S7 Ep8: Fun and Funky Blobs— A Tastier and Healthier Take on Candies with Mike Schanbacher and Nicholas Kheny
"If we're not having fun, we need to stop doing it." —Nicholas Kheny
"Work with people only bigger than you and you become a company of giants." —Mike Schanbacher
When it comes to candy, the word "healthy" might not immediately come to mind. However, with the rise of vegan lifestyles, there is an increasing demand for plant-based alternatives, including vegan candy. Vegan candy delivers a guilt-free indulgence, without compromising on taste. These candies are often made with natural flavors and colors derived from fruits and vegetables, making them a more wholesome option that aligns with your healthy choices.
Blobs is a better-for-you candy brand founded in 2020 by childhood friends Mike Schanbacher and Nicholas Kheny. The company creates vegan, low-sugar gummy candies that aim to provide an accessible and fun candy option for health-conscious consumers. Blobs gummies contain only 2g of sugar per serving while still delivering bold fruit flavors. Their signature pectin-based recipe achieves a traditional gummy texture without the added sugar or guilt typically associated with candy.
This week's conversation offers inspiration and practical lessons for anyone interested in starting a CPG business. Listen in as Mike and Nick share their journey starting the company together as friends and co-founders; the challenges of developing the right vegan, low-sugar recipe and finding a manufacturer to partner with; Blobs' expansion into retail stores; their upcoming new product launches, and much more.
Connect with Nick
Nicholas Kheny is the Co-Founder and Operations Lead at Blobs. With a background in finance and biochemical engineering, Nick handles product strategy, operations, and business development. Prior to founding Blobs, Nick worked on growing several consumer brands through acquisitions and sales. At Blobs, Nick applies his analytical skills to ensure the business runs efficiently while creating great tasting yet healthy candy products. When not working, Nick enjoys spending time with his family in Philadelphia and coming up with new product ideas for Blobs.
Connect with Mike
Mike Schanbacher is the Co-Founder and Marketing Lead at Blobs, a better-for-you candy brand. With over 10 years of experience in growth marketing and strategy, Mike oversees all marketing and sales efforts at Blobs. Prior to founding Blobs, Mike worked at several startups helping drive organic growth. At Blobs, Mike leverages his expertise to position the brand as a fun and accessible candy company while creating healthier products. When not working, Mike enjoys spending time with his family in New York.
Connect with Blobs:
Episode Highlights:
00:58 Meet Mike and Nick
05:19 Making Candy Healthy
08:25 Launching Business with Fun
12:32 Vegan Gummy Bears
16:37 What It's Like Being Co-Founders
20:24 Potential for Growth
Tweets:
Candy CAN be healthy. And, no. It's not an imitation. It's REAL candy— and vegan too! Find out more as @jreichman interviews Blobs Co-Founders, Mike Schanbacher and Nicholas Kheny. #podcast #entrepreneurship #socialgood #inspiration #impactmatters #NextGenChef #EssentialIngredients #Season7 #EatBlobs #Blobs #BetterForYouCandy #HealthyCandy #VeganCandy #LowSugarCandy #GummyBears #SourBlobs
Inspirational Quotes:
02:17 "Blobs is not being a health food company that makes candy. But first and foremost, being a candy company that makes great candy that happens to be better for you." —Mike Schanbacher
09:09 "Just stick with the plan. A lot of things go wrong in life." —Nicholas Kheny
10:02 "If we're not having fun, we need to stop doing it." —Nicholas Kheny
10:11 "Work is hard, work can be hard. But when the fun outweighs the other, it becomes a problem." —Justine Reichman
20:50 "We disagree a lot, but we respect each other's expertise. We learned a lot from each other." —Mike Schanbacher
21:00 "Nobody needs a duplicate of themselves. What we really want is a partner that can pick up the slack where we fall short." —Justine Reichman
21:14 "Work with people only bigger than you and you become a company of giants." —Mike Schanbacher
Transcriptions:
Justine Reichman: Good afternoon, and welcome to Essential Ingredients. I'm your host, Justine Reichman. With me today is Mike and Nick, Co-Founders of Blobs.
Welcome, Mike. Welcome Nick.
Mike Schanbacher: Thanks for having us, Justine.
Nicholas Kheny: Thank you, Justine.
Justine Reichman: Pleased to have you here. It was fun to get to know you right before we hopped on talking all about the Northeast Corridor. You guys are making me nostalgic for New York. I dare I say Philadelphia, but I did have good memories there with family and friends. So it's fun. So Nick, Mike, tell us first what are your respective roles in this company?
