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October 21, 2021

Sabir x Gabi & Greg Part 2

Part 1: The Magic Spoon Journey with Gabi & Greg: $100,000 Expert Insights

The Lessons Learned From Magic Spoon

Magic Spoon has been on an incredible journey over the last year and a half.

It has inspired a new industry, provided thousands of children and adults with a healthier breakfast option, and made its owners two of the most influential figures in the health food sector.

They clearly have a lot to teach aspiring entrepreneurs and business owners. During my discussion with Gabi, he spoke about his journey and highlighted some of the key influences and challenges along the way.

You can hear his story in the video attached above. In this guide, however, I will go over the points in a little more detail and highlight them in an advisory way, hopefully helping you to launch or grow your e-commerce business.

1. How To Create A Unique Business Idea

The average person thinks that being successful is about having a completely original idea.

It’s a belief that extends to all areas of business and something that can even be seen in the entertainment industry.

Take a look at the reviews of the latest Box Office releases, sort by the “most negative”, and you’ll see a deluge of complaints saying that the film was derivative, unoriginal, and did nothing new.

And we’ve all heard the conversations that non-business owners have about shows like Shark Tank:

“I have an idea {insert original but incredibly stupid idea} and think I should go on Shark Tank. I could get millions.”

It makes sense, as everyone wants to produce the next Avatar or launch the next iPhone.

But we live in a vast world populated by over 7.5 billion people. Every year, over 800 films make it to US cinemas, and countless thousands are released on-demand or through independent platforms.

Furthermore, official statistics suggest that over half a million businesses are launched per annum.

Do you really think that all of those films and businesses are trying to be unique? Do they even need to be? Why create the next Donnie Darko or Memento, when every new superhero epic breaks Box Office records? Why reinvent the wheel, when most consumers are happy with the one that already exists?

Generally, there are three types of business ideas, and only one of these covers 100% new and original concepts. The vast majority of businesses fall into one of these two categories:

A New Niche In An Existing Industry

This is arguably the most effective category, the one that offers the most promise.

You take an existing industry and carve out your own niche. Previously, I mentioned the iPhone as an example of a completely new and original product, as that’s how many consumers see it.

In truth, the iPhone just combined elements of products that already existed and used these to create its own niche.

On the one hand, it’s a revolutionary smart device. On the other, it’s a touchscreen, high-powered phone that borrowed existing ideas from devices like the Blackberry and PalmPilot. More importantly, as these markets were on the rise and the demand for Blackberries was at its peak, Apple knew that customers would be receptive.

It’s a concept that Greg and Gabi know all too well as it’s something they have done with both of their businesses. They weren’t the first to launch a series of great tasting bars that were low in sugar and high in protein, but they were the first to use cricket protein.

They carved a new niche in an existing market, and they did the same later on with Magic Spoon, creating cereals that tasted great but were actually healthy.

When you adopt this approach, you have all of the benefits provided by originality (including the hype and publicity that can be generated) but you’re also tapping into an existing market, one with a proven history of sales, and this makes life easier for your investors and your marketing team.

A Proven Concept With A Twist

Many of the most successful businesses don’t do anything new or different, they just do it better than everyone else.

The majority of modern entrepreneurs crave the guarantees provided by a successful industry and are just looking for their slice of the pie.

They’re essentially walking into a crowded room and saying to existing customers, “Look at me”.

How they get their customers to focus on them is the defining part, and it could be everything from lower prices to more attractive branding and better customer service.

The supplement industry is a great example of this. Everyone has heard of creatine and whey protein, and everyone who wants to use these products already has a trusted supplier, but that doesn’t stop new brands from entering the scene, nor does it stop them from succeeding.

They don’t necessarily offer anything else, they just utilize the power of marketing to push a unique selling point, whether that’s sustainability, quality, or a carefully worded brand story.

Make Sure There Is Demand

Rather than focusing on how original your idea is or how original you can make it, what you should be asking yourself is whether or not the demand is there.

Greg and Gabi didn’t do that initial market research when they established ExoProtein. If they had done so, they would have realized just how disgusted US consumers were with the idea of eating cricket protein and that there was no existing supply chain for them to use.

In the end, it worked out for them, but only because they made it work, and it wasn’t easy, as there were a lot of things to consider and a lot of problems to overcome.

In our interview, Greg talks about how difficult this process was, noting that in addition to creating a supply chain, they had to change consumer tastes and convince them that this product was something they should be interested in.

That’s not something that the average first-time business owner can contend with.

