Having done IT work, and helping debug PLCs, for two food startups let me tell you it was a big eye opener. I had this impression that in factories you buy equipment, hook up conveyors and away you go.
In reality the equipment is just a starting point. Getting it to produce the end product needs a LOT of trial and error. The smallest adjustments in timing, parameters or recipes can result in a completely different looking, tasting or mouth-feeling product. There is a loop of adjusting the equipment to fit the recipe, then adjusting the recipe to fit the equipment. Then repeat.
Lower-end manufacturers also lie about their product specs, lie about the availability of spare parts and MTBF. Saving money ends up costing a lot more, just like it did to Ample Hills.
Maybe if you have a department of chemists who are working closely with high-end equipment manufacturers you can better predict the outcome with less trial and error ... but I doubt it. Look at Tesla and the manufacturing issues they are having. The best engineers that money could buy spent a lot of time trying to speed up the production line only to find the hard way that shaving two minutes off time on the line resulted in the paint not having long enough to dry.
Food production is a lot harder than software. If you ever want to create a large scale food manufacturer, hire people who have a lot of experience doing it.
I gained a bit of appreciation for the complexity of this dialing-in process when I was in high school...I was staying in a hotel mostly occupied by my extended family for a wedding, and across the street there was a brand new Krispy Kreme store about to open.
During the fine tuning stage of the newly installed machinery they were giving away unlimited free donuts, so my cousins and I formed somewhat of a bucket brigade funneling them across the street whilst piping hot. I ate enough donuts over the course of the weekend that I was able to observe the batches getting more consistent...less variation in color/texture/glaze. I thought it must be interesting to be the person traveling to each new location and making the call as to when everything was exactly perfect.
My ex-wife worked for a massive beer company for a few years, on the back of a degree in advanced chemistry - she was effectively headhunted two years before completing her course. The reality she conveyed was that food manufacturing is really a chemical-reaction business: they have labs full of researchers and quality-controlling chemists, and massive hyper-specialized equipment to manage every aspect of the process, typically unique to this or that plant. The smallest mistake can result in millions of $ of losses, not just from wasted product but from the long effort required to empty and recalibrate a setup. And as you said, machine vendors are as unreliable as, well, any vendor; so you buy these massive things, set them up, and maybe two months down the line you have to call in super-expensive consultants to figure out why a certain sensor is lying to you and spoiling the product.
Wasn't there a thread on here a few days ago about some process for making vaccines with this almost exact discussion "just because you buy the <some kind of simple equipment> doesn't mean you can get the whole end-to-end process to run."
From the article -- "By chasing rapid expansion without paying enough attention to how much they were actually spending, the co-founders ended up making big bets that cost the company millions — and mistakes that left thousands of gallons of ice cream literally swirling down the drain."
In my experience, this is possibly the most common reason that VC funded startups fail. If you're an entrepreneur, your #1 question that you can answer without any notes or aids should be "What is the marginal increase in net revenue from each increase in sales."
Why that number rather than all the others? Because it tells you whether or not growing the company is worth doing. If it isn't, then that means you need to understand operations better.
> But Smith and Cuscuna now are severed from their creation. Cuscuna told Marker that the bankruptcy allowed, in her words, “bottom-feeders,” to snap up the company, and says it was clear from the start that they couldn’t work together. Zapata, she says, wasn’t particularly interested in them, and she was not interested in “defending her worth.” (“Nobody’s irreplaceable,” Zapata explains, something he says he learned in his Navy SEALs days.) Zapata says he did eventually offer them roles, but they declined. Smith says he does not regret this. “We would have been miserable trying to operate with somebody’s vision who didn’t support us.”
Ouch. Sounds like maybe their personalities got in the way of the business.
> ‘The rules of physics don’t apply to us. We’re Ample Hills!’” Scott says. Smith, he adds, had begun to think of himself as “the Steve Jobs of ice cream.”
Whenever someone makes favorable comparison of themselves to Steve Jobs (Elizabeth Holmes comes to mind), it's time to run screaming in the opposite direction.
From what I can tell from the podcast and the article, their business was successful enough to weather a few major missteps, but what really sunk them was the factory becoming an unproductive money pit. And the thing is, they might still have turned it around, if not for the pandemic.
Seems like had they had a 3rd founder grounded in business administration, it might have been a different story.
