How to Grow a Drink Brand to $1 Billion

0:00so how much money have your companies generated in your lifetime yeah so the brands I've created have generated well over a billion dollars a billion yeah okay great all right well you are the founder of for Loco which was a personal favorite of mine in college and so I really just want to kind of understand how you literally went from basically a college kid when you created it to getting these into every gas station in college town in America so just if people don't know how would you describe for loo so for Loco was at its uh at its Inception a caffeinated alcoholic beverage so it's classified as a

0:36flavored malt beverage we used uh malt which is like beer that's that's removed of all the beer flavors and then we added flavoring and and at that time caffeine torn and Gana over it and created this brand so despite popular rumors I was not in college I was shortly after college I had got a job selling vodka for nma startup and so you know was that that saying of like learn on someone else's dime right I learned how the alcohol industry works and it's a three- tier system so you have to sell into a distributor who sells into a bar or a store and then customers buy it and

1:06so I got trained to manage five states in selling vodka and then around 2004 I just I realized I was selling a bulk of this V could be mixed with red bullt and I guess naively but fortunately I was that naive I was like I can do this better so I should make a premixed version and so I called by two college buddies one was a a guy named Jeff who's in my fraternity and asked him he wanted to start this thing and he said yeah and then called my other buddy Jason he said yeah why not and that was how we got started just how did you guys go about

1:37getting actually made so good question we didn't know right so great C we have an idea we're all in we're going to do this and we're like okay what do we do next and we started asking around to a lot of people like what what steps can you take and we found there found out there were these things called flavor houses they make flavoring for food and beverage and once we found them they we had no track record so they charged us I think it was 10 grand of the time and they said we'll make you like a couple versions of of whatever it is you want

2:04okay okay great we have that now what do we want we're like well we want alcohol and want caffeine they're like okay what levels and so I was literally reading the back of a monster can saying okay want this much caffeine I didn't know so and then it's just being curious so we asked them well okay you make us the samples that how do we go get this made at scale and we knew we couldn't buy or didn't want to buy a brewery me when there were there were what's called co- mans co- manufacturers and so they put us in touch with one of them and kind of navigated that and we

2:33figured out how would you get it made so you got to put $10,000 in to get like how many did you get like cans or is it just for like the formula it's just the formula yeah so uh I think it was roughly $10,000 and we had three versions that we would get back so we got a first round tweak this flavor add this whatever it may be they send us the second round and the third one we landed on we're like okay I guess product so U and it wasn't for Loco at the time it was called four and it was our first ation so how long did it take you until

3:01you landed on the Four Loco like the one we all know enough yeah it was about 2 years so we we raised a little bit of money from friends and family mainly Jeff and Jason's friends and family because my family didn't have money to invest and um and we did essentially everything people told us to do to launch an alcohol brand and every one of those things was wrong and so I look back and I'm like I'm glad we didn't have more money cuz we would have spent more money on all the wrong things that didn't drive the business right so after 2 years of doing that we realized that

3:30we were on the verge of going out business we had hired a few people we let them go we took you know months without salary at least my partners did and um we said we have to try something and so we iterated and came up with this brand called for Max which was just hired alcohol content and looked a little different and it did okay and then uh my partner Jeff came back from a a essentially a crew drive it's where you go out and sell the product in the market with the distributor and he said hey there's this product out there it's 24 ooun can it's 99.9% alcohol it's

3:59selling well we should do this m and my reaction was like no we should there that's too big no one's going to be able to drink that much but um fortunately we did and he was right and as soon as we put that product out it it took off so in those two years that you're iterating like what was the process to like even test if this was something people were interested in like were you just literally go to a local gas station saying hey can we put these right here to see if people buy like how would you gauge success at that small of a scale

4:25so you you have to sell through what I was saying earlier the three- tier system so we we could go to any gas station to just sell it unless we had a distributor in place so the first thing was you had to convince a distributor to sell your product and now the good thing is no distributor wants to miss the next Red Bull or whatever brand you're going to pick right the bad news is they also sell 50,000 other products so even if you get in the distributor it doesn't mean that they're going to spend their time focusing on your brand so getting the Distributors first the second step

4:53is kind of doing what you're saying which then we would go to that market cuz they're geographically constrained Market local yeah local markets that they and we'd go to those stores and we would pitch it ourselves and then the distributor would deliver it and then how we would judge success was early was the wrong metric we would just judge the Su uh success by how much we were selling to the distributor but we realized that was like a false uh security we could selling a bunch if it's not selling off the store shelf they're not going to reorder and you have no business right and we hit that

5:21wall and so we really judge success as we learned to judge by velocity the number of turns the number of repeat purchases in in a retailer repeat purchases from the retailer or from the customer so we couldn't get as granular as the customer I mean the store might tell us say there's one guy that comes in here and buys this every day but we didn't get that it's not likely to see we couldn't see so by the store what would be like so you would like have like six cases you'd say you gave them yeah I mean we would sell them so we have to sell it you can't give away

5:51alcohol and uh we usually they want to bring in one case they want to try and they say if it sells you know um our job was to make sure that we took as much space in that storees possible we put up as much point of sale as possible so that when you walked in there was no way you didn't know that there was this brand called for Loco there got and um they they'd order one case if they sold out in a day or a week it was exciting they reorder if they sold out in a month they probably weren't reorder so day to week would be like it's a good good sign

6:18what's a velocity metric how do you what's the metric that you're tracking so that the number of units sold in a specific time frame so that can be day week month depending on what data you get um we would try to look at as granular as possible but if we could see you know a case selling a wheek we had a pretty good account okay so what's like the allstar PR or like uh metric for that like if you were filling it yeah I think we were say it depends right so there's there's some stores that are just high volume stores you you've been there right there's there's some stores

6:45that just there cost right and then if you have this little corner store that's like slowly trafficked it just depends on if it sells well for them so that there wasn't a standard metric what we would try to do is compare based on their sales gotta and and often as we got going for local we might be the number one selling product in their sto yeah pretty quickly so you found that once you had the formula dialed in it was just caffeine in a large size that worked and it was kind of free obvious from the get-go yeah I think it was a unique package as well so it looked

7:14different the C the bright colors exactly so how did you get the dist Distributors to give you a shot you just need one right so as soon as we got the first distributor with with four the original product we asked them about their Network and so who else distributes at that time was Miller and Kors in that market right in that state so these guys might cover five counties in what's called Central Ohio who covers the rest of the state and they would introduce us to the other Distributors and then there was kind of that social proof of like they're Distributing it so we sh was there any sales point you had

7:44to do to convince that guy or you like your guys's energy like I mean look I think any product or company in the early days is really about you right your passion and how much they beli you and so yes we we gave all the reasons we thought it was going to work but ultimately they were believing in US how' you find um when I I went to Ohio State actually all three of us did and I met um the executive vice vice president of that distributor randomly somebody introduced us and in college I met a lot of people and I I kept all business cards and so I

8:13just had his business card and ially called him up and cool call yeah that's cool okay so once you guys were in your first few stores you had that actual like clear proof that it was working what is the scaling process to get across cuz you have there's so these are all head there's so many like what is the proest action scale for logo Across America so so it's different than software and digital assets right like there is a lot of heavy lifting to logistically get your product in every store and then when you when you go into alcohol it's even more intense because you have that other layer of the

8:46distributor right you so the number one thing we had to do to scale nationally was we had to get distributors in every County across the entire country and so fortunately for us there were threee of us we divided the country in three we used kind of our Network in the different states and we asked them what Distributors we should talk to and when we got a little bit more sophisticated we evaluated the options you had the unhoused bush distributor you had the Miller Kors distributor you might have had someone else who's the best in the market right and there's a clear V in in many markets and then we get them to

9:15carry the product our next step was we would go in and do what we call a crew Drive which is we would jump in the car with the distributor reps we'd hit the top accounts we would sell it in ourself once we sold it in they knew it was possible and it was kind of like proof for them that it sold through and then they would go do you know head of the market after that okay so can you explain what a distributor actually does so a distributor is going to go to every store and bar or hotel wherever they sell alcohol in this case they're going

9:40to go there almost every week and they're going to take an order and not only take the order but what they're supposed to do is also sell in new products a new flavor of this a new brand of that um you know just like everything else they're strapped for time so they sometimes do that they sometimes don't when we would get in the car they were forced to right because either we would do it or we them to do so that's why our presence was important yeah okay so they are you like just shipping this Distributing Company like a ton of palets to their location yes

10:09and then they have like 20 reps or like people that are just driving to like their yes so that's a go to this County you go to this County we use those simple numbers so we have one distributor they have 20 reps we send in one chop as an example each one of those distributor reps calls on 20 accounts a day so there's 20 reps on 20 accounts a day 400 accounts they'll go 5 days a week so 2,000 accounts a week they're hitting they may have a tell cell which like calls them up calls an account up that maybe isn't as high of volume and

