Making Something From Nothing: Kat Connor and Lindzi Shanks Of XO Marshmallow On How To Go From Idea To Launch

An Interview With Fotis Georgiadis

Hire people before you need them — When you’re bootstrapping, it’s easy to get in such a scarcity mindset and be afraid to spend money before you have to. But in my experience, if you wait too long to hire someone for a new position, you are opening yourself up to missed opportunities and important items that fall through the cracks. In 2020, we missed out on a couple of large corporate gifting opportunities because we did not have someone responsible for handling them. In 2021, our CG’s increased by 40% by having some in that position. This year, when we decided to ramp up online orders, we hired a head of fulfillment now before the ramp-up to better prepare for that growth when it does happen.

As a part of our series called “Making Something From Nothing”, I had the pleasure of interviewing Lindzi Shanks and Kat Connor.

XO Marshmallow is the leading purveyor of handmade, gourmet marshmallows in the world. Whether it’s in front of a campfire or a microwave, making s’mores and sipping cocoa is a fond childhood memory for many. Created by Kat Connor and Lindzi Shanks in 2015, XO Marshmallow’s co-founders have revolutionized the confectionery industry with their modern take on these nostalgic treats. In 2020 alone, wholesale rose 114% 2020–2021, and online sales increased 40% during the same time frame. XO Marshmallow saw a 50% increase in sales from 2020 to 2021 (after a 154% increase from 19' to 20'), and eCommerce sales increased 42% from 20’ to 21’.

Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a bit about your “childhood backstory”?

LS: I grew up in a very small town outside of Dallas, TX — the type of small town where everyone knew everyone. My mom not only graduated from the same high school I went to, but she taught there, too. That’s how small it was. The oldest of 3 girls to a single mother, I learned quickly how to be very self-sufficient and independent. I was your typical overachiever student active in sports, theater, debate, and was top of my class. I grew up in a household where “B’s” were “F’s” so this level of achievement and involvement was expected. Although I was involved in many activities, I spent the majority of my time in debate or working on DIY craft projects. After I graduated, I went on to study psychology at Texas Tech University where I planned on becoming a professor. While in undergrad, I started my first business, an Etsy store that grew so quickly I was able to quit my other jobs while in school and live solely off that income. I never planned on staying in Texas — from a young age, I dreamed of moving somewhere completely different. When it came time to go to grad school, I opted for the University of Chicago where I gained my Master’s. However, I quickly realized I didn’t enjoy graduate school. Instead, I was spending most days working on my Etsy shop, so after I finished my MA I stayed in Chicago and continued to run that shop before meeting Kat and starting XO Marshmallow together.

KC: I am originally from Chicago, and one of 5 kids. Growing up, I loved being in the kitchen and watching my mom bake; we were definitely a “microwave treats” kind of household so lots of rice crispy treats, brownies, and chocolate chip cookies. I loved reading, writing, and watching movies which led me to pursue a degree in creative writing and film at Hollins University in Virginia. I became increasingly interested in our rapidly changing political environment and how it intersected with popular culture and began focusing on political science, and then intellectual property law. Following that passion, I ended up at Marquette University Law School in Milwaukee, Wisconsin. It was while in school that I made my first batch of marshmallows in my tiny kitchen with a 20-year-old mixer. After graduating and moving back to Chicago, I decided to take a few months to experiment further with homemade marshmallows and the rest (as they say) is history!

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

LS: I’m the type of person that absolutely loves looking at little quotes and phrases for inspiration. That said, I actually don’t have a favorite quote because I look more for a variety of quotes that match the energy I’m looking for at the time. Right now, I’m very focused on the importance of self-care and setting personal and professional boundaries as a business owner so I am gravitating towards quotes in that area that are inspiring this current stage of my life. Right now, I’m loving the quote “you can’t pour from an empty cup”.

Is there a particular book, podcast, or film that made a significant impact on you? Can you share a story or explain why it resonated with you so much?

KC: There are so many books, podcasts, and films that have made an impact on me! Recently, the documentary Disclosure on Netflix has really resonated with me. The film focuses on transgender representation in cinema and calls into question how the trans community has been impacted by popular media. While at Marquette, I saw Laverne Cox give a speech, and her call for advocacy and allyship was incredibly powerful. I think the points she makes within the documentary offers an important view into how exactly diversity and representation matter — not just within tv and movies — but within businesses and society as a whole.