2. Keep It Simple

Before launching Magic Spoon, Greg and Gabi decided that they wanted to do something that was simpler. With ExoProtein, they weren’t just manufacturing a product from scratch, they were creating the supply chain and convincing consumers.

It wasn’t a road they wanted to take more than once.

Cereal seemed like the perfect fit. The average child eats 100 bowls of cereal a day and it’s a staple for many adults as well.

Breakfast is one of the few meals that we ritualize. We tend not to eat the same thing for lunch and dinner, but more often than not, we eat the same one or two meals for breakfast.

In addition, Greg and Gabi knew they could source the ingredients (without building a supply chain) and create a quality product range that was scalable.

In many ways, it was a perfect idea, combining a simple product with a readymade supply chain, and a huge market.

Many business owners, particularly those taking their first steps, lose track of the simple things, and try to overcomplicate everything from day one.

Greg and Gabi made the same mistake with ExoProtein, and while they made it work and turned their business into a successful launching pad, they are the exception. The more complicated the business is, the more obstacles you will face.

A complicated business may require more capital, take more of your time, and leave you with many more stressful situations to deal with.

One of the problems that startups face is that they compare themselves to bigger and more established businesses. They look at their product line in comparison to their rival’s product line, and they think about industry leaders when considering their marketing efforts.

But a lemonade stand shouldn’t compare itself to Coca-Cola; an independent bookstore shouldn’t compare itself to Amazon. And even if they do, they should focus on how those companies got their start in this industry and not where they are now.

3. Remember That You Make The Name, Not The Other Way Around

The naming process is always troublesome, especially if you have multiple owners. You think you have a great name, and your partner practically laughs in your face; they have a name they are committed to, and you think it’s terrible.

This process is incredibly important as it connects to your brand story and to your future marketing, but it’s often the business that makes the name and not the other way around.

Think about the names of some of the biggest businesses in the world right now. If you approached your business partner with the idea of naming your technology company after a fruit, they’d probably think you were insane, but it worked for Apple. And where is the logic in naming a book store after the largest rainforest in the world?

Out of context, these brand names sound ridiculous, but marketing makes them acceptable and takes the absurdity away.

Bands are a great example of this, as the names are often concocted by teenage band members who get together in high school, know nothing about PR, and have their judgments clouded by youth.

When you hear the name “The Beach Boys”, you don’t see it as an incredibly cringy and uninspired name, even though it really should be.

The same applies to “The Doors” and “The Police”. Forget about the songs, the imagery, the marketing, and the reputations that these bands created, and imagine that your friends are creating a band and approach you with one of these names.

Doesn’t have such a good ring to it now, does it?

Now compare that reaction to the one that you had when your business partner told you about their “amazing” name that sounded dumb to you.

That doesn’t mean that you should pick the first name on your list, but that you should stop overthinking it.

The name doesn’t need to be clever, relevant, and original.

One of the worst things you can do is create a name based on a novelty or a joke, because that joke will get old very quickly and, as a result, the name may not stand the test of time.

Relevancy is key, as it can help with branding and SEO, but once that marketing kicks in and your brand grows, it will become relevant by default.

Ideally, you want a name that meets all the following criteria:

  1. Domain: Is the domain name available in its clearest form? In other words, can you buy YourName.com, or do you need to settle for YourNameCompany.com or even YourName1.com?
  2. Trademarks: Can you trademark your name and is it similar to anything else out there right now? You don’t want to run into any legal disputes as your reputation grows.
  3. Simplicity: Imagine that you’re telling a customer about your brand and they ask about the name. Do you have to spell it out for them and mention how it uses unusual characters? Is it long-winded? Short, punchy, and clear is always best.

Magic Spoon is a great example of all of these points. It’s an original name, but it’s also relevant and easy to understand. Furthermore, when someone types “Magic Spoon” into Google, they’re going to get results relating to this company.

If they had used a name like, “Health Cereal”, however, there would be millions of results from websites, forums, blogs, and product reviews.

4. Give Yourself Time To Think

Procrastination has killed many business ideas and you don’t want to be the person who regrets every decision they made and every idea they didn’t act upon. However, that doesn’t mean you should rush.

A successful business takes time, and this applies even before you launch.

When Greg and Gabi sold ExoProtein, they realized they had the funds and the time to start another venture, one that could be even bigger and more impactful.

They were eager, but they didn’t let that eagerness force them into making any rash decisions.