10:38tries to sell them products and then usually they're pre-selling the products so the next day a truck is routed and it's going to deliver all the product that they order what is the hardest part of scaling this business uh the the most intense part I think is getting all the distributor Partners in place you know you want to pick the right partner you want to have a good contract you need to talk to them and that's just a long process I mean for us to to cover the country it was 325 Distributors there a lot of contracts side yeah and they're all in they don't work together they're

11:09all like independent like businesses yeah that's changing over time but traditionally it's a lot of family-owned local businesses and there's a lot of consolidation happening in the the district but they're literally to the business of hey ship us your drinks we have relationships with all the local liquor stores gas stations or whatever we'll get you in those stores exactly so you you ship to this one point of sale and then they distribute to the local stores yeah okay now keep in mind each state may have 20 Distributors right so and most likely each shiver is not picking a full truck of product so we would ship and we would try to like

11:41maybe we combin a couple Distributors and they would pull from each other but in essence yes it's you're shipping to them they're going and pre-selling it and they're delivering it to that customer and they cover that route uh uh that market exclusively for the brands that sign up of that but Red Bull and these other companies are they doing their own they so big out they have their own they're their own Distributors uh Red Bulls is an exception when they came in they they didn't do their own distribution but they found they did sry but they found their own um distributor partners that they liked and they made

12:15them sign exclusive contracts where they were the only energy drink now think at that time there weren't any energy drinks right but for the most part no they're selling a lot of other brands gotcha but they had so I used I guess I see Red Bull trucks driving around that's just the exclusive deals that they made and they just brand it well there could be a couple things they can uh Brands will pay the Distributors to put their brand on their truck it's a moving advertisement right um they may put their own vehicles in market like the Little Red Bull cars with the can on the back those are their own cars and

12:44their field team is driving those around um or they may be doing self-distribution so did you guys do any sort of like marketing gimmicks like that yeah yeah we we bought a car we bought a Scion we put a can on top we knocked the can off multiple times um we did we we did all kinds of things at the beginning before for Loco hit once for for Loco hit we literally just spent our time making sure it was in the store and there was as much sign as possible the brand went viral back then there really was no yes like there was no real social

13:13media but it was going viral cuz people adopted the brand as their own and were making authentic music videos and whatever reviews and um it it was just a viral brand that's it's like it was like pretty iconic I will say it was very culturally relevant probably the most culturally relevant like alcoholic J that I can even remember so I know you guys basically how long was caffeine allowed in it so all the hype and what the brand is known as as a caffeinated alcoholic brand and there was caffeine in for 2 years yeah it was like it was like a vodka rental but in the drink B

13:51automatically that's right and people were drinking that anyways but was there ever any like a research that actually showed that people were having heart attacks from caffeine so when we had a lot of government pressure to for us to change the formula we hired a group that was um helping us do a grass study generally recognized as safe because the government required that of us and so this group did a pretty in-depth study and It ultimately was inconclusive they could not say that caffeine and alcohol was dangerous was causing any um inherent issue that you that's not unique to alcohol right like when you drink alcohol there's inherent risks

14:27you're you're alcohol's not good for you yeah so there's no there was there was no distinct difference uh but that didn't matter in so do you think it was more like the incumbents like seeing an opportunity they saw how fast you grew it was like more of a competitor thing where they like poured gas on the fire to like get you guys out of the market I can tell you they weren't coming to our rescue whether they were actually p p pouring fuel on the fire I don't know um I I wouldn't be surprised I mean here's the reality there's only so much shelf space in a in the store right and the

14:57more we take up we're not one of their Brands the less they have so who knows yeah it seems I mean seem pretty rare for like a small group of guys to be able to build with a nationally known brand so especially because we we barely raised any money yeah so it's very odd gu asked how much Equity you got to give away for your family and friend raise back roughly uh roughly 10% and that money was just to do like AQ of like did you have to take a bet on this ordering all the product up FR it you have to order uh cans was the mo the biggest

15:27expense the physical cans the phys anything nothing in it because you had to have you had to buy it in bulk right they'll produce small amounts of those they do now but at that time they didn't and um and then our production run was was most of it we would do some you know some T-shirts and other things like that but none of those were were big expenses the product itself was gotcha and then was it all was it made in America everything was made in America nice good yeah so I guess were there any like marketing stunts that you guys did that kind of forc the vir or created the

16:01virality or did it just naturally just kind of it was a really identifiable can there was the first dram to have caffeine in it which is a hole in the market and it just really caught traffic with college kids naturally and then the cultural like meme is the term now but like the virality of it just happened naturally or did you guys it really happened natur so first of all we weren't the first caffeinated alcohol B there there were a few others what we did is go bigger and stronger than anybody else no we consciously did that we said we're going to go up to the

16:28Limit our was like we're going to play by the rules whatever the rules are right we went up to the alcohol limit in each state and in general that was 11% that we realized it was 12% and so it was very unique in that sense um we made it look different than anything else in you know in the market and that was that was literally it and we consciously never put a face on the brand because we didn't want you know you said college kids college kids drank it right um but we never marketed the college kids there were also you know inner city environments that it was really relevant

17:01because it was high alcohol there were also you know Suburban environments that it worked really well because it was a party drink right so we we purposely didn't try to like pigeon ho where it worked and it was a a battle for a long time with Distributors because they would do naturally what you just did they would say well it's for this person we' say no it's for everyone let's put it out there and let's see where it sells and everyone was always surprised you don't want to turn people away that's okay so what was I guess just into the marketing topic what was the biggest marketing channel

17:30uh well the the biggest um marketing channel I guess that we didn't really own um but that drove the brand was YouTube there were people making YouTube videos and keep in mind this is like my space early before 2010 yeah Facebook was like new right um and so YouTube uh people made rap videos about it they made like review videos about it and those just kind of went viral and and and then as the mainstream press hit it it gained awareness in all these noncore demographics like people that were never going to really drink for local became aware of it because it was on the news

18:04or was on uh Saturday Night Live or whatever and um and that was actually I would have not chosen to have that awareness because it only was a negative gotcha did you guys ever do any like internal marketing campaigns just like like paying for Billboards paying for like signage inside the stores that other thing inside the stores we just did like very Grassroots marketing so we had stickers that would that would put the price up we would had some posters just stuff like that you have free reign to do that like you can like they give you this section and you can like add like a little you have to ask in our

18:36case we didn't always ask we kind of had this ask for forgiveness out permission model um that came back to B us sometimes but in independent stores they're they're less uh worried about it in a in a chain like let's say a Wawa or 7-Eleven they might have a little bit more stranger required gotcha gotcha but were there other marketing campaigns so after we had to remove caffeine touring in Gana we were trying to figure out a way to like make sure that people knew for Loco was still available because the the mainstream narrative was that it was Bann illegal and would kill you yes so

19:10that was a very not good not good right very difficult thing to to battle and and I think this one moment I was in the store after all that happened we we had the non-caffeinated product on the Shelf within two weeks so there's almost an imperceptible you know uh removal of the product and I was in a store there was a ton of prod product stacked up right next to me I had a AFF local shirt on and somebody came up to me and they were like doesn't that stuff kill you and it was just baffling to me because we're literally selling it right here I have

19:37the shirt on of course it doesn't kill you but that it's really hard to overcome that like mainstream awareness so what we did we were coming out with a 12 um a six-pack 12 oz bottle everything we had done to this point I've been in a 24 oz can and we said let's put a let's put a billboard campaign in like 10 major cities across the country kind of spoofing the idea that like everything's gone Loco because it was just so hyped up right we did it with these bottles and uh it did work yeah it the the product didn't the consumers didn't identify with the product the form and

20:10and delivery I guess of it and then the Billboards kind of they just were looked past yeah it was a pretty serious like it felt it feels like an attack on you guys you were literally do like the doj was going after every doj was going after you yeah did you I always feel like even at my scale of rip like anxiety that I'm like someone's coming after me or anything like how did that how long were you like you probably felt like you like mind in jail or something yeah so I mean V language people were using like it'll kill you it'll kill you yeah I mean I just put a book out called

20:44blackout punch and it it really details my whole entrepreneur Journey but it goes into detail around a lot of that and the only reason I say that is cuz it there's a lot right that's a lot to uncover but I will say that um it it felt very it felt felt very difficult to navigate that cuz it felt like everyone was against us and there was a point where I was told by our attorneys like don't answer your door because you may get served papers and you may personally get arrested so you know my wife was like what what's going on here right we just started the company made a product

21:15everything we did was legal everything we did was approved and now we're risking jail time so that was that was difficult you know anytime there's a tragedy which I'm not saying didn't happen but um I'm saying didn't happen because of for Loco like or any inherent risk around that like that's that's horrible right I don't want to hear that somebody got hurt or potentially died but then when they would say you did that me or our product it's like look people die in car crashes when they're driving drunk it doesn't mean that the product they drank is right it's legal so how long was that period where like

