How a Multimillion Dollar Ice Cream Startup Melted Down & Bounced Back

A dream flourishes in Brooklyn Ice cream making started as a quirky hobby for Brian Smith, whose zeitgeisty
flavors and fresh ingredients would become his trademark. In summer 2010, Smith and Cuscuna got serious about
selling their homemade ice cream. They opened a pushcart during a neighborhood arts festival, where they could test
flavors with the public—a smart move
“Brian had his whole period of doing it as a cart and really understanding demand and understanding what flavors
were working; it was rigorous upfront testing to see if there was really a business there. This is one of the key
lessons for people who are trying to understand bridging a passion project into a business. They saw that people
were enthralled by their inventive “mix-ins” of fruit, candy, and even maple-candied bacon into traditional ice cream
flavors. They fell in love with a Brooklyn storefront and bargained down its rent. They invested their entire life
savings—$225,000—into opening the store. The store sold all of its products within four days of opening, forcing it
to temporarily close. Earning $1 million in total sales, the store did so well that after three years, the couple
expanded to a second location in Gowanus. That location was a huge success, too, with total sales of $1.4 million.
The Disney partnership
One day, while hand-packing an ice cream order, the couple noticed that Robert Iger, CEO of Disney at the time,
was the customer who would receive it. They added a cookbook and a personal note in the package to Iger, who
later contacted them about a partnership that would make Ample Hills the official ice cream of the Star
Wars franchise and harness its unique flavors to celebrate Mickey Mouse’s 90th birthday. There was marshmallow
“Light Side” and chocolate “Dark Side” flavors; Iger’s influential friends followed. It was the opportunity of a
lifetime. An Ample Hills Creamery store in Disney World would be part of the deal, necessitating, Smith thought, a
new factory. He set out to build it in high-cost Brooklyn—the Red Hook neighborhood—to show the company’s
commitment to its community.
A case of wrong investors, mismatched personnel
The outsized branding partnership would set off a wave of questionable decisions. The couple turned to venture
capitalists with little experience in food and beverage businesses, and with the addition of bank loans, backed by a
personal guarantee, were able to raise $20 million. To keep up with the pace of their rapid expansion, they hired
people who were not well-matched to their roles. Despite these issues, Ample Hills expanded from the East Coast to
the West, opening a store in the trendy Los Feliz neighborhood of Los Angeles. Like any big grocery store, hiring a
co-packer would have helped Ample Hills scale production in line with store expansion. Instead, the company fell
far short of the 400,000 gallons of ice cream it needed to sell annually just to break even on its Red Hook factory,
selling about 250,000 to 280,000 gallons per year.
‘Taking away part of my family’
When the company’s finance director told the couple in 2019 that Ample Hills was running out of money and may
not make it through the lean winter months.“They built a giant factory costing almost $7 million that required sales
that were beyond their reach”. Even with an average store profitability of 15 percent, and the fact that it was
shipping its product to 800 grocery stores, the company simply did not have the sales it needed, given the scale of
the new factory. If it wanted more sales, it would have to open new stores, but it lacked capital.The couple appealed
to their largest investor for support. In 2020, when no investor stepped in to save the company, Ample Hills filed for
bankruptcy.
No more ‘going with the flow’
Smith and Cuscuna licked their wounds, took time off to reflect, and decided to open a new Brooklyn ice cream
shop called the Social in 2021 that mirrored the values of Ample Hills—that is, fresh, homemade ingredients and a
store serving as a community connection point. This time, however, they resolved to avoid the pitfalls of their last
venture. Smith remembered: “We had what I would call a ‘go-with-the-flow’ vibe at Ample Hills. It seems strange
and counterintuitive, but that ‘go-with-the-flow’ vibe, when stretched as far as we stretched it, can result in lots of
miscommunication, lack of accountability, and unclear roles.” They professionalized their business with better
budgeting and record-keeping. They even drew up a mission statement, which they didn’t do the first time around.
They took an online business course in how to pivot after a failed venture and through its teacher met an investor
experienced with rebounds willing to provide the capital, they needed.

Q1. Initially what made Smith & Cuscuna earn $1 million in total sales?
Q2. What was the reason behind Smith & Cuscuna's startup fall? And how did they make it back?
Q3. As an entrepreneur, how is this lesson going to be useful for you?