Sep 30, 2024 · 1h 7m · how-i-built-this
Lily’s Sweets: Cynthia Tice
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of 'How I Built This', host Guy Raz interviews Cynthia Tice, who drew upon four decades of natural food retail and consulting experience at age fifty-eight to create Lily's Sweets, growing the pioneering no-sugar chocolate brand into a $425 million acquisition by Hershey's.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 38.9% of the talking time here. How this is scored →
Guy as informed peer 2.9 Guest teaching 1.7 Guest disagreement 0.3 Guy pushing back 0.4
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 44:42 Cynthia rejects the assumption of promotional losses
Cynthia directly refutes Guy's assertion that heavy early discounting meant burning cash, pointing out that their zero-overhead model ensured steady profitability.
Hardest push from Guy ▶ 59:25 Guy questions why a large payout didn't soften the emotional blowGuy challenges Cynthia's distress over losing control after the VMG deal by pointing out she received a life-changing sum of money at age sixty.
Biggest teaching moment ▶ 26:40 Cynthia explains multi-sweetener formulationsCynthia explains the chemical synergy of combining erythritol and dextrin to mask the bitter licorice notes of stevia, correcting Guy's simplified assumption about pure stevia chocolate.
Guy holds their own ▶ 22:00 Guy details sugar substitute history and biological impactsGuy articulates the metabolic differences between stevia, maltitol, and artificial sweeteners like aspartame, showcasing deep preparation on food industry shifts.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Announcement: Launch of the New Newsletter | 4 | 0 | 0 | 0 | Segment 1 contains the opening newsletter announcement, a brief teaser clip with Cynthia about delegating, and Guy Raz's introductory monologue detailing the food science of sugar alternatives and the history of Lily's Sweets. Guy demonstrates background industry knowledge during the monologue, while Cynthia is agreeable in the teaser clip. | |
| Challenging Expectations and Discovering Natural Foods | 3 | 2 | 0 | 0 | Guy asks about Cynthia's upbringing and early exposure to natural foods in the 1970s. Cynthia recounts defying family expectations by working as a waitress and radically shifting her diet after an encounter at Temple University, while Guy chimes in with nostalgic references to 1970s health food stores like Mrs. Gooch's. | |
| Opening a Philadelphia Natural Food Store in 1977 | 2 | 1 | 0 | 1 | Guy inquires about the economics and family backing behind opening Cynthia's first natural food store in Center City Philadelphia. Cynthia candidly explains her lack of basic business accounting skills and admits the store ran hand-to-mouth for years despite providing immense personal fulfillment. | |
| The 1989 Alar Scare and the Rise of Organic Awareness | 4 | 2 | 0 | 0 | Guy and Cynthia discuss pivotal moments in health food history, including the 1989 Alar scare on apples and Whole Foods' aggressive positioning against conventional grocers at an industry conference. Cynthia explains how these shifts motivated her to transition into natural foods consulting for conventional supermarkets. | |
| Early Product Experiments: From Soda to Bitter Stevia Prototypes | 4 | 2 | 0 | 0 | Guy details the food science behind stevia, aspartame distrust, and sugar alcohols like maltitol, while Cynthia explains her initial abandoned attempt at a diet beverage when major soda giants entered the category. She describes how early stevia-sweetened chocolate prototypes tasted excessively bitter. | |
| Mid-Episode Break: Teasing the Whole Foods Breakthrough | 3 | 2 | 1 | 0 | Cynthia details the falling out with her initial business partner Elizabeth and her discovery of bulk chocolate wafers combining erythritol, dextrin, and stevia. Guy explores how the ingredients balanced mouthfeel and sweetness, while Cynthia gently clarifies that the supplier only made wafers, not finished retail chocolate bars. | |
| Partnering with Chuck Ginarty and Naming Lily's | 3 | 3 | 0 | 0 | Cynthia recounts teaming up with Chuck Ginarty, structuring his initial financing as a loan, and naming the brand in honor of Chuck's niece Lily, who survived childhood brain cancer. Guy probes into the charity-focused branding, and Cynthia explains their conscious choice to lead with taste rather than relying on cause marketing. | |
| The Whole Foods Review: Winning a National Launch | 3 | 2 | 0 | 1 | Guy asks about pitching Whole Foods and whether Cynthia would have approached other retailers if rejected. Cynthia explains her strategy of keeping the four launch SKUs simple and notes that executive Earl Schweitzer's support secured them a nationwide launch without needing a backup plan. | |
| Executing the 2012 Launch and Rapid Organic Growth | 3 | 3 | 2 | 2 | Guy questions whether Cynthia was burning money on heavy promotions and who the actual target demographic was in 2012. Cynthia firmly corrects his assumption about losing money, pointing out that without corporate overhead or employee salaries, the lean model remained profitable despite constant in-store discounting. | |
| Restructuring the Company and Facing an Unforeseen Lawsuit | 2 | 1 | 0 | 0 | Cynthia outlines buying out Chuck's stake to bring in Laura Fraga alongside her two children, while maintaining profitability even as her former partner filed a major lawsuit claiming co-ownership. Guy empathizes with the immense personal stress of litigation during operational scaling. | |
| Mid-Show Interlude: Scaling a Four-Person Enterprise | 3 | 1 | 0 | 1 | Guy asks about the resolution of the legal battle and whether Cynthia ever considered settling out of court like other startup founders. Cynthia explains that the requested settlement amount was impossible to meet, forcing her to litigate through to full exoneration in 2017. | |
| Recognizing Bottlenecks and Searching for an Equity Partner | 2 | 2 | 1 | 0 | Guy notes the incredible accomplishment of reaching tens of millions in revenue with only four staff members, while Cynthia self-critiques her limitations in team building, training, and delegation. She describes conducting due diligence across the investment landscape to find a private equity partner. | |
| The VMG Buyout and Redefining the Founder's Role | 2 | 3 | 1 | 1 | Cynthia details partnering with private equity firm VMG, bringing in Jane Miller as CEO, and the emotional friction of redefining the founder's post-acquisition role. Guy presses on whether accepting a massive payout eased the transition, but Cynthia emphasizes how deeply attached she remained to her creation. | |
| Scaling to $110 Million and the $425 Million Hershey's Acquisition | 3 | 1 | 0 | 0 | Guy highlights Lily's rapid surge to $110 million in revenue within 18 months, leading to Hershey's $425 million acquisition in 2021. Cynthia expresses satisfaction with Hershey's female leadership and explains why she felt ready to fully exit the company at that point. | |
| Reflections on Late-Career Success, Experience, and Luck | 3 | 1 | 0 | 0 | Guy and Cynthia reflect on launching a massive brand in her late fifties, balancing accumulated domain expertise with the luck of shifting market trends away from sugar. The conversation wraps up with playful banter about chocolate fountains followed by standard production credits. |
Statements from this episode (21)
Tice: Founded first natural food store with unpaid $10,000 loan from father
“So, that was in 1977, and he literally lent me 10 grand, which I never paid him back, but it was technically a loan. And he helped me find a location, which at that point was on South Street in Philadelphia.”