21:53it was like you probably had like a good ERA where you were like feeling really good everything was going great saale for amazing going viral at like top of the world and then all of a sudden like you're getting attention from the doj yeah and then how long was it between like you first SC like things started to turn and then was did they just literally make caffeine inside now beverage illegals so I would say about a year before so in 2008 we launched for Loco in 2009 we had some um letters from A couple attorney generals requesting that we voluntarily reformulate and remove these pretty early okay pretty

22:25early and our take was like we're not going to Vol unily do because it just leaves it open for the next person to come and do it and that's all we were doing we didn't have beer sales and other products right um so we we decided not to do that but we did decide to protect ourselves and have formulas backed up without those ingredients just in case about a year later it just somehow and again I won't speculate on how but it hit mainstream press and it started with this um story in Washington state where there was a party and they said people were dying from this new

22:56drug called for Loco and it and my partner Jeff is like a super sluth somehow he uncovered the police report and he read through it and it had like 14 mentions of actual drugs and like 10 mentions of liquor you know six mentions of beard one mention of four Loca but that was the headline right and so that sweat from the East Coast I'm sorry from the west coast to the east coast in a matter of a week and um and it just took over and so it was pretty sudden that that happened and then that just that just brought everyone out right trious lawsuits and and every agency jumped on

23:28board and and put the pressure on and our legal bills were you know outrageous so what do you say frivolous lawsuits is are these just like random people who like see an opportunity to like maybe they can get some damage I I stepped on a boat slipped fell hurt my handil of SW but how long uh did you did they just make it illegal or did you guys preemptively just say we don't want anything to do with this no so so we pushed it all the way to the end we we basically took the mentality like if it's going to be legal it has to be

23:55legal you have to make a ruling you have to change the laws and I don't think they like that and alcohol is interesting the ttb actually regulates alcohol the FDA doesn't but in this case the FDA the ttb would not change their requirements which were they approved all our products uh and neither would each state which approved all our products but the FDA stepped in and they said caffeine is a food additive and therefore we have jurisdiction and they ruled that caffeine and alcohol no very nuanced artificially added caffeine to a malt-based beverage is unsafe and illegal but I'm sure you can see that there's a lot of loopholes there right

24:34so naturally occurring caffeine in malt based beverage artificial caffeine in the spe there's just it felt very narrowly defined um but we canly yeah interesting and how long was that process until you switched uh so the day it happened meaning the the fda's ruling we stopped production and sales of the product that had caffeine and two weeks later we were shipping product that looked and tasted the same but had no caffeine tour gate what' you do with all the leftover oh great question we tried to we tried to do everything we tried to sell it overseas some states were still letting to sell it in some states weren't some states

25:15are saying take it back CU alcohol is regulated on a state-by-state basis so we tried to navigate those Waters we tried to sell it internationally because it was a US viral brand everyone wanted it we got blocked by the US governments and you can't sell it overseas what yeah yeah on and so ultimately what we did is ended up uh recycling it and turning it into ethanol and recycling the cans wa at least we didn't have to pay to destroy it we didn't make anybody off it but it was like $20 million of inventory in cans already in cans and so you just had to ship it to like to some ethanol

25:47company that was pour it all in there they would just squash the cans the liquid would all pour out and they did their thing how how much was in inventory about 20 worth oh my God yeah it was massive how much did you get for it for all the ethanol nothing so they would no they would essentially do that process and they would make the money therefore they wouldn't charge us but they would take them all ship it all to them like cover CS yeah I think I don't remember the details they might have paid for the cost we might have had to ship it regardless like if we destroyed

26:18it it might have been like a buck a case or something or two bucks a case that we would have to pay it added up quickly this was like a no money has to exchange places we'll we'll recycle it will you know sell off whatever they could in whatever form it was the aluminum the the ethanol whatever and then we didn't have to pick interesting did you guys see a big hit in sales cuz I feel like C how was caffeine like on the can like like big no uh it was it was on the can it was written in the ingredients it was the size that it was allow like on like

26:47the micro just how monster is or was it like part of The Branding under the so we had figured out that you could put some of the ingredients on the front of the can under the brand they all just had to be the same size and so it wasn't small like in a nutritional panel it was bigger but it wasn't like like for loal might be this big and this was like a line underneath gotcha um and so the sales spiked for a minute when all this controversy hit and then they fell off maybe 3 months later when people started to realizing there wasn't caffeine and

27:16and then to their credit my I don't run the company anymore my partners have really kept that brand socially relevant and and it's grown significantly s so it's bigger than it's ever good yeah wow what are uh what was like a revenue like do you have like do you have public numbers like your annual revenue anytime uh we were well over 150 and 150 million a year mm oh my God what are good uh What are all the expenses that go into this you have the canons you have the actual product yeah and then the variable cost of like shipping right and then just there's no like real marketing

27:49cost I guess really uh there were small ones but like the biggest expense would probably be doing distributor incentives so you can you know those people that sell 50,000 products you can give them an incentive to make sure it's placed in I know whatever as many of their stores as they can so anytime they get a deal they would be like a kickback that's right nice yeah yeah so that was 5% 10% or is that that might be like uh it might be like $5 if you get it in a new store right or $10 if you get five flavors in something like that no it was

28:17based on facings we didn't pay it per case we paid some of our team commission per case in the early days just to help keep everybody aligned and Sun what is fa things for so so if you go into a store there's going to be especially in the single Sur action there's going to be you know a can of this a can of this a can of this right each one of those is a fixing and so we we would ideally take at minimum you have to have one facing right cuz one can and one slot but we would try to like spread out to get as

28:45much space as possible so at one point we were getting full shelves so we'd have nine facings now there' be maybe nine flavors but at its peak we were getting full doors of product and and the reason retailers do that if it's selling that fast they don't have time to restock it so they need a lot of holding power on the shelf for us it was like a display so you got a lot of attention interesting and so you just pay them for every facing they could negotiate within the store uh we would do that in incentive periods so we might do it like one quarter and then not for

29:14the rest of the year gotcha it's a nice little bonus for these people absolutely okay so what would be like a individual unit cost for like a four how much would you sell it for so we sold it um let's see we probably sort of maybe a buck and a quarter a can really it's only a dollar buck and a quarter to the distributor quick math the less your business spends on operations on multiple systems on delivering your product or service the more margin you have and the more money you keep so to reduce costs and headaches smart businesses are graduating to netsuite by Oracle netsuite is the number one Cloud

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30:34wgmi that is netsuite.com wgmi thank you netsuite for sponsoring today's episode okay the distributor takes their mark up which is 25 30% and then the retailer takes their mark up which is 30 40% and so that's where you get to the ultimately at that time 299 a can price point mm um so we had good margins I mean our margins were over 50% as we went through cost saing exercises wow so we could so there therefore we can make it for 50 cents is it more expensive to ship all the palace to the Distributors than it is to actually make the cans and fill them at the time it wasn't I mean

31:13Freight has gone fre has changed a bit um but you can pack a lot into a truck and so no it it might be I'm going to use rough numbers it might be like 20 cents a can 10 cents a can to ship to ship yeah got you then probably like 30 40 to fill the K assuming that you're shipping efficiently which mean the most efficient is full trucks gotta and then the last you get the L of fish there's definitely an economies to scale for this business so okay trying to think if there's anything else you guys had to take out the caffeine you turn it all

31:46into gas those are the main costs you did 150 million year revenue and then you Bas so you guys also that's just a brand that your company own the underlying PA companies called Fusion project correct Fusion projects Fusion projects so that was one brand that you guys spun out corre was there it's interesting that you guys are like just trying to take these different angles so that's like a vodka Red Bull a can so it's like caffeine with alcohol were there any other creative brands that you spun out of there yeah so what we realized at one point is that the distributor and that distribution agreement were really important and once

32:24you had that we had access to the market right right and so so for Loco was the was the the Beast right it was the big one that everyone would then listen to us but we would launch other things so we launched a brand called earthquake which was like a high-gravity Mt liquor so high alcohol beer right so think of like U cold 45 or Sher was there right so we had a brand called earthquake that was competing with that um later we launched different versions of four Loos so we had this one called Poco Loco which was in 16 oce can but what I what

32:53I realized that I'm sure my partners did too was like we had multiable assets we had this we had this for Loco brand and the value of that brand we had this distribution Network and we had a team right to handle all all of the logistics production sales so how do we capitalize on that so my goal was to really start to create different brands that helped us diversify because we were essentially in one channel of sales we were in the convenience store I guess two and independent liquor stores that c past is the same we didn't sell in grocery stores we didn't sell in bars we didn't

33:27sell in restaurants right they weren't talking to us about for Loca those were big sales opportunities so as I started to turn my attention to Innovation I found this product which was a alcoholic root beer and it was a it was an independent operator had this great formula but he had no real way to scale it and so we essentially acquired the company on a future royalty deal and created this brand called Not Your Father's Root Beer and it's oh you guys created that you know that brand yeah yeah we used to sell it at the pizza shop that worked in in high school it's like crap yeah there you go and so we

