the grocery store pricing out ingredients and maybe we could give it a try.

Tiffany Chen:

Yeah. That’s Leon’s recollection and mine’s different because I think he could never have let it go. And so I may as well just get the show on the road and start doing the practical part of it.

Tricia Sciortino:

So are you the operator in this relationship then Tiffany?

Tiffany Chen:

Well, he’s the dreamer.

Leon Chen:

Yeah.

Tiffany Chen:

… and I’m the… I don’t know what to say-

Tricia Sciortino:

Doer.

Tiffany Chen:

… Doer. Yeah. Yeah. So anyway, the truth is somewhere in between those two things, I guess, but we get to work on just looking at, “What flavors can we make, how much does it cost to make them, how do we get the word out? How do we package them?” And then we spent two weeks doing that because we were on winter break from college. So two weeks later we went back to college and we just started right out of Leon’s college apartment. We made flyers at Kinko’s. We put them under all the dorms and apartments and we waited for the phone to ring. And those days, the only way to take an order was by phone. And so we waited for the phone to ring and eventually it did.

Leon Chen:

Well. Yeah. And that’s one thing about taking risks. It’s we can’t really give ourselves that much credit. It’s just when you’re young and naive, you just don’t know what you don’t know. You don’t even realize sometimes the risk. Looking back on it we’re like, “I can’t believe we did that,” but we went in being young and naive. We started from my college apartment. I had roommates, I surprised them with the news that we were starting a business, a warm cookie delivery concept, which no one had ever done. And so they were like, they didn’t understand what that was. And being young and naive, we didn’t even realize until months and months in that at that time in the State of Texas, it was completely illegal to do a food-based home business.

Tricia Sciortino:

Oh.

Leon Chen:

We didn’t know that’s part of it. Had we taken the time to look into that, we probably wouldn’t have even started it, but by then we’re all along the way of doing that. So we started as small as any business could start. We would… Oh, one thing, she made me promise. She wanted to still go to school. And then she wanted to go out with her friends on Friday and Saturday on the weekends. So we were only open Sunday through Thursday, 8:00 PM to midnight. And we first started targeting the students because that’s all we knew. We quickly found out and the business model has very much changed to where we do a lot of corporate orders and a lot of gifting, on demand gifting. But we did that small time, part-time from our apartment for a few years, right?

Tiffany Chen:

A few years. And I think the bigger risk, and even though we didn’t consider it much of the time would be when we graduated and then we went full time with the business. But even then it wasn’t a huge risk for us because we weren’t giving anything else up. We had kind of done that along the way through college, we gave away our chance at really focusing on a particular major. We sort of went back. I dropped out of all of my extracurricular activities. I lowered my specific college degree to a more generalized one because it wouldn’t take as much work.

Tiffany Chen:

So by the time we got out of college, we almost had no other options because we had sort of boxed ourselves into this. So again like, yes, it was a risk, but didn’t feel like it. And we would take on loans and things like this, but we kept doing it little at a time. So it never felt huge, but if you would step back and look at it at a certain point, we realized that if we went under, which was extremely likely, we’d be paying back loans for the rest of our lives. But what can you do? We had already done it.

Tricia Sciortino:

Yeah. Well it sounds like it was just a very organic one day at a time, one decision at a time trajectory that took you through those first few years.

Tiffany Chen:

Yeah, it was.

Leon Chen:

Yeah, it was. And I mean, if we had stepped out and gotten paying jobs when we graduated, it would’ve been impossible to come back because once you felt security, you probably wouldn’t want to leave it. We were never secure, right? And so when we graduated those first three years after graduation, we worked 120 hours each, day and night, it was stressful. We didn’t pay ourselves and we laugh about it now. But after that first year we had our accountant calculate everything and it turns out not only did we not pay ourselves that year, the business lost $15,000 as well. So we worked for negative $15,000 that first year, but we felt like things were special. There was something special about the brand that was resonating with people. And again, being young and naive, we just kept going because it just felt like it was getting better every day, even though it was incrementally. So it’s just one of those things where you just kind of go by gut feel when you don’t know any better.

