- 2 years ago
Magic Spoon is a health focused cereal brand founded by Gabi Lewis and Greg Sewitz. Before cereal the two launched Exo, a line of protein bars. The brand is committed to delivering gluten-free, high protein alternatives to your childhood favorite cereal.
Magic Spoon co-founder Gabi Lewis sits down with Brittany Lewis on "Forbes Talks" to discuss growing his business, influencer marketing — plus advice he would give to entrepreneurs just starting out.
Magic Spoon co-founder Gabi Lewis sits down with Brittany Lewis on "Forbes Talks" to discuss growing his business, influencer marketing — plus advice he would give to entrepreneurs just starting out.
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00:00 Hi everybody, I'm Brittany Lewis, a reporter here at Forbes. Joining me now is Gabby Lewis,
00:07 co-founder of Magic Spoon. Gabby, thank you so much for joining me.
00:11 Thank you for having me. Great to be here.
00:14 Before we dive right in, for those who don't know, can you explain what Magic Spoon is?
00:19 I can. So Magic Spoon reimagines your favorite breakfast cereal with more protein, less carbs
00:25 and zero sugar. So imagine that delicious sugary bowl of cereal you grew up loving and
00:30 we made it legitimately healthy for you. That sounds almost too good to be true, but
00:36 I want to know really how you did it because sometimes when people think of healthier things,
00:42 they want to try a healthier version of X, Y or Z, they might take a bite and be like,
00:47 "Oh, I can tell, you know, that's healthy. That's the healthy version of what I really
00:51 want." So when was the moment for you when you took a bite of Magic Spoon cereal and
00:56 you're like, "This is it. We've got it."
01:00 Yeah. So the reason we even called it Magic Spoon was because we wanted you to feel this
01:05 is too good to be true. It must be magic. And so we spent over a year testing hundreds
01:11 of formulations, trying to basically recreate that taste and texture of sugary cereal, but
01:16 without the sugar, without the gluten, without the grains. And at first, honestly, we didn't
01:20 even know if it was possible. We thought maybe the reason why this doesn't exist is because
01:24 from a food science perspective, you just can't do it. But after hundreds of recipes
01:29 and iterations, we eventually came up with a formula that uses a whey protein. It uses
01:33 a blend of natural sweeteners like allulose, monk fruit, stevia leaf, and we use natural
01:39 flavorings to come up with something that looks and tastes just like you remember, but
01:43 it's really delicious for you and very healthy.
01:46 You just said you thought it might not be possible. So can you describe what your ultimate
01:52 vision for Magic Spoon was? And did you ever have to pivot at any point?
01:57 Yeah, the vision was to create a product without compromise. And so it's funny you mentioned
02:03 that often when people are tasting something that's a healthier version of something, they
02:08 think, "Oh, it's not going to be as good." And we've all had an ice cream or something
02:13 that's maybe claiming to be really healthy and tastes just like regular ice cream, but
02:17 you try it and it's not quite there. And so what we wanted to do was to create a product
02:22 that tastes basically just the same as the unhealthy version, but it is incredibly good
02:27 for you. And so again, yeah, we weren't sure that it could be done. There's lots of food
02:32 science challenges involved with that. And this is something that we wanted to do, not
02:36 just for the cereal aisle, but something that we thought was lacking in the food industry
02:40 at large. There's always this idea that you have to trade off taste with nutrition and
02:46 you can't have something that's good for you, that's fun, that's delicious. And we've sort
02:51 of been trained to expect that trade off. We wanted to create something that had fun,
02:55 colorful packaging, was legitimately really healthy and actually delicious and indulgent
03:01 all at the same time and create a product that just really has no compromise. And so
03:06 no matter what you care about, whether you're a parent trying to give their child some healthy
03:10 cereal that the child thinks is actually sugary cereal, or you're a workout fanatic trying
03:14 to get more protein after your workout, you don't want another shake, Magic Spoon cereal
03:18 can sort of solve your problems.