I feel fundamentally, we are in a time where, every business is a unicorn and needs hyper growth. It's like grow at all cost, you can do it if you throw enough money at it. While it may be feasible for some businesses, most require strong fundamentals to survive for long.
Is it really? Or is this just availability bias. You choose to hang out on HN and read whatever e-rags cover startups. Meanwhile there’s probably a new plumbing proprietorship or small software consultancy starting nearly everyday in your town. They don’t get or need much press.
For every ample hills there are how many BR franchises? Not many hipsters go to BR though.
Yes you are absolutely correct. And to be fair, for context, I was talking about businesses that usually get high profile fundings (and therefore coverage). This obviously even the big names that are already billions of dollars.
I lived down the street from the original location for 7 years and because it was on my way to the Q, I passed it at least twice a day, frequented it countless times, and used to chat with the owners. I remember when it opened up in the neighborhood and being so proud of their growth, so this is sad to see. I watched them expand, even after I left New York (I now live down the street from the similar Salt & Straw in Seattle, albeit S&S seems to have managed their growth better), and was really rooting for them. What a shame.
As I see it, with physical goods, unlike software, production costs go up with revenue. So you can't simply growth hack your way out of fundamental inefficiencies.
Yes and no. With physical products, it's usually non-linear due to economies of scale. The more you make, the cheaper the unit cost gets. But there are often other challenges with scale, like distribution and large capital injections needed to order raw materials and scale up factories.
There’s a similar concept explored in Catch-22[1]: Milo buys eggs for $.07, and sells them to the mess hall for $.05 What the mess hall doesn’t know and doesn’t look into is that Milo is running the wholesaler, too - He buys eggs elsewhere for $.01, provides the egg to middlemen for $.045, and buys it back from the middlemen for $.07. For each egg sold, he’s losing $.02 selling it to the mess hall - But making $0.035 selling it to the middlemen. He can’t sell it directly to the mess hall, because the entrenched middlemen would cry foul, and likely have the connections to make it stick (or simply the thuggery to make his life hard if he doesn’t cut them in).
Sometimes, you’re not selling ice-cream - You’re selling milk, and the sugar is a loss-leader.
We live nearby the former Los Feliz location, and I personally loved going there. They had built out a classic Craftsman house into a very lovely location and I often thought, how could $6 a cup pay for all this? Must be VC money or something? Knew nothing about their history.
There were other signs. Looked into having a kids birthday party there and they wanted something like $650 for not much... oh well, park it is!
It's not true however the area has no foot traffic, it's a very walkable neighborhood. But yes, you're not gonna make back millions on ice cream. Gotta be realistic, considering the competition, which was a factor.
At some point we had three ice-cream shops on the same road, first forcing an older gelato shop out of business, and then Ample went too. Now the only one left is Jenni's, which is even more expense, a lot more pretentious and has had some drama also. Rite-aid (Thrifty) for $1.99 a bit farther away it is.
So, they closed the shop a few months before the pandemic and we were dumbfounded because it all happened so fast. Finally got an explanation, thanks.
Still love the beautiful house and believe it or not thought about opening a we-work type of place there, but the pandemic nixed those plans as well. Thankfully, while vacant it is still in surprisingly excellent shape considering the situation in much of the city.
It’s a really great article, worth the full read. The big take away though is that the founders had essentially no business instincts or discipline, but a phenomenal product and lots of fundraising success.
If they were a software type company their shortcomings probably wouldn’t have mattered, but they weren’t.
Looks like that was an Iowa City based company back in the day?
I was thinking about Whitey's, based in Moline, IL as I read through the story. They have a factory in Moline, 8 locations in the Quad Cities, and supply to some Midwest grocery stores (notably Hy-Vee). They pull it off well, and have very reasonable prices. A friend from Minneapolis noted them as being the best value ice cream shop he's been to.
Whitey's closed its two Iowa City locations a number of years ago. I'm guessing it simply wasn't worth it logistically. ~120 miles round trip in their own trucks, empty one way, driving up the cost per scoop compared to their locations in close proximity to the factory.
Yeah that was sad. Whiteys shop was right next door to the old Midwestern Ice Cream Co storefront actually!
Not sure shipping was an issue - we actually have refrigerated trucks in Iowa. You can ship iced cream just like meat or anything else. Maybe long-distance management was problematic - not every business manager can figure out franchising.
