[00:00:05] Mike Cesario: They say it takes doing something 10,000 times to be good at it. With over 60,000 beverage formulations, Flavor Man is better than good at making dreams into drinks. We're Flavor Man, and we partner with dreamers and entrepreneurs to not just get your flavors perfect, but help you develop your beverage product from start through finish. When you work with us, we're with you from start up to bottoms up. So let's get started at flavorman.com. Flavor Man, change what the world is drinking. And now, Taste Radio.
[00:00:50] Ray Latif: Hello again and thanks for tuning in to the Top Podcast for the food and beverage industry Taste Radio. I'm Ray Latif and you're listening to episode 179, which features an interview with David Smith, the founder and CEO of fast-growing brand High Brew Coffee, who reflects upon his 20-year journey as a beverage entrepreneur. Tune in on Friday, September 13th for episode 51 of our Taste Radio Insider Podcast when we're joined by Mike Cesario, the founder and CEO of canned water brand Liquid Death, who discusses his unconventional approach to branding and marketing. Just a reminder, if you like what you hear on Taste Radio, please share the podcast with friends and colleagues. And of course, we'd love it if you could review us on the Apple Podcasts app or your listening platform of choice. So if you were a beverage entrepreneur who co-founded a brand that just sold for tens of millions of dollars, what would be your next move? If you said get on a boat and sail the Caribbean, guess what? You're in good company. That was David Smith's plan. His brand, Sweet Leaf Tea, was acquired by Nestle Waters North America in 2011. And after 13 years on the grind, it was time to relax. But like many entrepreneurs, he grew restless and within months began planning for his next idea. That idea was High Brew Coffee. which launched in 2013 and has since become one of the top-selling brands in the competitive cold brew segment. In the following interview, I spoke with David about cutting his teeth with Sweet Leaf, his relationship with lifelong friend and co-founder Clayton Christopher, and why culture was everything at the company. He also discussed his next act with Highbrew and how his prior experience played into the launch and development of the brand, the importance of planning for growth, and why he believes that no matter how well you plan, mistakes are unavoidable. Hey folks, it's Ray with Taste Radio. I'm gonna call with David Smith. David is the founder and CEO of High Brew Coffee and calling in from the great city of Austin, Texas. David, how are you? I'm doing well, Ray. Thanks for having me on your show. I'm honored to have you on Taste Radio. You know, I've never asked you, do you go by Dave or David? I've always called you David.
[00:03:04] Liquid Death: Yes, I always go by David Smith's one of those pet peeves that some people that just continue to call you Dave, and you're like, you know, it's David Smith's not Dave.
[00:03:13] Ray Latif: but you've always gotten it right. Yeah, I've always, before I came to BepNet, I was always Raymond. And then for some reason, it became Ray. I mean, people called me Ray in the past, but it was, I preferred the formal longhand version of my name. But anyway, I'm glad I've gotten it right all these years. And you and I have known each other for, geez, going on six or seven years at this point? I believe so.
[00:03:36] Liquid Death: Like I met you at the first expo when we were launching High Brew in 2000. Maybe 2013.
[00:03:45] Ray Latif: I think it was 13. So if it was 2013 that we met, that was six years ago, but you've been in the beverage business for over two decades. What would you be doing if you weren't in the industry?
[00:03:55] Liquid Death: You know, that's a good question, Ray or Raymond. You can call me Ray.
[00:04:01] Ray Latif: We're good.
[00:04:03] Liquid Death: You know, I studied to be an architect early on at the University of Texas, and I spent my summers growing up building houses with my father. So, you know, I would likely be designing or building houses if I hadn't discovered our industry.
[00:04:19] Ray Latif: Interesting. So what from your education in architecture have you been able to apply to beverages?
[00:04:26] Liquid Death: Hmm build a good foundation.
[00:04:29] Ray Latif: Oh, I like that. That's against a good metaphor for For starting a company.
[00:04:33] Liquid Death: I do feel like there's an analogy there with with hybrid. I was able to actually spend some time Thinking through that foundation and building out the supply chain and really, you know thinking through all the critical components of the business whereas With Sweet Leaf, you know, we were just running and gunning and didn't know what we were doing. And, you know, you live to go through those consequences when you don't have a good base.
