How SmartSweets Went From $0 to $360M in 4 Years: Case Study

You've probably seen this brand on the shelf, Smart Sweets, but you might not know that this brand sold a majority stake for $360 million just 4 years after this first-time founder started the business at just 21 years old. She had no capital, no experience, and no connections in the space. So how did she turn that idea into a 9-figure exit in just 4 years? Today we'll break down how she did it.

My name is Tara Bosch and I am from beautiful Vancouver, BC. Today I am here to ask you for $100,000 in exchange for 10% of my company, SmartSuites.

Tara Bosch is the founder of SmartSuites, and she started this company when she was the ripe old age of 21 years old. She had no connections. She had no entrepreneurial experience. She had no capital to be able to make a splash in this market.

I am a university dropout. Oh, how old are you?

I am 21.

22. Awesome.

Yet she went into a saturated market where there are already a bunch of big companies. She carved out her slice and created a raving fan base that helped propel her to a 9-figure business that she sold for $360 million. However, there are some gaps in the story. It begs the question, how does someone with no experience walk into a market and dominate? How does someone carve out their slice and make it worth 9 figures? I wanted to figure that out, so I sat down with Tara more than once to put together some missing pieces of the story and to pull out the lessons that we can learn as entrepreneurs so that we can sprinkle them into our business and achieve these types of results. Now, first of all, let's address the elephant in the room. It's very common for headlines to read the big number, but for the terms of the deal to not be disclosed. That is the case in this transaction. However, what we do know is that the total value of the Transaction was $360 million, and Tara owned more than half of that, which means that her slice of the transaction was in the nine figures. Was it cash or stock? Does it really matter? A 25-year-old woman with no experience walked out with a nine-figure deal. That's pretty freaking impressive. This company went into a giant space. Candy is a huge market. There are multiple multi-billion dollar companies. That sell candy. And Tara was an unknown. She had no entrepreneurial experience. She had no connections in the space. She was just passionate about it and she wanted to do something different. That's lesson number 1. If you look at the recent transactions that have happened in the CPG or e-commerce space, they all follow exactly that pattern. They go into really big markets, but they do something just a little bit different. Just in the last year, We've seen Dr. Squatch exit for over $1 billion. That's a really big space, personal care, and they did something just a little bit different than everybody else. A few years ago, Dollar Shave Club did exactly the same thing. They sold for over $1 billion in a really big space doing something just a little bit different. Groon's Gummies went into a big space, did something a little bit different. That is the starting point if you wanna build a really big company. For a lot of entrepreneurs, it does not make sense to try to create something brand new. It makes more sense to look at really big markets and say, I can do this better. SmartSweets was the first brand to go into the candy vertical and do it with low or no sugar. The real play is not copying what other people did. It's looking at the big market and trying to do it just slightly different than everybody else.

A lot of the early communities, they hadn't had candy in 5, 10, 20 years, and they were in tears in the candy aisle being able to have that emotional experience of having something.

Pretty simple concept, excellent execution. But it starts with a market that's already been proven, and it's been proven by a lot of established companies already investing a lot of money in that space. In my book, 12 Months to $1 Million, I argue that big companies cannot innovate as fast as small, nimble entrepreneurs.

People are saying, you know, well, Mars or Hershey's is just gonna copy what you're doing. But what these big companies can't replicate still to this day, and they scratch their heads trying to do it, is authenticity. They cannot replicate an authentic story of a reason of why a brand exists in the world, and it truly takes them years to launch one SKU.