33:57turned that from a concept into the number one the fastest grown craft be in the nation in a matter of 18 months and we were opening up all these new channels right now I'm talking to Whole Foods I'm selling to the military I'm selling to grocery stores and so for me that was the big potential for the company and you have to have different like um infrastructure to be able to support those sales so that was the big opportunity we ended up selling that brand of PS um and then that was my transition out of the company today as the company sits they have multiple brands in multiple categories so are the

34:29multiples for selling these Brands pretty high yeah traditionally in cpg and in beverage if you're a fast growth brand they'll they'll base it on multiples of Revenue not multiples of evida if you stabilize and you're profitable sometimes they the based on multiples e ultimately it all flushes out in the end they're going to do multiple assessments of of what they're comfortable paying but um they're usually pretty high it seems like a pretty straight is it like 5x 10x do you know uh of sales your Revenue Can it can vary I mean if you're a really fast go brand there's some that have gotten 15 20 times Revenue right there's others

35:04that have gotten two one yeah specifically with drinks it seems like a really good business because people can you always get a new drink every day basically you buy ton of repeat orders and then the sales channels are relatively just like okay we're in Walgreens okay we're in liquor stores okay now there's gas stations and so you can like really scale these verticals that's a very like laborious time intensive path you have to follow but it's not for for a buyer at end stage right so see like a pretty straight it's pretty easy to sell these if you have like the distribution already down or uh

35:35I mean usually strategics are buying so other companies in that category right so for alcohol you might say for f you might say like some of the VR Brands might buy it right and then they would plug it into their system and they have a bunch of efficiencies they wouldn't need the Salesforce they wouldn't need the you know the brewery or the Coman they they have all that right so that's the most valuable transaction that can happen there are others that Acquire Brands um you know for the capabilities so if you have a presence in a channel that they want as an example they may say hey we'll buy this brand add the

36:07revenue to ours and then we can have access to this new channel so there's multiple different ways interesting and then some is it's a financial buyer who says I just want this revenue and this especially if you're profitable this ebba do and you know we'll require for that okay so is it the brand is really pretty much 90% of the value of these products I feel like the ingredients are all commoditized yeah and so it's all about like proving the BR is something that people want and the right formula to match it basically brand is brand is everything and it's also how you're going to get the highest multiple right

36:34loyalty and and all that kind of stuff but there are other assets like as an example with coyo we're vertically integrated so we have our own manufacturing facility we have a lot of capabilities there it's uncommon in our space and so companies may look at us and say hey we really want to be able to produce products like this so that production facility is really valuable so there are multiple um things that are valuable for the company okay I want to get into COA cuz see now scaled multiple of these companies to very high Revenue numbers but before Co what were were there any other products that you had

37:05tested that what were all the different products that you had tested so something that work didn't work yeah yeah so we had tested this um so right after the FDA ruled that we were we had to remove caffeine we had this big company that was essentially taken away from us on the whim right we were like scrambling and so we said let's diversify not only the channels but the products and we have these capabilities we have this team in place as so we're looking at the market we're saying what what's really working and we found this one category and that was these like alcoholic pouches think of like uh like

37:35a Capri Sun pouch right a little bit bigger and you would freeze them you'd throw them in the freezer over night when you pull them out you could kind of squash it up and you'd have a margarita or Frozen dacker right and so there was only one brand in that in that category they were called dailies and it was $100 million category and so we said this is right up the alley of what we do so we jumped into that heavily we were really excited about it and as we were starting to produce that we kind of came up with this other idea where there were these

38:03like think of Push Pops you know we could create alcoholic push poops and so we could make them in a stick it would have 6 8 9% alcohol we thought that was really cool so we went down that path we made a bunch of mistakes we we bought Machinery to produce the products we it took us a little too long to uh to sell in by the time we actually stood those products up and were selling in there were 10 other products in the category right and so now you have buyers who are going I don't have shelf space I don't even know how to merchandise these

38:31things and so that ultimately was a bust I mean we were we were ahead of our time in many ways like now if you look at it um truly and even Natty light have these popsicles but at the time uh was it was too early and then the category got too crowded so that was one that we did that that didn't work um you know uh Bud Light Lime marito was really popular at one point and so we decided to kind of extend Loco into into that so we did loritas with these Margarita flavors and we went really like high-end we did these tactile like textured cans we

39:05thought it would be different and um and kind of stand out and it didn't work so we were always and and the same with with all companies we're always testing things right and and uh you don't know what's going to work if we hadn't iterated into Four Loco we wouldn't have had a company right so uh we weren't away from that but not your father should be was like the other like hit success that you had yeah nacho root beer became like I said the the fast grown craft beer and ultimately sold the paps for a big number but they would have paid more right we had we had

39:31pre-structured the deal so they got to kind of trigger it and um look I mean in retrospect I the reason I wanted to keep that brand is it put us into these different categories but um in retrospect maybe it was the right decision to sell it which my partners wanted to do because maybe I don't know a year or two later like sugar publicly became the enemy and that brand kind of fell off and then the um hard selers emerged go so what do you mean you pre-structured the deal so we were talking to the guy trying to figure out we didn't have cash to just go buy a

40:04company right and there wasn't really a company to go buy there was he was Distributing in like 20 bars he was producing in in his own you know Brewery essentially taking it up himself so was there wasn't really anything to buy you couldn't really value it so what we did is we went to him and said look we have all the infrastructure in place we'll turn this into a $100 million brand if you can believe that and look at our track record that we'll do that we'll give give you a royalty all you need to do is what you want to do which is kind of Play Willy Wonka you know product

40:32Creator you'll be the face of the brand you are the founder of it and let us tell your story and he did all that and so we structured a future royalty deal where they got nothing up front but they made money off of every case M that's smart and it worked out really well for that too but okay so that's like me the pre-structured with the founder of it with the founder did you mean with PS yeah did you have a deal lined up with them even when like was brief kind of like middl Manning this in no way yeah um there were some different opinions in

40:59in terms of myself and my partners on how we should do this so again mine was to build out infrastructure that would put us into different channels uh one of my partners had developed a relationship with the new owner of paps and he was looking at them saying hey they already have this infrastructure and they're trying to grow fast and so let's partner with them and make them our Salesforce in these new channels and then to do that the owner of P said I'll do that but I need to have a pre-structured do deal because I don't want to build a brand and then have to pay for what I

41:28built so they were actually like manufacturing no no they they were actually the S so they would go call on like let's say um Public's headquarters and try to pitch them and they had people that were doing that sales okay they would do the sales of it yeah interesting then an option to buy and with an option to buy gotcha did you guys transition into actually buying the machines that fills the cans we did not we we bought some machines to fill those pouches when we did that and um and we LED go last we spent I think we spend like 20 million on machines that we

41:59ultimately ended up fire selling what are those companies that actually do the formulation and canning required like will can someone that's like just starting out a brand could they literally just like they just have toit anq of like 10,000 cans yeah for the most part and some places will charge you to create the formula like I was mentioning like at later on when we were at scale we could just call them up and say hey we want five different flavors and they would Haily make it forp the TR we had the track record we had the track but at the beginning they would charge you for it some brand uh some of those

42:27companies would say we will make and we're TurnKey solution right we'll even buy the raw materials for you the cans the ingredients whatever and we're going to charge you X right and that was obviously premium so I would say right now it's easier to make a beverage than it ever has been there are a lot of like TurnKey Solutions out there but still pretty expensive like there's no way around it right like you have to order them up front that's right okay so final thing which list what all these people are called so what were the people that made the flavor called so that's a flavor house flavor house and then the

42:56people to can it and actually make the tree a co-manufacturer or co-and okay and then from there they send it to you so we would either have a warehouse um at the manufacturing facility or we'd have a third part of a 3pl third party Logistics or Warehouse that we would ship it to and store it there then we'd have a logistics company that would actually bro uh organize and broker the freight to pick it up and deliver it at 300 plus Distributors the Distributors right they would try to and that's where some of the intern internal people come into play they would try to marry loads

43:29up so if you can fit 20 PS on the truck and this guy's going to take five and this guy's going to take five like can we make that one truck and one trip and then we would sell it to the distributor who would be the local market like they'd receive it they'd sell it out to the stores then there retailing the customer but your job's done distributor level B technically but if like I was mentioning earlier if the if the retailer doesn't buy it and if the customer doesn't buy it from the retail your liability it's our liability so you you really need to manage multiple

43:56businesses is yes we need to get the Distributors on we need to work with them but ultimately our customer is the End customer we don't have direct access to because if they don't buy the brand we don't keep sell Gosha that's awesome really interesting story thanks that's a brand that we all know and love okay but now that you have another huge success COA I see the Starbucks all the time what where are you all at right now uh what retailers are we in we're in most retailers we're in everything from Whole Foods and Sprouts so like natural retailers and there's a long list of of