Ok super. Let’s now shift to the main part of our discussion. There is no shortage of good ideas out there. Many people have good ideas all the time. But people seem to struggle in taking a good idea and translating it into an actual business. Can you share a few ideas from your experience about how to overcome this challenge?

LS: I think the main reason most good ideas never made it to a business is fear. Most people are afraid of starting something new or turning an idea into a business. What if someone doesn’t like it? What if I fail? What if someone else just copies me? These are the questions new entrepreneurs face every single day, and for most, those ‘what if’ questions are scary enough that they just don’t start. When that happens, the best advice I can give is to start planning it out and create a runway you’re comfortable with before leaping. Come up with a product, a concept, a brand, and a business plan — then just start knowing that it won’t be perfect when you do. At some point, you’ll have to either overcome the fear or learn to live with it — all entrepreneurs do. Otherwise, an idea just stays an idea.

Often when people think of a new idea, they dismiss it saying someone else must have thought of it before. How would you recommend that someone go about researching whether or not their idea has already been created?

KC: I think most people assume an idea has been thought of before, which often keeps them from moving forward. While yes, there are legal protections that every entrepreneur should be aware of when it comes to intellectual property, one principle to keep in mind is: it is the product that is made from the idea that is protected, not necessarily the idea itself. What I would recommend to someone researching a new idea or concept is to keep in mind that it’s what you do with the idea that matters.

For the benefit of our readers, can you outline the steps one has to go through, from when they think of the idea, until it finally lands in a customer’s hands? In particular, we’d love to hear about how to file a patent, how to source a good manufacturer, and how to find a retailer to distribute it.

KC: The process of idea to tangible product can be pretty tough and complicated.

• Research: Once you have an idea, step two is always research — looking for the limits of your idea. By that I mean, where can this idea take you? Has the physical product been made before? Are you improving an existing process or creating a new one?
• Logistics: That will lead you to step three, logistics. You’ll want to figure out how to get your idea to production. Maybe you need office space, materials, or legal help. That’s a great time to find some resources, and I definitely recommend knowing your own strengths and weaknesses for this part. You will save a LOT of time and money down the road setting yourself up for success now.
• Manufacturing: Step four is manufacturing and scaling, so maybe you’re making a product by hand at home, but you need to keep up with demand. More decisions come up — like do you hire help? Do you automate the process somehow? A lot of the decisions come down to budget, and it’s always ok to work within your budget with an eye on the future.
• Markets: Next, you’ll want to strategize on how to bring your product to the marketplace. There are a lot of great resources available here, probably in your community! I recommend reaching out to your local business center or chamber of commerce for some free guidance. E-commerce businesses versus retail establishments have different requirements and possibly different customers. Knowing what you need to make a splash in the market is an important step!
• Do it! The final step is to just go for it. Showing up for your customers is the most important thing when bringing your idea to life; even if you show up imperfectly. Be flexible and learn from your mistakes as you continue to grow your business.

What are your “5 Things I Wish Someone Told Me When I First Started Leading My Company” and why? (Please share a story or example for each.)

LS:

1. There is a difference between a “leader” and a “boss” — We started our business during the height of the “girl boss hustle culture” movement, and as young entrepreneurs who both went straight from school to running a business, our concept of what a “leader” is was not what it is now. People think these words ‘boss’ and ‘leader’ are naturally interchangeable. They’re not. A leader champions their employees to grow and do better while also encouraging healthy work/life boundaries. A leader shares the credit but owns the blame. A leader is constantly looking for ways to better serve their team and customers. Your company needs a good leader way more than it needs another boss.
2. Your team is your biggest asset — When you start your business, it’s easy to think your product is everything. That as long as you have an amazing product, then everything will work out. But over the last few years, I’ve learned that your team is everything. A good team can be the difference between a shop that thrives during difficult times or one that crumbles. By focusing on our team over the last couple of years, we have been able to dramatically reduce turnover and focus on growing those team members rather than spending energy on rehiring and training.
3. Hire people before you need them — When you’re bootstrapping, it’s easy to get in such a scarcity mindset and be afraid to spend money before you have to. But in my experience, if you wait too long to hire someone for a new position, you are opening yourself up to missed opportunities and important items that fall through the cracks. In 2020, we missed out on a couple of large corporate gifting opportunities because we did not have someone responsible for handling them. In 2021, our CG’s increased by 40% by having some in that position. This year, when we decided to ramp up online orders, we hired a head of fulfillment now before the ramp-up to better prepare for that growth when it does happen.
4. Your mental health/health matters, too — As a founder, it’s so easy to work yourself ragged. To bear the weight of everything on your shoulders, and to put every single person before yourself. But if you are so beyond exhausted, stressed, and burnt out — you are not able to be the best leader for your team. You have to remember to set boundaries and take time for yourself. Otherwise, you are trying to pour from an empty cup, and that stress will bleed out onto your team. A few years ago, my business partner and I were working ourselves to the bone and the stress was too much. In response, she developed Bell’s Palsy and I nearly had a full breakdown. Now, we remember to take time off for ourselves and prioritize self-care and boundaries. Our business and our team thrived and grew when we started working LESS!
5. Who you know is so important — Growing up, I naively scoffed at the phrase “it’s not what you know, it’s who you know”. My upbringing focused so greatly on the importance of intelligence and hard work, that I thought you could grit your teeth and just outwork everyone to the top. Obviously, hard work helps, but do not underestimate the importance of making connections with people who can help your business. There are plenty of people out there who know more than you and who have connections with people that can help you, and you are doing both yourself and your business a disservice by not capitalizing on them. As we’ve been building our new production facility, we’ve relied heavily on the connections and knowledge of others to help get us through this process.

Let’s imagine that a reader reading this interview has an idea for a product that they would like to invent. What are the first few steps that you would recommend that they take?

KC: I would recommend first writing or drawing out the idea and all the details you can about its invention. Then, do a bit of research to see what similar products or other solutions to the problem you are trying to solve are out there. As a part of that research, try not to get too into your own head about comparing yourself to others. Refer back to your initial thoughts and feelings surrounding the product, and trust that vision! It will help keep you on track.

There are many invention development consultants. Would you recommend that a person with a new idea hire such a consultant, or should they try to strike out on their own?

LS: Personally, I wouldn’t. I think ultimately it boils down to the product/idea, but, for me, I think it makes the most sense to try to cultivate and grow your idea as much as you can on your own first. It helps you work out any kinks or issues you may have with the product before you grow too quickly. It makes sure that you really know your product better than anyone else and are poised to be a champion of that product. Obviously, if you get to a point where you can no longer develop a product on your own, then it might make sense to bring in a consultant but do as much as you can on your own first.

What are your thoughts about bootstrapping vs looking for venture capital? What is the best way to decide if you should do either one?

LS: I think funding is often very industry-driven. It’s hard to bootstrap in an industry where your business requires a lot of upfront capital to get started. However, if you are in a position to be able to bootstrap vs. get VC funding, I think it makes more sense to bootstrap for as long as you can. Not only does it allow you to retain control over your company, but often the “grow slow” approach leads to more long-lasting companies. If your goal is to build a business that you plan to be with long-term, then bootstrapping is the way to go. If you’re looking to grow a company incredibly quickly with a planned exit strategy, then VC is the better choice.

Ok. We are nearly done. Here are our final questions. How have you used your success to make the world a better place?

KC: Our success has allowed us to give back to our community, both professionally and personally. When we first started XO Marshmallow, we each put in $100 to a bank account and scraped together what we could on the smallest of budgets. We relied on the advice of fellow business owners, our chamber of commerce, and free education wherever we could find it. Now, when we can, we like to be a resource for other entrepreneurs, especially womxn, who are asking the same questions we were when we got started. In addition, we are able to financially support many causes that we are passionate about, like racial justice, LGBTQ allyship, and mental health causes.

You are an inspiration to a great many people. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger.

LS: The importance of mental health is something we are very passionate about — not just for ourselves and our employees. We plan to continue to integrate the importance of taking care of your mental health and reducing the stigma around mental health in our company culture — but we’d like to expand upon that through our business somehow.

We are very blessed that some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US, with whom you would love to have a private breakfast or lunch, and why? He or she might just see this if we tag them.

KC: I would love to grab a coffee with former first lady Michelle Obama. I think what makes her such a fascinating person is her personal philosophy of becoming, that personal growth is a journey, not necessarily a destination. While her accomplishments as a lawyer, health advocate, mother, and First Lady are incredibly impressive and well-deserved, it is how she moves through these roles that makes her truly a leader and an inspiration for all.

Thank you for these fantastic insights. We greatly appreciate the time you spent on this.