03:21 What's really interesting about cereal in particular is there is that sort of certain
03:26 sense of nostalgia to it. You know, you remember the cereals you had growing up, maybe when
03:32 you went to your friend's houses, they had the better cereals, but there is that sense
03:35 of it brings you right back to childhood when you have a bowl of cereal. So how do you convince
03:40 people to ditch their tried and true cereals because everyone has a favorite few boxes
03:45 of cereal and then instead jump onto the Magic Spoon? You know, get some Magic Spoon.
03:52 Yeah, well, firstly, a lot of people don't have to be convinced, right? If you look at
03:57 the cereal market over the past couple of decades, it's been declining every year, right?
04:01 So people know that cereal, whilst delicious, is not the healthiest option. And so people
04:06 have been leaving that category and they've stopped eating cereal. And instead, they've
04:09 been having these boring health foods that they don't really want, but they feel like
04:15 they should have. So people are having Greek yogurts or smoothies or protein bars instead
04:20 of cereal.
04:21 And so a lot of our customers are people that already left the cereal aisle. We're saying
04:24 to them, "Hey, you don't need to have that chocolate protein bar or gross green juice.
04:30 You can actually have a bowl of colorful, delicious cereal and it's really, really healthy
04:34 for you, just like you remember." And so a lot of our customers are not convincing them
04:38 to switch Lucky Charms to Magic Spoon. We're convincing them to come back to the category
04:43 that they love, but they felt like they had to leave because it didn't speak to them anymore
04:47 once they started paying attention to it.
04:51 And can you just move your head for a moment? I want our viewers, if they haven't seen the
04:54 Magic Spoon box, to actually look at it.
04:57 Well, there's one right here as well.
04:59 Perfect. Because I want to talk about the design there because it looks fun. It looks
05:04 like you mentioned Lucky Charms. It has that quality of it's fun. It's a cartoon. Is this
05:10 how you were able to cut through the competition and kind of marry the nostalgia of the classic
05:15 cereal to, "Hey, but this is the healthier version of that."
05:19 Yeah. So from a packaging perspective, we wanted to nod to the classic characters that
05:26 we all remember, but do it in a slightly grown up, slightly psychedelic way. So we wanted
05:32 to make people feel like they're a kid again, and we wanted to make them feel like they're
05:35 watching cartoons, but do it in a more elevated way. So these characters, it's a different
05:40 kind of person riding an animal, and every cereal box is a little bit different. And
05:46 yeah, we definitely wanted to lean into nostalgia, even down to the fact that we put this in
05:50 a rectangular cereal box. If you think about it, a cereal box is not a very intuitive packaging
05:56 form. It's less practical than a standup pouch that reseals, for example. The reason we did
06:03 a box, not a standup pouch that reseals is because of that nostalgia. Even though it's
06:07 slightly less practical, you see a box of colorful cereal, you feel amazing. You feel
06:12 like a kid again. That's why there's the character, the fact that there's a box, the shape, the
06:18 color, all of it is designed to evoke that nostalgia and feeling amazing and eating healthy
06:22 at the same time.
06:24 I have this conversation with my friends a lot. I'm a 90s kid, and we think back to some
06:30 of the snacks and some of the foods that we ate 20 years ago, and we're shocked that that
06:36 was going into our bodies. So there has been this rise of healthy foods. How do you cut
06:42 through that competition, and how do you show people, "Hey, Magic Spoon is the best, tastiest,
06:49 and healthiest option"?
06:51 It's hard. Like you said, there's so much noise out there. Whatever your category, even
06:58 just looking at cereals, there are dozens of other companies claiming to be the best
07:02 healthy cereal. Some of them are quite good, and some of them are quite awful. It's definitely
07:08 a challenge to get front and center. The way we do it is we try not to do that ourselves.
07:13 We try not to be the ones saying, "This is the best," because who's going to trust a
07:16 company saying that?
07:17 So the way we do it is we get either influencers that love our products. We try and generate
07:23 lots of word of mouth. We try and have other people shouting the rooftops for us. That
07:29 comes across far more genuine than us just running an Instagram ad saying, "We're the
07:33 best healthy cereal." People talk about it, and then it snowballs from there. We've been
07:39 fortunate enough to have, for example, some celebrities or influencers who tried the product,
07:44 liked it so much, they then invested in the business. Then they want to talk about it
07:47 all the time. It's win-win for us, and them as investors in the business.
