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Amanda Kramer: Welcome to the��Leeds Business Insights Podcast, featuring expert analysis to help you stand out from the herd. My name is Amanda Kramer. We are thrilled to be discussing how to prepare a company for acquisition with��Leeds Advisory��Board��Member Jane Miller, co-founder of��. Jane Miller has 35-plus years of executive experience in the food industry, working with both startups and��Fortune 500��Companies. Jane most recently was CEO of Lily’s��Sweets and has held several other CEO roles in the natural and organic industry, including Rudi’s Bakery, ProYo High-Protein Ice��Cream, and HannahMax��Cookie��Chips.

The Leeds School has turned out more than its share of entrepreneurs who bring big ideas and business savvy to some of the most urgent challenges of our time. But oftentimes, they're so focused on innovation and growth that they don't consider what their exit strategy should be. Today, it's my pleasure to welcome Leeds Advisory��Board��Member Jane Miller to Leeds Business��Insights.��Today, Jane is co-founder and CEO of Haevn, but previously she was CEO of��Lily’s Sweets and helped prepare the business for its sale to Hershey’s.��Today, Jane will walk us through what that process looks��like, as well as the role your professional failures can play in preparing you to ultimately succeed.��Welcome, Jane, and thank you so much for being here today.

Jane Miller: Thanks, Amanda. I'm really excited to be here today, and I'm very excited to talk to the��Leeds audience.

Kramer:��You are a master business scaler, having served as the CEO for several mega brands, as well as having scaled smaller brands and prepared them for acquisition. Most recently, you��helped scale��Lily’s Sweets and prepare the company for acquisition by market conglomerate Hershey’s. Can you share with us - what are the key success factors in scaling a business that you may be interested in selling?

Miller: I think the starting thing I would say is, it is good to have the end in mind. If you do think that at some point you do want to exit the business, as opposed to passing it on to the next generation of your family, you want to think about it in a little bit different way. But what I would say on the��outset is you can never��depend on that. Hershey's example is going to be the buyer of��Lily’s. So, you can't really actually predict that because��there are so many different things that can happen. But it is helpful if, from the outset, you're thinking a bit about the fact that you do want to exit a business.

So, let's just assume that you do want to be that person that will exit��to, whether it's a strategic or a private equity firm, or maybe do an IPO at some point, but there is something where you will potentially not be involved in the business in the future, what I would say is the starting point is establish a really well-run business, because that will increase your options. And so, what's a well-run business?��When you're looking eventually at an exit, they're going to be evaluated. I like to think on three things. You want to have robust topline growth in an important segment. For us, we were in the confection and candy segment, and we had really, really, strong growth over the years we were in it and became a market leader in low sugar.��

So, you want to make sure, from a top-line standpoint, that you really have robust growth because that is going to make it very valuable to a potential company. And not just robust growth while you're running it, but also with this idea that there's white space for the company that buys it. So, let me use Lily's as an example. We had gone from about��18 million U.S. dollars in sales, and in three years we'd gotten to 130 million U.S. dollars in sales, which is a big increase on the��top line. But we also hadn't really penetrated Costco or the convenience channel or food service or any other number of potential ways that Hershey's would be able to grow the business. So, you want to be able to show this robust growth, but you also want to be able to show that��there are places where the strategic or the potential buyer could take the business that you haven't tapped in to every potential opportunity. So, both a track record and an outlook for continued growth is very, very, important.

The second thing, and this is where I think a lot of entrepreneurs get off��track, is you need a strong gross margin. And what that meansis that, when you take out the cost of the products, the cost of distributing the products, and also any trade��spending, that you have a robust gross margin so that you can fund marketing spending, you can fund��people expansion, you can fund miscellaneous, other costs. And so, a lot of entrepreneurs will sort of say,��“Well, I, you know, if a big company buys me, they can get a strong gross margin because there's going to be so many synergies.” Well, what makes you a really attractive to a potential buyer, again, whether it's a strategic or a private equity firm, is that you already have a strong gross margin. You already know how to make money on��this, and that what happens if somebody else buys you is they can actually improve on that, not try to get it good, to begin with.