Tice: Early Philadelphia grocery store was almost never profitable
“It was almost never truly profitable, but back in those days, I was single. I really didn't care about money. I truly didn't. I lived in a really small, not good apartment in a bad part of town, and I just really didn't care. I was on a mission, but the profit…”
Tice: 1989 Alar scare drove first-time shoppers to natural food stores
“What we saw was people that had never before come into a natural food store came in for the very first time, because apples were When you think about it, apple and apple juice and applesauce is like one of children's first foods. Right. So, you know, it, like …”
Tice: Maltitol is a sugar alcohol that causes severe digestive distress
“The problem with maltitol was that maltitol is, is a sugar alcohol that is intensively, digestively upsetting.”
Tice: Distrust of artificial sweeteners drove 2008 Coke and Pepsi diet slump
“So in 2008, Coke and Pepsi were experiencing this enormous downturn of diet beverages. And it was really due to the fact that there was enormous consumer distrust of artificial sweeteners.”
Tice: High doses of stevia cause a bitter, licorice-like aftertaste
“Stevia, especially when you're using enough to really sweeten something, has You know, has terrible aftertaste, and you know, has like this almost like a licorice flavor, and it just, it was terrible.”
Guy Raz: A social mission does not sell products like quality does
“A lot of brands really push their social mission, and I'm not convinced that that sells product. I think what sells a product is a good product.”
Tice: Lily's chose not to lead brand positioning with charity
“We had large discussions that we did not want to be Alex's lemonade. We wanted to be a delicious chocolate bar that had a charitable Give back.”
Cynthia Tice: Product Innovations Should Stand Alone Without Novel Flavors
“You know, my belief is that when you have an innovation, the innovation should stand on its own, and you shouldn't innovate with flavors outside of The innovation itself.”
Tice spent $50,000 on development before pitching Whole Foods in 2011
“Up until that point, just to kind of give you a sense, we've probably spent 50 grand. And, you know, in developing the packaging, and getting the samples produced, and, you know, in, in, you know, in everything that that took.”
Tice secretly planned to shut down Lily's if Whole Foods passed
“And I had decided that if Whole Foods didn't say yes, we weren't going to move forward. Like, I, like, I, like, Chuck didn't know that.”
Tice: Lily's was the first stevia-sweetened chocolate bar at Whole Foods
“It was the first Stevia sweetened chocolate bar, because remember, there were some maltitol chocolates at Whole Foods, but they were not performing well, and you know, they were regional rather than national.”
Tice: Lily's Sweets was profitable every year after its first year
“So we lost money the first year. We lost a little bit of money, not a lot. And every year, subsequently, we were profitable.”
Tice: Lily's Sweets never grew less than 40% in any year
“I don't think there was ever a year that we grew less than 40%.”
Tice: Lily's Sweets made nearly $1M in revenue in year one
“It was almost a million dollars the first year.”
Tice: Lily's Sweets was run virtually by a four-person team
“And we continued to run the company virtually. My two kids came in and joined, and we were, from that point forward, a team of four.”
Tice: Lily's Sweets cash flow fully funded operations and costly litigation
“It was not only enough to sustain it was enough to sustain it in the midst of a law battle that cost a lot of money.”
Tice: Lily's Sweets Reached a $40M Run Rate by 2018
“But our run rate by the, by 2018, when we partnered with our equity partners, VMG, we, our run rate was 40.”
Tice: Founders must communicate desired post-acquisition roles to new partners
“And I really, really encourage any founder to spend some time developing your own thoughts and communicating that effectively to your next set of partners. You know, the old paradigm is that you have to sort of wipe out the old team, but that's an old paradigm…”
Tice stepped aside because she couldn't manage Lily's rapid growth
“So it wasn't that I didn't want to do it as much as I knew that I wasn't capable of it. I mean, Lily's was a category disruptor, and it was growing beyond, you know, we, you know, it was, we hit the marketplace at the right time when there was this growing awa…”
Tice attributes Lily's success fifty-fifty to retail experience and timing
“I mean, I think, fifty-fifty. I think my experience was instrumental, but I think there was a big aspect of luck with regards to timing that I didn't really understand at the time. I took advantage of it, but I didn't, you know, I did not know that there would…”