44:25other ones um to you know specialty retailers like Wegman's um to Conventional retailers like krog and Publix to convenience stores like Wawa and 71 to watch Starbucks and airports and we're trying to be pretty ubiquitous okay you got to you got to teach me how to do this okay so and and soon to be on Amazon we hav't I I'm so excited to go into how this is different now than it was back then too sure so first off you left Fusion were you did you like were you taking some time off and then you like were you like I'm sick of this industry I worked my ass off I'm done or

45:01was this just like like how did you decide to get involved in coet yeah so there there was um the the cliff notes of it is basically my cars and I over the course of 10 12 years we just kind of started to see the world differently and it was it was becomeing clear that all three of us weren't going to keep working in the company so we didn't know how that was going to work and I pushed a lot I was kind of the odd man out in terms of the mentalities and so I woke up one day was fired from my own company oh okay and so I was like the first

45:27emotion was relief cuz it was very you know tense for a while the second emotion was like oh what do I do now and along that um those final years I had started investing in better for you food and bage because my life had changed my wife is a nutritionalist my I had I had a son my second son was born and so I just wanted to really work on things I was aligned with and and in those early days I was investing in them so I had invested in this company called roll hr5 I had a buddy in Chicago who called me and he said hey I know this

45:56girl and this guy and they created this drink and would you check it out and it was a plant-based protein drink and it was in a few it's very similar to Not Your Father's Root Beer it was in like 20 stores uh one of them happened to be the gym that I worked out at so I tried it thought it was good my second son was born dairy intolerance so we became a Dar free household so it just made sense to right and keep in mind at this time that would have been let's call it 2012 2013 like plant-based was not what it is now that meant like soy milk right they

46:25with these options out it wasn't pocket and I was in Chicago which is like a meat and potato Town Midwest like but but it seemed to be working and so I invested and then a few months later the original two Founders called me and they said hey we're on the verge of going out of business and this is after Fusion I was looking for something else to do they had a consultant who had been asking me to come and be CEO of this company and I was like I'm not a CEO for hire I found Brands like I work on my own things but I saw an opportunity

46:52there so me and these two other guys we said we'll found the company or we'll fund the company I'll come in and co-found the pivot of this company and then I'm going to run it and initially my plan was to be the one-year interim CEO roll uh but here I am seven years later uh it just happens and um and that was it we pulled raw nature 5 off the shelf for a couple months while we made it uh scalable and bulletproof safe and what I mean by that is Kya is what they call a low acid uh product so it's very sensitive think of like milk and so it

47:26has to be refriger ated from production to consumption and so the FDA had come in and said hey the way you guys are pasteurizing this which is called HPP High Press pasteurization they said we don't know if we feel like that's safe so you need to prove to us that it's safe or you need to find a new way to produce it and coming off of Four Loco I like we are not getting into that game again so we ultimately pivoted and we found what's called uht ultra high temperature posterization so it Heats it up kills anything in it and um and we were able to scale the product based on

47:56that so um you the product was off the market like I mentioned for a couple months and then in I'll call it I get my years mixed up I want to say it was September of 15 it could have been 16 we launched ntion with Whole Foods that was our first part gotcha okay I have a lot of questions so first off when you were fired from your company you still the equity and you just don't work there day to day that's right okay so you still get distributions if that's ever Happ okay gotcha and when you so I so I'm just as being if not a bigger fan of of

48:26dam in the brand now for sure this is cive now okay then what so this seems like your playbook now cuz the same thing with not your fathers like it's like good to kind of let the founder make the mistakes do the early leg work and prove it in a small small market and then you step in with all the experience of like this is how we get into these stores this distributor networks we need that's kind of like your go-to strategy now yeah I like innovating and I like coming up with new things but like I also recognize opportunities and so just like not your fathers this was an

48:57opportunity and and um it me it s for so what did you specifically see in Kya was it sales numbers was it like reorders velocity like or is it just you like people it made sense to your life yeah a bit of it was gut I just I liked the product cuz it fit with my life style and it was it was actually interesting to me that there was this like emerging plant-based movement so at the time you know saying you were vegan was very and I think still is very polarizing right you're either vegan or you're not this idea a of this plant-based movement allowed people to like like me eat a

49:30hamburger one night but choose to have only plant-based proteins in my you know in my pantry or refrigerator and so I thought that was an interesting opportunity um like I mentioned I was you personally moving into a dairyfree lifestyle so was my wife and um I don't know it just I just felt like there was a good opportunity there I can't crystallize what it was yes there were some sales um but there was nothing that suggested it could be what it is today uh we did have some distribution in one whole foods and I walked in there and like kind of secret shopped it and I was

50:03standing behind you know the wall of of the products and ARS was on there as Ron H5 which was an ugly package and a bad name but but it was there that's when it was called R Ron okay yeah and um and I listened to this woman explain the product to her the guy shoots with whoever he was and she just it was very simple she was like it's a plant-based protein drink it's St free and I was fascinated because anytime you can get I I believe anytime you can get a story so concise that somebody else can tell it there's really something there right now

50:34at that time I was also looking at other products and categories I was looking at an alcoholic tea product to to get involved with and maybe just advise maybe invest in and I remember talking to one of the guys at our flavor house and he was like yeah go in that tea like protein who cares like there's plenty of proteins and I'm glad I listen to them but uh you know it was it was just a bit of gut that's so it's more subjective through that objective you it's just like okay and even with all the investing I've done it's really just been like do I understand the product

51:03and the proposition and does it is it something that I want even if I'm not an actual consumer of it I'll give you an example I don't really consume much THC I'm not against that and just I get paranoid right but I have a buddy who helped us create the brand Not Your Father's Root Beer and he's big in the THC space and he came to me with this idea of this brand called drippy which is a TC beverage and if you look at the trends like dry January is bigger than ever but the people that are not drinking aren't staying sober they're just switching to other substances right

51:34so so it just made sense to me so those are the kind of things I decided to jump into okay interesting so COA I guess when did I guess when did the name change so when we pulled it off the market we were going through all these kind of changes right and so one was to Rebrand it so we hired this go ahe so did you buy so you bought the company they were going Bank basically yes and did you how much of it did you those two guys buy we put a quarter we put a half million dollars into the company we we didn't buy it out right

52:02but I was clear with them like I'm I felt like Marcus Lon is in the profit I was like I 100% in control right and um and that's just how work and they stayed involved with the brand and so um we we quickly put the we pulled the product off the market we hired a branding agency we created the brand COA and then there were two other criteria for me to really launch the brand one was that we needed representation um like I didn't know Brokers or distributors in the space and so we needed somebody who was GNA come of introd introduce us to the retailers

52:33and so I flew out to California to what's called Expo West it's the big natural food and beverage um trade show and I met this guy named Bill Wyland who owned presence marketing which is the main broker in the space and we were chatting and I said look I'm thinking of you know doing this but I'm not going to do it unless I have your support he goes well I'm not going to support unless I have you involved so that was easy shake hands we're good there the the third criteria scalable product was the first one having Bill well was the second and the third was that we had some level of

53:02support from a launch partner well luckily Bill and presence had helped us get Whole Foods interested and so that wasn't a smooth roll out we could talk about that but um but essentially that's what gave us the confidence to relaunch the brand it was actually in 16 in late 16 so scalable you had a distributor connection yes and a launch partner meaning like a retail stord to launch with right what what made it scalable so um the pasteurization process made it not scalable and so when we pivoted it it was scalable how long did that take you to figure out it took probably about four months okay and then they the

53:40original Founders have gotten into one whole F Whole Foods before correct how did they negotiate that they just went into so Whole Foods was different right it was local exactly it was before Amazon was involved and so they just went in and they just talked to the people in the store and they said will you let us sell it in here and they said well let we'll let you sell them in the store but then okay so then once you took over you wanted to like legitimize that relationship and launch through them I wanted to launch with someone so look Whole Foods was a dream to launch

54:05with but if it wasn't them it had to be somebody that had some scale cuz what I did not want to do was go knock door too and try to scale this thing just take too long okay and then what was that cerence called that you went to to find the distributor uh it's called Uh product or Expo West okay so the Distributors that you knew from for Loco completely different it's liquor stores gas station 7 this is going to be like the vegan product right so right so they they sell into grocery stores but they uh CO's uh shut Coya is refrigerated it's um the bottles like the yes not

54:39this version but but our original version so it has to be kept cold like I was saying for production and consumption the beer distributors don't have that capability so we had to have different distributors so gotcha so you're starting from scratch based you just knew what steps need to be taken that's right interesting and so one of one of the ways I found to kind of legitimize myself in that specific space is I is I met another entrepreneur this guy named Bill Moses who had founded a brand called cavid which was a or is a kombucha brand and he had just sold it to Pepsi and so he and I kind of HD it

55:10off he invested in the company and he was another like intro into the into that world so you're really meeting really key players that's part the main part of it at this point okay so I'd love to hear your CEO strategy here of like all right I got the brand I have the connection we're ready to launch you you have a million different choices you can go with so why did you did you start with Whole Foods or who did you start with yeah so Whole Foods came to us after a meeting and said we will launch you guys nationally and at that time to launch nationally was a