Tricia Sciortino:

Okay. Guys, that brings up a really good point when it comes to financials and business. And I think maybe a lot of people might not recognize this, but it is so very common. And it was the same story for us here at BELAY that you probably will have many years you’re not actually profitable, but that doesn’t mean you don’t have a successful business. I mean, I think a lot of people, there’s assumptions that you’re going to go out the gate and you’re going to make money the first week you start and you’re immediately going to be reaping those rewards. But I think that it’s very practical and reasonable for people to miss the fact that when you’re sometimes building an organization, you’re investing back into growth that you might end up in the red.

Leon Chen:

Oh yeah. We’re experts in that. Yeah.

Tiffany Chen:

Yes. For all of those years, I mean, you make a choice, right? I mean, yeah. I think we had a business that could be profitable, but in the early days, but we would make choices to open a new location in Dallas. So there’s always kind of a trade off between growth and profits and it probably depends on what you’re looking to do.

Leon Chen:

And really in many industries, the more successful you are, the more your brand is resonating with customers and the more demand there is almost creates an issue where in order to handle that demand, you do have to make those decisions and you should be facing losses. It’s almost like you’re not investing enough in your brand and in your business and in your infrastructure if you’re trying to make the perfect tidy profit as you’re growing faster.

Tiffany Chen:

Yeah. That was never our big goal was to come out with tons of profits. I mean, we wanted to know that we had a healthy business at the store level, but at the same time we would reinvest into expansion and then-

Leon Chen:

Software.

Tiffany Chen:

… Software is a big one, things that we wanted to make it so that our business was ready to grow to the next level. I mean, we still make those decisions today. It’s the same thing now, you decide on what to reinvest in. If you were to decide, “Okay, I’m going to stop growing and we’re never going to grow again,” then yeah. Then becoming profitable I think is largely important. But if you’re trying to grow, there are trade offs you have to make.

Speaker 6:

So one of my favorite things is getting on a Zoom call and a couple of times I’ve looked into of the eyes of some exhausted and tired leadership. I implemented really a focus for my clients on delegation and had one leader in particular who just held it all then. I said, “Let’s start with delegating and doing that from a financial perspective.” And so we built his budget and his chart of accounts around, “What ministry head is going to own this?” I challenged him to not look at the nitpicky line items to just look at the overall budget for a couple of months and he quickly became relieved of that stress. And that was a huge win for that client. I remember talking six months later and he was not the same person he was six months ago and it was a win-win for both of us because I could do my and his people could do their job and then he could do his.

Ryan Fitzgerald :

Their story can be your story too. And all it takes is One Next Step to get started. You shouldn’t have to do everything. And with BELAY Bookkeeper, you don’t have to. Visit belaysolutions.com, today to start accomplishing more and juggling less.

Tricia Sciortino:

It almost feels like that’s the answer, is kind of what have you learned over the years about how to grow your business? And so I think it sounds like you’re saying, I mean the most important thing is first you’re making decisions on whether you’re going to invest in growing or not and then recognizing that might mean there’s profit or there’s not. I mean, that’s one core decision you’re making as the owners of the business. I mean, there’s so many other ones and then you’re balancing scaling. How do you scale without investing? I mean, you have to.

Leon Chen:

Right.

Tiffany Chen:

Yeah.

Leon Chen:

And it’s a choice and one size does not fit all in the industry or within an industry. For us, it’s always been about-

Tiffany Chen:

Building a brand.

Leon Chen:

… building a brand. We could be double or triple the amount of stores we have right now. But we chose instead of to open stores, we chose to invest in technology and infrastructure and the customer experience. And that’s just our choice and that’s how we wanted to do it because we wanted to lead with the brand. And it’s different and people can make different choices and all end up in different varying levels of success. It’s not one size fits all.

