Founder: Lindzi Shanks 
Business: XO Marshmallow 
Revenue/Month: $108K 
Founders: 2 
Employees: 7 
Website: xomarshmallow.com  
Location: Chicago, Illinois, USA 
Founded: 2016 

In a world where trends fade faster than a summer bonfire, XO Marshmallow has achieved the near-impossible: transforming a nostalgic childhood treat into a cultural phenomenon. Founded in Chicago, the brand has taken marshmallows from campfire staple to luxury indulgence, creating not just a product, but an experience. At the forefront of this sweet revolution is Lindzi Shanks, co-founder and co-CEO, who’s turned what some might see as a simple confection into a symbol of creativity and connection. 

“We didn’t just want to make marshmallows; we wanted to reimagine what they could be,” Shanks explains. “Most people think of them as something you throw into a hot cocoa or roast over a flame. We saw an opportunity to elevate that, to make them the star of the show.” And elevate them they have. XO Marshmallow’s flavor lineup reads more like a high-end dessert menu than a grocery store shelf—Pistachio, Lavender Honey, Bourbon, Butterbeer. Each is handcrafted with care, using premium ingredients and innovative recipes that strike a delicate balance between nostalgia and novelty. 

But it’s not just the flavors that have captured hearts—it’s the entire ethos of the brand. Shanks understands that today’s consumers, especially millennials and Gen Zers, crave more than just a good product. “People want to feel something when they buy,” she says. “They want to see themselves in the brands they support.” That insight has guided everything from XO’s pastel-hued packaging to its vibrant, personality-driven social media presence. The brand’s Instagram feed is a visual playground, brimming with cheeky captions, marshmallow close-ups, and pops of color that practically beg to be shared. 

XO Marshmallow’s offerings extend far beyond its namesake treat. Among the most buzzworthy creations is the OMG—short for Ooey Marshmallow Goodness—a jar of gooey decadence that invites endless experimentation, from spreading it on toast to baking it into desserts. Another hit is the Oh Dough You Didn’t, a playful mashup of marshmallow and cookie dough that Shanks describes as “the ultimate indulgence.” For Shanks, these aren’t just products; they’re invitations to have fun. “We want people to play with their food again, to find that sense of wonder they had as kids,” she says. 

Perhaps the most unique extension of the brand is the XO Marshmallow Cafe, the first marshmallow-focused cafe in the world. Equal parts retail space and immersive experience, the cafe is a physical manifestation of the brand’s joyful spirit. “When we created the cafe, it wasn’t just about selling marshmallows,” Shanks says. “It was about creating a space where people could feel the happiness and whimsy of our brand in real life.” With its pastel walls, photo-ready decor, and menu items like marshmallow lattes and s’mores tacos, the cafe invites visitors to step into the XO universe—a place where even the simplest pleasures are celebrated. 

The cafe has become a destination in its own right, attracting locals and tourists alike. Shanks notes that customers often linger longer than expected, soaking in the atmosphere and snapping photos. “People don’t just want a good snack; they want an experience they can share with others,” she says. And sharing is at the heart of XO Marshmallow’s appeal, from its Instagrammable aesthetic to the gift-worthy nature of its products. 

It’s not just food, though. XO Marshmallow has leaned into lifestyle branding, offering merchandise like mugs, tote bags, and apparel that allow fans to carry the brand’s cheerful energy with them. “The goal has always been to bring joy,” Shanks says. “Whether it’s through a marshmallow or a sweatshirt, we want people to feel uplifted.” It’s a vision that extends into every facet of the company, creating a cohesive experience that resonates deeply with their audience. 

For Shanks, the success of XO Marshmallow is rooted in passion and purpose. “We’ve never wanted to be just another dessert brand,” she says. “We want to be the brand people turn to when they’re celebrating, when they need a pick-me-up, or when they just want something that makes them smile.” From the carefully curated flavors to the cafe’s inviting decor, every decision is made with that goal in mind. And as their tagline says, XO Marshmallow is truly “more than just a marshmallow.” Through Shanks’ vision, it has become a colorful, sweet, and irresistibly fun way of life. 

