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Taking Stock #3 | Interview with Melanie Goldsmith

Scaling a confectionery business from a single stall at a local food market to cracking the American market is no easy feat.

In this week’s Taking Stock vodcast, I chatted with Melanie Goldsmith, CEO of Smith & Sinclair and POLLEN, about her journey from getting her first big order for their edible alcoholic pastilles to scaling up and branching out into new categories such as CBD.

Follow Melanie on LinkedIn.

Listen to this podcast on Spotify

TRANSCRIPT OF INTERVIEW

Anil Stocker:

So hello everyone, and welcome to the MarketFinance podcast series called Taking Stock. I’m Anil Stocker. I founded our Fintech business MarketFinance back in 2011, and we deliver finance for ambitious business leaders and entrepreneurs. And one of the big highlights in my job is getting to know the variety of business owners who have used us for hearing their story. And we often used to invite these entrepreneurs to our office in Shoreditch on a Friday night for beers and to listen to their stories in person. But now with COVID, we have moved these online and we’re going to continue having great conversations and meeting great people. Hearing about the challenges that are facing, how they built their business, how they’re dealing with COVID, and much more.

So let’s get into the action. I’m very excited to have our guest today, Melanie Goldsmith, who is the founder of the boozy sweets company called Smith & Sinclair. I probably got that wrong in how she describes it, but that’s what it looks like to me. And we’re also going to be hearing about one of our new ventures, which is in the CBD space. So, Mel, welcome to the show. How are you?

Melanie Goldsmith:

I’m good. Thank you. And thanks for having me.

Anil Stocker:

And you’re sitting in New York, but we’ve met in London. Your story is great, you’ve really had a great journey from starting up. So before we get into your business, your two businesses, tell us a little bit, how did you get started on an entrepreneurial journey? How did you get started from the beginning?

Melanie Goldsmith:

So mine was very much an accidental start to entrepreneurialism. I think there’s a lot of stories out there of people who like side hustled from the age of 11, creating tuck shops in their school. And that was very much not me. I was too busy learning how to put on makeup, and having a really good time. I did, however, become a bit more entrepreneurial at uni. I was studying music in Cardiff. And I had an obsession with jazz, and it was a very poor jazz scene in Cardiff, considering there’s the Royal Welsh College of music there. So I started out a university focused jazz series of events, which went on to be a festival at the Hay Literary Festival. And I carried that on for two and a half years before graduating my master’s. I came back to London, tail end of the recession with no one paying for any level of music or theatre producers.

Melanie Goldsmith:

And got a job and PR, which was not for me. But whilst I was doing that job to stay sane, I started side hustling these board game nights, where the whole mission was to get adults to play and connect in a much more natural, organic environment than these sort of stagnated speed dating nights, or like you meet online and then you have to meet in a mutually beneficial environment to stay safe. And these were just about like, you had to know someone that had been to one previously. And they were bars all around East London.

Anil Stocker:

It was a dating night?

Melanie Goldsmith:

Yeah, but twisted so that people came and they didn’t just have a drink and have nothing to say. There was Guess Who, there was Battleships, there was Articulate and Pictionary. You could join a group game, do a solo game, preferably not solo because it was a dating night, but is what it is. And what we found is people came and they just bottle necked around the bar because as adults, we become so stagnated in social constructs. And I needed people to feel, what I would say, more socially lubricated. So my cofounder Emile, who was a chef at the time, created this twist on a classic cocktail and made it edible, so that when people came and they got given like the classic candy stripe bags, and they scavenged the area where we had bottles with just like tons of alcoholic gummies, basically, they looked like giant penny sweets and they were very boozy at the time. Not like a jello shot, not like slimy.

Anil Stocker:

How much booze were you injecting into it?

