1. Stay on task. Entrepreneurs tend to be optimists with high risk tolerance. It’s why someone like Adam was willing to leave a great job at PepsiCo to start AWAKE with two co-founders. That type of enthusiasm also makes him susceptible to chasing new ideas instead of maintaining focus. Don’t go after every good idea; focus on pursuing one great one.
2. Find your brand’s North Star. For AWAKE Chocolate, it’s taste. While the product provides energy, it must be delicious above all else.
3. Customers can help course correct. If you ask customers, they’ll tell you what they want. If you listen to them, you’ll be able to correct mistakes that you’ve made at various points of the production process.
4. Play the long game. Reinvesting as much as you can into growth early on is the best path to long-term viability. If you’re focused on short-term financial wins, you can starve your business of long-term opportunities.
5. Be resilient. No plan will go perfectly. Avoiding every mistake is impossible. Learning to bounce back from those setbacks, however, is a skill. One every entrepreneur should hone.
Adam Deremo and his co-founders built the AWAKE from one single game-changing insight: There was a sizeable market of people who wanted more energy, but weren’t buying a coffee or energy drink to address that need due to the taste. Caffeine is bitter. AWAKE Chocolate delivers that boost from caffeine while masking the taste, making it a delicious option for anyone looking for a pick-me-up. As you read about AWAKE’s growth, you’ll see how data-driven, thoughtful entrepreneurship has steered the company through unexpected challenges and built partnerships with companies like Costco, which asked to introduce an exclusive line of AWAKE chocolate. It’s amazing what a company can do when it identifies what’s most important to its customers.
Meet Adam Deremo, co-founder and CEO of AWAKE Chocolate.
The distribution model is unique for a packaged food item. Thirty percent of sales are direct-to-consumer, a total that includes Amazon and Shopify. Thirty percent are through retail partners, meaning grocery stores and (more recently) Costco. The remainder is via food-service partners as AWAKE has built relationships with some of the biggest players in that space, companies like Compass, Sodexo and Aramark. Going forward, one of the company’s main priorities is expanding its sales through retail outlets.
Adam had extensive experience in packaged food, having worked first for Kraft Food and later for PepsiCo. AWAKE Chocolate grew out of a very straight-forward insight he gained over time: Eighty percent of the population feels it needs more energy. Only 70 percent of that group, however, addresses that need by consuming something like coffee or an energy drink. The other 30 percent? They can’t get past the taste. Caffeine is bitter, and that’s really hard to counteract in a beverage.
What looked like a beverage problem was actually solved with a food technology by Adam and his two co-founders. Coating the caffeine particles in vegetable oil—a process called microencapsulation—suppressed the taste without affecting the functionality. Now, they needed the right vehicle to deliver that caffeine.
“As soon as we had that breakthrough, we got focused on the chocolate category,” Deremo said. “If taste is the first thing you're trying to solve for, why wouldn't you go to chocolate? It's delicious.”
The more they looked at the market, the more exciting it became because while it is a large category among supermarket products, it’s also very mature. Many of the top brands have been around for 50, even 100 years. “We thought we could really make a contribution to the chocolate space by introducing functionality,” Deremo said. “So many other categories have grown because of functional innovation that we wanted to be the brand who brought that to chocolate.”
The team is lean for a company of its size, but it works well. Two-thirds work out of the company’s office in Toronto, Canada. The remaining third in the U.S. AWAKE went to a hybrid schedule before COVID happened with team members working in the office some days, from home the others. Deremo was skeptical of the proposal at first, but ultimately decided to listen to his team and give it a try.
“It was a thing that I was happy to be wrong about,” Deremo said, “Because having a certain amount of work-from-home time really did increase people's productivity. I think a founder and a leader should do whatever they can within reason to make the team happy as long as they're not sacrificing productivity.”
Taste is the company’s North Star, and Deremo said the company’s objective is to make every customer’s experience happily delicious: “Every time somebody has one of our products, no matter where they buy it, I want them to be surprised and delighted: This tastes amazing.” This requires a tremendous amount of testing before any product is released as different formulations are tried to get the taste just right. “Food is an absolutely visceral thing,” Deremo said. “You physically experience it, and when you eat something that tastes great, that makes you happy.”