And the third part of what I call the trifecta is a strong EBITDA margin. So, not only do you have robust growth, strong gross margins, but you're really managing your spending below the gross margin line.��And where a lot of companies can kind of get out of hand is by hiring too many people, not being really cautious about the positions that you bring on board, realizing that when you're a small company you're going to have different needs than when you get to be a big company or a medium-sized company. And so, really being thoughtful about your spending below the line.��

Kramer: I'm homing in on something you mentioned there, Jane, about managing the business. What about from the perspective of people and the leadership team?�� How is that looked at if a larger company is potentially thinking about acquiring a smaller company?

Miller: Well, I think it totally depends on the company that's acquiring you. But what I would say��is, forgetting about for a second the company that's looking at you, making sure you have the strongest team that you possibly can around��you, and not being afraid to hire people��that are more talented than you are. And in fact, being really kind of critical of yourself in terms of what your skills are and adding complementary people that will even make the business stronger, because��you just, you know, you don't know what the outcome is going to be. Every pitch that I've been on to sell a company, we've always talked about how strong the management team is and that would be an important factor when they looked at buying us.��But you know, in many cases, the company will not keep the management team, or in other cases, they may want to run it as a standalone. But again, you keep your options open if you have a really, really, strong team that surrounds you.

And you know, one of the biggest questions I get is, “How do you figure out how to hire? Like, what are the positions that you really need, as you're continuing to grow the business?” And again, I would start��very strongly with what is your��skill set?��And then how do you begin to surround yourself with people that compliment that, as opposed to bringing people on that are duplicative of what your skills are?

Kramer:��In a recent interview, you had noted that one of your favorite phrases is��“to run your own race,” a phrase, I believe, you adopted from Cheryl��Strayed. In a world where it's so easy for entrepreneurs to compare themselves��and their companies to one another - can you share more about what this phrase means to you, and��how would it be applicable to entrepreneurs you've worked with or seen out in the marketplace?

Miller: Oh, gosh, Amanda! I love that question so much, because it really��is, whether you're an entrepreneur trying to figure out how to scale a business, or you're a lead student trying to figure out, you know, how you graduate at the top of your class, or really, you know, an alum just trying to navigate your way through the business world, we all have this kind of pressure to sort of figure out how we create in this world the impact that we want to create. And run your own race, which I did get from Cheryl��Strayed, was really about this idea that don't compare yourself to others, set your own goals and compare yourself to what your goals were. And running your own race really is, I'm not about how fast I am relative to you, Amanda. But if I set up I was going to do a��10-minute mile, did I do a��10-minute mile, regardless of whether you did a��nine-minute mile or an��eight-minute mile?

And I think it's such an important concept, because if you are very clear on what's important to you, then you can judge yourself against yourself. So, when you're trying to start a business, not going on social media and seeing,��“Oh my gosh, there's somebody else��who is doing exactly the same thing, and they have more followers, and they've got more customers. And they've got more doors that they're in,” if you're a food business. But instead, sort of say,��“Okay, my plan was that I was going to get into��Whole Foods in the Rocky Mountain division, and I am doing everything that I can to make sure my brand is successful there, even��if I see somebody else that's gone national in��Whole Foods.” Or,��“I see that, you know, I'm kind of still bootstrapping this, and I have friends and family money. A similar company has just raised like $10 million from private equity firm. How do I feel about myself?”��And maybe you're not ready for that $10 million. So, running your own race really is and starts with you being very clear on what's important to you, not what is important necessarily to your spouse, or if, you know, you're in school, your parents, maybe, someone else in your family that has high expectations for yourself. But��instead, to set your own guidelines��on what success looks like.��

Kramer: That is so helpful, and I think a really good grounding point for so many to remember to keep your eye focused on your goal because it's so easy to look in the lane to your right or to your left and say, “I'm not doing enough”, but that's not your path. Let's go back to where we started in terms of the Lily's acquisition. I think it would be surprising to some people to learn that it took over a year to prepare the business for acquisition once the negotiation process��started. Let's peel back the curtain. Can you tell us more about what happened behind the scenes?

Miller: Sure. First of all, let me, let me start and say that, you know, one of the things that, from the very beginning, we had amazing partners with our private equity firm, which is VMG based on the San Francisco, and our founder, Cynthia Tice. And so, when I was able to come on board as the CEO, from the very beginning, you know, we had—at some point, we didn't think it would be maybe as soon as it was an exited mind. And so, as a team, we really worked strongly on that trifecta, from the very beginning. It wasn't something that just happened a year before the company actually sold. So, I think for anyone who's thinking about a business and you think about your partners, you know, just realize that you want to have, again, the end in mind from the beginning, not when you decide to sell.