55:39huge deal with it was kind of unheard of right so look there's different um routes you could take I know other companies that have launched in a local geography and they've really saturated it and they've really like supported it and they've gotten their velocities really high and then they went and sold that story cross the rest of the country and they expand to and story that's that story that data that that proof right so they have proof that it works and then and they've raised money based on that they've expanded based on that and that's great it's really hard to say no to the number one natural retailer um

56:14when they say we want to launch you nationally now was it the most efficient scalable I don't know right we had an over support and there were multiple reasons that we had over support we we produced our first run of the product and when the distributor was there to pick it up we realized that 10% of it had spoiled and so it wasn't it's it wasn't um unsafe for consumers but if you've ever had spoiled milk it wasn't pleasant right not tast so we decided we had to kill that that line dump it all um and we had to we had to produce it again really quickly to get it to Whole

56:45Foods we had to call Whole Foods and ask them if they would extend our launch because they have certain days as it it needs to be here by this day we're going to do what's called a reset that Chang the the shelves or the coolish and needs to be here about this day for us to do that we missed that so we had to hire merchandisers to go out and make sure the product got on the Shelf we hired um demo companies to go out and Sample the product we had to the way I looked at it is like this is our shot we have to make

57:11it work if it doesn't work it's over and if it does we have this amazing story that Whole Foods launch us nationally and here's the blossom right and so that's what we did okay so a few things on that one how did you sell full full foods like what are you saying in a sales call with the so ultimately when what I realized afterwards is that a lot of it had to do with Bill Wildland presents so the the pitch was simple it was a plant-based protein drink and actually my my partners Maya and Dustin had done the original pitch and so there was interest around that because it was

57:39this emerging category right um and and Whole Foods was supporting new things and we were vegan but we weren't positioning that way so I think they were supportive of that but ultimately what we found out later is that bill and the presence team they represent a lot of products and so Whole Foods had come to them and said look we have this successful product I don't know what it was in this one region we want you to rep it and take Nationwide with us and he said I'll rep it and take you Nationwide if you guys put K in N uh so that relationship really mattered and it

58:08gave us a lot of leeway where we may not have had it otherwise we miss as I mentioned we missed the first reset we we had missed the whole first launch date um but they they gave us a lot so he had the leverage basically there cool did you I mean did you guys like show analytics of like this segment is growing this is what we like predict the market size are literally just like this is the concept is our angle it's proven here yeah we didn't have that data at the time I mean we could have paid and tried to get the data about the market

58:35the category but we were just we use their data we use their insights we use passion and you know somebody takes a chance gotcha so then you were saying that some people choose to launch locally inside of a Whole Foods Market and they what do you say they learn the the sale or are you saying that these people will like put just their drinks in one local area and then test their marketing like their branding the messaging yeah on the actual product or so so there's a brand called Vive that I invested in they're a functional shop like kind of like taric shop yes we know

59:03that and they launched in Southern California and they were in um a lot of the Southern California retailers like Lazy Acres like uh Bristol Farms whatever and they were in that division of Whole Foods so geographically they were within a a reasonable no precise geog what that allowed them to do is when you hire team go out into the stores and support or do demos you don't need somebody in Baltimore and in New York City and in Florida you need one or two people in in SoCal right and so it's a little bit more efficient they can pop in stores they can do demos they can make sure the products on the Shelf

59:40so that's what I mean and then when they would get in in those stores they would make sure it worked yes they might test their packaging but it's not like digital you can't like I can't put a new image up next state right I have like 3 months worth of inventory I have to sell before I get the new one so the demos they have a person that goes out there and like giving away samples and then like explaining it basically so the so the saying in in beverage alcohol or non is is that liquid the lips wins people have to try your product if they if they

1:00:08like the taste of it they'll buy it again if they don't they won't right as simple as that and so we're legal and non out the idea is give it away and that could be at a demo or that could be going to a big event and just handing out bottles right so the so you hire people to go to the store yeah into giveway samples do the storage let you just do that no you book you booked through them so they have like two people allowed to do this a day yeah think think of Costco if you ever walked through Costco there's demo stations all

1:00:36over the place those those are all booked those are all paid for it's done different at different retailers so in a place like Costco you might have to use their demo company you educate them and they sample that and they'll sample whatever the next day right they're not employees of the company and others they say we want your employees in here doing it which I actually prefer because we know the right and uh you may have to pay for a slot or you they may just decide so those are more like kind of like focus groups for the brands to learn exactly the message and how people are conveying

1:01:05the brand I think one of the most important things that we did is that we would go do the demos ourselves at the beginning and then you would learn how to talk to the customer and What mattered to them right we we never pitched it as a vegan drink as an example we would talk about it being plant-based or dairyfree that was more that was less polarizing we would always talk about low sugar because sugar was really a really hot topic at that time um we also talked about how delicious it was which is subjective right everyone will say their drink T Tes great but we

1:01:33would put in their hands and let them take a sit and uh you'd hear that firsthand feedback so you're literally there in the store and then every person that walks by you're opening with a different one lighter totally it's Megan no one replies it's PL based two people reply anything you can do to get them over first of all and then second of all whatever it takes and and the way I look at it is you're only in that store once you can't be there every day you're not going to go there every week and so do whatever it takes one to get them to try

1:01:58it and then two to get them to buy it so we would offer like here's a coupon if you buy one you'll get one free right now after you tasted let's just stack the deck and we would always see the velocity Spike up you'd sell a bunch when you're there just normal right but we would also see we'd see it come back down after the demo but it was at a new in a basine people come back that's right ah okay so how Grand does it get like if you're in California may be saying it vegan is a benefit cuz the culture over there is a little different

1:02:24cuz in Texas no way right so have you seen any examples of that and then two how does that how do you implement a strategy around that so that can be Geographic like you just mentioned California and Texas there could be retail or trien right so in in Whole Foods I might say as an example that it's vegan in 7-Eleven I'm just going to say it's low sugar protein gocha cuz they don't typically R I'm I'm I'm pained with broad strokes but like that consumer doesn't care as much about the fact that it's vegan but how are you comenting that um cuz the bottle stays the same right sure so we looked at

1:02:57sorry I thought you were talking about how are we mentioning it in in person so on the bottle we try to find our key attributes and put them on the front of the bottle so as an example with this 20 grams of protein we think that's the number one most important thing and then we look at in this case in these ones we fortified it fortified it with 21 vitamins and minerals three gram of sugar we know low sugars inv and then dairy free on this one so we would put the key calls on the front and then the entire um ingredient list is on the side

1:03:26people so that's how we would conve convey what was most important and I'll go back to four Loos an example like 12% alcohol was key friend Center on the on a camp we actually even found to highlight it yeah so I think that's the way to like draw people to your and and convey your message without being there person well you can't segment that based on state no no we cannot segment our message yeah so we try to take our a top three so even once you found the marketing you're so doing those dios is like worth doing consistently like that's like a Maj that's like kind of

1:03:57your marketing at the end of the day like an in-person person Ed a store it's one form of marketing so um but I'll stay on that for a minute so we are in Ralphs which is a Southern California grocery store that is part of the Crower company we are in our category which is refrigerator functional juice the number one number two and number three bestselling items so it's it's clearly relevant there we have three items we found out that 8% of the people that walk in Ralphs shot that cooler section and only 6% of them buy coil we're the number one product so there's so much

1:04:32low hanging fruit from people who are even walking over to that cooler to getting them to to try it and let alone the people that are walking in the store so demos are are really valuable and I think we did this like one of the mistakes people make over time is it seems like a launch an early stage that intact it and it's something I think that you should just actually never stop do God um now we talked to consumers in a very different way now as well I mean with digital and social we do a lot of stuff on Tik Tok and and I'm guilty of thinking that Tik Tok was all

1:05:04like kids dancing and why would we ever do this and we had uh an amazing director of marketing tell us like we really need to be on Tik Tok we had this new investor come in and they told us your first dollar if you're not on Amazon should be on Tik Tok for awareness and we started doing it and the difficulty with what we do being retail focused is that you can't link us to the sale right the attribution yeah yeah we have to go in and we just watch our velocity and it just happened to go up around that time and so I can't say

1:05:33100% but I can say with pretty good confidence that Tik Tok to move move the needle because awareness is important so you guys have a Tik Tok strategy we do interesting what is it then so what we started doing I would say about a year and a half ago we pivoted to all social being Tik Tock first so we would create a lot of content that was focused on Tik Tok and then we would take the best of that content and reuse it on Instagram we also recently realized like our static images on on Instagram were performing really well so we don't want to be all video they were oh interesting

1:06:03yeah which traditionally for the last year we would say all video uh video still does really well but these static images were doing really well as as well fascinating okay so you launched with whole Fus yes you got some hiccups you said yeah so our first our first production run spoiled so we we decided not to ship it we had to kind of troubleshoot it really quick produce It Again by the end of the week get it out to them and then it wasn't seamless it wasn't just on every shelf like it was supposed to be so we had to we had to over support but in general the the