About 30 percent of AWAKE’s business is direct-to-consumer where convenience is a significant factor, but once a company achieves any kind of scale, it’s impossible to prevent all mistakes.
“The law of numbers will tell you,” Deremo said, “if you're fulfilling hundreds of thousands of orders in a year, a couple of them are not going to go the way that you want, and so in those circumstances, our philosophy is really the consumer is right and do what it takes to make them happy.”
Currently, about 90% of AWAKE’s revenue is generated by the sale of bite-sized pieces. That’s a surprise because when the company was founded, the expectation was the company would primarily make chocolate bars.
In fact, the only reason AWAKE developed its bite-sized pieces was so it could provide samples to potential customers. Almost immediately, those consumers said they preferred the bite-sized pieces compared to the full bars.
“Different people had different reasons,” Deremo said. “Reduced sugar, fewer calories, easier to take with you. And so we said, ‘All right, why don't we try selling that?’ And as soon as we tried selling it, it sold better than our bars.”
Customer requests for dark chocolate flavors provided a similar cue for the company.
“You only need to hear that a few times to realize there's interest,” Deremo said. “In our case, we were hearing it hundreds or thousands of times. So we took that insight, reached out to consumers with different surveys and polls and said, ‘What dark chocolate flavors would you like us to launch?’ “
That research led to formulations for Dark Chocolate Salted Caramel and Dark Chocolate Salted Almond. The fact that Costco was interested in those flavors was an unexpected perk, and they wound up launched as exclusives for the store.
AWAKE’s sales really pick up around Labor Day as students are returning to school and everyone is resetting their schedules. The surge continues until Christmas especially since AWAKE’s retail customers will tend to update their product displays ahead of the holidays. Being a food brand poses a very specific challenge for Deremo’s team. “We try as hard as we can to get forecasts from our customers so we can anticipate needs,” he said. “We try to build inventory in advance within reason because the product has to be fresh when it gets to the store. Those are really the two things that help us just trying to build as much foresight as possible into the business.”
Anyone considering the food space specifically needs to start with the understanding that the quality of the product is everything, according to Adam: “You can convince a lot of people to try something once. They're only going to eat it again if it's great. If it's delicious and it delivers on whatever benefits you say it should deliver on. So cut no corners on the quality of your product.”
Also, you absolutely must be resilient. There are going to be unforeseen obstacles.
“If anyone out there has launched a food company,” Adam said, “and had everything go the way they expected, let me know because you're a unicorn. You're going to have to bounce back.”
What is the most important quality that you're looking for in new hires for your team? Attitude. We hire for attitude and train on skills. The attitude we're looking for is entrepreneurial in nature. Someone who's just passionate about growth and wired to solve problems.
What is the No. 1 tool that you personally couldn't live without? I like to read so books and publications.
Do you have something that specifically stuck with you? One was “Measure What Matters.” That’s all about OKRs (Objectives and Key Results), which is a framework we use at Awake. Another book was “Radical Candor’ by Kim Scott, which is more about management philosophy and the need to just be really clear with people, but also genuinely care about them. I particularly appreciated the emphasis on making sure you can build real relationships. It's one thing to speak with candor. It's another thing when they know it's coming from a place of care. That's where you unlock some effectiveness, and I think just finding ways to make sure your team knows that you care is probably an overlooked part of being a leader.
What is the most important quality you look for whenever you're bringing on somebody to the team? Initiative. I'm not a micromanager, so once they're trained, I like to have them take their own initiative. People that are able to come in and start making decisions, I believe those are the type of people that can really grow your business. I obviously can't be in charge of every single decision within the company, and having people that are willing to take the initiative and do that for me, that's really what's helped grow the business up to what it is now.
What’s your No. 1 challenge as a leader? Maintaining focus, and avoiding priority dilution. That was especially a problem for me early on. One feature of entrepreneurs is that most of us have a high tolerance for risk and some sense of optimism. We all see opportunity. It is very difficult not to chase the newest thing, but I found that when you're doing that, you don't actually accomplish anything meaningful. So it's necessary to remain on task.
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