Instead, they spent time thinking about the market, product, name, and everything else. It was something they didn’t really do with ExoProtein, and this time they wanted to get things just right.

The more time you allow yourself, the more information you can collect, and the less likely you are to make costly mistakes.

It’s a careful balancing act between taking your time and making sure that time is put to good use.

Don’t simply waste those weeks dreaming of making your fortune and deliberating over the minor details.

5. Don’t Force It

While market research is important, it only works if you actually listen to it and heed its warnings.

Many business owners focus only on the positives and either ignore or neglect the negatives.

Let’s use ExoProtein as an example.

The idea of creating protein bars and powders with crickets is ingenious. After all, crickets are a more sustainable source of protein than most other animal-products.

They require less water and money to produce and they can also be produced in abundance. The idea is a little off-putting, but they can be made flavorless, which means it’s easy to add other ingredients to create the flavors you want.

The protein bar industry is huge, and when you add the potential for powders, meal replacements, high-protein food mixes, and even animal feed, you have all the expansion possibilities that you need.

From this point of view, it’s a great industry to be involved with and it offers an endless number of opportunities.

But that doesn’t paint a complete picture.

As Greg and Gabi soon discovered, there is no supply chain for this sort of thing and while consumers are happy to eat crickets if they can’t see, taste, or smell them, they are still disgusted by the idea.

With this knowledge, you move from an ingenious business idea that can’t fail to something that requires a massive investment of time and money, and something that is incredibly high risk.

Not only do you need to do your market research, but you need to follow through on the results. If your research tells you that consumers aren’t interested in your product, tweak it, and try again. If it’s still not working, try something different.

Don’t dig your heels in and insist that you’re onto a winner, because you’re only blinding yourself to the truth and setting yourself up for failure.

You turn into a conspiracy theorist who insists that their notions are correct because that’s what they want to believe. You find an excuse for everything and use it to back your plans.

It’s not that customers aren’t interested in your product, it’s that you just didn’t find the find customers and that particular focus group didn’t know what they were talking about.

Your competitors are not struggling and going out of business because the industry is dead, they’re just not doing it right.

This is why you’ll also see new clubs and restaurants opening in dead-end towns, it’s why VHS businesses still opened in the age of the DVD and DVD businesses still opened in the age of streaming.

Those business owners had already made up their mind even before their supposed “market research”.

It’s not just about asking questions, it’s about being receptive to the answers and changing your business plans accordingly.

6. Don’t Assume

A few months ago, I say down for a discussion with Paul Butler, the co-author of Think to Win and a master of strategic thinking.

One of the many points we discussed was how many business owners are destroyed by their own false assumptions. These assumptions are common with all industries and entrepreneurs, and you may be making a few of your own without realizing it.

For example, Gabi talked about ExoProtein and mentioned how the ultimate goal was to make cricket protein as common as soy protein. It was a lofty goal, but a logical one, nonetheless.

The problem is, it’s not something that can happen overnight, or even in five or ten years. To make sure a major change, you need decades, and that’s what Gabi and his business partner realized.

It was one of the reasons they sold the business and moved into a new industry.

Before launching your business, take an objective look at your business goals. Ask your friends and family; speak to your customers.

It doesn’t matter how much experience you have in your chosen industry, always challenge your assumptions.

7. Stay Focused On Your Number 1 Goal

Once you launch your business and get those first few sales, it’s easy to let the excitement and the ambition get the better of you.

Every business owner has their sights set on growth. They know which products they want to launch in the future and what industries they want to expand into.

These plans can give investors an extra incentive, but it’s important not to get too carried away early on.

Keep it simple.

Magic Spoon launched in April 2019, which is nearly 18 months ago at the time of writing. Since then, they have added just 6 products to their range, and all of these are just flavor variations of the same product.

In that time, they have shipped countless orders, received nearly 10,000 reviews, and have been featured in many leading publications.

In other words, they have opportunities for growth and a customer base that is receptive to buying new products, but they understand that simple is sometimes best.

The Kitchen Nightmares TV show is a great example of what happens when business owners try to do too much.

Every show seems to begin with Gordon Ramsay sitting down in an empty restaurant and picking up a menu that looks like it was written by Dostoevsky. The owners add dozens of dishes to the menu, hoping to appeal to everyone who walks through their doors.

In the process, they end up spreading their resources too thin. The dishes suffer, the service follows, and before long, the restaurant is on its knees.

If you follow these patterns, your business could go the same way.