But yes, to your point, I mean, it was almost a year from the moment that we identified investment bankers that we could potentially partner with to actually selecting one to��going through the process of building a very strong presentation that would be interesting to a number of different buyers to actually doing the presentations to those buyers, to then having a select few buyers that were very interested go through due diligence with us, to dig even deeper into the��business, and to finally, having��sort of final offers.��

So, you know, from August 2020 until June 2021, we were in that process of, that I just described, from hiring a banker to actually closing the deal with��Hershey’s. So, it definitely is something that might take a��little longer than you might expect, just especially if you want to make sure that you are really playing the field, letting the right number of people know about your business, that it is available to be potentially purchased, and then, really vetting the potential buyers for, not just money, but also cultural implications and implications for the employees that would be joining the company that would be acquiring you. You know, and every process, Amanda, is different. But I think for us, it was that��kind of robust process from beginning to end to really get the right buyer at the right price.

Kramer:��It sounds like a very intentional process on both sides of the transaction.�� You had mentioned that the presentation is incredibly��important, and often, you'll talk about the management or leadership team in that presentation. Would you be able to share with us other key components to a successful presentation are when you're pitching your business?

Miller: Our three key things were that there was a huge macro trend that was going on, which was people were trying to cut back on sugar. In fact, 80% of the mainstream consumer was trying to cut back on sugar. And this is an important point, which is if someone's there to sell the businesses, what is the context that somebody wants to buy it in?�� For us, what we were trying to represent was that Lily's, for all the success that we've had, we were barely scratching the surface on something that was very mainstream. And a company like Hershey's has got huge household penetration would be very attracted to that because they're mainly in the sugar business.��And so, what we tried to present to them and to the other potential buyers was that low sugar was a big��idea, that it wasn't a niche. It wasn't a fad. It wasn't something that was going away.�� It wasn't something that was only for a certain economic group. You know, like, only rich people are cutting back on sugar. You know, and it was really this concept that the mainstream consumer of all age groups and all economic groups were really interested��in that. That was��the big picture to start with.

The second thing, really, was about the fact that Lily's was really��unique, that we were the first product to market that had great-tasting low-sugar products with a clean label. And this was important from our positioning, which was to say,��“Okay, not only are people looking for��low sugar,”��but what we know is that they're not going to make a sacrifice with candy, that 87% of consumers, the number one reason why they buy a chocolate product is for taste. And so, what we wanted to represent in our presentation was that Lily's was unique in��that and that we had an amazing-tasting product, but also with one that was very��on-trend in terms of a clean label. So, no ingredients you can't pronounce.��Or, you know, anything that would not be accepted at��Whole��Foods.

And then thirdly, we talked about the management team, that it really was the group of people, not just the management team, the whole��team, that was our secret sauce that kind of brought it all together. So, thinking about a presentation on how they want to sell the business,��is first understand the big context of how it's relevant. So, in our case, people are trying to cut back on sugar. What's the unique differentiation of the business in a very crowded category? And ours was, we were first to market with a delicious product that had a clean label. And then, you know, what made it so really, really, special for us was that we had an amazing team that we wanted to actually showcase.

Then, in the guts of the presentation, we would go into a lot more detail around each one of those topics. Because what I didn't talk about at the outset was how we made a lot of��money, and that's an important thing. We didn't talk about the loyalty of our consumers and how we have really strong repeat rates, and that's why people come back to that. You know, why we had so much, as I mentioned earlier, white space, that although we were doing a great job in the natural channel and with a number of key strategic��partners, like��Target and Walmart, there were still a lot of other customers that we hadn't penetrated. So, it really is trying to understand, again, the big context, what makes you unique, and then why the company should buy you? Because they can expand that to channels that you're currently not in.

Kramer: You know, by all accounts, the Lily’s Sweets acquisition was a success. But you've also been open about the fact that you've worked at the helm of failed businesses or startups��and that failure not only makes success sweeter but it's also a crucial component to achieving success. Can you share with us some of the lessons you've learned that contributed to this successful Lily��Sweets acquisition?