Melanie Goldsmith:

So at the time we were working with rum, whiskey and gin, and you’d think it was injecting because that’s a classic boozy sweet, but it wasn’t. We were actually reformulating it to be a layer, like a drink. So in the way that when you make a cocktail, you’ve got your spirit base, you’ve got your mixers, you’ve got your garnish. We were doing that just in a solid product. So we used vegan setting agents, which are pectin, which is the derivative of citrus fruits. And you mix the alcohol. It’s a patented recipe. It’s completely proprietary to us. And it allows us to retain the alcohol without burning it off, but not creating any sluggish texture to the gummy itself.

Anil Stocker:

Excellent. Wow. So that’s where the idea came from and you were using it in those dating nights. How did you then turn that into a business? So how did you start to get that off the ground and actually start doing more with that idea?

Melanie Goldsmith:

So we were doing these events. We both still had full time jobs and a couple of the people that worked in agencies, PR, whatever. And one of the women who came offered us a market store on Barrack Street Market, 20 quid a day, you have to be there for 12 hours. So we would drive into Central London at seven in the morning, set up this marquee in the middle of winter, dead freezing cold, and would hawk these alcoholic gummies, at a pound a pop, sandwiched between a fruit vendor and a sandwich guy in Central London. And we made about three grand. We built a website over that Christmas holiday. That’s the Christmas of 2013.

Anil Stocker:

Yes.

Melanie Goldsmith:

And two days after the website went live, we had this inquiry from Imbibed Live, which is the largest alcohol trade that happens at the Excel Center every year. And they wanted to use it for their marketing campaign that year. And they wanted 20,000 gummies.

Anil Stocker:

Wow. Wait, put that perspective, you sold how many gummies on your store?

Melanie Goldsmith:

Like a thousand.

Anil Stocker:

And they wanted 20,000?

Melanie Goldsmith:

So we were making them in my flat and you could make two, three hundred a day there without setting off the carbon monoxide alarm. So we got half the money up front. So we were like, okay, we can rent some spaces, except this is 2014 and the support for food and drink startups wasn’t what it is today. And it was very hard to rent kitchen space that was affordable. We ended up renting off synagogues kitchens. So we rented like a church, a school, a community building. They were all licensed food facilities and they didn’t use them after five o’clock. So it was a really convenient way of us getting like a six-hour stint and a bigger space where we could bring in a trolley and cure the product. There were a number of disasters…

Anil Stocker:

Wow. Did they know that you were making sweets alcoholic in those kitchens, or you didn’t tell them that detail?

Melanie Goldsmith:

No. They didn’t care. Not that think they’d have a problem with it. It’s not like we had child laborers working in the kitchen with us. But everything goes wrong in the beginning and the end, but we had to cure them at very specific temperatures. If we were working, we had a two week, it was a school holiday and it was a massive industrial school kitchen and they let us take it over for the two weeks school holiday, nonstop. So we got the bulk of our manufacturing done in that space in time. And I had dehumidifiers all around the space to make sure the moisture levels were stable for the gummies. And like half way through this holiday a cleaner came in overnight that we weren’t made aware of. And when we came in the next day, all of our gummies, 4,000 gummies, were melted because they turned off all the dehumidifiers in the middle of the night.

Anil Stocker:

Oh my God, that’s crazy.

Melanie Goldsmith:

So we drive to Costco and get four kilograms of rice and try and dehydrate all the gummies to stabilize them. We did get through that patch. We got the 20,000 out. We got paid. We sold some bits and bobs that we owned to make a bit more cash, which got us the ability to buy some packaging and some more equipment. We worked with Secret Cinema and different events companies in that first year. And I’ve actually got the attention of Harvey Nichols and Selfridges, where we launched at Christmas 2014. This is all off cashflow profitability. And then we got the attention John Lewis, and that was kind of scale up, manic time. We had to grow the team, so we raised a small seed round of 370,000 from private angels.

Melanie Goldsmith:

Moved into an army site where we had full 24-hour access to the production kitchen and a packing facility where we did all our own logistics. And were there for about a year and a half before then growing into a site in Bermondsey where there’s a huge sort of food and drink industry going on. Have a proper innovation lab, got a proper office, got some more people on the team and raised a series A of around two mil, again from a small VC, but two big angel backers. And it grew from there. The packaging got a bit of a glow up. We expanded the range outside of just being alcoholic gummies. Our mission was always to make adulting more fun. Our mission wasn’t to make alcoholic sweets. It just happened to be that something that’s really fun is sweets that make you tipsy.