07:52 Let's talk about influencer marketing a little bit, because the first time I heard of Magic
07:56 Spoon, I was on Instagram. I was going through stories, and an influencer I followed was
08:02 pouring a bowl of it and eating it. That's how I heard of Magic Spoon. Can you talk about
08:06 how you decided, "Hey, let's go the influencer marketing route"?
08:10 Yeah. It's been an evolution. In the earliest days, we used influencers as investors. The
08:17 first $500,000 we raised for our company was actually from influencers who invested in
08:22 the business. That was the first way we worked with influencers. Then over time, we've worked
08:27 with influencers of all different sizes, whether it's micro-influencers that we're just seeding
08:32 products to, and then up to them if we want to post or not. We work with large-scale celebrities,
08:38 and everyone in between as well. For us, we think the best kind of marketing is what we
08:43 call endorsement marketing. It's where somebody who has a following of any size, people believe
08:49 that person is talking about our brand. We do that on podcasts. We do that with Instagram,
08:54 with YouTube, wherever it might be. We want people who have a following to trust them
08:59 to talk about Magic Spoon and talk about it genuinely. When we work with influencers,
09:03 we never give them a script because then it sounds poor. It doesn't sound like it's real.
09:08 We don't care whether the influencer is talking about fashion or food or cars or whatever
09:13 it might be. We just want them to be genuine because cereal has such a broad audience that
09:17 we can work with influencers from any genre because everyone loves cereal, and then talk
09:22 about it genuinely if they're following. That's been one of our largest marketing channels
09:26 since we launched four years ago.
09:28 I want to talk about some of those investors. Like you said, everyone likes cereal. I'm
09:33 going to rattle off a few names. This really shows the spectrum of the investors in Magic
09:39 Spoon. Nick Jonas, Halsey, Russell Westbrook, and Shakira. These are A-list celebrities.
09:47 How did you get them on board?
09:51 Some of them got on board purely because they love the product. There's a much longer list.
09:55 We probably have 20, 30 celebrity investors. We probably have over 100 investors total.
10:00 Some of them came to us. Questlove, for example, he organically posted on his Instagram three
10:06 years ago, "This is crazy. I just tried this cereal. I cannot believe it's low carb. It
10:11 tastes like Fruit Loops." I just sent him a DM after that and said, "Hey, we'd love
10:16 to get you involved some way," and ended up becoming an investor in the business. That
10:20 was a case of just genuine love for the product. He had no idea whether our business was successful
10:25 or not at the time, didn't know our numbers, just loved the product, wanted to get involved.
10:29 Others, it's purely business, purely investors. They have to like the product as a baseline,
10:34 obviously, but then we're talking about our cat, our OTB, any business measures that any
10:40 other investor would be asking about. Some of them, of course, have business managers,
10:44 various kinds who are doing due diligence as well. It's a little bit different in any
10:47 case. The through line is that they all believe that healthy food is a big trend that's lasting,
10:55 not a fad. They believe the cereal category is a bright, firming invention, and they genuinely
11:00 enjoy eating Magic Spoon as well.
11:03 Something that's interesting is that Magic Spoon was exclusively online from 2019 to
11:09 early 2023. Can you describe its growth from 2019 to now?
11:17 We launched about four years ago. For the first two, two and a half years, it was entirely
11:21 direct to consumer. You could only buy Magic Spoon on our website. Then we launched on
11:25 Amazon. We very quickly became the number one selling breakfast cereal on Amazon. Then
11:30 just over a year ago, we launched in physical retailers as well. Just over a year ago, we
11:35 launched in Target nationwide. Then in January of this year, we launched in Walmart, Kroger,
11:41 Albertsons, Sprouts, and a few others as well. We've gone from being in zero stores
11:47 just over a year ago to over 10,000 stores today, and then launching in many more in
11:53 January next year as well.
11:55 I do want to talk about the price point. This is actually one of the frequently asked questions
12:00 on your website. For a four-pack of Magic Spoon, it's $39. That's almost $10 a box
12:08 of cereal. A box of cereal online, another brand, is anywhere from $4 to $7. How do you
12:14 explain that price point, and then how do you get people to get on board with it?