From Holiday Experiment to Full-Fledged Business 

Great ideas often originate in the most unexpected places, and for XO Marshmallow, that spark was lit in a law school kitchen. Long before the brand became synonymous with gourmet marshmallows, it was the product of a holiday experiment, a pop-up shop, and two entrepreneurs with complementary strengths. The early days of the business were shaped by creativity, adaptability, and a shared determination to turn an unconventional idea into something much bigger. 

“Kat [Connor] was experimenting with homemade marshmallows during her last year of law school,” Shanks recalls. “It started as a way to give her family something personal and affordable for the holidays, but it quickly became something more. Her family loved them so much that she kept playing with the recipes, trying new flavors and textures.” Connor’s culinary tinkering took on a life of its own, and a s’mores bar at her graduation party proved to be a lightbulb moment. “That was when she realized people really loved this concept,” Shanks says. “It wasn’t just a novelty—it had potential.” 

While Connor was perfecting her marshmallow recipes, Shanks was deep into her own entrepreneurial journey. Armed with a master’s degree in psychology and years of experience running a successful online boutique, she decided to take her talents offline, launching a holiday pop-up shop in Chicago. The temporary storefront combined her skills in eCommerce and branding with an opportunity to test new ideas in a physical space. 

“Kat joined the team during that holiday season,” Shanks explains. “She started helping out with the pop-up, and one day, I asked her to make marshmallows to pair with our coffee mugs. It was such a natural fit—people immediately loved the idea of the ‘mallow + mug’ combo. It became our best-seller almost overnight.” 

By the time the holiday season ended, it was clear they had stumbled onto something special. Connor’s knack for crafting innovative recipes and Shanks’s ability to connect with customers and create a standout brand made for a perfect partnership. “We each brought something different to the table,” Shanks says. “Kat is incredibly talented when it comes to product development, and I’ve always loved the business and branding side of things. We knew we could build something really exciting together.” 

With just $100 each and a shared vision, Shanks and Connor officially launched XO Marshmallow in January 2016. From the outset, their approach was highly collaborative. Shanks explains, “We were constantly listening to customers. During that first pop-up, we kept notes on what flavors people loved, what questions they were asking, and what ideas they had. That feedback shaped everything we did, from the marshmallow flavors we focused on to the way we packaged them.” 

This customer-driven creativity became a core philosophy for XO Marshmallow. Connor’s recipes continued to evolve, incorporating unique flavors that pushed the boundaries of what a marshmallow could be. Meanwhile, Shanks’s expertise in branding turned the company into more than just a dessert business—it became a lifestyle brand that resonated deeply with its audience. “We wanted to make people feel something when they interacted with us,” Shanks says. “It wasn’t just about selling marshmallows; it was about creating an experience, a sense of joy.” 

That blend of innovative products and strategic branding was the foundation of XO Marshmallow’s rapid growth. What began as a quirky experiment soon gained traction, earning recognition and a loyal following. “The magic happened because we brought together two very different skill sets,” Shanks reflects. “Kat’s creativity in the kitchen and my love for connecting with people through storytelling—it’s what made XO Marshmallow what it is today.” 

From Pinterest Recipes to Gourmet Treats: Perfecting the XO Process 

Turning marshmallows into a gourmet treat with national appeal didn’t start with sleek kitchens or finely tuned production lines—it started in a law school apartment, with a Pinterest recipe and a lot of trial and error. That unpolished beginning shaped the way XO Marshmallow approaches product development even now, blending creativity with practicality to deliver innovative products that delight their customers. 

“Kat’s first marshmallow recipe wasn’t exactly user-friendly,” Shanks says with a laugh. “She found it on Pinterest, and it was overly complicated—too many steps, unnecessary ingredients. But she kept tweaking it, figuring out ways to streamline the process while still making something that tasted amazing. Eventually, she landed on a recipe that wasn’t just delicious—it was scalable.” That evolution, from a one-off homemade treat to a production-ready recipe, became the blueprint for how Connor and Shanks would approach new ideas as XO Marshmallow grew. 