[00:05:00] Ray Latif: Totally. You mentioned you went to the University of Texas at Austin, and it's amazing how many entrepreneurs I meet who either went to UT or from Austin. What is it about that city? What is it about the college that really spawned so many new companies and entrepreneurs?
[00:05:18] Liquid Death: You know, Austin is a progressive city. I think there's over 100,000 students if you add up all the schools. You know, it has a very cool vibe, a ton of great energy around music and film and technology and now even food and beverage. I feel like Stubb's Barbecue Sauce and Sweet Leaf Tea really helped get Austin on the map for CPG brands back in the late 90s, 2000s. But obviously, being Whole Foods Market's headquarter has helped with this. And over the past 10 years, it really has become a hotbed for entrepreneurs in the food and beverage space. Austinites are fanatic about supporting local products. So it's a great place to launch a brand and prove out the concept.
[00:06:01] Ray Latif: That makes a lot of sense that certainly makes a lot of sense that Whole Foods would embrace local brands in its own backyard as well Yeah, they're strong supporters of local products You mentioned Sweet Leaf a couple times and you joined your childhood friend Clayton Christopher as the co-founder of Sweet Leaf About a year after you graduated from UT that was in 1998 is that correct? That is correct. And so you exited the company in 2011. I remember that I wrote the story for BevNET about Sweet Leaf being sold. But from 98 to 2011, 13 years grinding, what were some of your happiest moments? And what were some of the things that were most challenging?
[00:06:44] Liquid Death: You know, we always say that the journey is more important than the destination, and Sweet Leaf Tea was one hell of a journey. Producing our first batches, literally using pillowcases for teabags, brings a smile to my face. Neither one of us had really any previous experience, so just thinking about how we solve for so many things makes me laugh. In the beginning, when our products weren't turning fast, fast enough, Clayton and I would run to the local hardware store to buy metal tubs and build wooden stands to place the product near cash registers. We built our first trade show booth in my driveway to look like an old storefront that was made with real cedar post. And the thing weighed so much that our drainage bill from the convention centers would be like the largest expense item for the entire trade show. So just thinking back on the creative solutions that we came up with on a shoestring budget is really great. Also really proud of the company culture we built there. On the challenges, man, the challenges were endless. In the beginning for us at Sweet Leaf had a very perishable product with only a few weeks of shelf life. We would place these perishable products in ice down tubs, you know, only to find bottles floating in warm water a few days later. So at times it felt like we were picking up more spoiled product than what we were actually selling. That was very demoralizing. Also just trying to do everything yourself can be exhausting. It took us several years of trying to figure out the business before we were really comfortable hiring more experienced people to help us with our cause. I'd also add beverage distribution in general, you know, it's always a challenge and it takes a lot of experience to build out a traditional kind of DSD network model.
[00:08:29] Ray Latif: Being able to hire experienced professionals seems like one of the critical parts of a successful brand, particularly in the beverage industry. When it's just you and your friend or you and your best friend, you know, what are some of the toughest parts? What are some of the best parts about that relationship, having a friend be your co-founder?
[00:08:49] Liquid Death: Yeah, Clayton I've known each other since we were 6 years old. Best friends our whole lives. Best man each other's wedding got parents, my children, it's like a he's like a brother. It probably rarely works out for most but our personality types. Work well together kind of the end the Yang and and my strengths or his weaknesses and vice versa so We proved that we worked really well together and we still do lots of things together today. We've had people over the years come and want to try to learn how that works and I just don't think it's coachable or teachable. I think it's in your DNA and it's really just when you get two personalities that match well, you can't teach that stuff.
[00:09:36] Ray Latif: Sometimes though, when you're working with your friend or working with someone that you know really well, it makes it easier to be critical of them, I would say.
[00:09:44] Liquid Death: Yeah, there's definitely a lot of trust and a lot of honesty, you know, and you know that all the constructive criticism, whatever that might be, is coming from a good place. So you kind of leave your ego at the door and be pretty humble and honest with each other. And I think that's one of the strengths that helps our relationship.
