9 ms·

The Meltdown of Ample Hills

73 points by JackFr 6y ago

sparrish 6y ago
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."
- TedDoesntTalk 6y ago
  Thanks for this. I’m interested in the story but not going to spend 30+ minutes or more to get to the bottom of it.
  - afavour 6y ago
    Then it sounds like you’re not interested in the story! You’re interested in the conclusions. Which is fine, but telling a story takes time.
    - TedDoesntTalk 6y ago
      Correct. I should edit my comment to say I’m interested in the reason for the downfall.
- codeulike 6y ago
  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!
  - PhantomGremlin 6y ago
    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. [1] https://en.wikipedia.org/wiki/Five_Ws https://en.wikipedia.org/wiki/Five_Ws
    - afavour 6y ago
      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.
  - toyg 6y ago
    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.
- trhway 6y ago
  also notable that they did try to save money on the things like the actual ice cream making equipment.
  - phnofive 6y ago
    On the contrary, they didn’t know what to buy: - 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
- deleted 6y ago
  [deleted]
zamfi 6y ago
> 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.
- ipsum2 6y ago
  > ‘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.
zzzeek 6y ago
Ample Hills had a pretty ice cream parlor on Vanderbilt but I never liked their ice cream very much. Blue marble was way better.
teruakohatu 6y ago
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.
- macNchz 6y ago
  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.
- toyg 6y ago
  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.
filmgirlcw 6y ago
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.
bsder 6y ago
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.
- PhantomGremlin 6y ago
  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! Too much dumb VC money sloshing around. [1] https://en.wikipedia.org/wiki/Zume https://en.wikipedia.org/wiki/Zume
  - TedDoesntTalk 6y ago
    I’m guessing turnover in a pizzeria is very high. Robots don’t quit or show up late or get sick. But yeah, you have a great point.
    - bsder 6y ago
      Then double their salary and suddenly you will have people who want to show up for work. You can pay a lot of $20 per hour while working out your bugs before a $50,000 robot would have been cheaper. And, in the meantime, you are still making money. Cash flow is good.
      - 6y ago
lordnacho 6y ago
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?
- thaumasiotes 6y ago
  > 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.”
deleted 6y ago
[deleted]
hackitup7 6y ago
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.
wan23 6y ago
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.
- pimlottc 6y ago
  Have you been there since the change in ownership? Has the quality of the ice cream changed? Hadn’t heard of them before now and wonder if it’s still work checking out next time I’m in one of those cities.
deleted 6y ago
[deleted]
ChuckMcM 6y ago
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.
mixmastamyk 6y ago
Amazing story that hit home! 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.
tpmx 6y ago
It's kind of hard to feel bad for a marketing-driven company failing.
- FriedrichN 6y ago
  Bill Hicks on Marketing https://www.youtube.com/watch?v=tHEOGrkhDp0 https://www.youtube.com/watch?v=tHEOGrkhDp0
  - naldini 6y ago
    Thanks for the laugh, classic Bill Hicks
- marcinzm 6y ago
  People seem to have actually liked the ice cream. Most every company will do marketing, nothing evil about that.
- thomaslangston 6y ago
  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.
  - throwaway0a5e 6y ago
    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)
- prawn 6y ago
  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.
- acjohnson55 6y ago
pradn 6y ago
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.
- striking 6y ago
  Is it really so unfortunate? They seem to still be operating[1][2][3], just without the froth. 1: https://www.amplehills.com/ https://www.amplehills.com/ 2: https://twitter.com/amplehills https://twitter.com/amplehills 3: https://order.trycaviar.com/ample-hills https://order.trycaviar.com/ample-hills
  - acjohnson55 6y ago
    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.
    - FireBeyond 6y ago
      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.
      - acjohnson55 6y ago
        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.
    - graerg 6y ago
      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.
marcinzm 6y ago
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.
- mdorazio 6y ago
  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.
- scrozier 6y ago
  "We're losing $1.00 on every sale, but we'll make it up in volume!" (I can't remember where this comes from.)
  - GauntletWizard 6y ago
    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. [1] I found the relevant quote at https://norighttobelieve.wordpress.com/2011/06/08/everybody-has-a-share/ https://norighttobelieve.wordpress.com/2011/06/08/everybody-...
  - throw_away 6y ago
    https://www.nbc.com/saturday-night-live/video/first-citiwide-bank-change-ii/n9703 https://www.nbc.com/saturday-night-live/video/first-citiwide...
romwell 6y ago
Everything aside, props to headline writers for coming up with that "Ice Cream Meltdown" title.
JoeAltmaier 6y ago
Same thing happened at our local Great Midwestern Ice Cream Company. They expanded, had several stores. Built a factory and Boom! bankrupt. Just because you like ice cream, is no reason to think you should run a business. You have to like business.
- DavidPeiffer 6y ago
  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.
  - JoeAltmaier 6y ago
    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. Anyway it works all kinds of ways.
h2odragon 6y ago
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.
- gsk22 6y ago
  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.
  - CydeWeys 6y ago
    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.
  - fredophile 6y ago
    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.
    - carabiner 6y ago
      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.
      - Alupis 6y ago
        Not quite so simple. 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.
dundermuffl1n 6y ago
TLDR: they didn't do much math on the revenues and expenses. Even with a product that's an outright winner, it is hard to be successful if you do not have basic financial sense.
darth_avocado 6y ago
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.
- dialamac 6y ago
  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.
  - darth_avocado 6y ago
    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.
digitaltrees 6y ago
Unit economics are under rated
CPLX 6y ago
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.
skirunman 6y ago
Retail is very much a real estate business. Reading the article it sounds like they needed more expertise in this area.
acjohnson55 6y ago
I loved Ample Hills. Such a bummer that it didn't work out for the founders. A truly epic rise and fall. I recommend checking out the podcast, As The Ice Cream Churns, which is the rise and fall of Ample Hills from the founders' perspective. https://anchor.fm/astheicecreamchurns https://anchor.fm/astheicecreamchurns 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.
cwp 6y ago
What a great headline. Almost British.