Mike Schanbacher: Yeah. Nick likes to give this spiel a lot, but we come from complementary backgrounds. Nick's background is in the finance world and with companies of that nature, and growing through acquisitions and sales. And my background is more of the organic growth marketing side and growth strategy side. So that's how we, on a high level, laid out. But on a day to day, I would say that we find ourselves running around both doing a whole lot of everything.
Justine Reichman: In full transparency, the reason I really wanted to do that is when we get going and we have these conversations, people understand the lens you're looking through. I think that when you have a financial background or lens that you're looking at things, you have a different perspective than somebody that has a little bit of a marketing background. So it's going to be interesting to hear both of your perspectives, what it's like to work together and learn first and foremost what Blobs is. So for our guests and listeners that are not familiar with Blobs, Mike, you want to tell us what Blobs is?
"Blobs is not being a health food company that makes candy. But first and foremost, being a candy company that makes great candy that happens to be better for you." —Mike Schanbacher
Mike Schanbacher: Blobs at its core, it's a better for you candy brand. We tried to come up with a name Blobs to really encompass that we're trying to be that accessible candy for everyone. I would say the biggest focus for Blobs for us has been not being a health food company that makes candy. But first and foremost, being a candy company that makes great candy that happens to be better for you. And that's how Blobs concept was born from a brand perspective.
Justine Reichman: Okay, I appreciate that. And now, I really want to try Blobs. I gotta try though. Gotta get me some Blobs.
Mike Schanbacher: We'll definitely ship you out some ASAP after this.
Justine Reichman: I appreciate that. In the meantime, you guys founded this company together, is that correct? Can you, Nick, maybe share the inspiration for how you guys came up with Blobs.
Nicholas Kheny: At the time, I was working on a couple of different consumer brands. I'm a Biochemical Engineer by background, by education. So my fiance loves to eat Sour Patch Kids, loves all kinds of candy we had all around the house. But every time she ate them, she felt so guilty. I don't know about you. But basically, we need a bunch of candy and say, why did I do that? Why did I eat all this candy?
Justine Reichman: Like her, I would say, not just like her but similar to her, why should I eat it? I just didn't feel well after I ate it. I was nauseous.
Nicholas Kheny: I was pre diabetic that time and I had a bunch. I still have a gluten issue. I can't really digest it so she asked me to look into alternatives. We looked into alternatives on the market and the better candy space, and we couldn't find it. Actually, we liked the taste and texture. So I realized that it was a white space opportunity to create something in this market. I really chased after it, and in turn I knew the best marketer in the world. That's one of my best friends. We've known each other for 16 years. We knew we wanted to do something together so I called Mike and said, want some pizzas and some beer? So I opened up the presentation and went through my analysis when I thought it was, where do we take it from here. On that day, Blobs (inaudible), and Mike were all in.
Justine Reichman: What was your initial thought when you saw this?
Mike Schanbacher: If there's anything Nick knows how to do, it's put together a business plan. So when I first saw the business plan, I loved it. It made complete sense to me. I've worked in growth marketing, I've looked at a million things like this before and it kind of seemed like it was a perfect market opportunity. My first thought was, okay, let's look at what's on the market. And even before taste testing every single thing on the market, which we've done including unhealthy candy as well, I realized that none of the better for you brands sparked joy in me. Like when I saw that they all felt a little bit utilitarian compared to healthier versions or better few versions of other candy. So my first thought was, wow, this opportunity to just do something really fun and be someone that our market positioning could be fun, that's amazing from a marketing perspective. I was super excited.
Justine Reichman: So in terms of building a healthier for you candy, if you will, how did that resonate with you? Was it your need?
Mike Schanbacher: I've been obsessed with gummy candies for as long as I can remember. It's always been my favorite candy, so I did eat a lot of unhealthy candy. So on a personal level, I understood.
Nicholas Kheny: Every time we made a batch, it was what Mike had in mind. Well, Mike loves this candy because he's our target consumer. Mike and my fiancee, we have a couple of friends that eat candy non stop, and they're a target when they like this product.
Justine Reichman: Well, it's like the old campaign, Mike likes it. Are you guys too young for that ad? So you guys can do, Mikey likes this. This is great. I love gummies, I love Sour Patch Kids, but I also have a gluten intolerance. I have a problem with sugar too, though. I don't know why it doesn't sit well with me. So tell me, what are in these products, because you had your fiance in mind. Obviously, you are pre diabetic. So when you went to build out this brand and create this product, what were the ingredients you went to look for first?