[00:10:03] Ray Latif: When you were at Sweet Leaf, I believe your primary role was sales, right? Were you selling the story as much as you were selling the product? The fact that two childhood friends were brewing tea in pillowcases and did it work? I mean, were people receptive to that story?
[00:10:21] Liquid Death: Absolutely. You know the story can be everything. The difference of a buyer call with a seasoned salesperson doing it by themselves versus me going in there with them. You could just tell how enthralled the buyer would get when they heard that story. It's almost like you could be selling anything. They love the story so much. But obviously, you've got to have a high-quality, great-tasting product. But yeah, the story helped immensely. We used to say it was homemade Taste Radio a bottle, it was one of the first bottled iced teas that actually tasted like an iced tea that you would brew at home, like a sun tea, you know, that you make in your kitchen. Almost everything on the market back then, Ness tea and Lipton and to a certain extent, Arizona, it just didn't taste very natural. You know, there was a lot of synthetic artificial ingredients in there that left a metallic kind of taste in your mouth. Just using real sugar and real tea and clean water, it was a bottled tea experience that really tasted like homemade. We would set up wherever there was a crowd and just start pouring samples. Most of the time it was Clayton and myself early on before we had much help, but it could be a marathon or a bike race, an art festival. Like you said, music festivals. Sometimes I remember we used to do this kite festival. A kite festival? A kite festival in Austin. I think it's still going and it's turned into a really... But early on, it was something that was kind of new and a handful of people would show up with kites and we're like, all right, well, it's an opportunity. Let's get out there with our little 10 by 10 and start pouring samples.
[00:12:00] Ray Latif: Did you have a target consumer? Because I assume that folks going to a kite festival versus a rock show are maybe not the same person, maybe not the same customer.
[00:12:09] Liquid Death: I think early on, our strategy was just to sample anybody and everybody. There wasn't a whole lot of strategy to the method, but my wife, Elizabeth, started her career in the music business, and she ran several music venues in Austin. One that was pretty famous called The Backyard, and her relationships introduced me to the guys who started Austin City Limits Music Festival and Ballapalooza, I think Sweet Leaf was one of the first sponsors at ACL. That stemmed out of an opportunity and probably less directed by strategy, but we realized once we got out there that we had such a captive audience with so many folks. You can find a lot of different demographics at a music festival. through that experience and the feedback and the reactions, I think started to help us evolve our thinking of who the core consumer really was. It did happen to be a little bit of a younger crowd that frequented the music festivals, but that really kind of spawned out of just the tools that we had at our disposal at the time.
[00:13:19] Ray Latif: You talked a lot about your coworkers and hiring the right people. Skills and skill sets are obviously important, having someone who knows how to do their job. But company culture is just as important. You know, did you hire people based on your personality and Clayton's personality, or is it a little bit more of you know, looking for a skill set and putting people in the right place, regardless of what kind of personality or what kind of culture they brought to the company.
[00:13:53] Liquid Death: You know, it's great to find people with experience that have some carnal knowledge of, you know, what works or doesn't work. But at the end of the day, I think it's extremely important to hire for personality. And there's a lot of skills that you can train and teach over time, but you can't can't really teach a personality and You know we still have a kind of rule of thumb if we didn't want to go grab a beer with you after work, you're probably at the wrong place. I think that's still extremely important today, cultures, everything and everybody's personality. If you get a strong team and everybody's gelling well, and it's a good mesh of all those personalities, everybody just tackles the day with a lot better attitude. The few times that we did hire somebody from a Coke or a Pepsi that had a whole bunch of experience, it was like trying to fit a square peg in a round hole. It's like each one of those relationships didn't work out. a lot of it was just, you know, when you come from a really large company culture, you're a little bit of a fish out of water in the younger entrepreneurial world where you're, you know, everything is, is kind of flying by the seat of your pants and you're trying to be real scrappy and, and make the best out of every little thing you have. And when you merge over from some of these larger companies with really large budgets, it's just a different mentality, you know, and that's a, it's kind of like oil in the water. It's just, it's hard to make those work well.