Small startup entrepreneurs have the flexibility to be able to do things that have never been done before. Big companies cannot do that. That's why it makes more sense for the big companies to just buy up the small entrepreneurs. That is our secret advantage. Our advantage is that we can see the trends that are coming and how things could be a little bit different, and we have the flexibility to be able to move quickly, and do something that has never been done before. That's what Tara did with Candy. And as a result, she walked out with a 9-figure check. If you're early in your journey and you're still looking for your multimillion-dollar idea, it's always a good idea to look at doing something that is better for you. Take something that is being done in one specific way or has been done for many years and just do it in a way that's better for you. This is true in personal care. It's, I think, about to happen with cologne. It hap— it's true with food. It's true with vitamins. Anything that can be done in a slightly healthier, better-for-you way is almost always a good idea. Lesson number 2 is how you break into that market, because it is very difficult to just enter a market that is already dominated by really big players. You have to have a backroads way in, and this is where building a very small but passionate crowd is the magic formula for your way in. That's exactly what SmartSuite did. Tara did not try to run ads to grow Smart Sweets. She did not try to have a big national campaign in order to beat the big box retailers. Instead, she built up a list of about 500 people and nurtured them to become raving fans.

So I launched what was called the Smart Sweets Champion Program. Same thing, just seeing like who is showing up again and again excited, inviting them to the Smart Sweets Champion Program. And it was me just sending an email every week to them, literally just being like, hey, here's me in the office with my dog. Hope you have a great week. And then they were the ones that ended up being 500 people at first, then 1,000, then 3,000. We would send them products when we were developing it, when we launched on shelves.

That's your road into a really big market and how you can carve out your slice. You don't try to scale from day one. You start by building a little tiny passionate group and you leverage that to break into all of the distribution that is going to put you on the map and give you your 8 or 9-figure business. You can do that like Tara did, where you just manually reach out to people. You can do that by documenting your journey on Instagram or TikTok and sending people over to an email list. You can do it in a Facebook group. It doesn't matter so much how you do it. It matters that you build genuine relationships with your target customers and caring about them enough so that they will care about what you're trying to do in the world. That's your entry point for breaking into a saturated market. If lesson number 1 is going into a big market, but doing it differently. And lesson number 2 is building a community that cares about what you're trying to do. Lesson number 3 is charging enough to be able to do an awesome job. This is what trips up a lot of entrepreneurs. I bought a box of 8 of these sour gummies. It was $24. I didn't bat an eye at paying $24 for this. But if we compare this to Sour Patch Kids, Sour Patch Kids is about a 6th Of the price. That's the established market rate for sour gummies. It's like 1/6 the cost of SmartSweets because they're afraid to charge a premium and they're afraid to charge what they need to charge in order to just do a good job. Take out what you are gonna make from it. Even to do an excellent job, you usually have to charge a premium at the very beginning. The challenge is that most people will compare what they're trying to do to what every other company has done in the past. And you simply can't play that game. Let's go through a couple examples of companies who have done this well. When Magic Spoon launched their high protein cereal, some people thought it was absurd that they would charge 10 to 15 bucks for a box of cereal, and yet they've become a 9-figure company. How did they do that? They had a small passionate crowd that they were serving, and they knew that that person was willing to pay a premium. for an excellent product. Similarly, Groon's Gummies did the same thing. A bag of Groon's vitamins is like $65. Compare that to Flintstones vitamins. Flintstones vitamins are what, $8? I have no idea how much Flintstones vitamins cost. Both of them are vitamins. Both of them are things that parents give to their kids. One is $8, the other is $65, and yet it scaled and sold for over $1 billion in 3 years. So you can see the playbook kind of coming together. You enter a big market and do something different, build a small passionate crowd, and as a result of doing those 2 things, you can charge a premium. Not just a small 20% premium, but sometimes a 3 to 4x markup on what everybody else is doing because you're different enough to the target crowd that wants what you have to offer. That was the playbook that SmartSuite followed, and you'll see that play out in a bunch of different brands. So that's the playbook, but there's something else that brings all of this together, and maybe I should have led with this because it's probably the most important part. Tara credited her mindset to being the reason why all of this was possible.

What I know to be true is that you have to be able to see it and feel it for it to happen. So with Smart Sweets, to the world it looked like a girl recipe testing in my kitchen, but To me, I could see 5 years from now, I could see 10 years from now. And to me, SmartSweets already was the global leader in revolutionizing candy. It felt so real to me and like it had already happened. I was able to begin taking the conscious steps with such conviction.