12:21 The price point is where it is because what we're selling is actually not cereal. If you
12:26 look at our ingredients list, there's no cereal grains in there. What we're selling is high-quality
12:31 protein powder, natural flavors, natural sweeteners. All of those ingredients cost 10, 20 times
12:38 more than cane sugar, corn flour, and the ingredients that your average cereal business
12:43 is using. The price point is just purely a function of the ingredients we use.
12:48 For serving, Magic Spoon is cheaper than a protein bar, a protein shake, or other products
12:54 that have the same ingredients. When people understand that, they're usually very excited
12:57 when they get it. It's the same way that a protein bar is not the same price as a candy
13:03 bar. They're both rectangular, chocolatey snacks. The ingredients are totally different.
13:09 Over the course of a few years, people don't expect that a protein bar and energy bar should
13:12 be the same price as a chocolate bar. In the beginning, I'm sure people thought that seems
13:16 a little expensive for a bar when they saw their first protein bar.
13:19 We're educating people over time, and it's becoming much easier. People are understanding
13:23 that it's worth paying more for 10 times more protein, for a seventh of the carbs, for a
13:30 twentieth of the sugar. It's just such a massively better product.
13:35 You actually just mentioned bars, and you've expanded the business a bit. Can you talk
13:40 us about what you've expanded to?
13:44 Yeah, we've been asking our customers for years, what do they want to see from Magic
13:48 Spoon next? We get all sorts of answers, some of which are realistic and some of which are
13:54 not. One of the most common answers was the people that wanted us to create a grown-up
13:59 version of a Rice Krispie Treat, so a cereal bar Rice Krispie Treat, but with more protein,
14:03 less sugar, less carbs. A couple of months ago, we launched our very own Magic Spoon
14:07 Treats, which we've got one right here. We have a chocolate peanut butter and a marshmallow
14:13 flavor. They look and taste like a chewy, stringy Rice Krispie Treat, but they're only
14:19 one gram of sugar, 11 grams of protein, so as healthy or healthier than the protein bars
14:25 out there, but they look and taste like an indulgent Rice Krispie Treat. Those launched
14:29 a few weeks ago on Amazon and on our website, and people are absolutely loving them so far.
14:35 Gabby, I want to pivot the conversation just a little bit now and ask you some questions
14:39 about being an entrepreneur. Within the past few years since you launched Magic Spoon,
14:44 what's been the hardest business lesson that you've learned?
14:48 Oh, I think the hardest is always around people. I don't know if there's a single lesson there,
14:57 but the hardest periods for me as a founder are always when we've made the wrong people
15:01 decisions. I think every company does that in the early days because you don't know quite
15:06 what you need, and I think every company over time hires more specialized people, whereas
15:14 in the early days you're hiring for more all-rounders, and I think typically people wait too long
15:17 to hire those specialists. We made that mistake that we hired all-rounders for a little bit
15:23 too long before bringing in the specialists, and those all-rounders sometimes didn't quite
15:27 have the skills we needed to help get the business to the next level, and then having
15:30 to make even just one or two hard decisions when people in the business is heartbreaking.
15:35 In terms of personal things that have been a struggle, people decisions are definitely
15:40 up there.
15:41 I think another big lesson for us, which we actually took from our prior business and
15:45 tried to apply here, is not to expand products or focus too broadly too fast. Some people
15:53 might look at our business and ask, "Why did you stay online for three years before you
15:57 go into a single retail store?" or "Why did you wait four years before launching your
16:02 second product line?" We learned from our last business that it's very easy to say
16:06 yes to the shiny new exciting thing, very easy to get distracted, and if you have a
16:10 large runway in front of you with a product line or a distribution channel and it's working,
16:15 there's no need to get distracted and do all these other shiny things. We've tried to stay
16:19 as narrowly focused as we can. For years, literally only selling boxes of cereal on
16:25 magicspin.com, very narrow, and then gradually going up from there.