Miller: Gosh,��there are so many factors that, that contribute to success. And let me maybe start with, if you've ever had a great��success, don't ever assume it was all because of you. Or, the other side of that same coin, which��is, if you have a great failure, don't ever feel like it was all because of you. So, with��Lily’s, you know, I was really blessed in the sense that we did have this huge macro trend that was going on. We did have a founder who had really created an amazing product. We were first to market. So, we had that sort of opportunity. And we had a team of people that just did some amazing things and aggressively went after sales and marketing.��But we had very strong financial management. You know, in many cases with young companies, you don't have the right funding to be able to make the business work, and you're trying to really bootstrap it.

So, you know, I think what I've learned over the course of my career, Is that, you know, every success I've had, I've had some role in it.��And every failure I've had, I've had some role in. And if you��take it for that, which is��“What did you learn?” You know, a great example for me was that I was so convinced that we needed to get a peanut butter cup to market.��Because it was the number one thing��that consumers were showing on Instagram that they were making with our products��were their own peanut butter cups. And it was like,��“Oh my goodness, who wants to make their own peanut butter cup?” Let's get a peanut butter cup.��And Cynthia, the��founder, had been super stringent about product quality. I mean, her rule was��it had to taste as good as��full-sugar products. And I�� was like,��“You know, I think on this one, we can probably pull our standards down just a��little because, I just know that this product��will be better than any other product that's in the market.” That's low. Well, I had forgotten the��cardinal rule of why Lily's was so successful. We weren't comparing ourselves against��low-sugar products, we were comparing ourselves against��full-sugar products, and we��rushed something to market that was the best��low-sugar product on the market,��But it wasn't as good as a Reese’s.��And we actually had customers that complained about the product. We had consumers complained. We were very fortunate that I had an amazing head of operations, Phil Mason, who was able to get a really good partner for uswho developed an amazing product. And we were able to take that to market.��But you know what? I probably wasted nine months of the company's time and probably a lot of consumers that that might not come back and buy our peanut butter cup again because they didn't have the same experience that they would have expected from Lily's. So, what I learned from was even where when you're in the height of your success, which was with��Lily’s, is that you��can’t let your standards down for what is the thing that clearly differentiated us from other customers. Or, excuse me, other competitors.��

Kramer: Wow, Jane, thank you for taking us on that journey and walking us through��some failures, even within��Lily’s. That you were able to glean lessons from and say,��“Okay, we're going to look at who we are, and we're going to do this differently moving forward.” I think that that is really helpful. And, that��is a key��LBIdea or a key takeaway in terms of leveraging previous failures or��lessons to achieve future success. And you'd mentioned the importance of self-awareness, really being intentional about learning the lessons from those failures and just making sure that you utilize those insights as you move forward. Is there any other advice that you would give to our listeners about how to best leverage previous failures or lessons to achieve future success?

Miller: You know, I'm so glad you asked that because the thing that came to mind was��not to let failure scare��you, to not fail again.��Because the fact is that I think in my career, I've learned more from the things I haven't done right, than the things that I have done right. And I do think that if you keep putting yourself out there and taking a chance, and realizing that literally, you the worst thing that can happen is you pick yourself up, and you do it again.��

It just kind of��bruises your ego a little. But, again, I think it just really helps, I think, make you a better leader and a more insightful person if you push the envelope. I mean, if you don't fail, that means you kind of haven't pushed yourself hard enough, I think in some way.

Kramer: I think so many entrepreneurs, in particular, are afraid of failure.��When in reality, to some extent, it's inevitable. Important in terms of what you may do next. And it's also not a personal reflection on you. I'm thinking back to what you said earlier about if a business fails, it's likely not all on��you, so what��can you learn from and move forward? So thank you so much for the lesson learned there. You had mentioned that Lily's likely lost some customers with the launch of the peanut butter cup. Do you have any advice about how to manage that? Particularly as a natural foods company?��If you've launched a product that did not, was not well received in the marketplace, how do you address that, and how do you win back your consumers?