Today, every product begins with the same ethos that inspired Connor’s early experiments: make it fun, make it tasty, and make it something people can’t find anywhere else. “We start with what our customers are asking for,” Shanks explains. “From day one, we’ve been obsessed with listening to what people want—whether it’s specific flavor suggestions, seasonal ideas, or just trends we notice in feedback and sales data.” 

The product development process is a collaborative effort, with Connor leading the way in the kitchen. “Kat’s the mastermind behind the flavors,” Shanks says. “She’ll come up with a concept, like Bourbon marshmallows or our OMG jars, and then she and the team will test batch after batch until it’s perfect.” Those test batches are sampled by the XO Marshmallow team, who provide detailed feedback on flavor, texture, and presentation. It’s an iterative process—some ideas are scrapped if they prove too complex or expensive to produce, while others undergo multiple rounds of adjustments to ensure they’re just right. 

Once a product passes internal testing, the focus shifts to making it visually irresistible. “The look of the product is almost as important as the flavor,” Shanks says. “We’re a brand that thrives on Instagram, so it has to pop visually. The packaging, the photography, even how the product will look in a customer’s unboxing video—we think about all of that before launch.” 

New products typically launch with a burst of excitement, backed by targeted marketing on social media and email. Shanks explains that while some items become permanent fixtures in the lineup, others are released as limited-edition treats. “We use sales data to figure out what has staying power,” she says. “If a product sells out quickly and people are clamoring for more, we’ll consider adding it to the regular lineup. But we also love the exclusivity of limited editions—it keeps things fresh and exciting for our customers.” 

Building a Brand from Scratch 

While the marshmallows themselves are the heart of XO Marshmallow, the brand’s identity plays a huge role in its success. “When we first started, the branding was really barebones,” Shanks admits. “Our packaging was plain, and the logo was black and white. Honestly, it was all we could afford at the time. We weren’t thinking about building a ‘brand’—we were just focused on getting the marshmallows into people’s hands.” 

But as soon as they realized how much enthusiasm the products were generating, Shanks knew it was time to level up. “We started to ask ourselves, ‘What do we want XO Marshmallow to feel like?’” she says. The early concepts leaned toward a luxury aesthetic, but Shanks quickly realized that the real opportunity lay in embracing something more colorful and whimsical. “There were other brands doing the whole rustic campfire vibe, so we decided to go in the opposite direction—bright, playful, and fun. It was exactly what our audience was looking for.” 

That bold pivot paid off, helping XO Marshmallow stand out in a crowded market. To fund their early growth, Shanks and Connor launched a Kickstarter campaign to raise $5,500 for essential equipment and supplies. “We exceeded our goal and raised $6,288,” Shanks says. “That was the first moment where we realized, ‘Okay, this is bigger than we thought.’” 

With their newfound momentum, they tackled an even more ambitious project: opening a marshmallow cafe. Shanks remembers how the idea took shape. “Customers kept asking where they could buy our marshmallows in person, and we wanted to create a space where they could experience the brand in a whole new way.” They launched another Kickstarter, this time raising $9,524—well beyond their $6,500 goal. “It wasn’t enough to cover everything,” Shanks says, “but we were scrappy. We did a lot of the work ourselves and reinvested holiday profits to make it happen.” 

Of course, those early milestones weren’t without challenges. “Everything took longer and cost more than we expected,” Shanks admits. “But we learned that it’s better to take the leap and figure things out along the way than to wait for the perfect moment. That mindset has served us well.” 

Capturing Attention with Digital Strategy 

In the digital age, Shanks knew that mastering social media would be critical to the company’s growth. “Instagram and TikTok have been absolute game changers for us,” she says. “We’ve never relied on paid ads—it’s all about creating content that people want to engage with and share.” 