And this is the stuff that you really can't teach, but it's the work that you got to do. If you don't believe that it is possible for you to accomplish what you set out to do, you are probably not going to surprise yourself. Tara knew that. And so she practiced working herself into the belief that she was going to build a $50 million plus company, and she did it in 3 years. And so part of the work of becoming successful is training yourself to believe that you can be. And that sounds so esoteric, and it sounds so philosophical, and so manifestation mumbo jumbo BS, but there is at least some truth to it. Because if you do not believe that it is possible for you, your brain will reject all things that would help you accomplish that. So part of the work, maybe the most important work, is training yourself to believe that what you want to accomplish can actually be done. These 3 points are the foundation of what create a great company: a big market with something different, a passionate community, and charging a premium so that you can do an excellent job. From there, the next part of the process is Funding the growth and assembling your team, and this is where Smart Suites did things better than almost anybody because Tara was very careful with how she funded this business, and she was even more careful with who she allowed on the team. This is the entrepreneurial magic that determines whether something is going to stall out at seven figures or it's going to grow to eight and nine figures. So let's break that down. If you're selling physical stuff, you will have to keep inventory, and this is the part of the business. That is the most capital intensive. Even if you're selling really expensive stuff that has high margins, you're going to have to place large inventory orders to get ahead of sales, especially when you're scaling as fast as Smart Sweets did. So Tara had to raise capital in order to fund the inventory orders, and almost every physical product entrepreneur will have to do that at some point. But there are multiple ways to fund the growth of a business. Tara decided that she wanted to keep as much equity as possible, for herself and for her employees. Therefore, she did not raise a ton of capital on an equity basis. She decided to fund the inventory with debt. Funding a company with debt can be risky. You've got to have a lot of confidence that your business is going to grow if you're going to use debt as aggressively as Smart Sweets did. But she wanted to keep as much equity as possible for herself and for her employees. So she used bank loans to be able to fund the inventory orders that were needed in order to get SmartSweets on the shelves of retail stores.

Parallel to that capital, I scaled the company primarily on debt financing. So I treated the banks as I would an investor. So like every quarter I was meeting with them, giving them an update on where they, where we were, keeping them really excited about our vision and what we were creating in the world. And so I was scaling a line of credit right alongside that. It was like $14 million by the time we exited.

She funded this inventory order with a line of credit, and a line of credit is usually backed by the business and/or the inventory that the business orders. So what you can do is you can get the commitment from the retail buyer and use that kind of like collateral to get the loan from the bank. This is a really smart way to fund the growth of a business with Without giving up capital control or putting your life savings at risk, that was a really smart move that Terra made in order to scale smart suites. There are many ways to fund the growth of the business. You can bring on investors. You can take on debt. You can do lines of credit. There's other ways to do it too. But if you don't have the first three parts of the formula in place first, then taking on debt or raising capital is just going to make you fail faster. The purpose of debt or the purpose of outside capital is to make a winning idea happen faster. Using a line of credit to fund the inventory growth frees up a lot of capital to be able to make other investments in the business. Most importantly, that goes into hiring a great team. And this is where Tara's intuition probably gave her an advantage. Tara hired a few people in the right order to be able to support the company's growth.

The very first hire, she was someone who was— had the ability to wear all the hats. Having someone who's willing to wear all the hats, I think, is so important. And those Those first hires, then for me it was a sales hire. So I was the one getting the relationships, but actually on the backend serving the relationships and following through with what that looked like. Our 4th hire, I sucked at numbers. I didn't even know a sum function existed on Excel. So, um, we're way too early to hire like a head of finance. And so we hired head of finance way earlier than we needed to. Same with the COO.

The first was a generalist that basically wears all of the hats. The second was someone in charge of sales. The third was someone overseeing finance. And then the fourth was a head of operations. That is a really good order to model if you're growing a business. Someone who can just take things off of your plate, someone who is in charge of sales to help you grow, then someone who is overseeing the numbers, and finally someone who is head of operations. That's an appropriate order of hires as your business grows. Those that will support a good foundation to get it to 8 or 9 figures. Now there's a tactical lesson to be learned about how SmartSweets launched their product for the first time, because they built a passionate community and they had strong margins, but they still needed a place to take the sale. Tara decided to go retail first.