On the one hand, Magic Spoon could launch a hot cereal product, along with cereal bars and other high-protein breakfast options.

But if they want to maintain the same quality, they have to increase their expenditure, ensuring that careful attention is paid to research and development and that the same quality ingredients are used.

If they cut corners to keep costs low, the quality of the product suffers, which means customers lose faith in the company and its reputation drops.

And that’s not the only problem.

Adding more products to your range means expanding the supply chain, hiring more staff, relying on more partners, and creating more potential pitfalls.

As Gabi said during our discussion, you can create a multi-million-dollar business by focusing on the basics. Once you’ve got those nailed down and the profits are flowing, you can start focusing on a gradual expansion.

As the saying goes, sometimes less is more.

8. Build A Team And Play To Your Strengths

You need a good team behind you if you want to build a successful business, and you should always play to the strengths of that team.

The more input that you have, the lower your expenses will be, and the more you can influence the business.

Think of it like flipping a house.

In the beginning, you’re on the same footing as everyone else. You have the capital behind you, but don’t necessarily have any way to guarantee success.

Your first step is to choose the right house and to make sure you get a good deal. Once you have the property, you need to start the renovations, and this is where the real work begins.

A builder could do most of the work themselves, maybe with help from a real estate partner who is also a skilled electrician.

They know people who can supply them with cheap materials, they understand how the process works, and they only need to hire a few contractors to perform basic roles, such as cleaning the yard, painting the doors, changing the locks, etc.,

If you have the same money and buy the same house, but have absolutely no building experience, your success rate won’t be the same.

You need to hire contractors to perform all of the roles and because you don’t have experience in that particular industry, you can’t get the materials cheaply, nor can you call in any favors.

The capital, the building, and even the end result is the same in both instances, but the first example could make a massive profit while the second will struggle to break even.

One of the aspects of business that is so often overlooked is that you should always do something you know or something to which you can add value.

The less you know, the more reliant you are on others.

Of course, Gabi and Greg didn’t have any experience with selling cereal before they launched Magic Spoon, but they did have connections to investors and existing supply chains. In addition, they knew how to market a food product, and likely had a team of reliable freelancers and contractors they could call upon when needed.

As the business continues on its ascent, these two co-founders keep adding their value, assuming major roles and always playing to their strengths.

They perform the tasks that they know they can perform and outsource the rest to skilled workers that they trust.

If you’re a bricklayer or plasterer, you wouldn’t try to re-wire a house or fix the plumbing, and if you’re a social media marketing expert, you should probably leave website design to someone else.

Running a successful business is about letting the partners perform the roles that they do best and hiring freelancers and employees to fill the gaps.

If there’s a lot of work to do and you’re not skilled in any of it, consider looking for a business partner beforehand.

Analyze what they can bring to the table, draft a plan, and build a business that benefits from your input and is not reliant entirely on outside support.

9. Get Advice From Relevant People

Everyone who has ever operated a successful business seems to be selling themselves as an advisor these days, but their advice isn’t always worth taking.

They like to remind everyone that they have worked for major corporations, even though many of those corporations have nothing to do with the project at hand.

It has become a cliché amongst advisors, and it has created a trap that many aspiring business owners are falling into.

For example, let’s imagine that you’re preparing to launch a food business. It’s a small company and you’re selling jams and hot sauces that you create yourself in your kitchen.

You don’t know what you’re doing, so you look for help, and get a quote from someone who has advised companies like Coca-Cola and Nestle.

They seem relevant to your industry. After all, they have experience working with major food and beverage brands, and their advice should be worth its weight in gold. Right?

Not quite.

The challenges faced by Coca-Cola are not the same ones that you will encounter. Their daily challenges involve multi-million-dollar marketing campaigns, viral ads, and sponsorship deals.

They invest millions just to create logos and product packaging.

They can’t sympathize with the struggles of a small business selling homemade sauces.

As another example, I’ve encountered numerous entrepreneurs who recommended Facebook and Instagram ads.

They create paywalls and eBooks claiming to expose “secrets of the trade”, and when you actually get inside, those secrets amount to little more than, “Spend lots of money on Facebook”.

It worked for them. It’s how they made their millions, and so it only makes sense for them to advise others to do the same.

But while Facebook and Instagram are great platforms for some companies, they won’t work for everyone.

Maybe your business is better suited to using Google Ads, maybe you need to get influencers to market for you, maybe you should join affiliate programs.

The point is, everyone’s business is different and an adviser who doesn’t have recent experience in your niche and budget, is not worth your time or money.