My sister has a Winan's Chocolate and Coffee shop in town, which is headquartered in Piqua Ohio! She used to work in that town, liked their product, and when she retired she walked into a store and said "I want to open one in Iowa!"
The couple that runs the chain (3rd generation Winans) said "Sure! It'll be the first one West of the Mississippi!"
Weeks of training, lots of specs for cabinetry and signage and her shop opened. With a 2-page agreement written on notepaper by Joe.
Working 'ok'. Winans owns the other 24 shops, this is the only one owned by somebody else. So some bumps in the road early on - they kept sending 'standard loads' of chocolate, coffee and shop seasonal decoration even though in Iowa she sells lots more chocolate than coffee (the opposite of all the other stores), doesn't have the same furniture nor wall space for trimming, has little storage. Half the business is premium gift baskets for real estate agents, hotels etc. Everything is Ohio branded and this is Iowa. And so on.
This is really unfortunate - their ice cream is some of the best I've had. They took a risk in trying to scale up rapidly and paid the price. It is what it is.
The company got bought out of bankruptcy for $1M. The founders walked away with literally less than nothing. The new owner felt he could continue the brand without them, which I think is probably pretty foolish, but I guess we'll see.
Doesn't seem unreasonable. The new owner hired back ~90 of the ~120 employees? I suspect they know how the sausage (ice cream) is made so even if they lost the "creative genius" of the owners they can still churn out product people seem to already love.
The founders admit on their own podcast that making the ice cream is not rocket science. All the recipes are out there, including for their custom mixins. Anybody can do it.
Getting the factory to work to scale that quality is another story. But that's only worth it if the demand can be generated, and that requires the kind of marketing that the founders were actually extremely good at. It remains to be seen whether their rabid fanbase will follow the brand without them, which was very tied into their story and community connection. It would be one thing if it had already achieved critical mass, but the business crashed just before that.
My nearest two grocery stores in NJ carried Ample Hills until recently. Now it's gone and that space is occupied by the other few dozen boutique ice cream brands. I doubt I'll see it return.
It was likely only on your local shelf in the first place because of growth hacking; the fact that it's gone doesn't mean they won't be able to continue the brand or keep making great ice cream.
And maybe it will come back, once it's actually grown to that scale.
Unless the new owners are daft, I agree they'll be able to keep creating excellent ice cream. But it's hard for me to imagine it sustainably growing beyond NYC again. So much of the original magic was the interaction of the story with the home community, and people evangelizing the brand. Much of that same community has very conflicted feelings about whether it's truly the same brand. It's a catch-22. The new owners are keeping everything the same, at the risk of being perceived as inauthentic. But if they change everything to be authentic to them, they lose any chance of keeping the brand goodwill.
But reading the article at least, the founders were a huge part of the failure, ignoring fundamentals for flash and growth, and (allegedly) rejected offers of capital or investment from people who weren't willing to let them remain the monarchs.
They absolutely were a huge part of is failure. But they were a huge part of its success, too. This wouldn't be a story but for the heights they achieved before crashing and burning, and that's not going to be so easy to replicate in a sustainable way.
It sounds like the projections were caught up by reality. They spent too much, expecting the new shops to be as good as the old ones.
It's like if my mom and dad had decided to mass produce spring rolls. My mom actually made about 100K of them over 30 years, manually. If they'd built a factory, it would be a totally different thing. In fact, another immigrant did just this and his product is still for sale in supermarkets.
As an armchair CEO, why not just license? What you've produced with Oprah and Disney is not an amazing ice cream, you've made attention. By some stroke of luck, too. Chances are, ice cream being a rather ordinary thing, that your ice cream is ordinary and appeals to people about as much as an ordinary ice cream does. But you have that Disney tie-in, and you have celebrity attention. Why not turn your business into an Instagram marketing thing, go around chasing celebs, and let other people make the stuff, which they probably can scale better than you?
> What you've produced with Oprah and Disney is not an amazing ice cream, you've made attention. By some stroke of luck, too. Chances are, ice cream being a rather ordinary thing, that your ice cream is ordinary and appeals to people about as much as an ordinary ice cream does. But you have that Disney tie-in, and you have celebrity attention.