Melanie Goldsmith:

And now we’ve expanded our portfolio into other really fun food and drink products. They’re just advocate for the experience of socializing and treating yourself and indulging in something that just tastes amazing. So we’ve got edible glitters that go into cocktails. We’ve got instant cocktail tablets that are effervescents that you just drop into a mixer to turn it into the perfect peach Bellini. And then we’ve also now got on mocktails because there’s a number of people who love the product, but are in a period of their life where they don’t want to be drinking. So that’s the full range of Smith & Sinclair.

Anil Stocker:

So it sounds like it was a real story of hustle and starting really small and incrementally trying to push the boundaries further and further. There must be times when you… What drove you in that period of time, that’s what I’m trying to get at? Because I’m sure you must’ve had bumps on the road and these things that didn’t go according to plan, but what kept you going and thinking that this could be bigger, trying to get a little bit more of that on that motivational side.

Melanie Goldsmith:

Yeah. Ambition is a funny one because you get addicted to it when you start getting those successes, even though they’re probably only 10% of the time, it’s a success in 90% of the time is failing. Those small successes are addictive and I’m infatuated by learning. I love to be in the deep end. I love to fight fire. I find a huge satisfaction in solving a problem and coming out the other end. I think my motivation is very heavily led by fear of failure, as much as it is an ego to create something that could be in everyone’s home in the world. That’s a brand that’s globally recognized for years to come. So I think anyone that starts a business with a strong mission, I wanted to make a brand that stood for something beyond just constantly having to be excusing yourself a purpose.

Melanie Goldsmith:

There was so many amazing brands that are doing amazing things for the environment and humanity, in general. And then there’s a lot of brands that are doing not so good stuff, but no one really focused on just a moment of a smile. And I think mental health is such a topic of conversation that’s rife, especially at the moment, with everything going on. And we just needed a brand that was fun. That’s such joy to gift, that’s such a joy to receive. And everything we do is thought through from an environmental perspective. All our packaging is recyclable, all our products are vegan, but it’s not about that. It’s about just that moment of fun.

Anil Stocker:

Yeah. Having that moment of having fun. Yeah. Capturing that in some sort of way and living in the moment. You’re a large part of the brand, right? Because the founder really almost is an extension of their character as well I’ve noticed speaking to a lot of entrepreneurs. Okay. So you’ve built this business. It’s been hard work. You go to your funding in, your series A. When did you start to think international and the United States or other markets. Told me about how you got approached by big company didn’t you? Over in the States?

Melanie Goldsmith:

Yeah. So when we did our series A, it was very much on the intent of exploring how we can grow globally. We’d had quite a few inquiries from Australia and America because the brand is really unique. There isn’t a single competitor out there who’s managed to retain alcohol in a gummy. And everything about the brand, like you said, it’s supposed to be this camp fun, inclusive, it’s like a mini festival. It’s pride in a box. It’s just supposed to be that on shelf and the product’s striking and it’s beautiful and it’s bright. And a lot of retail was approaching us because there was a gap in the market, but growing internationally is savage. And it isn’t as easy as just sort of putting products on a ship and getting it into a new dock. There are logistic complications that are regulation complications.

Melanie Goldsmith:

America is like 50 countries separately operating in one geographical territory. And it comes with a lot of costs. So once we raised the two mill, we were looking at what it would realistically take to be a success internationally and decided it was time to raise a more substantial sum of money. We were achieving around 120% growth year-on-year. And we really hit that scale point. So we wanted to do that big jump from a medium dollar brand or multimillion dollar brand. And to do that, we went out looking for 6 million in funding and had an acquisition offer from Tilray.

Anil Stocker:

Wow. So someone came and wanted to buy you? Wanted to buy you out?