Tricia Sciortino:

Yeah. And I definitely want to talk about the technology part because it’s so important about today, but before we get there, I want to talk a little bit about your balancing. And this is a hard one for growing businesses who are off size, balancing the growth with the culture and the warmth, like maintaining that. Are there things that you did or that you knew that worked or that you would recommend to somebody when you’re in a growing business it’s so easy for the growth to creep in and change culture or lose warmth, but it sounds like you guys really were just tuned and invested and committed to not losing that customer experience. So any how tos on that?

Tiffany Chen:

Yeah. I think it’s important, the customer experience for sure. And the team experience, the staff experience as well. And for us, we’ve got multi-locations so we’re not all together in one place. When we just had one location, even two, we were sort of a family of staff. We knew each their ins and outs and you knew to trust me and I knew to trust you and it was just effortless. The culture was effortless. And then as we started expanding to new locations, we’re not even in the same city with other people that became harder and harder, but I think putting a focus on it was really important. The first step is to know that you need to. And one of the big keys for us as we were growing in the early days was to meet in person with our leaders from other areas so that we were on the same page, we were solving problems together, we weren’t just directing from afar.

Tiffany Chen:

And again, then you kind of bring back in that trust with each other and the really getting to know each other. So I think on the one hand, recognizing that your team has a culture that’s super important and it’s really important that what are your values? Even if that’s not their values, that they understand what the values of the business are. We ended up creating what we call our Tiff’s Top Five, which is our top five values to guide our team in knowing, “Here is as a company what we stand for.” And that was really helpful on that end. And then on the customer end, yeah, I think that’s super important. And I think he and I are probably the biggest ambassadors for the customer in terms of every decision we make. “Is this making the customers’ end easier or harder? Is this more fun for them or less fun, is their experience better or worse?”

Tiffany Chen:

And a lot of times you’ll make decisions that don’t bring as much profit, but do bring a better customer experience. And just trusting that what you’re building here is a brand and so we’re not here to build a P&L statement. We’re here to build a brand, which means we’re going to invest in having our own delivery drivers, because we truly believe that is core to our business. You’re having a special moment, we’re delivering cookies to you. We want to own that experience from top to bottom. We want highly trained individuals coming out with a smile in the uniform and knowing how important that moment is to you as opposed to outsourcing for example.

Tricia Sciortino:

Yeah, that is great. It resonates with me because I feel this way about how we run BELAY is first and foremost, I mean the first step really is know that it’s important. I mean, there’s so many businesses and organizations out there now that culture doesn’t matter, but then we’re in things like a great resignation right now where people are leaving places because they don’t have great cultures. And so I think first and foremost, knowing that it matters and you’re trying to create an experience for your employees, I think that’s a huge opportunity for a lot of businesses out there is to really remember, like you said, “The team experience is equally as important as the customer experience and maybe sometimes that gets lost.” And I think I always sit on the stool of if your team has a great experience, then your customer does too because they’re touching your customer. So it’s almost like a ripple effect.

Leon Chen:

Right. We saw that early on too. We just had someone here celebrate their 20th anniversary. Our first four delivery drivers, they were undergrad in college, they’re students, our friends’ little brothers, they’re all four with the company today in management roles.

Tricia Sciortino:

Wow.

Leon Chen:

And so I think it’s something that we try to remember as we grow and scale on these other locations, we knew the impact on having a close knit team with values that we shared and running the business to do well, but also to take care of our people. We saw the positive effects of that early on. And it helped us before it was mandated by the government, very, very early on we were one of the only companies in our industry to offer paid healthcare for part-time staff. That was years, probably a decade before it was mandated by the government. We were doing that just as a benefit to our people. And so it’s always been first and foremost in our mind.

Tricia Sciortino:

Yeah. People first, people first.

Leon Chen:

People first.

Tricia Sciortino:

The people then the cookies.

Leon Chen:

Yeah, really.

Tiffany Chen:

Well, the people are making the cookies.