Miller: Gosh, it’s hard. I think the good news is that our product wasn't a terrible product. It just wasn’t a great product, you know? And so it wasn't like, you'd come to market with something that was, was absolutely horrible. You know, I think what it's all about trust. And I do think for us, what we did was we tried very hard from a social media standpoint to let people know that we had a new and improved product with a creamier center.��And then, I think as we introduced other new products, we made sure we didn't make the same mistake again. So we came out with a line of white chocolate products, which were one of our most successful rollouts. But we were very, very conscious about making sure we compared ourselves to the full sugar comparison. But I do think it depends on the brand, you know. I think being authentic and admitting that you could do better, and being humble. I��think that is something that was part of our DNA. And that might not be a part of every company.�� I do think that consumers resonate with companies that are authentic; that realize that they're making mistakes. But that also��wants to keep making products that are better and doing better with the consumers. So it's kind of��an interesting balance between, kind of admit that maybe you could have done better. Still, you don't spend too much time on it. And get to the next thing and just realize that you want to keep working on building trust and the best way you do that��in��a food product is to make sure that your products deliver for consumers.

Kramer: Absolutely. And Jane, what I’m getting from you as very much the fabric of what it sounds��like, what��encompasses Lily's brand. Which is,��“Okay, this happened. I know the game plan for what we need��to do better. Let's go do it.” There's nothing that I hear from you about getting��dragged down or feeling defeated by some of these lessons that you've learned. It's very much, “Okay, and let's keep moving forward”, which, I think, is really important for people to get a glimpse of and to see directly from you.

Miller: Well, one of the values that we had as a company, which I think is really important, is this concept of��“assume the best.” Which is that everyone has the intention to do the best job that they do. Everybody has the best intention for��Lily’s to be successful, but along the way, we're going to make some mistakes. And along the way, you're not going to agree with people.��Along the way, you might not understand why decisions are made. But if you always come back to this idea. We're trying to do the best job that we can. That it kind of elevates the discussion from pointing fingers to saying, like,��“Jane, why did you introduce this peanut butter cup? That was wrong.” Instead, to sort of say,��”Wait a minute, we just reserve the right to keep getting better all the time.” I like to say; we make the best decision we can with the information we have at the time. And sometimes, you get more information as you go along, which allows you to make better decisions. Sometimes, something may have failed because you didn't have the perfect information or the market is changing very quickly, and you didn't react quickly enough. But you made the decision at the time when you had the best information that you had. So I do think it's this kind of permission to make mistakes, but also assume that others can make mistakes too.��And that you sort of assume the best, which��is again, that everybody has the same positive intent. We just go at it in different��ways.

Kramer: I think that's a really important idea. And could be another��LBIdea and key takeaway for our listeners is remembering that assuming the best, even though others may come at it from a different perspective. Everybody's rowing in the same direction. Jane, I have read that you are a proponent of entrepreneurs having their own personal advisory board. Can you tell us what a personal advisory board is and why you recommend them?

Miller: Thanks so much for asking��that, Amanda.��Because it really is, I think the core of developing a successful business is surrounding yourself, not with just a great team of people that you've hired, but people around that you can trust. And��so, a personal advisory board, imagine, almost like a board of directors you'd have for a company, but these are people that you have selected that can surround you, and you can go to for advice. A lot of people are like, well, how is that different from a��mentor? You know, in some ways, a mentor is someone that you go to for advice on a range of things. But an advisory��board is more of a group of people that can be your resource for specific topics. So, for example, we'll say I'm running��Lily’s Sweets. Now, how do I surround myself with someone who can talk to me about finding a good investment partner that might not be the same person as who knows a lot about distribution in the natural channel? Which might be someone who's very different��from someone who's got experience, really building teams?��Which could be different from someone who knows how to be an expert in social media? So instead of necessarily hiring these people to be part of your team, especially when you're bootstrapping, making sure that you've got people around that you can go to ask��advice in a safe kind of environment.��You don't imagine that you'd ever pull all these people together like a board of directors. But��instead, being able to reach out to each one of them as you need them. And it's really important because one of the things I've seen with many entrepreneurs isit can be kind of lonely. You feel like you're the only person��who is dealing with the issues that you're dealing��with, when in fact, you're not.