Melanie Goldsmith:

Yeah. So the team who’d invested in the two million were heavily involved in Tilray and recognized…

Anil Stocker:

So Tilray is the name of this company. What do they do?

Melanie Goldsmith:

So then one of the four biggest cannabis companies, they’re on the New York Stock Exchange, they have their primary business in medical cannabis, but then they also own a company called Manitoba Harvest who are hemp food-based business. And their intention is to be the biggest legal cannabis brand in the world.

Anil Stocker:

Yes. Because it’s legal in certain States in the U.S., is that right?

Melanie Goldsmith:

Yeah. They’re operational in Canada though.

Anil Stocker:

Okay. So they came to you, they’re a cannabis company, why do they come to an alcoholic sweets company? What was the vision?

Melanie Goldsmith:

So they actually found out about us because in 2016, we did a bit of a stunt product around the U.S. election. And we would go through really bad cash flow month, quarter, and needed to bringing cash to pay payroll. It wasn’t necessarily like we were on a downward spiral. It’s just we’d hit really tight spot and thought it’d be fun to do something charitable that would also like help us out in a tight fix and build some funny noise. And being half American, when Trump got elected, I’m very vocal about the fact that that would not have been my choice. And we created a product called Trump Sucks, which were these suckers, these lollipops in the shape of Trump’s head. And they were orange and bitter in taste. And we were selling them for five pounds a pop. We did over a weekend. My friend did the video. It cost us a hundred pounds. My husband’s a sculptor so he made the mold and overnight when it went live, it just had instant, viral pickup. I’ve never seen anything like it. It had 4 million shares in 24 hours. And we ended up selling 20,000 pounds worth of these lollipops.

Anil Stocker:

That’s amazing.

Melanie Goldsmith:

There were four people making…

Anil Stocker:

And that’s what got you through that cashflow crunch. That’s a real hustle.

Melanie Goldsmith:

Yeah. We ended up donating all the profits to Planned Parenthood. So we didn’t profit off it as a political activity, but it really did like, yeah, the cash injection managed to keep us alive, which was great. Giving 6,000 pounds to charity was great. And when we were doing the fulfillment of these items, there was one order which stood out because one person had ordered a 300 lollipops. This is pre GDPR. And I Googled him, obviously, and got in touch with the guy.

Anil Stocker:

Why does he need 300 of them?

Melanie Goldsmith:

And was like, “Why do you need 300 Trump lollipops?” And it turns out that he was very impactful in the Hillary campaign. And he thought it was a very fun product to gift to a number of the people who were also involved in that campaign. And I happened to be going to New York the following week because my friend was opening a Broadway play. We met up for coffee. We got on really well and he was the person who then like really started investing. He financially invested, but he also got really interested in the innovation we’d created. We had all these products that were first to market and there was such lack in innovation from a product development standpoint in cannabis, I think it made sense to acquire us as an innovation opportunity and brand builders. We’ve been really successful in creating a brand that’s got a huge following, a really successful global clarity around it.

Melanie Goldsmith:

And it gave us a launch pad, once we got acquired, to launch a second brand under the umbrella of still making adulting more fun, but more focused on a younger audience that sort of gen Z target where the mission was to make and help people feel that kind of good. So rather than Smith & Sinclair, which is very focused on that, like a millennial audience where it’s like frivolity and they’re going through hen parties and housewarmings and birthdays and engagements, and you want to be celebrated in quite a, not materialistic, but like in a very physical way. Whereas that gen Z audience, they’re not necessarily having parties, they’re just trying to survive their three side hustles and trying to do it and feel good about it and not feel like they’re be medicated. And that’s where we came up the idea for a second brand POLLEN.

Anil Stocker:

Okay. So Smith & Sinclair was the alcoholic gummies and your new brand POLLEN, which you’ve been doing in conjunction with Tilray is a CBD. Is it supplements or is it also in gummies or what kind of format is it?

