Carmel Hagen: Founder & CEO of Supernatural

Episode 469

In this episode, Carmel Hagen, Founder and CEO of Supernatural, shares her journey of disrupting the baking essentials industry with premium, plant-based and natural products. What started with coconut sugar and gradually expanded her product line to include natural food colors and sprinkles. Carmel emphasizes the importance of validation and iteration in building a successful brand. Carmel emphasizes the importance of validation and iteration in building a successful brand. She discusses the challenges of introducing natural alternatives in a market dominated by artificial ingredients. Carmel also highlights the value of partnerships with major brands and the power of storytelling to build a loyal community. Her advice to founders is powerful with a lot of great words of wisdom. Listen now on this episode of #TheKaraGoldinShow.

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Transcript

Kara Goldin 0:00
I am unwilling to give up that I will start over from scratch as many times as it takes to get where I want to be I want to be, you just want to make sure you will get knocked down. But just make sure you don’t get knocked down knocked out. So your only choice should be go focus on what you can control control control. Hi, everyone and welcome to the Kara Goldin show. Join me each week for inspiring conversations with some of the world’s greatest leaders. We’ll talk with founders, entrepreneurs, CEOs, and really some of the most interesting people of our time. Can’t wait to get started. Let’s go. Let’s go. Hi, everyone. And welcome back to the Kara Goldin show. We’re so excited to have our next guest here. We have Carmel Hagan who is the founder and CEO of supernatural. And you may be familiar with supernatural, we’ll get into some of their partnerships that they have that are very, very exciting. But supernatural is a premium plant based modern baking essentials brand making food colors, vegan sprinkles, and allergy friendly rainbow chocolate chips, and they’re absolutely delicious. They make those yummy cookies and cupcakes and all the other great things that you’re making at home extra extra yummy. And also doing it in a way that is disrupting an industry that is maybe not surprisingly, not so great for you. But I was very, very interested as I was researching the company overall. So they’re the only locally made and women led baking brand to whose colorful products are made entirely from natural and plant based sources. And she is a Tory Burch fellow, super, super fun. And also a former former child Pillsbury Bake Off winner, I, that would have been so much fun. I’m sure I want to hear all about that. And they’re setting a new industry standard for the baking essentials category that is very daring to say the least. And also just really killing it. So I’m very, very excited to have you here today. Carmel. So welcome.

Carmel Hagen 2:25
Thank you. I’m so excited to hear I’m such a fan. And it is a thrill to have another girl that’s a tech startup realtor and CPG. Founder. Thanks for having me. Yeah,

Kara Goldin 2:37
absolutely. So it’s such an interesting story. I mean, obviously, every time I look at that section in the store that has the writing frosting and the sprinkles, it’s like that, it’s going to put that extra, you know, beauty on whatever you’re creating. But do you really want that on there. And I knew solve that problem. So tell me the story behind it. Obviously, you hadn’t been in this industry. So what gave you the idea to go and do this.

Carmel Hagen 3:10
So I was in tech for about a decade, the idea was always to spend a bunch of time in startups, I come from a startup family, my dad was a serial entrepreneur. And the idea was, you know, get your MBA in the real world, so to speak, climb the ladder as fast as you can a tech startup and then go start a tech startup. And after a decade, I just could not fathom starting a tech startup I was craving like every part of my being was craving real atoms and less binary, you know. So of course, being like an entrepreneurial type, instead of joining someone else’s food startup, which would have been a great way to learn the industry, I decided to order you know, like a couple pallets of coconut sugar myself and bring them over from Indonesia. So I just made a big leap, I decided I was going to start with coconut sugar, which is a far cry from where we landed. But the story is that like passionate Baker my whole life and was so impressed by coconut sugars ability to sort of slip into all these traditional recipes without major recipe modifications. Like when you use honey, you have to change everything. use maple syrup, you have to change everything in coconut sugar. I didn’t have to change anything. It made a beautiful end product and seemed like nobody knew about it. So coming out a tech. I was like, You know what, let’s just start with coconut sugar if I can do a good job giving this a brand that makes it approachable and understood why people rather than sort of like the Paleo Ultra, kind of healthy audience that had previously been a fan of it. Then from that point on, I’ll see if this the rest of this role did really for me.