They seem to have been aware of this:
>> He wanted Ample Hills — named after a line from the 1865 Walt Whitman poem “Crossing Brooklyn Ferry” — to have flavors that would appeal to “seven-year-olds and to the seven-year-old in the 40-year-old.” Over time, flavor inspiration would come from pop culture. One called the Elvis Impersonator featured banana ice cream with swirls of honey-sweetened peanut butter and candied bacon. A flavor called Heisenberry came from Breaking Bad — vanilla ice cream with a swirl of strawberry preserves and blue rock candy that stood in for meth on the show. “We think of a story and then a flavor that draws on that story,” Smith later told Bloomberg. The story, Smith often said, was what made Ample Hills ice cream “more than just milk, cream, sugar, and eggs.”
Ice cream is a particular bitch to scale; it seems. Look at Blue Bell. Either you lose the delicate fats (fake ice cream blah) or you get contamination problems, or you stay small batch.
Is it actually hard to scale or just expensive? Breyers mass-produced "non-fake" ice cream for years (at a high price point) before switching to the fake stuff more recently.
I'm guessing most people just aren't willing to pay $8 for a quart of real ice cream when there's "almost" ice cream for $3.
It is hard to scale. The taste and texture of ice cream depends a lot on things like fat content, air content, and ice crystal size. Every time you scale up you need to use different equipment to make your ice cream. Getting the settings right on the new equipment to match the product you had on the old equipment is difficult at best. The article points this out when it talks about their attempt to switch to a continuous process.
This seems like a startup opportunity for a group with the chemistry / food science / mechanical engineering chops. Build machinery that can make consistent ice cream at scale in a turn key operation. Sounds incredibly hard and capital intensive.
It's not like mega-ice cream companies like Breyers don't already have an army of chemists, food scientists and mechanical engineers on staff to solve these problems - and yet they still have a tough time producing real ice cream at everyday prices.
The silicon valley wiz-bang startup crowd often forgets... sometimes an industry's incumbents are not lazy and incompetent.
There is machinery that can make consistent ice cream at scale. The problem is that it is very different from the machinery you would use at smaller scales so matching the results of the two processes is very hard.
It's the ice cream with mix-ins that is specifically hard to scale (it doesn't flow well at all). This was Ample Hills' main thing, and they never got the continuous production method to work.
Wait is Ben & Jerrie's missing those good fats? it's obviously huge scale, tastes way better than cheaper stuff, but still not as good as my local shop.
Anecdotally the premium ice creams (McConnell's, Haagen Daaz, Strauss, etc.) taste better to me than Ben and Jerry's.
If it's covered up by flavoring/sugar, then it may be hard to notice the difference. But if you just have vanilla or chocolate (with chips, nuts, etc.) then I think it's pretty easy to tell the difference.
I am not a fan of ice cream, but perhaps I have never had the "good stuff."
In addition to some of the premium brands you mentioned, are there other even higher-end labels? And what is it, experientially, I should be looking for? What are the signs, good and bad, in the ingredients list of proper ice cream?
Best meal I ever had was in an Amish farmyard during a bicycle event. Chicken and biscuit with fruit salad, followed by iced cream made in a churn run by some boys up by the house. On Amish home-baked peach pie.
I still felt a rush when I wrote those lines, and its been 5 years.
My opinion: low end ice cream usually has more sugar. It makes it taste good superficially but it wears on me after awhile. I like it creamy/fatty and I think that is harder to make? (never made ice cream myself)
I look for the fewest ingredients. If I see preservatives or coloring I generally don't buy it. Haagen Daaz is one of the few national brands that is really good about that. Jeni's is really good IMO
oh that could 100% be it I love the chunky stuff. But hands down the store by my house that makes there own a league of its own compared to even like the fanciest gelato at whole foods
This is my favorite ice cream shop! Even though it's sad that the founders lost their business, I'm sure they'll be able to start over with a new shop and new flavors. There are so many chains in New York that are spin offs of each other, or were very clearly created by the same people. Hopefully this will lead to another great ice cream shop.
Really good read, it's the physical product version of the startup lesson that a great product isn't enough to make a company succeed. Ample Hills ice cream is really really good but that business sounds like it had a lot of issues. I hope that the new CEO can turn it around without losing the product quality.
tl;dr "Scaling in the real world is hard--food scaling doubly so. Let's go shopping."
What I really don't understand is why business owners don't try to use people for the initial scaling attempt. If you can't make people scale, you probably can't make machines scale.