Melanie Goldsmith:

We’ve worked so hard to create the best tasting gummy on the market and we do have a gummy range of CBD. So you get three different flavours per pack. We have three different benefit skews. So we’ve got your power bank, which is an energy and focus building. We’ve got no pressure, which is all around boosting circulation, improving lethargy of the body, if you’ve been sitting down all day. And then we’ve got sooth you, which is more of a mindfulness decompressing range. Each of our skews has active ingredients that enhance the CBD. So in no pressure, you’ve got turmeric to increase blood circulation, in power bank you’ve got natural sources of cacao to create energy, in soothe you you’ve got honey and camomile. And in the UK, we also have drink drops, which are water soluble, they’re first market, kind of a replacement to squash, so that you can put them in your water to add a bit of natural flavour. There’s no sugar and you get a really high level of milligram dosage without the taste because we’re specialists in flavour. And we’ve developed all this technology around beta blockers. So you don’t get that terpene flavour  coming through. It’s constituted with really powerful flavour  matches.

Anil Stocker:

Excellent. So that’s a younger clientele in the UK as well. And the U.S.? You can sell this everywhere.

Melanie Goldsmith:

Yeah. There are some states which you can’t ship to that still haven’t regulated the retail of CBD, but we sell online to the states that do.

Anil Stocker:

And is CBD… Obviously we’re going to come to COVID, because we’d love to hear just what’s happening there, but are people buying more CBD products right now? Is there a greater anxiety in U.S. and UK and all over the world? Or do you see an increase in orders?

Melanie Goldsmith:

Yeah, we’ve seen a spike since the new year. Definitely. We haven’t invested too much into the exposure of the brand yet. We were looking at 2020 as our big year and with COVID, we’ve had to pull back on our marketing spend. So we don’t have that much brand awareness. We only launched it in November. That hasn’t been the legacy of Smith & Sinclair. So it’s obviously not selling, in comparison, it’s baby brand, but we’ve definitely seen a spike. I think the more you research around CBD, the more you can understand how it will work for you. It’s not a quick fix. It’s not instant. People will take one gummy and be like, “I didn’t feel anything.” It’s not supposed to feel like anything. It’s something that you have an endocannabinoid system. Everyone does.

Melanie Goldsmith:

So we actually produce cannabinoids. So CBD isn’t taking something extra ordinary from your body and putting it in. It is to boost in the same way you would vitamin D or B12. But it takes 14 days to integrate into your system. So you’ve got to keep a routine going for 14 days. And then you will, like, I personally have found a huge difference. We’ve had phenomenal testimonials from people who’ve enjoyed the brand and the products, from anything from improving sleep to reducing anxiety. We’ve had a beautiful testimonial most recently of how much it helps someone’s, one of the team members actually, child who suffers with autism. And how much has it improved their articulation of words, they’re behavioural challenges. So I think people like to call it placebo. It’s definitely not, but it is homeopathic.

Anil Stocker:

Wow. That’s really interesting. So you’ve got these two brands. Have you kept most of the team that were your original team? Have they all come with you into the bigger group now with Tilray?

Melanie Goldsmith:

Yeah. We actually didn’t have any one turn over during the acquisition. We have nineteen who work across Smith & Sinclair and POLLEN just to create efficiencies across both brands. As POLLEN grows, I’m sure we will need to split certain people off for certain roles, but we’re fortunate that our operations, sales, marketing departments can all be efficient across both brands at the moment. And, yeah, our longest team members have been with us for four and a half years. Our shortest team members have been with us, it would be America because we only launched her in September, so they’re our newest team. Probably a year.

Anil Stocker:

Yeah. Now we’ve got all this way without even talking about the effects of COVID really. So tell us then what happened when lockdown happened and how is it affecting your business or are you able to just continue as you were?

Melanie Goldsmith:

We’re fortunate that we have a parent company who is able to help us finance any cashflow dips that we’re experiencing. Being fully transparent, we are running around 25% to-date less than we thought we’d be at for year-to-date. We’ve taken a pretty chunky financial hit against our forecast. That’s predominantly down to retail. We’re in a lot of physical retail, independents, department stores who have also taken a huge financial hit bearing in mind, essential goods are the one thing keeping everyone alive right now. And I think due to the amount of people that are worried about their own personal finances, one of the first things to go are those frivolous items.