And I think if you could, you know, reach out to people. That could help you out.��It’s very satisfying in some ways. And it also gives you more of a sense of comfort about the decisions that you're making. So you may say,��“Well, gosh, how do I get this personal advisory board?” You know, it could be people that are already in your network.��It could be as easy as identifying someone like Jane Miller on LinkedIn and reaching out and saying,��“Hey, Jane, I know you have a lot of experience, having just sold a company. Do you have five minutes you could spend with? To talk to me now, I might not join your advisory board, but I would be someone that you could reach out to for advice.” And maybe if we developed a relationship, I could eventually do that. So I think, you know, the starting point, the idea that you want to have people surround you to help you. But to get there, build your network. Reach out to people that you don't know, the worst thing that's going to happen. Again, it��goes to the failure thing is you're going to reach out to someone on LinkedIn, and��they will say, I don't have time for you, or maybe they don't answer you, but then you go onto the next person. I think it is this idea of building your network. Seeing who can really help you out. And then you'll start to develop relationships with people that might want to even be a closer associate of yours and develop your personal advisory board.

Kramer:��So, thank you so much for that, Jane. And I think the one other piece that I like to ask you about is what's next for you. There's been��a successful acquisition. Tell us more about what you're working on right now.

Miller: So, yeah,��right now, I'm doing a couple of things. One is I've had the great pleasure of coming back to Rudi’s��Bakery, that I was the CEO of from 2008 to 2014. And I was able to join the board a couple of months ago and be instrumental in hiring of the new CEO. Who's, uh, Doug Radi. Doug was my head of marketing and sales when I was the��CEO, and he, for the last seven years, has been the CEO of��Good Karma.And Doug is one of the most incredible leaders that I've had a chance to work with in my career. And as I always like to joke with him, he was an incredible leader. But I will actually take some credit for him becoming an even better leader. So I'm super excited about him stepping into Rudi's where I will, you know, as I said, be a board member and be able to work closely with him as a leader of this company.

It's honestly one of the most exciting things that��have had happened to me. So, first of all, I'm very excited to be back at Rudi's and to be a part of this wonderful company that was started Forty-five years ago by Sheldon Romer, who's also a great inspirational leader here in the Boulder, Colorado��Market. The other thing that I'm doing that is like nothing I've ever done before, I am a co-founder, as you mentioned, a couple of times of a company called��Haevn. For anyone��who wants to check that out��online, it's t-h-e-h-a-e-v-n,��The Haevn dot com. And a��Haevn is all about solving the chicken and egg dilemma, which is if you're a student, you can't get a job without experience, but you can't get experience without a job.

And so we're working on helping young people. Specific��college-age students develop their soft skills. Their skills to be able to prepare themselves to go into their first job. And then we're matching them with companies in micro internships. And what's really, I think, unique about��Haevn is this��high-touch approach to building students' skills. Then providing these internship experiences where you're not just following somebody around in an internship. You actually have a very specific project with specific goals. And it kind of is great on a couple of levels. It gives a sense of accomplishment. And that accomplishment builds confidence because they have had a very specific project. And it really makes companies excited about having��interns because they have very specific deliverables that will help with the growth of the company. So my two co-founders and I, and our first employee, the four of us are really working hard at developing matches between students and companies. We have got a big agenda on curriculum, on developing��Haevn members. And with your membership, you get the sense of community. You get additional training, and you get access to different internships. So it's probably the most exciting thing that I've done in my career.�� Our goal is in the next five years to hopefully have created about 5,000 internships and really be able to help that next generation of leadersget jobs. So it's super exciting. Not anything like 35 years of being in the food business.��It's new for me, and it's kind of scary because it's outside my comfort zone. I've never really been a founder. Or you mentioned��Jane Knows. Jane��Knows is a free career advice website. So although I'm a founder of that,��it’s a one-woman show. So it wasn't involving co-founders and involving companies and career centers at different colleges and universities.��Keep your eyes out for the��Haevn because I think we'll be doing great things over the months and years to come.

Kramer: Jane, thank you so much for joining us today for this conversation. It has been really insightful.

Miller:��Thanks,��Amanda, for having me here. It's always a thrill to be involved with the��Leeds School and whatever I can do to��help,��and I hope everybody enjoyed this. And of course, you know, you can reach me at jane@janeknows.com with any questions you might have.

Kramer:��Thank you again for listening to Leeds Business Insights and a special thank you to my guest Jane Miller. Don't miss a single episode. Subscribe to Leeds Business Insights wherever you get your podcasts. You can also find more information about our podcast series at Leeds dot L Y slash L B I podcast. We'll see you next time.