SmartSweets was on the shelves of local retailers in Canada Okay, candy's an impulse buy, and so you want to buy candy online sometimes, but when you have a sweet tooth, you wanna get it right away. So that really informed the how accessible in the world, which was finding national partners.

But they didn't try to get into big box retail stores right out of the gate. Instead, what Tara did was she leveraged her small community to get into small retail stores, local retail stores, and once they were proven in there, they were able to get distribution in the bigger stores. A lot of entrepreneurs will look at all of these brands on the shelf and think, ah, that's what I gotta do. I gotta get lots of distribution in these big stores. But that's not the play. The play is to get into a small sales channel and prove that one out first. Then you leverage that success to get distribution in other bigger places. The takeaway here is that it makes the most sense to do one sales channel extremely well. For a lot of the people that I work with, that is Amazon or it's Shopify. Sometimes it's even Kickstarter. Most entrepreneurs are not gonna go from zero to retail shelves. Overnight, and Tara really didn't either. She went into retail stores, but it was niche retail stores that she could go to and build relationships with, and she did that with excellence because she had a community that would support her in her local retail stores. She was able to leverage that success to get more distribution. That's the play: you'll leverage the community that you have to be able to do one sales channel extremely well, and then you leverage that success to be able to get bigger distribution. There's a lot. There's a lot of business lessons that we can learn about building a community and getting into the right sales channels. But I think the most important thing that we can learn from the SmartSuite case study is that Tara set her mind on a big vision and she committed to it. You can have every single strategy and tactic in the world, but none of it matters if you don't believe it and you don't want it. Tara actually wanted this thing to be out into the world. She had an emotional reason for bringing it to life. After sitting down with her for a few hours I didn't leave with the assumption that Tara was particularly motivated by money. Money motivates all of us to some extent, but I don't think that was her primary driver. For a lot of entrepreneurs, that is our primary motivator, and that's totally fine. But you have to believe and actually care about what you are bringing to life if you're going to get the end result. First of all, I work with a lot of entrepreneurs and analyze a lot of case studies, both successes and failures. And I I am often challenged with excuses like, I don't have the money, I don't have the resources, I don't have the connections, I don't even have the right idea. And I think that Tara could have used any of those excuses to not start SmartSuite. She's an example, however, of somebody who just decided what she wanted to create and brought it to life despite all of those possible excuses. So the first lesson I think that we can take away from this case study is that your excuses are BS. Tara created excuses for her success, and I think that's why she was able to move forward so quickly. From a business perspective, here's what Smart Sweets did well. Number 1, they went into a giant market and they were just different enough to be able to carve out their slice of that really big pie. Number 2, they built a passionate but small raving fan base. The way they did this was manually reaching out to people and putting them onto an email list where she nurtured them and leveraged them to create connections to break into retail stores. Number 3, Tara funded the business with a line of credit. Now, there are many ways to fund a business. She decided to fund the inventory growth in a way that protected her control and her equity. Number 4, they went into one sales channel first, and in this case, it was local retail. Once they had that nailed, they leveraged that success to get into bigger distribution. And finally, she built a great team. A team that first took things off her plate and then specialized in the things that helped the company grow. That, with a great product and decent timing, took a 21-year-old first-time founder from zero to a 9-figure exit in just 4 years. If you want to build your version of SmartSuites, I help entrepreneurs create their idea, launch, get to the first 7 figures, and then prepare for a life-changing exit. And if you want to see our playbook for doing that and our best resources for getting you off the ground, you can download them for free at capitalism.com/startup. My name is Ryan Daniel Moran, and I help entrepreneurs build brands and prepare for a life-changing exit. And if that's the journey that you're on, then subscribe to the channel. I'd consider it a privilege to mentor you on your journey. Thank you for watching. I'll see you guys on the next episode. Take care.