Melanie Goldsmith:

However, online we’ve seen a 20% increase against forecast because I think gifting is something that a lot of people are doing to showcase community and kindness and stay close to people. And we offer really good gifting with Smith & Sinclair. And like I said, POLLEN, if you’re searching CBD, we’ve got a really good SEM and press awareness for such a small brand. So that’s not necessarily suffered. It’s mainly the retail. And then we have a third part of the business that people aren’t necessarily aware of. That’s B2B innovation. So we work with other brands on creating first-market products and that’s also dropped off because a lot of that’s travel retail, which is obviously not thriving.

Anil Stocker:

Yes. Okay. So it sounds like different channels that working, obviously some are physically just not working because people can’t go and shop, but it sounds like you’re still staying on your vision. You think that regardless of how long this locked down is the category of CBD is going to be growing and you’re well positioned to build a great brand there. So I guess what’s the five-year vision or where do you see yourselves in five years? You’ve achieved a lot in the previous five years. Where are you headed towards?

Melanie Goldsmith:

It’s interesting because this year we were seen as quite a big tipping point. And I think what COVID will do is potentially set us back 18 months. As long as we continue up our energy and the team have been amazing at remaining motivated and coming up with creative solutions. We’ve moved a lot by our events to virtual events. We’ve got a lot of our community producing amazing content for POLLEN online. Over the next five years, my absolute ambition is to just grow the brands even further into mainstream retail. So to date, we’ve been quite selective in premiums, independents, department stores, and we want to be a grocery item.

Melanie Goldsmith:

It’s just not right for our product portfolio now. So we’ve used this time to innovate a lot. To really consider what’s going to help us come out the other end in a much bigger and explosive way, because to carve back the revenue we’re going to have lost during this time, you almost need to do like three steps forward rather than just the one we were planning initially. So our five-year plan is how do we get into grocery in a more essential way? How can we get POLLEN at a more affordable, accessible price points that people that are exploring out the back of this to help with their mental health can do it without investing $35? How can they invest five? And so that we can definitely introduce it to a wider audience so that in five years, both brands are household names.

Anil Stocker:

If people want to buy your products, where should they go? Where’s the best place?

Melanie Goldsmith:

So, you can get them from our website. Smith & Sinclair’s is smithandsinclair.com. POLLEN’s is withpollen.com. Follow our socials. We retail Smith & Sinclair across John Lewis. We’re in Harvey Nichols. With POLLEN, you can buy from Selfridges now. We just launched in Selfridges and we’re at the drug store. So whatever’s easiest.

Anil Stocker:

Good. And in taking stock in all the journey that you’ve told us today, if you could go back and give advice to the Mel before she started any entrepreneurial venture, what would that advice be?

Melanie Goldsmith:

It would probably be to not panic so much in the beginning. I think experience builds more confidence and patience. It’s a volatile journey. By no means, has it not been anything but a roller coaster. And there are a lot of lows and I would get, at the beginning, I’d get very overwhelmed by those lows. And I’m very grateful to my personal community who ensured that I could fight through them. But I think I’d go back and just sort of ask myself to take so much pressure off myself because you will always figure it out and letting yourself become emotionally overwhelmed doesn’t help.

Anil Stocker:

That’s correct. Yeah. Great advice. And I can empathize with that. It’s a roller coaster that. You got to make sure you don’t ride the road coaster. You got to level it out somehow because you can get really high, but there’s also lows and by levelling it out, you’re more durable and it’s more like you’re running a marathon, not a sprint.

Melanie Goldsmith:

Agreed.

Anil Stocker:

Great. Thank you, Mel. Take care.

Melanie Goldsmith:

Thank you for having me.

Anil Stocker:

And see you soon.

Melanie Goldsmith:

Thank you.

Anil Stocker View All

Co-Founder of MarketFinance

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