73 points by JackFr 6y ago

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."

TedDoesntTalk 6y ago
Thanks for this. I’m interested in the story but not going to spend 30+ minutes or more to get to the bottom of it.
- afavour 6y ago
  Then it sounds like you’re not interested in the story! You’re interested in the conclusions. Which is fine, but telling a story takes time.
  - TedDoesntTalk 6y ago
    Correct. I should edit my comment to say I’m interested in the reason for the downfall.
codeulike 6y ago
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!
- PhantomGremlin 6y ago
  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. [1] https://en.wikipedia.org/wiki/Five_Ws https://en.wikipedia.org/wiki/Five_Ws
  - afavour 6y ago
    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.
- toyg 6y ago
  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.
trhway 6y ago
also notable that they did try to save money on the things like the actual ice cream making equipment.
- phnofive 6y ago
  On the contrary, they didn’t know what to buy: - 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
deleted 6y ago
[deleted]

zamfi 6y ago

> 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.

ipsum2 6y ago
> ‘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.

zzzeek 6y ago

Ample Hills had a pretty ice cream parlor on Vanderbilt but I never liked their ice cream very much. Blue marble was way better.

teruakohatu 6y ago

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.

macNchz 6y ago
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.
toyg 6y ago
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.

filmgirlcw 6y ago

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.

bsder 6y ago

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.

PhantomGremlin 6y ago
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! Too much dumb VC money sloshing around. [1] https://en.wikipedia.org/wiki/Zume https://en.wikipedia.org/wiki/Zume
- TedDoesntTalk 6y ago
  I’m guessing turnover in a pizzeria is very high. Robots don’t quit or show up late or get sick. But yeah, you have a great point.
  - bsder 6y ago
    Then double their salary and suddenly you will have people who want to show up for work. You can pay a lot of $20 per hour while working out your bugs before a $50,000 robot would have been cheaper. And, in the meantime, you are still making money. Cash flow is good.
    - 6y ago

lordnacho 6y ago

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?

thaumasiotes 6y ago
> 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.”