$11 million in annual revenue (and I'd imagine a fairly miniscule profit) seems like a bit early to try pulling off big capital investments for expansion.
What I really don't understand is why business owners don't try to use people for the initial scaling attempt.
Very good advice.
For example just a few years ago there was a startup, Zume[1], that was trying to cook pizzas in vans, en route to customers.
When they had problems with that, they pivoted to a commercial kitchen type flow for making the pizzas. As part of that flow, they tried to design some Rube Goldberg robot like device that shifted a partially prepared pizza 90° between two pieces of equipment.
But they were a startup with very little revenue. Why invest in expensive equipment that sits idle 99% of the time? Why not hire local teenagers for the initial production? It's not hard to train people to move pizzas between pieces of equipment!
It's no coincidence that the Zume Wikipedia page says "Zume announced that it was ending pizza production".
Edit: found somewhere a headline which explains the source of the dumb money financing Zume. Now it all makes sense: Softbank-backed Zume to shutter robotic pizza business
tldr;
"By chasing rapid expansion without paying enough attention to how much they were actually spending, the co-founders ended up making big bets that cost the company millions — and mistakes that left thousands of gallons of ice cream literally swirling down the drain."
I just came here to post literally that same sentence. This long form stuff is so formulaic. It always goes like:
It was an [adjective] day in [month] [year] with [seasonal weather or some such described] and [person] had no idea about [the thing that was about to happen] and we're going to slowly describe what happened, out of order and jumping around a lot, over the next 5000 words. Enjoy!
It’s a very American style of journalism. I personally find it very irritating (just give me the 5-Ws, dammit), but it sells. I guess you can blame Capote, or Hemingway.
That writing style also annoys the heck out of me. Get to the point!
That style was great when a person received perhaps two or three magazines a month in the mail. Today, if I don't get some inklings about the Five W's[1] in the first paragraph or two, then I'm on to the next article.
Life is too short for me to read the ramblings of someone being paid by the word. There's a need for, and a place for, long form writing. But not for 99%+ of what's out there.
I have to disagree. When I’m reading API documentation (or a particular bugbear, a recipe) then yes, cut the crap and get to the point. But when it’s an article like this telling the story of the rise and fall of a business? I want to be taken on a journey, not receive a bullet point list of things they did wrong. There’s no reason why this topic should not be covered long form style.
- an extruding, continuous freezer which clogged with mix-ins
- storage containers designed for milk which they destroyed by filling with ice cream mix
- square packaging which further complicates packaging
That appellation seems inappropriate in this case. They made good ice cream. At least it was good to me. And the customer service I received at multiple locations was good too.
The only marketing I received was word of mouth referral.
It is kind of hard to make "bad" ice cream though.
(yes I know some snooty people will disagree with this but the literal tons of Hood, Breyers and Friendly's that fly off the shelves for $2.99 on sale beg to differ)
My now-wife and I stumbled upon original Ample Hills location while looking for my first apartment in Brooklyn. It was quite literally the best ice cream I'd ever had. And I like my ice cream. Turned out, they had just opened the week before.
Pretty quickly, the word of mouth spread, and maybe there's a point after which you could call it "marketing-driven", but at the core of it was a truly excellent product.
Admittedly, I didn't read the full story, but the bits I did read included a mid-life crisis guy taking courses to learn to make ice cream and growing a business with the support of his partner.
In reality the equipment is just a starting point. Getting it to produce the end product needs a LOT of trial and error. The smallest adjustments in timing, parameters or recipes can result in a completely different looking, tasting or mouth-feeling product. There is a loop of adjusting the equipment to fit the recipe, then adjusting the recipe to fit the equipment. Then repeat.
Lower-end manufacturers also lie about their product specs, lie about the availability of spare parts and MTBF. Saving money ends up costing a lot more, just like it did to Ample Hills.
Maybe if you have a department of chemists who are working closely with high-end equipment manufacturers you can better predict the outcome with less trial and error ... but I doubt it. Look at Tesla and the manufacturing issues they are having. The best engineers that money could buy spent a lot of time trying to speed up the production line only to find the hard way that shaving two minutes off time on the line resulted in the paint not having long enough to dry.
Food production is a lot harder than software. If you ever want to create a large scale food manufacturer, hire people who have a lot of experience doing it.