By all means, look for help, but don’t equate experience to value, and don’t assume that the advisor who has worked for the biggest companies or charges the most money is the one who can help you the most.

If you’re a small business owner who needs answers to a few quick questions, you may discover that the best advice can be found on forums or social media groups.

10. Invest Time, Not Money

There’s another lesson that we can learn from Kitchen Nightmares and Gordon Ramsey.

This show is all about failed businesses and it gives you some useful insights into the minds of business owners going through these difficult times.

If a restaurant fails, a business owner can change from a competent, professional, and happy person, into a miserable, desperate individual chasing a lost cause.

Restaurants have a lot of overheads. They need to think about rent, utilities, and staff, but they also need to buy fresh food.

If the numbers are low for a few days, all of that money goes to waste. If the business is dead for a month, they can lose tens of thousands of dollars.

That’s why the owners on this show often state that they have close to a million dollars of debt.

The problem is, when things start to go wrong, the first reaction is to throw money at the problem and hope it will fix it.

When numbers are low and money is tight, they remortgage their home and keep the business alive for a few more months. When things still don’t pick up, they acquire additional loans.

They enter a depression. They know there is a problem, but they’re so drained and desperate that they can’t see it, nor do they have the energy to remedy it.

It’s not just restaurants either. You’ll see the same thing happening with businesses across the e-commerce sector.

Owners pray that if they can keep the business alive for a few more weeks or months, things will eventually turn around, they’ll get the break they so desperately need, and everything will be perfect.

In some situations, this can actually happen. 2020 is a great example of this, as many businesses have been desperate to stay alive during the pandemic, knowing that things will be back to normal eventually (or so we hope).

In most instances, however, cash won’t fix the leak.

Rather than throwing money at the problem, invest your time and energy into solving it.

Run an audit of your business to see what the issue is. Speak with your customers, test your product, negotiate with suppliers, and get advice from your staff members.

If you can’t find a problem, hire a consultant; if you discover that your business is struggling because you’re in a dying or dead industry, it’s time to call it a day.

Save your money for another business or another venture and stop throwing it into that vast and never-ending money pit.

The $100,000 Question

This Week With Sabir is all about providing millions of dollars’ worth of advice to aspiring entrepreneurs, small business owners, and anyone else involved with the world of e-commerce and personal branding.

As regular listeners and readers know, at the end of every interview, I ask my guest for their best piece of advice, the single snippet that can generate over $100,000 in income.

At the end of my eventful conversation with Gabi from Magic Spoon, I asked him the same question, and his advice was:

Keep it simple.

It’s something that I touched upon above, several times in fact, and it’s something that has been integral to the success of Magic Spoon.

It may not look like the simplest of businesses, especially when you consider how much investment it raised, how many sales it has generated, and how innovative it is, but simplicity is the lifeblood of Magic Spoon.

In creating Magic Spoon, Greg and Gabi set out to establish a business that appealed to all ages and sold a product that was healthy but could be consumed daily.

Many health food products either taste like dirt or are only consumed on occasion. In fact, a lot of protein bars and alternative high-protein snacks are bought once and then never purchased again, either because the user is no longer on a health fix or because they realize that they preferred the real deal.

The goal of Magic Spoon was to create something that was just as good as the foodstuff it was replicating, but with a nutrition profile that would see it being added to the daily diets of countless Americans.

On top of this, they wanted to launch a single line of products that could target existing markets with a simple premise: The cereals you enjoyed as a child, but healthy.

Simplicity is at the root of Magic Spoon’s success and if you want to follow in the footsteps of Greg and Gabi, you need to keep things simple as well.

For more information on launching and running your own business, take a look at other This Week With Sabir episodes.

For instance, this discussion with Kristina Bucaram can help with personal branding while my interview with Bernadette Butler can teach you about the power of customer testimonials and how to acquire them.

Meet Our Guests: Greg & Gabi

Gabi and Greg are the founders of Magic Spoon, a company recreating your favorite childhood breakfast cereals with more protein, fewer carbs, and zero sugar. Forbes called Magic Spoon “the future of cereal” and TIME Magazine named Magic Spoon in their Top 100 Inventions of 2019. Prior to Magic Spoon, Gabi and Greg founded Exo, a company pioneering sustainable cricket protein that was named in Fast Companies Most Innovative Companies in the World. Gabi and Greg both hold degrees from Brown University and have been included in Forbes 30 under 30 lists. Greg and Gabi share their journey.

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