The results speak for themselves. In just 90 days, XO Marshmallow’s Instagram following grew by 30%, with engagement rates soaring by 200%. Viral videos on TikTok have driven millions of views, translating into significant traffic and sales. “It’s not just about showing off our products,” Shanks explains. “We want to entertain and inspire people. Whether it’s a recipe, a behind-the-scenes look, or something playful, the goal is to make them smile.” 

Beyond social media, the company has invested in SEO to attract organic traffic. Their blog, packed with ideas for s’mores boards and dessert inspiration, ranks highly on platforms like Pinterest. “It’s all about being where our customers are,” Shanks says. “If they’re searching for creative s’mores ideas, we want to be the first brand they think of.” 

Once customers find XO Marshmallow, the focus shifts to keeping them engaged. An email newsletter, sent twice a week, keeps fans in the loop about new products and promotions. “It’s all about striking the right balance,” Shanks says. “We want to stay top-of-mind without overwhelming people.” 

Customer reviews and a rewards program add to the brand’s appeal. “We’ve made it super easy for people to leave reviews with photos, and that builds trust,” Shanks explains. “Plus, our rewards program gives customers a reason to keep coming back—it’s a win-win.” 

By combining standout products, strategic branding, and innovative marketing, XO Marshmallow has grown from a scrappy startup into a beloved brand with a national following. Shanks and Connor’s ability to stay agile, embrace feedback, and take bold risks continues to drive their success. 

Scaling Sweet Success: Growth, Challenges, and Lessons Learned 

For XO Marshmallow, growth has been both thrilling and demanding, propelling the brand from a modest operation to a multimillion-dollar enterprise. The shift hasn’t just been about increasing production or expanding their customer base; it’s been about rethinking what the business can be, while staying grounded in the joy and whimsy that first captured people’s attention. But with growth comes complexity, and Shanks has faced the kind of tough decisions and growing pains that define a business on the rise. 

“When we started, it was just the two of us and a single mixer,” Shanks says, reflecting on their scrappy beginnings. “Now, we’ve got 21 employees, nearly 9,000 square feet of space between our production facility and the cafe, and a whole lot more moving parts to keep track of.” Those parts include a business that generated $1.5 million in sales in 2022, with year-over-year growth that has ranged from a staggering 300% in some years to a steady 25% in others. 

Shanks is quick to point out, though, that scaling hasn’t been all smooth sailing. This year, they made the bold decision to invest in two larger spaces: an expanded cafe and a production facility designed to handle their growing eCommerce and wholesale demands. “These moves were absolutely necessary for our long-term vision,” she explains. “But in the short term, they’ve been a strain. Between inflation, rising costs, and the uncertainty of the economy, profitability this year isn’t something we can take for granted.” 

Still, Shanks is confident that the risk will pay off. “We’re planting the seeds for the next phase of growth,” she says. “Bigger spaces mean more room to create, more customers to serve, and more opportunities to bring our brand to life.” 

Bigger Spaces, Bigger Goals 

The decision to relocate their marshmallow cafe to a larger space reflects more than just a need for room—it’s a strategic move to test the viability of scaling the concept further. At three times the size of their original location, the new cafe offers the team a chance to refine the customer experience and operational flow. “This new space is really a prototype for what future locations could look like,” Shanks explains. “We’re figuring out what works and what doesn’t so that, when the time comes to expand, we’ll be ready.” 

The cafe has always been a cornerstone of XO Marshmallow’s brand identity, offering customers a chance to immerse themselves in the playful, pastel-hued world they’ve built. From marshmallow flights to gooey lattes, every detail of the cafe reflects the company’s core mission: spreading joy. “It’s not just a place to grab a treat,” Shanks says. “It’s an experience. It’s where people can see, taste, and feel what XO is all about.” 

But as much as the cafe represents the physical side of their brand, the digital side remains just as critical to their success. eCommerce continues to be a major driver of growth, with a loyal customer base that Shanks affectionately calls “Troop XO.” “Our online audience is everything,” she says. “They’re the ones who share our posts, engage with our content, and tell their friends about us. We owe so much of our success to the community we’ve built online.” 

