From Exit to Cocoa Bean: How The Plaxo Founders Started Dandelion Chocolate

A few years back while walking Valencia St here in SF Caroline and I noticed Dandelion Chocolate, a new factory/store which focuses on bean-to-bar production – that means they take care to manage the whole supply chain. Dandelion’s founders previously started the internet company Plaxo, so I was particularly interested to learn how they were incorporating technology into their business. In founder Todd Masonis’ words:

Q: So, the chocolate business? Tell me the founding story of Dandelion Chocolate.
It all started with a love of chocolate. Prior to Dandelion, my friend, Cameron Ring, and I co-founded an Internet company, Plaxo. We sold the company in 2008 to Comcast and were taking some much-needed time off. We were hanging around the HipChat guys, helping them with their company. They had a vacant garage and for fun, Cam and I started experimenting with roasting cacao. We’ve always loved chocolate and it was a challenge make it from scratch. Before long, we had a small chocolate factory running from the HipChat garage.
It’s really fun to make chocolate — you have to source interesting beans from crazy places, build your own machines, and develop whole new processes. When we shared our chocolate with friends and family, they were surprised by the unique and distinct flavors of each bean. While still in the garage, we started winning awards and getting wholesale orders. That’s when we decided we should do something with this.
We also now know, what we didn’t know then, that it’s a really exciting time for chocolate. What happened to coffee, microbrew, and wine, is all happening to chocolate right now. There’s a new American craft chocolate movement where guys in garages all over the country (and now, world) are roasting up specialty beans. In ten years this shift is going to be painfully obvious, but we just stumbled into things right as they were about to take off.
Q: How did your technology background help shape the way you approached DC?
I think it helped tremendously. For one, having a mindset of keeping things lean — and solving the problems you actually have — let us take things one step at a time. The first step was to make sure we could make an incredible product. In our case, that means single-origin bars made with only two ingredients with each origin tasting unique, distinct, and delicious. Second, we wanted to prove the market, but that’s been straightforward. We’ve always been production-limited: our wholesale customer waitlist currently exceeds our actual customer list and we always run at max capacity. Now it’s just a matter of scaling the hard parts, without compromising flavor. This is a process that takes a very long time, but has allowed for a purity of vision and a simple business model.
The tech background also helps in unexpected ways, like even with roasting. The traditional French chocolate makers will say you need at least 30 years to learn how to roast and make a great chocolate bar. But we knew about A/B testing and optimizing metrics, and search spaces and fitness functions. So we applied a very rigorous methodology that got us to testable, repeatable, great flavor much faster.
On the flipside, one unexpected surprise in the non-tech world was all the permitting and regulations. One permit for our factory took over a year and half — and there was nothing contentious, that’s just the speed of government. If every time you wanted to start a website you had to go to city hall and have a bureaucrat sign a piece of paper, there would be no tech industry.
Q: What technology tools do you use at Dandelion and why? (point of sale, back office, etc)
Things are much better now, but when we started a few years ago, there were very few good tools. We were spoiled by having had dashboards, analytics, and data warehousing at Plaxo, so we ended up building our own dashboards for each part of the business. Over time, we’ve been able to swap out parts of our home-grown solution piece-by-piece with better tools. So we’re sort of just left with high-level dashboards and glue code to keep it all together.
The great tools we use are: square (POS), stichlabs (order tracking, invoices), shipstation (shipping), wordpress (blog and basic auth), xero (accounting), intuit online payroll, freshdesk (customer support). All the tools play nicely together, so every transaction/action is seamless. And we have high-level dashboards anyone at the company can look at, e.g. in the kitchen we have an iPad where the pastry team tracks every brownie and cookie sold.
Q: There are many startups who want to serve the local retail market – any advice to founders in that space?
I think there’s still a ton of opportunity here. We were forced to build our own tools, but are very happy with other companies filling this void. Most of the magic comes from the glue code though — when every tool interoperates, it makes for a clean experience. For instance, when someone orders online, it goes straight into our accounting software and a shipping label pops out of the shipping printer. The demand dashboard updates and the fulfillment team gets a notification. Each application is being attacked in it’s own niche way (which is great), but most small companies don’t have the knowhow to glue everything together, so I think that’s one place that is currently underserved.
hunter’s note: SMB SaaS & other retail tools are a focus of our Homebrew seed venture fund