Tricia Sciortino:

Somebody has to make the cookies it cannot be you Tiffany in the kitchen anymore. Yeah. So I want to go back to, you talked a little bit about the investment in things like technology and you have some brand attributes that you’ve mentioned already, technology, your warm moments, you’re focused on customer service. You charitable, talk a little bit about those core things and how they’ve helped serve your business well.

Tiffany Chen:

Yeah. And it’s one of those things where we sort of naturally drove towards these things and then upon reflection you can say, “Oh, okay, these are some of the pieces of the puzzle that have helped us make us successful.” For technology, we were trying to solve problems that we had and in doing so we found that building our own technology was the way that we thought was easiest.

Leon Chen:

Because nobody else was in it, we created an industry.

Tricia Sciortino:

Right, there wasn’t a custom cookie delivery system app that existed you could go use.

Tiffany Chen:

Exactly.

Leon Chen:

And especially bake to order warm cookie delivery too on top of that.

Tricia Sciortino:

Provider. Definitely not.

Tiffany Chen:

And it was gifting. And plus, when we were looking for software, we took orders by hand and over the phone for the first year that was in 1999. And then a year later we launched our website and an online ordering platform, which I only really recently thought back and thought, “Gosh, you know what, we must have been one of the first places offering online ordering for food or anything.”

Tricia Sciortino:

You were so innovative and you didn’t even know how innovative you were.

Leon Chen:

Yeah.

Tiffany Chen:

A problem of we couldn’t take as many hand orders we could, online ordering would be better and that we just did off the shelf. But after a couple of years, we really wanted something more custom for us, both on online ordering and then on our internal system. And so we started building and hiring people to build custom software and it’s made a huge difference to our growth. It was how we were able to scale with a small team. I mean, for years, the corporate team was he and I. I mean 10 plus years, at least. And so in order to do that, it was great to have this software that helped us run our business. And that’s been really awesome for us, it’s also great for the customer experience. So you’re able to make something more seamless and more fun for the customer to engage with.

Leon Chen:

And as important as the technology is, it’s only there to serve the customer. And so what we found early, early on is that the cookies they’re warm, they’re on demand, they make great gifts. They’re great. But what made the brand special was the connection that those cookies helped people make with each other, whether they were ordering together at the office to have an afternoon snack or whether they were sending a gift from thousands of miles away, we started to realize we got to be a part of some really amazing moments. And the cookies were the conduit to connect people and we call it connect people through the warm moments.

Tiffany Chen:

Yeah. It was kind of a light bulb moment. I don’t even remember what really when that happened, but we were like, “Aha, we had been calling it sort of magic.” Like there was magic or there was energy around the brand when we were young and we weren’t making any money and the sales weren’t there, but there was something and we couldn’t put our finger on it. We just said, “There’s an energy around this, we don’t want to stop. There’s some kind of magic here. How do we bottle up this magic?”

Tiffany Chen:

And then years later we were like, “You know what it is, it’s that connection between people and that’s they’re having this experience and it’s with our brand.” Our brand is there as part of this experience, it’s there when their baby is born, because we’re gifting to the hospital. It’s there when their sending it to somebody for their anniversary or birthday, it was there during the shutdown when people couldn’t see each other, but they could still send each other love through warm cookies. And we’re like, “Aha. So this is why it’s resonating with people.” And it’s great when you can kind of key into what it is that people are connecting with. With your brand and then we can lean into it.

Leon Chen:

Yeah. But we have tons of our favorite stories and favorite examples. I’ll just give you a quick one that has stuck with me for years. Many years ago, we had a customer call in and at the time our manager was taking the order by phone and got to talking to the customer. And it was a woman who was an admin downtown. And our staff was saying, “Hey, what, what’s this order for?” Just making small talk. And the admin said, “Well our office pulled our money together and decided to order these to the office for my boss because every time it rained, he would go into this long story about how it reminds him of his mom, because whenever he was in elementary school and junior high, whenever it rained at school, he’d come home and she’d have a batch of cookies baked for him fresh as a snack, because he couldn’t go out and play.”