The focus on digital engagement isn’t just about visibility—it’s about building relationships. Viral Instagram reels and TikTok videos have driven millions of views, while creative content like marshmallow recipes and behind-the-scenes looks keep followers coming back. “We’re not just selling marshmallows,” Shanks explains. “We’re creating a sense of belonging. Troop XO is part of our story, and we want them to feel that.” 

Lessons in Leadership 

Leading a rapidly growing business has taught Shanks lessons that go far beyond marshmallows. One of the biggest, she says, has been learning to trust her instincts. “In the beginning, I was constantly second-guessing myself or relying too much on outside advice,” she admits. “But over time, I realized that my gut reactions were usually right. No one knows this brand better than we do.” 

Still, Shanks acknowledges that trusting her instincts doesn’t mean going it alone. Delegation has been a game-changer for her, allowing her to focus on strategy while empowering her team to take ownership of their roles. “I used to think I had to do everything myself,” she says. “But that’s just not sustainable. Building a great team and giving them the freedom to thrive has been one of the best decisions I’ve made.” 

Shanks is candid about the challenges of letting go. “It’s hard to step back when you’ve built something from scratch,” she says. “But at the same time, it’s so rewarding to see your team succeed, to see their ideas come to life.” By trusting her team, she’s been able to create a workplace culture that values creativity and collaboration, ensuring that XO Marshmallow remains not just a great brand, but a great place to work. 

Even as the company grows, Shanks continues to stay grounded in the principles that brought them this far: bold ideas, calculated risks, and a willingness to learn from every mistake. “Nothing ever goes perfectly,” she says. “But that’s okay. As long as you’re willing to adapt and keep moving forward, you’ll get where you want to go.” 

For Shanks and XO Marshmallow, that philosophy is more than just a mindset—it’s the foundation of their success. With bigger spaces, ambitious goals, and a devoted team, the future of this sweet venture is shaping up to be just as exciting as its beginnings. 

Lessons for Aspiring Entrepreneurs 

Behind XO Marshmallow’s pastel-hued branding and viral success is a story of grit, adaptability, and lessons learned the hard way. Building a business from the ground up, Shanks explains, is as much about persistence as it is about vision. While XO Marshmallow has grown into a multimillion-dollar brand, its journey has been anything but linear, with plenty of risks, pivots, and unexpected challenges shaping the path. For Shanks, these experiences have crystallized some essential truths about entrepreneurship—wisdom she now shares with those hoping to follow in her footsteps. 

“Don’t wait for everything to be perfect before you start,” Shanks says, a lesson that’s been reinforced throughout her journey. “If we had waited until we had the perfect logo, the perfect recipe, or the perfect business plan, XO Marshmallow might not exist today. There’s no such thing as a perfect starting point. You have to just take that first step and be ready to learn as you go.” 

For Shanks, the early days of XO Marshmallow were full of trial and error. Those missteps, combined with the feedback they received from real customers, became the building blocks of their success. “Some of our best ideas have come from listening to what our customers want or realizing that something isn’t working and being willing to change course,” she says. “That’s the magic of starting small—you can pivot quickly and adapt to what people are actually asking for.” 

Building a Team That Propels You Forward 

As the business grew, one of Shanks’s most important lessons was learning to let go. Early on, she wore every hat—handling operations, customer service, social media, and more. But over time, she realized that scaling a business requires more than just hard work; it requires trust. “You can’t do it all yourself,” she explains. “At some point, you have to hire people who can take things off your plate and do them even better than you could.” 

Hiring the right people, she emphasizes, isn’t just about filling roles—it’s about building a team that strengthens the business in ways the founder can’t. “You need to find people who bring fresh perspectives, who take ownership of their work, and who share your passion for what you’re building,” Shanks says. For XO Marshmallow, that has meant recruiting individuals who are just as invested in the company’s success as she is, whether they’re developing innovative new products, managing operations, or driving growth through social media. 