1:06:32launch was pretty successful we had given them a 3month exclusive window and I think we launched in September but what I didn't know at the time was that the re so so retailers it's a really long sale cycle so they review a category maybe once maybe twice a year and then when they review it it might take up to 6 months until they change that on the Shelf so best case you get a review you get a yes and that means 6 months from now you'll go on the shelf right very different from digital where you get a yes buy that minute um so what I did realize was we were launching in

1:07:07the midst of review season so our exclusive window which should have been to December actually ended up going all the way to March because we no one was considering new products uh we had a very pragmatic approach it was like get into natural and then saturate natural and maybe year two or three go into specialty saturate specialty year four go into conventional then go into mass and club which would be Walmart T Costco whatever and then maybe one day get into SE store the sou Alin and um year one it blew up it's the best way though yeah Wegman's came calling us they're specialty retail in New York we said yes

1:07:42and it became the number one beverage in our category quickly and then shortly after that Giant Eagle which is a very conventional retail in the midwest it's kind of where I grew up and um they said they wanted it and I was really nervous about launching a at that time almost $5 drink at at a very conventional retailer but we said let's give it a shot I worked well did they come to you or did so so that guy I was talking about Bill Moses he had launched a couple beverages with them we're both from youngston Ohio so Giant Eagle was our local retailer and he knew some

1:08:13people there he had success with them he scheduled the meeting and um and they said yes and so we decided to go for and so the kpi is still velocity for them to be like for sure this is how to what was the k what was that looking like so velocities are different by channel so like as an example I was looking at our cool Foods numbers today and we might sell we're on C right now we might sell like 170 to 200 bottles a week there per store per store um you go to a conventional retailer we might sell if we have three flavors we might sell 10 a

1:08:45week right so but that's good for them right so so it just depends um Whole Foods has roughly 425 stores Kroger has 1,800 right so there's just different scales and different metrics what we want to make sure is that we're in the top 25% of of products in our category in any retailer based on their metrics gotcha so how do you choose which retailer to go with next so once we proved out that we worked in natural specialty in conventional it was just a race like we would take any retailer and we would aggressively support them we would do what are called tprs temporary price reductions our idea there was we

1:09:21noticed that every time you do a two for seven as an example or a doll off or whatever you would get a lot of new trial and so we would do that um we do an aggressive schedule we' do a Deeper Discount with maybe a buy one get one free at the very beginning since we were new we might do demos at the beginning um but it's really kind of dependent on who was saying yes that's so we watch did your manufacturer can just handle this as you scale so we had a co-and um at that time and they had two facilities and so they were able it wasn't seamless

1:09:49it of course has issues but um we were able to scale pretty quickly now two years ago we decided to vertically integrate we bought our own manufacturing facility gives us a lot more flexibility doesn't mean we want to be less planned out but we can if we need to interesting yeah and then so if you get to like into a Starbucks right like that's like all of a sudden you have like a million units you need extra there's upfront cost to that yes where does that come how do you get that money for those upfront costs so unlike uh for Loco or Fusion we raise a lot of money

1:10:18at Co oh okay so we have a lot of investors uh which helped us with that you know working capital would you ever get a load from a bet or it's investor is the better way to go yeah uh if you can I mean we we started this company intentionally being a high growth and high burn company it was very popular at the time it was like profitability didn't matter that was the that was the that was the vibe right it was like profitability doesn't matter just grow as fast and big as you can the stre Strategic will come and inquire you and and they'll figure it all out and over a

1:10:48couple years you saw that message start to change it was like okay you have to have a path to profitability so we would show how we were going to bring down our production cost cost and our raw ingredient cost and how we maybe do a price increase things like that then about 18 months ago it switched to like no you have to actually be profitable and so that was a bit of a a transition um but we navigated all those all those work that was six months ago no about 18 months ago 18 months ago so five years you're just only growth five years all growth earning a lot of money U I would

1:11:18say for the last 6 months we've been profitable every month so we've turned that corner how much did you raise in in total raise 72 million oh my God how much you do your Revenue now uh we sell over 100 million in retail sales wow that's so it took 72 million to get to 9 F years in Revenue basically over five years over five years it's a lot different than the digital world yeah that's incredible that because now you're just ing greeing for the future theoretically we hope so I mean but but there are decisions we make right like we now have facility so we may decide to

1:11:50invest in capex on Machinery or whatever it may be we are manufactured we manufact everything that we sell except for these products we manufacture out of our facilities since these are a different process we use coand right now um but yeah I mean you know if we will be doing a rotation in Costco so we will invest heavy to make that work so there are always investment opportunities which is why I say hopefully because you have to make those decisions now that you're operating a profitable compan but you're just building a massive Enterprise Value yes as you do all this okay so you're pretty much an almost

1:12:21every retailer I would say that you possibly can is there anywhere else that you like want to be um we're not back in Target yet we were for a while um and what happened it so we we actually don't know okay our velocities there were really good they were beating the category average and then we got taken out and we've been working with them ever since to understand why and then and then present them our case we think we're making progress we think we'll be you know back in there relatively soon so that that's a big one for us we're not doing any business in Costco yet but

1:12:53we have some some things coming up there uh we're not on Amazon so we'll be launching our Tetra packs next month in 12 packs cuz the number one request we get from people how do I buy in bulk right now is one bottle at a time we're selling over 2 million bottles a month but it's one bottle of a time does it cut from a customer perspective uh so what we found out is our customers are buying four bottles or more every individual bottles four times like four individual bottles when you each time somebody goes into the score that store the average purchase is four bottles wow

1:13:22so our number one request the request is how do we buy bulk right so there were there were multiple solutions for that so I'll tell you all of them for our existing products what that meant is we would do a multi- serup so we're currently a 12 oz bottle we we created a 30 G bottle so you can buy and bulk that way and what that does for us is it gives us different use ucation so what you would typically do with a single Sur bottle is just drink it by itself now the multier you can use Koy as a a protein creamer for your coffee or you

1:13:50can use it as a protein milk for your cereal there's otherx base for your smooth whatever it may be so that's one the second we did is we we're launching four packs so you can buy four bottles of a time which we already doing anyways just a little more convenient you pick up one four pack so those are the two with our existing products but what we what we decided to do was look at Amazon we had no presence there we had over 5,000 searches a month for COA with no transactions because there's no product right they don't sell perishable Beverages and so we decided to launch a

1:14:21Tetra pack 12pack shelf stable on Amazon to fulfill that occasion so that's what these are that's what these are yeah okay gotcha so I I would have to imagine that selling on Amazon and actually shipping these two customers the old version or even like a Ford L I guess it's alcohol can't sh yeah yeah but that's expensive is it like you have to like Char double the price that we sell online so so we have kind of traditionally with our first product our our perishable 12 O product we have the double whammy which is we are heavy because we're a beverage and then we we're refrigerated so you have to ship

1:14:54it overnight with dry ice or ice I know that right so we just could not make that profitable so we just stopped doing it gotcha with with this it's still heavy we don't have to ship it overnight cuz it can be warm the other thing we noticed is that and and I'm guilty of this too when I have a fridge full of COA I drink one or two a day when I have to go to the store to get it I drink one or two a week when I go to the store right so this is an opportunity for us to Pantry to have people Pantry load

1:15:21they have 12 of them minimum in their store they'll drink a B often gotcha so this is that was basic is it the same product or internally so so we started with the exact same product because we were looking at it and saying what people are asking for is not like a a higher protein or a different product they were asking for buy and bow and get it delivered got it so that's when we started with these are the same flavors as our top three perishable flavors and then as we looked at it that it's a little bit lower um liquid so it's 11 o versus 12 which made the protein a

1:15:53little bit lower we we thought protein was important so we boosted this a little so this is 20 g of protein our original one is 18 G gotch um and then we decided that we wanted to fortify with vitamins and minerals so you can kind of get a little more bang for your buck it can almost serve as a meal replacement um and so that's those are the two differences what did you have to remove to make it so we didn't have to remove anything oh okay what we had to do is process in a different way so to this is called aseptic so what you have

1:16:21to do is is package this in a completely a setic enclosed environment no air can get in and that allows it to sit on a shelf warm and not spoiled our existing product is called ESL extended shelf life and that means you do everything cold and you still try to keep it as um enclosed as possible but it's not airtight that's the only difference okay interesting and this is your first time selling online uh no we we before Co we had a d Toc store and then we realized it was not cofin B so we shut it down and then Co hit and everyone was buying

1:16:59everything on line so we relaunched it we also launched on instacart and goop all these other like other delivery options and then again we realized that 80% of our marketing teams um time was being sent on C spent on customer service issues with our D Toc cuz we didn't wasn't like just shipping through Amazon we had third party warehouses there were always issues it was slow might not get delivered and so we shut that down again so this will be our first time on Amazon but not our first time delivering product gotcha how has it change since for Loco to now the business the industry itself uh well I I