Leon Chen:

Well, this woman went on to say, “Well, today is the first day since she’s passed. She recently passed away and he has been very sad and today’s the first day it’s rained since she’s passed away. So everyone here at the office wanted to get together, order these cookies to arrive hot as a special celebration for him to remember her by.” And so it’s stories like that we get to see every single day.

Tricia Sciortino:

Yeah. That you can align it with great purpose. It’s such a great vehicle with which to show gratitude and gratitude is just the word that resonates with me when I hear your stories. And my first experience with your brand was I had a pretty big surgery many years ago on my back. It was very scary and I was nervous and one of my girlfriends sent me Tiff’s Treats cookies when I got home after my surgery. And it was my first experience with them because you guys weren’t in my area at the time just got here and I will always remember receiving Tiff’s Treats the day I got back from the hospital from that surgery and I will always remember that. I mean, and then I also remember my family fighting over how many cookies per person and we have to share, we have to cut all the cookies in fours because everybody has to have their portion of the cookies.

Tricia Sciortino:

But it does, it brings people together and it’s a great way to make people feel something around you. So I love what you’re doing, I love what you’re doing.

Leon Chen:

Thank you.

Tricia Sciortino:

One more thing I want to ask you guys about is there’s so much rhetoric if you will, in the market, when it comes to fundraising, investing, “It will change the organization, right?” There can be this negative tone. I’ve been through it and I had a very positive experience. You guys have obviously been through it and you’ve had a positive experience. Would you talk a little bit about your philosophy around funding and investment and how that’s served and supported you and your organization and how you’ve been able to do that and then keep your core culture and brand healthy and alive and thriving.

Leon Chen:

Yeah, absolutely.

Tiffany Chen:

Yeah. Those are great questions. And I was going to start with something that I learned along the way from Leon, which is even when you don’t think you need money, it doesn’t hurt to go out and get some to have because you don’t want to have your back and against the wall in terms of making a decision because of cash. And so because of that philosophy, we’ve sort of stayed ahead of the game in either taking out loans when we were young. So one story I’ll give when we were very early on. Now this is a different climate, so you can’t just go out and enact this, but we signed a-

Leon Chen:

$100,000 line of credit.

Tiffany Chen:

… $100,000 line of credit with nothing more than our signatures. So, that was just a banking thing at the time that does no longer exists.

Tricia Sciortino:

You got lucky, you said, “All right, we’ll take it.”

Tiffany Chen:

And we’re like, “Great.” And I remember saying to Leon, “Wait, what do we need this for?” And he goes, “We don’t, but it’s just nice to have.” And we’re like, “Okay great.”

Tricia Sciortino:

A safety net, a just in case, backup plan.

Tiffany Chen:

Okay just in case, and two months later, we got our notice to vacate our space that we were leasing. We needed to find a new space. We were under the gun to find it very, very quickly. And when we did find a space, it was not a kitchen and we had to renovate to become a kitchen, which cost roughly $100,000 at the time. And so it’s like, “Okay, yeah, you’re right we needed it.” Had we not had it, I don’t even know what our options would’ve been. Honestly probably to go out of business at that moment, we wouldn’t have had a ton of other options.

Tiffany Chen:

But later on, you might have to make decisions. We were talking earlier about whether you want to be profitable or whether want to grow. If your back’s against the wall and you don’t have cash, you no longer have those options. All you have is, “I must make profits because otherwise I can’t make payroll and otherwise we can’t continue on the next day.” And that’s not a great way to look long term.

Leon Chen:

So that’s not a way to build a brand, because you’re always just going to make the money decision, which a lot of times is the opposite of the decision you need to be making for your brand.