Kara Goldin 4:51
So were you a baker, or like what would you were you a chef? I mean, had you been classically trained to do any of this?

Carmel Hagen 5:00
Oh, God knows. So I want you know, so many people that have a passionate hobby as long as they’re curious enough, you do get to a point of I am in no way professional, but I could produce a professional level product inside the kitchen, that very narrow realm. So I think I was at that level with bacon, you know, I had sort of moved away from cookies gotten into things that were a little bit more technical, and just really enjoying the process. And of course, coming out of tech, also just this, the instant. And this has been something that I think, still is so much part of why supernatural exists, but but the pleasure of having an idea that that hours later, instead of years, whatever, later is a real thing. I think always for me, that ability to create something with my hands with my mind and bring it into the railroad is always such a reward. So that’s, uh, yeah, I am not I had no business doing anything that I was doing, ever. Oh, like, starting that company, no business at all. But we did it. And it did. Alright, we got into Whole Foods. After six months there, I still felt incredibly uncomfortable, like, oh my god, that first year of starting a food company. What an uncomfortable year. That was, it was by far the hardest. My I was so nervous all that I still not like be like I drank from the gutter, though decisive. And that year, I did not, you know, it was terrifying. But by the end of it, I knew not only that, it’s what I really wanted to be doing with a serious amount of my time. But that I knew exactly where the biggest problem was in that aisle. And I was gonna go solve that. And that was the decorative segment.

Kara Goldin 6:50
I love it. So before you got into Whole Foods, I would imagine you had a business plan of some sort. And what were the first, what was the first skill or first skews that you decided you needed to kind of master before you can actually get it into some place like Whole Foods.

Carmel Hagen 7:10
So before we even got to the point where we were confident, hitching it to a store, we have to really validate. I’m sure you know, a lot of people listening to this, I’m sure you know that when you used to go into a natural grocery store, there was no decorative section. And if there was anything, you know, if there was a sprinkle, it was very sad. Like it just looked like a saddled couch. And if there was a set of food colors, you take them home and everything would be brown or everything would be pale. So the obvious opportunity that we saw, which was to build out the decorative category for the natural baking aisle, was also kind of tempered by this scary knowledge that like, Wait, it looks like there’s a lot of evidence that maybe this doesn’t work, because nobody else has been able to do it. It doesn’t even like does it not exist? Because no one’s taken that opportunity? Or does it not exist? Because there is no opportunity. So the first step for me in my home kitchen, which was so fun. And one of my favorite memories for this whole process of building supernatural was collecting almost 100 different samples of natural food color from all of these different regulated color providers and testing them on my own for doesn’t work in eggs. Does it work in the oven? What happens if it’s getting exposed to heat? What happens if it’s getting exposed to ask what’s happening? We have all these different test cases that a choleric, which can go into anything, you know, it’s not like you’re making baking mix, going to make them often no matter what, like a coloring could go into a million different things, including, by the way weirdly, like kids bathtubs, you know, like kids put color in their bathtub. So like. So we really just tried to test every use case that we could. And I think through that, that’s when I really was able to say this hasn’t happened yet, because it’s an innovation problem, because no one’s done it the right way. Because nobody really understands which ones to give to customers yet. And so that’s what I had to figure out on my own before I even went there. And then once we realized that that’s when I said okay, let’s launch with a really funky crazy sprinkle that is not just like a boring pink sprinkle in a jar. Let’s show everybody just how far natural can gum and then let’s do with natural food coloring product. So it’s a very small we launched with a very small little capsule at our Northeast Whole Foods in New York City, the Northeast region. That’s

Kara Goldin 9:42
awesome. And so so just that you just had that one SKU or

Carmel Hagen 9:47
so we launched a natural food coloring said which was the same one that we have today. It’s one of the top selling natural food colors on Amazon. So it’s like a four pack of color powders. And then we launched with it Think it was to sprinkle the star Betty. And then there was one star fatty, which is sort of the the, our, our baby our firstborn, it was a mix of many different colors of stars, open stars, closed stars and the little dot. And then we launched a more basic sprinkle that was called White sequins just to see if people kind of like one and we didn’t know if maybe they wanted that more boring one because all you ever found at the grocery stores was the boring ones. And so I was like, well, maybe that’s what people want. It’s just me over here wanting these crazy confetti shapes. So we tested both and guess what the the white one didn’t last.