Nicholas Kheny: Yeah. So first, we kind of work on a (inaudible) based product. We didn't really use organic ingredients. In the beginning, we were just trying to get a product that me and Mike could eat and know how to cook it correctly. Ending up being really, really delicious. Then we made the switch to an organic product using a pectin base because we want to be vegan, we wanted to make sure we have all these brand attributes while still tasting great and be really clean, hyper focused on clean and did not taste good. It took a while for us to get the product that tastes good because people probably don't know (inaudible). The cooking process just became a mess to try to get something to actually work and get things to stick together. It takes us two months to nine months and Blobs is finally done.
Mike Schanbacher: Yeah. And the big thing for us was we came in and we said two things like need to be true. This has to be really fun, but we have to test better than anything else in the market that we're competing with. So that led to a very long road of getting things.
Nicholas Kheny: We probably had a minimum viable product about three months and then spent another six months making sure that we had the best taste possible.
Justine Reichman: Wow. Since this is your first time starting your own CPG product, is that right for both of you? I mean, you've done acquisitions. And yes, you've done marketing and taking people. But in terms of creating a product from beginning to end, this is the first time you guys are doing this. What are some of the biggest challenges that you didn't even think about when you first started?
Mike Schanbacher: Well, when we first started, the biggest challenge is that we really didn't know anything. It was a whole lot of cold calling, it was a whole lot of reaching out to our network to find advisors to help us, guide us through the process. And it was very unstructured, especially very early on. So that was new for me. I've worked in small startups, but I've never had no idea what I was doing.
Nicholas Kheny: I would say the biggest challenge was doing a thousand things in the beginning all at once and you only move from one inch. Larger companies do a thousand things, you move it a mile, and you're gonna start your thousand things moving inches at a time.
Justine Reichman: Was that discouraging? Or was that just part of the process that you got to understand?
"Just stick with the plan. A lot of things go wrong in life." —Nicholas Kheny
Nicholas Kheny: You just have to take a step back and realize, look, in three months from now, this is where we'll be in. Five years, this will be in. Just stick with the plan and the date we've had. A lot of things go wrong in life, day to day, I keep telling myself that I'm surprised that that's gone wrong. We haven't hit any big major flaw yet.
Justine Reichman: Well, are they part of the whole process anyway? Even if you came up with a flavor then you decided you didn't like it so you pivot and change. Many times, I've seen that these changes were grown from information that we gained from our consumers, from people in the industry. And so as much as it might have gotten in the right choice, it helped us get to the right choice.
Mike Schanbacher: Yeah, for sure. I was gonna say that we've learned a ton, and that's what made the beginning interesting. It was fun. We're creating a candy company and we're learning. There's not as frustrating as some things were, or anxiety inducing as the unknown was. It was fun. It was always fun. It's all here.
Nicholas Kheny: So number one rule was, if we're not having fun, we need to stop doing it.
"Work is hard, work can be hard. But when the fun outweighs the other, it becomes a problem." —Justine Reichman
Justine Reichman: I'm with you. I'm totally with you. We spend so much time working that if you're not having a good time, or you don't feel good about what you're doing, you should really, in my opinion, move on. There's always something to do. Work is hard, work can be hard. It's not always gonna be 100% fun. But when the fun outweighs the other, it becomes a problem. In my opinion.
Mike Schanbacher: Yeah, exactly. We've definitely gone through pinch points where it's leading up to our launch like, oh, my God, there's a million things to do. It's all really stressful. But then the minute we see our first sale is like, oh, my God, this is the greatest thing ever. The fun has definitely been outweighing any of the other parts.
Justine Reichman: Where did you guys first kick off your sales?
Mike Schanbacher: So this is funny. So we originally just tried to get to the market. We were launching online doing direct to consumer, but we quickly pivoted our focus after launch to focusing on retail. I think the number of stores now is about 40. Stores mostly in the Philadelphia, New York market. We've really been using this time to learn, where are we getting good sales? What promo or sampling events? Or what does well for us? What areas? So that was probably the biggest pivot we've made. It was quickly pivoting to retail.
Nicholas Kheny: What are customers like about a brand? What do they like about our product? Where can we improve?
Justine Reichman: So when you think about your product, what other products do you see in the space that maybe compete with it? Or is a product that somebody might go look for, and then they would find yours.
Nicholas Kheny: That (inaudible) space is more tweets. They launched in 2016, and they've grown to be a massive company over the last couple of years. Especially during a pandemic. So where we see ourselves placed on the shelves mostly next to them and kind of like an alternative sports wheats where they focus more on traditional candy. We're in that new candy. Blobs aren't trying to imitate any other candy, we're just a new candy on the market trying to launch interesting flavors, interesting shapes. And that's the fun thing about candy, right? You can play with the shapes, format, textures. You can have a lot of fun with these products.