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hackitup7 6y ago

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.

wan23 6y ago

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.

pimlottc 6y ago
Have you been there since the change in ownership? Has the quality of the ice cream changed? Hadn’t heard of them before now and wonder if it’s still work checking out next time I’m in one of those cities.

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ChuckMcM 6y ago

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.

mixmastamyk 6y ago

Amazing story that hit home! 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.

tpmx 6y ago

It's kind of hard to feel bad for a marketing-driven company failing.

FriedrichN 6y ago
Bill Hicks on Marketing https://www.youtube.com/watch?v=tHEOGrkhDp0 https://www.youtube.com/watch?v=tHEOGrkhDp0
- naldini 6y ago
  Thanks for the laugh, classic Bill Hicks
marcinzm 6y ago
People seem to have actually liked the ice cream. Most every company will do marketing, nothing evil about that.
thomaslangston 6y ago
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.
- throwaway0a5e 6y ago
  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)
prawn 6y ago
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.
acjohnson55 6y ago

pradn 6y ago

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.

striking 6y ago
Is it really so unfortunate? They seem to still be operating[1][2][3], just without the froth. 1: https://www.amplehills.com/ https://www.amplehills.com/ 2: https://twitter.com/amplehills https://twitter.com/amplehills 3: https://order.trycaviar.com/ample-hills https://order.trycaviar.com/ample-hills
- acjohnson55 6y ago
  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.
  - FireBeyond 6y ago
    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.
    - acjohnson55 6y ago
      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.
  - graerg 6y ago
    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.

marcinzm 6y ago

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.

mdorazio 6y ago
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.
scrozier 6y ago
"We're losing $1.00 on every sale, but we'll make it up in volume!" (I can't remember where this comes from.)
- GauntletWizard 6y ago
  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. [1] I found the relevant quote at https://norighttobelieve.wordpress.com/2011/06/08/everybody-has-a-share/ https://norighttobelieve.wordpress.com/2011/06/08/everybody-...
- throw_away 6y ago
  https://www.nbc.com/saturday-night-live/video/first-citiwide-bank-change-ii/n9703 https://www.nbc.com/saturday-night-live/video/first-citiwide...

romwell 6y ago

Everything aside, props to headline writers for coming up with that "Ice Cream Meltdown" title.

JoeAltmaier 6y ago

Same thing happened at our local Great Midwestern Ice Cream Company. They expanded, had several stores. Built a factory and Boom! bankrupt. Just because you like ice cream, is no reason to think you should run a business. You have to like business.

DavidPeiffer 6y ago
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.
- JoeAltmaier 6y ago
  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. Anyway it works all kinds of ways.

h2odragon 6y ago

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.

gsk22 6y ago
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.
- CydeWeys 6y ago
  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.
- fredophile 6y ago
  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.
  - carabiner 6y ago
    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.
    - Alupis 6y ago
      Not quite so simple. 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.

dundermuffl1n 6y ago

TLDR: they didn't do much math on the revenues and expenses. Even with a product that's an outright winner, it is hard to be successful if you do not have basic financial sense.

darth_avocado 6y ago

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.

dialamac 6y ago
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.
- darth_avocado 6y ago
  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.

digitaltrees 6y ago

Unit economics are under rated

CPLX 6y ago

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.

skirunman 6y ago

Retail is very much a real estate business. Reading the article it sounds like they needed more expertise in this area.

acjohnson55 6y ago

I loved Ample Hills. Such a bummer that it didn't work out for the founders. A truly epic rise and fall. I recommend checking out the podcast, As The Ice Cream Churns, which is the rise and fall of Ample Hills from the founders' perspective. https://anchor.fm/astheicecreamchurns https://anchor.fm/astheicecreamchurns 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.

cwp 6y ago

What a great headline. Almost British.