Shanks credits her team with helping XO Marshmallow scale without losing its creative spark. “Empowering people to run with their ideas has been one of the most rewarding parts of this journey,” she says. “It’s not just my business—it’s ours. And when everyone feels like they’re contributing to something bigger, amazing things happen.” 

Progress Through Imperfection 

For Shanks, entrepreneurship is about embracing the messiness of growth. Mistakes, she says, aren’t failures—they’re lessons. “Nothing ever goes exactly the way you plan,” she admits. “But if you’re open to learning from every misstep, you’ll find opportunities you never would have expected.” 

That willingness to adapt, listen, and trust others has been at the heart of XO Marshmallow’s success. From its early days in a law school kitchen to its expansion into a growing production facility and cafe, the brand’s journey is proof that progress doesn’t come from waiting for perfection—it comes from taking bold steps, even when the path ahead is uncertain. 

“Start before you’re ready,” Shanks says. “Listen to your customers. Surround yourself with the right people. And remember—it’s okay if things get a little messy. That’s where the real growth happens.” 

Success Factors: Why Did XO Marshmallow Succed? 

• Visionary Leadership and Complementary Partnership: Shanks’s branding and marketing expertise combined with Connor’s creativity and culinary skills formed a powerful partnership. Their complementary strengths allowed them to focus on what they each did best—Shanks on business strategy and customer engagement, and Connor on product development. Shanks’s leadership in building the brand identity and her ability to listen to her instincts helped XO Marshmallow establish itself as a unique, customer-driven company. 

• Customer-Centric Product Development: From the very beginning, customer feedback played a central role in shaping XO Marshmallow’s products and overall direction. Listening to customers’ flavor preferences, packaging ideas, and overall input allowed the company to develop offerings that resonated deeply with their audience. This iterative, data-driven approach to R&D ensured that new products (like their OMG jars or limited-edition flavors) weren’t just innovative, but also in line with what customers truly wanted. 

• Bold and Playful Brand Identity: Shanks leaned into a colorful, whimsical aesthetic that differentiated XO Marshmallow from competitors, who were focused on more rustic, campfire imagery. This bright, joyful branding resonated with millennial and Gen Z audiences, setting the company apart in a crowded market. The emphasis on visual appeal extended to packaging, photography, and social media content, making the brand instantly recognizable and highly shareable online. 

• Mastery of Social Media and Digital Strategy: Platforms like Instagram and TikTok became major drivers of growth, thanks to their focus on creating entertaining, shareable, and engaging content. Viral moments, well-crafted posts, and strong SEO strategies brought in significant traffic and new customers without relying on paid advertising. 

• Innovative and High-Quality Products: The decision to transform marshmallows from a pantry afterthought into a gourmet treat opened a unique market. Their focus on handcrafted, premium flavors—like Butterbeer, Lavender Honey, and Bourbon—positioned XO Marshmallow as a luxury indulgence, not just a nostalgic snack. The willingness to experiment with new concepts, like the XO Cafe, marshmallow-infused lattes, and branded merchandise, created additional touchpoints for customers to interact with the brand. 

• Calculated Risk-Taking: The founders consistently took bold but calculated risks, from launching Kickstarters to opening the world’s first marshmallow cafe to investing in larger production facilities. They didn’t wait for perfection, choosing instead to learn as they went and adapt to the challenges of scaling the business. 

• Building a Strong Team and Empowering Employees: Shanks emphasized hiring strategically and building a team that could take ownership of their roles. Trusting her employees allowed her to focus on long-term strategy and helped the business scale efficiently without losing its creative spark. 

• Creating a Community Around the Brand: By fostering a sense of belonging through “Troop XO,” the company built a loyal customer base that feels emotionally connected to the brand. Fun, community-driven content and initiatives ensured customers felt like an integral part of XO Marshmallow’s story. 

• Flexibility and Adaptability: The willingness to pivot—whether it was refining recipes, shifting branding strategies, or adjusting products based on customer preferences—helped XO Marshmallow remain relevant and competitive. Shanks’s ability to embrace imperfection and view challenges as learning opportunities was a driving force behind the brand’s evolution. 