1:17:37can't say how the alcohol industry changed because I'm in anymore but uh but I would say the differen is here like Grass Is Always Greener right and so when when I was in alcohol I hated the fact that you had an exclusive distributor for an area 10 counties that's the only person that could sell that product but they called on every store in that county right so if I if I was out in the market and I decided to go pitch somebody on for Loco and they said yes I knew who to call in nonok there's layers of Distributors so you have what are called broad liners UNFI

1:18:09or K and they deliver to uh Whole Foods or to Sprouts or to even some Crower or Safeway divisions right and those are Broadline Distributors you have Store direct so I can ship it directly to Kroger or whoever accepts it that way right into a division Publix is a good example we ship directly to them Starbucks is a good example we ship directly to them then you have what are called dsds direct Store distributors and those might be in a specific geography like we have a DSD in New York they'll call on they'll be more like a beer distributor they call on every account in that geography or for the

1:18:42most part and then you have like Broadline food service and sea Store distributors this one's called mlan that delivers to 7el and they might deliver drinks as well as like keychains they deliver everything so it's it it's much more complex when you're shipping directly to Starbucks how do you facilitate that do you have like a logistics tempate that you hire yes and they just come to your warehouse and then they just have 12 trucks go in every direction so essentially the way it works is that Starbucks has their own distribution centers and so they get the product there and then from there they will ship out to and they may have a Mak

1:19:18up I don't know what it is but let's say they have like a like Dairy right they're cream for their coffees um they may deliver that that to each store every day every two days well Coya can be on that as well so okay so they have their own distributor locations you're not going individual stores yourself exactly okay okay that's manageable yeah and there's there's we're in 9,000 of them so it would be really hard to to hit everyone so you're writing a book now why did you decide to write a book and is this like a personal brand decision or what was you about process

1:19:46behind the book you know over over the years I had had people casually say like you should write a book and I just kind of brush it off whatever I remember very specifically one of our really good friends um at the beginning of Co she was struggling with something she shared with me and I shared a story back with her and she said you know you should really write a book I think I think you could help people and I think that was probably what set me over to to actually write the book so at the beginning of covid I would spend two hours every Friday on a walk talking to a ghost

1:20:14writer who would kind of comprise and and compile all of my stories and help me get a framework and I what I didn't want to do is create this like how to watch a BD book or how to I I just it's not my style right so what I was willing to do is just share my story who I am where I grew up my entrepreneurial Ventures mistakes I've made wins I've had and um I struggled with it for three years I I wasn't sure I was ever going to put it out and when I was moved here to Miami three years ago when I moved

1:20:45down I met this guy who I could kind of relate to similar upbringings and personalities and he read it he's like you really got to put this out like this this can help some people and so that prompted me to actually do it and um yeah I put it I put it out a couple months ago and it's I guess it's maybe partially a branding personal branding thing but really it's just sharing a story my my metric for success is that if it helped one person if I heard that somebody got something out of it it would be a success and I want to say a

1:21:16month ago I was I was heading to the airport I got a text in this guy that I used to work with and he shared uh my C my story is very candid right and so I share that my mother struggled with addiction for you know 15 20 years and talk about how I handled it and and he shared a a really heartfelt messageer with me and send you ahead and talk to his dad in seven years and because of my book he was going to reach out to him and I was like great success so mission accomplished where's it available uh it's available on Amazon and on barsen

1:21:44nobles.com interesting so do you think that writing the book is like opening up a new door in your career or just something you just felt like you wanted to get out there so people could relate to it it could be I don't I don't look I mean the only thing we know about creating any plan is that it's wrong we finish it right and so I I look at that for life as well so like could it open up some new things maybe is that why I did it no uh but I'm going to be open to whatever it brings and see see what happens what's your perspective on this

1:22:09whole like personal brand content creator World we're living in now like you feel pressured to like participate if people tell you you have to start making YouTube videos like CU you're so successful in your field like it doesn't seem like that necessary but I would love to hear how you could view it it's if I were a first time entrepreneur right now I feel like it would be essential I mean I feel and and you can tell me I mean all the people you interview I'm sure you hear a lot that are creating their own personal brand and content I also think the founder story is really popular and so there is

1:22:38a little bit of pressure even doing podcasts right um to kind of get in in the spotlight I guess and and put a face with the brand or whatever um I don't feel a lot of pressure it's just not something I'm going to I'm going to spend a lot of time on I I I have started posting a bit on LinkedIn and and I do it when I'm inspired to do it and I know it's not algorithmically correct but I don't when I'm not because it started to feel like a job sometimes it's a whole time job right I have I have so much respect for

1:23:09people that do create content historically I'd look at it and go what is this who gives a to you just beinging a video and then when you try to do it you're like this is actually hard especially if it's of you mhm you know and like actually saying to that you want to represent yourself on the spot it's like a lot of exactly so do you see that uh these Brands like that are led by content creators or the founders have big personal Brands like is that giving people an edge is that like the only way to enter the space now or do you think are there stories like

1:23:38traditional Brands popping up I don't know that it's definitely not the only way to to laun a brand um do they get an edge I think that probably in some ways what what I've seen look we worked with different celebrities and and influencers with our brand and um not in the way of them being the founder but them helping us get the message out I think the brands that are content creator influencer Leed are are interesting if they have a real brand and a real company behind and so the mistakes I would say is and this would happen in alcohol all the time so and so

1:24:11is launching a vodka so and so is launching tequila no one gives a because there are a million Tequilas right and that person may be cool but if it's inauthentic people can see through that now what I think is really interesting is the people that are living the brand they're not talking about how many times I need to post or do I want to have this product at this event they're literally living it and they have a partner or an infrastructure behind them that knows the business so you know if you were a content creator you try to launch a perishable ref refrigerator B rdge I think you would

1:24:44fail I think You' fail pretty quick or it be much harder and much more time intense than you would assume if we were to partner and I was going to take care of all that back part and you were going to take care of the the the face of the brand and the awareness and the marketing I think those are the ones that are really special and and succeeding yeah it seems like much more like a boots on the ground marketing type of business yeah yeah yeah there's definitely I mean look you know Mr Beast did it right I mean he can put a video out and and 100 million people walk into

1:25:12the store asking for that's an anomaly yeah 100 100 million views per video is not going to be the every everyday Creator yeah okay so I guess the last question I would ask is who would you recommend should start this type of business like what characteristics they have and what are the common mistakes that they might make that they'd also found so a beverage mhm I mean I think you have to really have a passion for beverages I wouldn't have thought of myself or our family in this way um for a long time and now I realized like we're a beverage house right we always have different beverages

1:25:43in here we're always looking and part of that's cuz I started things in it but like you have to have a passion for beverages you have to you have to whether it's alcohol or not out um you have to have an interest in it it's it's not like I would not suggest someone who just wants an easy layup or good LIF let just start this it is incredibly difficult even non perishable sh Nimble CR incredibly difficult huge failure rate um but you know it's it's exhilarating too I mean when you win in beverage you win so um I thought I'd say about starting what was the second one what

1:26:17mistakes do people make when they enter the space they probably they'll see coming uh I think the mistake that's most often me is the one that we made early in Fusion projects which is you judge success by your sales to a distributor or to a retailer and you don't realize that the key is velocity to the consumer so that's that's a huge one the other one is I think um failing to recognize that the number one uh single most important attribute of that any beverage is taste you can have the healthiest drink you can have the thing that checks all the boxes of the modern day you know diet or interest

1:26:56and it doesn't taste good at scale people are just not going to buy it keep okay I do I do want to ask what software tools do you all use internally to run the business actually I want to take one exception to that I will go back to if it has a function that really works people will bypass the taste and and Red Bull is a good example that right um and there's plenty of others with functional shots what software do we use um one of my favorite pieces of software we're a remote company we've been remote since one we were remote for a long time at

1:27:26Fusion I just like the remote culture I feel like I can hire the best people regardless of geography interesting and so for me to feel like I'm really in touch with the business and in tune with what's going on slack is amazing the team that's out in the market every day in stores is posting pictures sharing firsthand feedback so I'm even though I'm not there personally I'm still like at that demo getting that firsthand feedback that's incredibly um powerful for me um the platforms so like a logistics or 3pl or like a universal like you know management of your inventory the team would have would have

1:28:03some I try not to get too involved in what I'm not good at and so like warehouse and Logistics and production is not my specialty but I will say that one thing that was gamechanging for us as a production facility was this program called Red Zone where we were able to monitor like real time everything that's happening variances in the product uh if this process was done and and so it's really given us a lot of disability to go back and understand if we had something that tasted off or that spoiled or you know whatever it is we can we can track every detail that know

1:28:34exactly what happened so that's that's big good okay well this was a very interesting conversation I appreciate you making time yeah thanks for thanks for having me thank you where can people find you on LinkedIn uh just Christopher Hunter all right well my man thank you so much this was awesome