Tiffany Chen:

Yeah. And for expansion. So in terms of philosophy, I suppose that’s our philosophy. And it’s funny, we just never end with the fundraising. We ended up moving away from loans and into investors and we’ve had some really great experiences there. And it’s just sort of always raising even when you don’t think. And even when you’re like, “Okay, that one’s done.” And then six months later, you’ll just find yourself in another fundraising meeting and you’re like, “Well, I’ll take the meeting,” and then you end up going on another fundraise. It just sort of becomes a part of the business I suppose, that takes a little bit of getting used to, and it certainly depends on your threshold for how much you’re… It is a change because you no longer own the whole portion. And the dynamic with the people that are putting in the money is really, really important especially depending on how much they own and how much you own.

Leon Chen:

Right. Our first fundraising story, we didn’t realize until years later was not traditional and normally does hasn’t happened to everybody. We were very fortunate, we met a gentleman and he didn’t even know what Tiff’s Treats was. He just knew his wife was a fan and we had lunch with him and then he said he would invest. And he invested $1.2 million with just the lunch meeting. And then he put in another 1.8 million the next year and then put in a few more million over the few years. And it wasn’t until many years later that we said, “Okay, that doesn’t happen normally.”

Tiffany Chen:

Yeah. We found out after we started fundraising more in a traditional sense that we realized how difficult it is to raise 1 million. And usually individuals do not put that kind at a time.

Tricia Sciortino:

Sure.

Tiffany Chen:

Even really wealthy individuals to put in over a million dollars, much less multiple times is extremely rare. We didn’t know that. So we were very, very lucky in that regard. We were also very lucky with this particular individual because he was hands off. So you were talking about how to maintain your culture and your vision, gross, but also take in money. I think it’s really important, especially in the early times, and especially when you’re going to be giving up a pretty good chunk. That million dollars bought a pretty good chunk of our business.

Tricia Sciortino:

Sure. Yeah.

Tiffany Chen:

If you have somebody who’s investing in you and trusts you. If you have a sense that they are investing because they like your concept or they like something about your brand, but they don’t totally trust you to run it, then you’re going to be making decisions for them on their behalf. They’re going to be nervous and they’re going to be coming in and giving you a lot of suggestions, all well meaning, hoping to help, but sometimes the people that aren’t there every day, aren’t going to be giving you the most helpful suggestions in the world. And especially when it’s coming from a place of fear of losing their investment. So I think that relationship is really important and we were unbelievably lucky to have somebody who super smart, successful, there if we had a question-

Leon Chen:

Or needed help.

Tiffany Chen:

Or needed help, but otherwise totally hands off and say, “You guys do the business. That’s what you’re there for.” And we try to do that as I investors as well. If we’re investing in something our advice is, “Don’t invest in a business if you think that you need to be at the table trying to dictate what’s going to happen because that’s probably not going to have a great outcome.”

Leon Chen:

Right. And a big transition was going from the individual angel investors to institutional firms. And for me, that was a huge lesson. It was a education all in of itself that I’m still learning to this day because it changes. The stakes get higher and the ball game has changed.

Tricia Sciortino:

Sure.

Leon Chen:

And at that point, professionalizing your own business, making sure that you do right by your shareholder, who has shareholders, him or herself that they have to do right by. It’s a whole process that’s constantly ongoing as far as learning to jump.

Tiffany Chen:

And it takes a lot of resources to manage too. So we did that later in our career where we had a CFO and a very small finance team, a person. But we couldn’t have done that. I think it would’ve been a huge distraction to us to try to put together a data room and have all of these polished reportings that we weren’t qualified to do. So it worked better for us to start with the individuals and then move. We’ve kind of moved more and more institutional as we go, but you need a team to help you if you’re going to go for the really big like institutional.

Leon Chen:

And the last thing I’ll say about that is even with our first investor who put in 1.2 million, it does not happen all the time very often that, that much stroke of luck, but for us, it was seven years after we started. So it wasn’t like we had an idea.

Tricia Sciortino:

It wasn’t a startup, yeah.

Leon Chen:

We had a business, we had proof of concept, we had a brand, we had operations.

Tiffany Chen:

I think we had multiple locations at the time.

Leon Chen:

Yeah.