Kara Goldin 10:35
That didn’t last I was gonna ask you were there any things in the initial phase that that sort of didn’t fly? It’s it’s interesting. We have many things when we were launching hands, one of them and it actually lasted probably longer than we should have allowed it to last but cucumber, we found that cucumber you know you either it’s very polarizing. You either really love cucumber water, or you hate it. And we would have hysterical stories from so from it actually, is really funny from all from the East Coast, not from the West Coast. Typically New Yorkers, were tell us like, we really liked your product, it’s great. But were one email that was shared with us that told us that he was offended by the fact that there was cucumber in the water, and each slick couldn’t get past it. And, you know, he was he was like, I don’t care what the people in LA want. But I Oh, ever want to see it. And he was just, and I just used to laugh at those letters. Because I just thought anybody were actually take the time to even even if we’re not doing exactly what he wants us to do. I mean, that’s a really powerful thing. And did you have you ever gotten an email? Maybe not a cucumber? One, but have you ever gotten an email like that, that you’re just you know, you’re you’re not shrill on one side, but then you’re also like, wow, he loves what we’re doing. And we just have to, you know, tweak something.

Carmel Hagen 12:14
You know, first of all, I think it’s so funny that the New Yorkers were like, hell no, on relax. Like, that is not for me. That that sort of vibes with what with what it’s true. But we get you know, we, we get interesting pieces of data and feedback all the time, like Amazon comments are my favorite place to go and read. And just like you said, yeah, sometimes they are. Theirs so much passionate in such good direction, and sometimes that the different kinds of passion that’s maybe not as useful, and yet it’s still driven by something. So yeah, yeah. So yeah, long winded. But absolutely, we get that.

Kara Goldin 12:57
Well, that’s stuff I always share with entrepreneurs too, especially people that haven’t launched their product yet, because it’s not perfect. It’s, you’re going to do some sort of change, right after you launch, whether it’s, you’re gonna kill a SKU, you’re gonna change packaging, we’ve had many stories of people, you know, thinking that their product packaging was perfect when at launch, then we have a story around the fact that we launched with clear labels, I wanted the entire product to be clear, and what we couldn’t control with the lighting and stores, or who were going to be sitting next to on the shelf, and it would just get lost. And so that’s when we went to the white label, and we 10x Star sales overnight, just by going to a white, more vibrant labels. So it’s lots of, you know, stories like that. But it the, you know, the lesson learned, I guess, is that you really, it will never be perfect. And the best entrepreneurs are constantly iterating. And what would you say to that? Absolutely,

Carmel Hagen 14:04
I mean, every decision for me comes down to context, you can never make the best decision unless you have the best context and launching something new, you will never have perfect context, you can do a great job, creating a thesis and creating an iteration based on your thesis, you know, kind of just like agile development in tech. And then you need to keep your ear to the ground and know that whatever you learn is going to make something better. You know, I think there’s sort of this pressure to do something perfect coming right out of the gate. And the pressure should only be to do something good and researched and sort of sound coming out of the gate with awareness that the research process is gonna happen every day of your life. You know, you’re going to start in natural and that’s one type of research then you’re going to go to conventional. That’s another type of research. You’re going to hop on over to big box that’s another kind of consumer have different kinds of contacts. And all of these data’s that will feed into what you need to be this year. And the year after that, and the year after that, you know, there’s no such thing as perfect. There is such thing as good. I

Kara Goldin 15:12
totally agree. So, do you feel like in the, in the industry as a whole the baking essentials industry that is that? Are most people? Have they moved over to natural colors? Or are we still kind of in that artificial? You know, there’s there’s certainly candy that’s out there that has not moved at all. But do you feel like there are a lot of stores are kind of putting that pressure on? Or are they feeling like consumers? You know, want that? Are they aware? I guess? And, you know, obviously the consumers that are coming over to you are, but how do you get people to be aware? And I guess sort of a second question is what is in a lot of those sprinkles that are non supernatural, that are questionable.