Justine Reichman: So can you describe for me what the texture and the feel of Blobs are?
Mike Schanbacher: Yeah, for sure. It's very hard to get, call it the traditional Haribo texture with something that's vegan and low sugar.
Justine Reichman: Is it kosher too?
Mike Schanbacher: Yeah. I mean, it's vegan. We're not certified kosher so I won't make any claims. But it is vegan. We don't use any animal parts or anything like that. But the texture, we tried to get as close to that as possible. We did a ton of testing with people around the texture, we did surveys, we did focus groups. I would say it's pretty similar to a traditional gummy texture, a little less sticky in your teeth.
Justine Reichman: We'll take out the cavities.
Nicholas Kheny: There's no tooth stick, which I really like about it because that was the feedback we got on our competitors and other brands, and what people didn't like about gummies as a whole. So that was something I really aimed for.
Justine Reichman: I want to go back to the beginning for a minute. So you started this company, are you guys self funded? Or did you have to go fundraise? Or what was the process like in the beginning? Because starting a CPG company is expensive. I'm sure that our listeners and the people watching today are like, okay, so tell us how you got going? How'd you get it off the ground?
Nicholas Kheny: Yeah. A funny story about this, I took the same deck I gave them and I went to my boss and told him what I wanted to do. He wrote us that first check, $5,000 check to go out and get started, buy materials to really get going. Actually a couple weeks ago, he was like, Nick, I had no idea this is what you're going to deal with.
Mike Schanbacher: We raised essentially quick friends and family around to get us off the ground. We wanted to raise the least amount of money we thought we could to get from zero to 0.1. This was pre pre-brand. It was a pre product. So people that had faith in us as individuals to get over the finish line just to create a product and a brand.
Nicholas Kheny: We really only had a business plan at that point and a couple gummies we cooked on a stove.
Justine Reichman: Who was the chef?
Nicholas Kheny: I was.
Mike Schanbacher: I think Chef is a generous term.
Justine Reichman: I rephrased it and said cook in all fairness. So now you've moved along. I'm sure you're out of the kitchen now. I mean, out of your kitchen in your house. Let me clarify that. So where do you guys go to do this now?
Nicholas Kheny: So we have a third party. Matter of fact, make sure that we have a good relationship, we are personally on their board now, and they're handling over manufacture for us at this point.
Justine Reichman: That's great. Was that a challenge for you to find initially?
Nicholas Kheny: So we started with a qualified list of like, we need all the qualifications. We found one manufacturer. This is calling 20 manufacturers a week and we found one.
Mike Schanbacher: Yeah. Specifically what we wanted to do. Obviously, other people out there can do similar things. But for the specifications that we came with in the beginning, we really just happened to find one partner that we really aligned with, and it worked out very well for us.
Justine Reichman: That's great. So let's talk about going forward. How many different skews do you have right now?
Nicholas Kheny: We have three skews right now.
Justine Reichman: I think I see behind you, but I just wanted to double check. That's pink.
Mike Schanbacher: Yeah. So this is our brand color. The variety pack.
Justine Reichman: I love passion fruit. So how much sugar is in them?
Mike Schanbacher: One bag of Blobs only has two grams of sugar. So a 50 gram bag has two grams of sugar in it. We use natural ingredients as well. So there's no sugar, alcohol, there's no stevia in it or anything like that. So that was a big thing for us, it was getting the sweetness level with that little amount of sugar.
Justine Reichman: What about the juice or the fruits that you're using in there?
Mike Schanbacher: The fruits that we're using, we're using a lot of flavor extracts as opposed to just full juice which cuts down the sugar in the product. It actually comes from the tapioca that we use for the texture and the base.
Justine Reichman: Wow. Okay. So now, building out this company, Nick, I'm going to ask you this. Because building out something that's organic, vegan and traditionally can be very expensive and can make the price point high. You built out your plan with your finances. How did you work with that? And you are on target for what you had plans?
Nicholas Kheny: Actually much better off than I thought we would be in terms of margins. Price point is perspective to the market, a little more expensive we want to be at this point, but we see a lot of levers in the future to reduce that price point. And that's our goal. As we grow, get to this scale, get more contracts we can get there. But I see a great path forward.
Justine Reichman: That's great. And so within this plan that you guys created, are we going to be seeing some more skews coming up?
Nicholas Kheny: Yeah. We got something coming out this year that I think will disrupt the candy market. Mike, you want to talk about it?
Justine Reichman: Is it coming out?
Mike Schanbacher: Sour Blobs coming out.
Justine Reichman: Sour Patch Kids, but the healthy version.