Tiffany Chen:

We had already built our technology, at least the beginnings of it. So we had a lot to show. And so he’s exactly right. If we had come in with just an idea or even when we were just in college, as great as this investor is, I highly doubt he would’ve felt comfortable to take that leap. It was because we had waited and had an actual business to display.

Tricia Sciortino:

Yeah, totally. Absolutely. This has been a great conversation, so thank you guys. I actually would like to ask you, if you guys wouldn’t mind hanging around after we close out here for one more question. I have a follow up question about the funding and the financing and all of that, that I’d love to ask you as a bonus question after this interview, if you wouldn’t mind hanging around just for two more minutes.

Leon Chen:

Of course, let me hear it.

Tricia Sciortino:

Thank you. And to our listeners, if you want to hear that clip, you have to subscribe to our email list and we will send you a link to the bonus content or you can visit onenextsteppodcast.com and you will find the link in our show notes.

Ryan Fitzgerald :

A big thank you to Tiffany and Leon for coming on the podcast. As a reminder, you can hear their bonus question by joining our email list at onenextsteppodcast.com. LZ, for me a big takeaway was to remember the power of humble beginnings. Starting small is no indication of where you’ll finish. If you’re a person that’s a bit risk averse, ask yourself, what’s the smallest thing you can do to take the next step. Most things don’t feel so risky when broken down into smaller pieces. Okay. LZ, what was your biggest takeaway LZ?

Lisa Zeeveld:

I was reminded of the power of community multiple times Tiff and Leon referenced the meaning of experiencing their journey together. Having someone to talk to and work closely with that knows what you’re experiencing because they’re in the trenches with you. For me, that’s been Tricia, our CEO. She’s someone at work who’s joined me on this crazy journey here at BELAY. So I want to encourage every leader to cultivate a community. If you’re a solo founder or solopreneur, look into finding a group or I mean, shoot, you actually may have to create a group. The journey is so much more enjoyable with others.

Ryan Fitzgerald :

That’s amazing insight, LZ. I feel like you and Tricia’s relationship is one of the secret ingredients to our success at BELAY over the years. Before we let you go listeners, we have one next step for you to take as always. This week, we want to encourage you to buy Tiff and Leon’s new book, It’s Not Just Cookies: Stories & Recipes From The Tiff’s Treats Kitchen. The book goes into even more detail about Tiff’s Treats’ story and how they grew it from their dorm room to a $500 million organization delighting millions of people every year. It’s available for pre-order right now and releases April 5th. Order it now wherever books are sold.

Lisa Zeeveld:

And one more thing Ryan, Tiff and Leon have an extra tasty treat. They’re offering our podcast listeners 20% off of their cookies’ delivery or shipping between now and August 31st, 2022. Visit cookie delivery.com/BELAY to pick up your exclusive 20% off offer and grab a copy of their book, It’s Not Just Cookies.

Ryan Fitzgerald :

Well, thank you so much for tuning in for this week’s One Next Step. To make sure you never miss an episode, subscribe on Apple Podcast or follow us on Spotify. Normally you’ll find us in the business section, but this week we’re in the cooking section too it seems. And if you’re ready to start accomplishing more and juggling less, go to belaysolutions.com

Lisa Zeeveld:

For more episodes, show notes and helpful resources, visit onenextpodcast.com. Join us next time for more practical business tips and tools to help you advance your business one step at a time. Start by making today count.

Lisa Zeeveld:

Joining us next week are our good friends, Melissa Baggett, Senior Client Success Consultant at BELAY and Melissa Tidwell, MT, Solutions Consultant at BELAY. They will be talking to us all about the many surprising ways a bookkeeper can bring value and help you grow your business. You don’t want to miss it. Here’s a brief preview….

Melissa Baggett:

It’s really been an honor getting to partner with our clients and their bookkeepers and watch their journey. Then when they meet their bookkeeper for the first time on the kickoff call and you just see that connection, and you can almost see the relief that the client’s feeling because the bookkeeper understands their pain points. And just following that journey has really been a tremendous honor.