Carmel Hagen 16:11
Oh, man. Okay, so there’s so many interesting things to answer with. So that, too, there’s couple questions in there. So I guess let’s start with, you know, the conventional decorative that so the the set that you find, like let’s say you go to Safeway, and you actually see like a good, you know, probably six square feet dedicated to sprinkles and decorative frostings, which are kind of the squeezy, colorful ones, and even like little sugar shapes, and icing gels. So those are the same products that have been on those shelves for about 30 to 40 years. And all of those products, the ingredients within them, are the ones that were sort of approved also in the 60s and 70s. So like, it’s a very, it’s an incredibly old that that has not been prodded with nearly as much development as any other category in the grocery store. And, you know, consumers are actually very aware about that they’ll list the consumer will this corn syrup, they’ll this artificial colors that will list artificial preservatives, and the top five of things they want to avoid, like this is Nielsen, this is an everyday person, it’s not like a natural shopper. So people really do have a lot of generalized awareness that these things are bad for them. However, within the banking aisle itself, what we found up until pretty recently was that it’s, it’s not just the bank account, there are categories inside grocery stores that are just sort of the part inside of an aisle that the buyer wants to spend the least amount of time thinking about, because it’s, it’s, you know, it’s just it’s kind of a sleepy area. And they’re not, the industry is not giving it a lot of pressure, they’re not giving it a lot of pressure, it sort of has a good, a good foundation for just data as well, like that’s sort of like why it is what it is and why it’s continuing that way. And decorative has been one of those areas. So in natural, there has been no pressure to revise it, because there hasn’t been one, right like it never existed, they have their planogram filled up of other stuff, there’s plenty of other things to put there. And then over in conventional, there was no alternative. You know, up until supernatural started, there was less than 1% of all of the decorative products in the world even had a natural alternative. So like there wasn’t even a market for these things. So we have had a really interesting First, I would say five years, we kind of avoided retail, we were very soft in retail because it was such a challenging pitch. Because there wasn’t a precedent. There wasn’t they’re not getting pressure from the top to do their sprinkles that there’s like plenty going on and flour and sugar during the pandemic like don’t worry, we need to make more space for all that stuff anyway. And then what we would do is instead we’d say we are we know that every day is not where you’re going to be doing your trial. So let’s look at holiday. And so we started to build a really significant in our seasonal business as our first big retail push, while simultaneously investing a ton into Amazon, to sort of build up brand awareness and start to find out in our own data back way whether our products were resonating with regular customers, the Amazon customers, everybody, you know, it’s not just natural, it’s not converted to everybody. And more recently, what has been happening is that as California has banned red dye number three, and then New York and December followed suit with a ban on not just red dye number three, but a number of other things that are commonly found in those products as well. The buyers now, you know, everyone from William Sonoma to just like people in the middle of America, they have to start looking at these things because we 2027 They have to have all of these things out of their set and red dye number three is just like in a briefing in the decorative set. So we kind of waited for a moment, we’re waiting for it, we waited for a moment, we have an amazing moment. And what we’re seeing sort of more on the consumer side is, you know, for example, on Amazon last year, just the organic searches for natural sprinkles, it was up 180%. So that’s not, that’s not ad batch searches, like these are just consumer searches. So more and more people looking for this as the awareness increases.

Kara Goldin 20:28
And so when you think about, like the Amazon consumer, and I know you also recently went into sprouts, that’s amazing. I mean, you’re growing in all different retail locations. You’ve also got partnerships with major brands like milk bar, which I’m sure many people have heard of. So can you share more about those kinds of opportunities? How do you see the brand, obviously, you’re very omni channel, but it’s also you’re an add on to actually help other brands really speak to, you know, what they want to share?