Mike Schanbacher: They're somewhat similar. It's definitely in that product category. They are really, really good. We've had unbelievable responses to the taste testing we've done. We're really excited. So they'll be coming out at Q4 at some point. It's not locked in yet. I was looking at the date there on the top of the screen while I was saying that, but yeah, we're really excited about those.
Justine Reichman: Okay, I can't wait to taste those. I love the sweet and sour together. It's one of my favorites.
Mike Schanbacher: We'll get you some of the first batches.
Justine Reichman: Here's a question for you. I know what Nick would say about you because I heard him say it, best marketer ever. But I'm wondering, Nick, if you could guess, what do you think Mark would say about you, working with you as being his Co-Founder? And then we'll find out what he'd say. But yeah, I'm just curious what you'd say.
Nicholas Kheny: Hmm. I think it would say I'm constantly on. I'm up at 6:00 in the morning working and managing everything till midnight every day. And definitely, always forward thinking. I think I'm always constantly throwing way too many ideas out there.
Justine Reichman: I think that's what he would say about you. Was he right?
Mike Schanbacher: Honestly, if I were to describe Nick, he is always on. He's always working, and he's always thinking 10 steps ahead. So it's like, that's our job. Nick pulls me 10 steps ahead, and I keep Nick grounded sometimes.
Justine Reichman: Sounds like a good match.
Mike Schanbacher: Yeah, it's been really great working with him.
Nicholas Kheny: Yeah. Like Mike said, we're pretty complimentary. I do product strategy and finance strategy, and Mike does the marketing. I'm always thinking of strategy and operations, whereas he's on marketing and sales. And it's a nice match because marketing sales can do today, and I'm thinking about tomorrow.
Justine Reichman: But there is another dynamic, you were first friends for 16 years. So obviously, we could hope that you're always going to agree but you're also not going to always want to agree because you want to share different perspectives. What is that like being friends and co-founders?
Nicholas Kheny: We never agree. We've known each other for so long, we know we trust each other, we value each other's opinions. The point will be, okay, Mike's the expert here, he takes lead here. I'm the expert here, I lead here. And a lot of times, we know we have to discuss, right Mike, we've been doing it our entire lives.
Justine Reichman: And how does this work now that you're in Philly and he's in New York.
Mike Schanbacher: I think that works great. It gives us access to both markets when we need to have boots on the ground and do a sampling event, or walk to a store and say, want to buy this? That works great. We're constantly texting, slacking, calling, zooming multiple times all day. It worked pretty good. I would say that Nick put it well when he said we disagree a lot. But we respect each other's expertise in what we know. I feel like we learned a lot from each other.
Justine Reichman: I think that's key. And that's really important because you don't need to wait. Nobody needs to duplicate themselves. What we really want is a partner that can pick up the slack where we fall short and vice versa. I don't know, my mom always told me to surround myself with people that were experts in what I didn't know.
Mike Schanbacher: Yeah, exactly. Work with people only bigger than you and you become a company of giants.
Justine Reichman: To that point, how large is your company now? You're on a third, congratulations. That's exciting. What was it like to hire your first person?
Nicholas Kheny: He's actually another Philly friend who Mike grew up with, and he had experience that Mike and I both don't have. We realized that he was a great first hire.
Justine Reichman: Awesome. Well, congratulations on that. I'm just gonna ask you, I know that you're in a ton of stores. You can probably remember all of them because you guys are going gangbusters. I'm a New Yorker. We got a lot of listeners that are from New York and Philadelphia, and I'd love for you to share some of the stores where people can find Blobs.
Mike Schanbacher: So in New York, we're in a few different notable stores. We're going to be in pop up grocers soon. We're in The Goods Mart down in Soho, and also in Brooklyn Harvest Market. So those are some of the big ones to keep an eye out for us.
Justine Reichman: Well make sure that we tag them so people can go out and taste Blobs.
Nicholas Kheny: Thank you. I should have worn my shirt too.
Justine Reichman: You gotta wear everything. I have an Essential Ingredients t-shirt, I have a mug somewhere. In the meantime, I think everyone is excited to have a healthy candy that's readily available, better for you, better for me and the better choice that we can make when we go to eat candy. Because after all, candy is not generally good for you. But you go to The Goods Mart which now has a better for you products and make a better choice, and get Blobs.
Mike Schanbacher: Please do.
Justine Reichman: Guys, it was so great to chat with you. Thanks so much and fun chatting with somebody else from New York and Philadelphia learning about your products and your journey. I will let you know my favorite flavor. I'll do a little story for you.
Nicholas Kheny: And your favorite Blobs, your favorite shape.
Justine Reichman: Okay, I have a lot of homework to do. Thank you guys.