• A Focus on Experiences: Beyond selling marshmallows, XO Marshmallow created experiences for customers through its cafe, social media content, and packaging. The brand’s focus on creating joy and nostalgia elevated their offerings from simple treats to lifestyle products people wanted to share, gift, and celebrate with. 

Key Lessons to Learn 

1. Start Before You’re Ready: Waiting for perfection can lead to missed opportunities. Shanks highlights that taking action, even when the timing isn’t perfect or the plan isn’t fully polished, is critical to making progress. Early mistakes and feedback from real customers helped XO Marshmallow improve and evolve. The lesson: The learning is in the doing. 

2. Leverage Complementary Strengths: A great partnership can be the backbone of a successful business. Shanks and Connor combined their unique talents—branding and marketing on one side, culinary creativity on the other—to build a business neither could have achieved alone. The takeaway: Focus on your strengths and find partners or collaborators who complement your skillset. 

3. Listen to Your Customers: From day one, XO Marshmallow prioritized customer feedback to guide product development and refine their offerings. By paying attention to what customers loved, wanted, or suggested, they created products that deeply resonated with their audience. The lesson: Customers are your best resource for understanding market demand. Use their insights to drive innovation and improve your offerings. 

4. Differentiate Through Branding: XO Marshmallow set itself apart by rejecting the rustic, campfire aesthetic of competitors and embracing a playful, colorful, and whimsical identity. Strong branding helped them create an emotional connection with their audience, making their marshmallows more than a product—they became part of a lifestyle. The takeaway: Don’t be afraid to stand out. A unique, consistent brand identity can elevate your business above the competition. 

5. Take Calculated Risks: Whether it was launching Kickstarter campaigns, opening the world’s first marshmallow cafe, or investing in larger facilities, XO Marshmallow’s growth has been fueled by bold decisions made at the right time. Even when the outcomes weren’t guaranteed, Shanks and Connor embraced the uncertainty, knowing that risk often brings reward. The lesson: Growth requires stepping out of your comfort zone. Be willing to take calculated risks and learn from the outcomes. 

6. Focus on Experiences, Not Just Products: XO Marshmallow didn’t just sell marshmallows—they sold joy, nostalgia, and creativity. Their cafe offered an immersive experience, and their branding and packaging made every product feel like a celebration. The lesson: In today’s market, customers crave more than a product—they want an experience. Find ways to delight and engage your audience on a deeper level. 

7. Embrace Imperfection and Pivot When Needed: The early days of XO Marshmallow were filled with trial and error, from refining recipes to rethinking branding. Shanks and Connor learned to adapt quickly, shifting strategies and ideas based on what worked and what didn’t. The takeaway: Don’t fear imperfection. Mistakes are inevitable, but they can also lead to valuable insights and growth. 

8. Use Social Media to Build Community: Social media was a game-changer for XO Marshmallow, driving awareness, engagement, and sales without relying on expensive paid ads. By focusing on fun, shareable content, they turned followers into loyal brand advocates. The lesson: Build a community, not just a customer base. Engaging, authentic content fosters relationships that go beyond transactions. 

9. Invest in the Right Team: Shanks emphasizes the importance of hiring strategically and trusting her team to take ownership of their roles. Delegation allowed the business to scale without losing its creative edge. The takeaway: You can’t do it all. Build a team that shares your vision and empowers them to contribute meaningfully to the business. 

10. Adapt to Challenges and Stay Resilient: Scaling XO Marshmallow meant navigating inflation, economic uncertainty, and the challenges of rapid growth. Instead of letting these obstacles derail them, Shanks and Connor leaned on their adaptability and long-term vision. The lesson: Challenges are inevitable, but resilience and flexibility can help you weather the storm and come out stronger. 