Carmel Hagen 21:06
Yeah, so it’s been part of our day one, we knew that most people have sprinkles in their pantry. But most people are encountering sprinkles on a regular basis at their favorite coffee shop, where they’re encountering them on their protein bar on a cookie. So the way that we’ve modeled supernatural has always been, we need to build towards foodservice we need to slowly put the groundwork in for foodservice. And that was one of the big steps that we were finally able to make a couple years ago, initially, we had to manufacture overseas because no sprinkle manufacturers in America. Number one really had the capabilities to do what we wanted to do with natural sprinkles. But number two, Mo cues are so insane to get into this business. Sprinkle manufacturing, especially if you want to make a sprinkle that has multiple shapes in it, it is so prohibitive to make something super cute until you can purchase like 10s of 1000s of pounds of sprinkle. So we were manufacturing overseas, where the MOQ is we’re lower. finally were able to move it to America because we were big enough. And at that point, we were in a good price, a good price position to open up foodservice and so yeah, we with people like milk bar also with another one that fewer people know about Dr. Breakers, which is a great brand grows in lots of kids food, we were able to use some innovation that we did in natural colors to bring to them natural frostings that are sorry, natural sprinkles that for the first time we’re maintaining their color inside their natural products, which has always been this huge struggle and continues to be you know, we didn’t sell everything. It can continue to be a big struggle. But we yeah, we launched a sprinkle that has just been crushing it for people like Dr. Kriegers and PROMIX and milkbar. And a large handful of smaller ice cream shops and bakeries around America that are just looking to get away from nasty sprinkle. I

Kara Goldin 23:04
love it. So you were a Tory Burch fellow, can you share more about what what that means? How did that get developed? What did you learn from being a part of that?

Carmel Hagen 23:15
Absolutely. So Tory Burch is an incredible entrepreneur. And, you know, I think we know that from the outside. And then when you go on the inside and really see how that company has run. It’s even more just like flooring, but she has always wanted to launch a foundation as part of her. I guess every entrepreneur, you know, there’s things we want to do that achieve that sort of visible success. And then there’s the thing in our heart that makes us feel like we really succeeded, according to what, what is most important to us. So for supernatural, it’s very much brand for me building an incredible brand being a product incredible product. Traver James from has all those things and more, but she had in her heart that she really wanted to help women, women entrepreneurs, and in a way that was not small in a way that was huge. Like she has a huge vision for helping female entrepreneurs and I think she’s just getting started. While I was in one of the first classes of the for the Tory Burch foundation, I think it was the second class. And at that time, there were only 10 entrepreneurs picked every year. And I guess very similar to other incubator models, you know, we spent a lot of time together we got a lot of incredible one on one coaching from people in her network. And I think most importantly, right like we formed friendships. So to my my best food babes. Pooja who started malai ice cream, and then Sachi who started tea drops or we’re both in my class at Tory Burch and we continue to be great friends.

Kara Goldin 24:55
That’s awesome. I think all of those networks are is amazing for that reason. So I was a part of Eli’s network that winning. And I know I still have so many friends from that group, as well. So thinking about your entrepreneurial journey, what’s been the best part? Probably, you know, meeting these different creators, right, that are doing things in different industries. But what else what’s been so great for you and very fulfilling for you?

Carmel Hagen 25:30
I think what it was still such a surprise to me is, you know, when your 20s My first decade, I think professionally, were very productive, and you know, you work like crazy, but also they were a little bit emotionally tumultuous, like I found inside the company that I was then I felt sometimes disconnected to the vision. I felt like I personally didn’t know where I was spending my time building what we were building you, there’s so many reasons in your 20s while you’re going through all that stuff anyway. But I did not expect that building my own startup, you know, so much of startup lore is actually about how much of a yo yo it is. And while I’m not saying that there’s, there’s ever a straight line to where we’re going. And of course, there are great times and less great times in Supernaturals history. But for me, the fact that every problem has been sort of my own problem to solve has been a like deeply soothing influence. Anytime that something’s going wrong. I have the power to fix it anytime there’s something that needs to be done better. If I’m not doing it, you know, who is and I think in other companies, just the frustration of not being able something’s not my specialty. And yet, I wish it would, of course, in my 20 year old Huber’s wish it was done another way. But I couldn’t I didn’t have any power to change it. And I think it’s just been such a surprising thing about entrepreneurship, for me is just how emotionally even killed I have been inside the entire growing jerky like never would have expected that and didn’t expect that.

Kara Goldin 27:10
Yeah. I mean, that’s, that’s amazing. It’s surprising, because so many entrepreneurs say it’s like this, you know, peak and valley that goes on, and it’s unpredictable. And it’s a little chaotic versus their previous. So that’s, that is great to hear. So what strategies have you deployed to really help people get to know supernatural? And, and, you know, obviously, buying ads on Amazon or on Facebook seems to be one way to do it. But you’re a small company bootstrapped for the most part today. How do you build a strong and loyal community that really knows what you’re all about? And purchase your product?