16:29 What's interesting is if you told someone 10 years ago this was going to be your business
16:34 plan, influencer marketing, exclusively online for a few years, they would have looked at
16:39 you like you might be crazy. Clearly, you've thrown out the traditional business playbook
16:44 in some senses. What's another instance where you threw out the traditional business playbook?
16:50 Then what's an instance where you stuck to the script a little bit and what's worked
16:54 for you?
16:56 Great question. I think we stuck the script a little bit more. I'd say in retail we've
17:03 done a little bit more. In retail, the usual way to enter retail stores for a CPG product
17:10 or a good product is you start off with a local, regional, natural, crunchy type store
17:17 and maybe you launch in 10 or 20 of those. You know that the audience is willing to pay
17:22 a premium for a healthy product. After you've seen results in maybe 20, 30 stores and you've
17:26 spent another 50 or 100 and over the course of three or four years you've worked your
17:32 way up to the target store, the Walmarts, the Krogers, we skipped that step. We went
17:38 from nothing to being in 1,500 targets and then six months later being in 3,000 Walmarts.
17:45 That would have seemed risky from an outsider because usually people make sure it works
17:50 at Whole Foods or a smaller retailer before they take it to Walmart. For us, we believed
17:56 we had done those three years of brand building online. We'd really proved that concept and
18:01 the customers wanted it. We felt that we could go straight into thousands of mainstream stores
18:06 on day one. It's worked, but that was a little bit contrary to what most people would recommend
18:11 in terms of brand entering retail. Now that we're in retail, we're not following
18:16 one of the places. There's hundreds, thousands of companies before us that have expanded
18:22 into retail and gone from 1,000 to 5,000, 10,000 stores. Whereas with our DTC business,
18:28 we really had to reinvent the wheel for a food company scaling to tens and tens of millions
18:33 of dollars online and figure out how to do that. With retail, there's lots of companies
18:37 that scale to 50, 100, $200 million selling through retail. We're just following the playbook
18:43 and the best practices there. What would you say to one of our viewers?
18:48 Maybe they have this great idea, but they don't even know where to get started. They're
18:52 an entrepreneur in the making. What's your one piece of advice for someone starting their
18:57 own business? I think make sure upfront that people want
19:04 it. That sounds so simple, but I think a lot of founders are slightly blinded by their
19:10 own personal experience or what they want. They don't pay enough attention to the market.
19:16 There's always the classic story of the founder that says, "I really wanted this thing. It
19:20 didn't exist, and so I made it." Sometimes that works. Sometimes you're right, and there's
19:24 other people out there like you. Sometimes there's not. Sometimes it really is just you.
19:29 I think I speak to a lot of founders that are a year or two in, and then they realize
19:32 that it's just not the market for this that I thought there was. Once you're a year or
19:36 two in, it's pretty hard at that point to rewind or pivot. Really validating with as
19:43 many people as you can, and it doesn't need to be a formal study. You don't need to put
19:45 money behind it, but asking dozens and dozens of friends, family, extended people where
19:50 there's genuine feedback on the product, the price point, the nutritional profile, all
19:57 those kinds of things, and really having confidence in the product market upfront can save you
20:01 a lot of time and energy down the road. What's next for Magic Spoon?
20:08 We're doing more of the same. I think it's tempting to have a fun, exciting, crazy answer
20:13 for you, but at this point, we're expanding our store kind of rapidly. It's trying to
20:17 get Magic Spoon cereal and then eventually our treats into as many retail doors as we
20:23 can strategically, the right retail doors, but we want to eventually be everywhere that
20:27 cereal is bought and sold. Right now, we're in a small fraction of the potential retail
20:32 doors that are out there, and we get emails every day from people asking us, "Hey, why
20:35 are you not in my local X store?" It's just because we're just starting to roll out into
20:41 retail, and so many more stores to come, and getting our treats out there into more people's
20:46 hands as well because I only launched a few weeks ago.
20:49 Well, Gabby Lewis, thank you so much for sharing your insights, and I appreciate you coming
20:53 on.
20:54 Thanks for having me.
20:55 You're welcome.
20:56 Thanks for having me.
20:57 Thanks for having me.
20:57 [silence]
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