11. Trust Your Instincts: Shanks admits that she initially relied heavily on outside advice, but over time, she learned to trust her gut instincts, which were often correct. The takeaway: While seeking guidance is important, no one knows your business or your audience better than you do. Trust your intuition when making decisions. 

12. Leverage Crowdfunding for Growth: XO Marshmallow used Kickstarter not only to raise funds but also to validate their ideas and build buzz. Their campaigns gave them the resources they needed to scale and the confidence to pursue bigger goals. The lesson: Crowdfunding can be a powerful tool for testing demand, raising capital, and building community support for your business. 

13. Balance Short-Term Challenges with Long-Term Vision: Shanks is transparent about the financial strain that comes with investing in growth, particularly during times of economic uncertainty. Yet, she maintains a focus on the long-term potential of those investments. The lesson: Growth often requires sacrifice. Stay focused on your broader vision and make decisions with the future in mind, even when short-term challenges arise. 

14. Create Something Meaningful: XO Marshmallow’s core mission isn’t just about selling marshmallows—it’s about creating joy and spreading happiness. That emotional connection has helped them build a loyal following that keeps coming back for more. The takeaway: Successful businesses are built on more than just great products. Infuse your work with purpose and passion to create something that resonates with people on a deeper level. 

Opportunity Matrix 

Founder Background 

• Lindzi Shanks: Master’s degree in psychology; extensive experience in eCommerce, branding, and running her own online boutique. 

• Kat Connor: Law school graduate with a knack for culinary experimentation. 

Problem Identification 

Marshmallows were seen as a generic, overlooked pantry item rather than a gourmet treat. There was an unmet demand for premium, unique, and fun confections that could stand out as indulgent, giftable, and experiential. 

Market Opportunity 

The rise of specialty foods and the “treat yourself” culture, particularly among millennial and Gen Z consumers, created an opening for a gourmet marshmallow brand. Demand for visually appealing, Instagrammable treats was high. 

Competitive Landscape 

Few competitors in the gourmet marshmallow space, with most brands focusing on traditional or rustic branding. By embracing a playful, colorful identity, XO Marshmallow differentiated itself from campfire-centric imagery. 

Market Research 

Early customer feedback was collected from popup shops, flavor testing, and Kickstarter campaigns. Sales data and direct input shaped product development, flavor offerings, and packaging design. 

Business Model 

Direct-to-consumer (DTC) through eCommerce, retail sales via the XO Marshmallow Cafe, and wholesale partnerships. Revenue streams also include branded merchandise and limited-edition product drops. 

Initial Capital 

$200 personal investment from the founders ($100 each). Initial expansion and production upgrades were funded through successful Kickstarter campaigns, raising $6,288 for equipment and $9,524 for the cafe build-out. 

Product/Service Development 

Focus on handcrafted, gourmet marshmallows in unique flavors (e.g., Butterbeer, Lavender Honey). Expanded into complementary products like Ooey Marshmallow Goodness (OMG jars), cookie dough hybrids, and the XO Marshmallow Cafe. 

Marketing Strategy 

Leveraged Instagram and TikTok to create viral, engaging, and visually appealing content. Avoided paid ads, instead focusing on organic reach, storytelling, and creating a sense of community with “Troop XO.” 

Milestones 

• 2015: Initial holiday popup shop success. 

• 2016: Officially launched XO Marshmallow. 

• Kickstarter campaigns exceeded funding goals. 

• Opened the world’s first marshmallow cafe. 

• $1.5M in sales in 2022. 

Scalability 

• Expanded production facility and cafe to accommodate growth. 

• Potential to replicate the cafe model in other cities. 

• Increasing online sales via improved SEO and viral social media strategies. 

Potential Risks and Challenges 

• Inflation and rising production costs have tightened margins. 

• Economic uncertainty/recession may impact consumer spending on premium treats. 

• Managing cash flow while investing in growth. 

Key Performance Indicators 

• Year-over-year revenue growth (historically between 25%-300%). 

• Social media engagement rates (Instagram growth +30% in 90 days, TikTok videos with millions of views). 

• Online conversion rates and repeat customers.