Carmel Hagen 28:02
That is, yeah, so I would say, you know, supernatural our secret weapon, which is not something that every CPG brand can do, because of the rates and how hard it is to run a profitable business on Amazon. But I think I brought something over again, from my tech background, which is just, I could invest a ton of money in my own DTC presence, being a storyteller there and pulling people into my own storytelling environment. And flash, or I can take advantage of the places that are in this for me to do that where people already are. And they might help us step. And so I think our secret weapon has really been to use Amazon, every potential storytelling component that we can use on Amazon, strategically. And then of course, also back it with advertising break some people there that might not have landed there otherwise, but I know one a grocery store shelf, I only have especially with sprinkles, right? Like, I might have eight inches to tell my story. And on Amazon, you know, and it’s one candle and who knows if the merchandiser put your product like facing the right direction, who even knows if you’re in stock, and on Amazon, I have a number of clicks that are all happening before people even start to scroll where I can say the most important things. And I can share exactly what it is that we’re about and why you should care. There’s no way I can do that on a retail shelf. And at some point people already know you and you don’t need to and you’re just tearing through the promise and exciting them in other ways with new products and so forth but for supernatural it’s absolutely going to meet these people that are organically starting to search for better options in there. So much of it is kids you know kid the parents of small children looking for die afraid And to be able to speak to them in for free, you know, I can tell the story some of a lot of them are converting a lot of them aren’t, but they’re still hearing the story if they land on that page.

Kara Goldin 30:11
Definitely. I mean, I feel like when you’re doing something unique to an industry to it, you need to, and I certainly know this with within its calendar too, especially when we started the company in 2005. It was no one was doing and unsweetened flavored water. But unfortunately, when you’re the only one they’re doing it, or the largest one, they’re doing it, you have to do all the education around it and storytelling, and it’s, it’s really, it, it takes much longer than we ever thought. Plus, it’s just, it’s a lot above and beyond your own company, for sure. So last question, What’s the best advice that maybe you’ve heard? Or you would give to founders who are thinking, Okay, I’ve got this great idea. Now what? And should they do it? Should they do it? I’m sure you’ve been asked this a million times, like, you know, people are like, Wait, how did you? How did you become fearless and decide to just go off and do this? What advice would you give someone?

Carmel Hagen 31:18
So I was given someone I asked that question of someone before I started. And so and what he said was very obvious. It was one of those Zen answers, we were just like, okay, and then also something that I think is more of a my twist on it. But I had been given the like incredible opportunity to in interview Seth Godin, who is like, of course, the master of turning every answer into like one word. And I asked him that exact question. And what he said was dark. He just said, start, you know, like, just if you can just start and then the part that I added is the one foot in front of the other every day, that is actually the entrepreneurial journey, like starting is great. And failing fast as even is great to like, Don’t ever be worried if you fail fast, like God bless. But the other part is just, you will spend years, years, just one step in front of the other. It’s not and not only, like, everyone’s like to take a wild jump, but really just the grind and the ability to keep your nose down. And just work every day. Just work every day. And I noticed the same thing. You know, in tech startups where Why are some people winning? Why are some people not winning? When that product over there was actually better. And a lot of times, it does, of course you want it all. But a lot of times it also just comes down to the who works the hardest and the smartest, and not necessarily even the longest, but just keep going the start and keep

Kara Goldin 33:01
it cool, great wisdom for sure. And lessons. So Carmel Hagan, founder and CEO of supernatural, thank you so much. We’ll have all the info in the show notes. Really appreciate your time, and all of your great wisdom that you’ve given us

Carmel Hagen 33:17
being here. Thank you so much for having me.

Kara Goldin 33:19
Thank you. Thanks again for listening to the Kara Goldin show. If you would, please give us a review. And feel free to share this podcast with others who would benefit and of course, feel free to subscribe so you don’t miss a single episode of our podcast. Just a reminder that I can be found on all platforms at Kara Goldin. I would love to hear from you too, so feel free to DM me. And if you want to hear more about my journey, I hope you will have a listen or pick up a copy of my Wall Street Journal, best selling book undaunted, where I share more about my journey including founding and building hint. We are here every Monday, Wednesday and Friday. Thanks for listening and good bye for now.

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