[00:15:21] Ray Latif: I mean, I can only imagine what it's like to go from a company like Coke, who's got thousands and thousands of employees to one that's probably got 30. It's got to be a major change. It's also got to be interesting when you first realize that you need money and you need lots of money to keep your business going. What kind of conversations did you and Clayton have about outside investment and giving away or selling equity in the company?
[00:15:49] Liquid Death: You know, we've done... quite a bit of investing together over the years with various brands. You know, I think if you're asking about this, philosophically speaking about raising capital and giving away equity in your business, I get asked that question a lot. And I think it's a different answer for each individual. You know, a lot of times I'll answer that question with asking the person a question of like, you know, what are your objectives and what are your goals and where do you see yourself in five years? And, There's very different ways to grow and scale businesses based off of what your objective is. Some people want to try to build them up really big in a short period of time and sell them. Some people want to build that business slowly over time and do it for 20 years. Those two scenarios look very different of how much money you need and how much equity and control you have to give up to achieve that. There's no right answer to that question. It really just is more to do with the founder or the entrepreneur of what their goals are.
[00:16:56] Mike Cesario: We'll be right back with more from David Smith after this quick break. They say it takes doing something 10,000 times to be good at it. With over 60,000 beverage formulations, Flavor Man is better than good at beverage development. Let us guide you through the process of getting your drink brand created. Flavor Man, change what the world is drinking.
[00:17:20] Ray Latif: What were your goals when you started Sweet Leaf? Did you imagine that you'd sell the company? Did you imagine that it would be your career for the next 50 years? I mean, what did you want out of it when you started the company?
[00:17:31] Liquid Death: I gotta be honest with you, I just wanted a job. We had recently just gotten out of college, and I started to interview with some big companies, and within a month of doing a few interviews, I remember I went to Dell Computer, and then I went to American Express, like financial services, and I was sitting, going through these questions with these two guys, and the whole time all I could think about was, Wow, if I'm successful here and I get this job and do well, I might be able to be like this guy that's sitting across from the table from me who looks extremely unhappy. There's got to be a better way, you know. And I remember the day I called Clayton up and I was like, golly, I just... We're so young and we have everything. You don't have a lot to lose at that when you're young 20-something. So if you're going to risk everything for a startup, that's kind of the time to do it. I think the later in life you get, the harder it gets. The more responsibility, the more stuff you have to deal with, that makes it a little harder to be like, all right, let's just not pay ourselves any money for a couple of years and get this thing going.
[00:18:38] Ray Latif: So when you eventually did sell the company when it was acquired in 2011, were you happy with the outcome? Is that where you felt you needed to be?
[00:18:47] Liquid Death: It all went down kind of the way it feels like it should have. Like you said, we did that for 13 years, and it was a great journey, great experience, and wouldn't have traded for anything. But towards the end there, the culture was shifting, and we were working very closely the last 12 months with Nestle Waters, who eventually acquired the brand. And it felt like the right time. It wasn't really ever the goal. We just kept doing what we were enjoying. And as long as we were growing and having fun doing it, I could have done it longer. A lot of startups also, I think you get to a place where it's one thing to get a brand to $50 million in revenue. It's a lot different when you're at $100 or $150 million in revenue. And the activities and the day-to-day managing of the business is vastly different. The larger these companies get, you start to lose a little bit of that young excitement, being able to pivot and jump around quickly. over time as the activities shift, it can be less fun.
[00:19:57] Ray Latif: Sweet Leaf a brand seems to have had its ups and downs in the years since the acquisition. If you could, what changes would you make to the brand today? That's a good question.
[00:20:07] Liquid Death: It's fun seeing it pop back up. They gave Granny a facelift, which was kind of an interesting take of the label that we created and knew so well. But I get a kick out of seeing it in stores, and I hope the Brandt Gehrs on. When I look at it, it would be very easy to resurrect the brand that you built previously, because of all those little honey hole accounts that just would crank volume. And it would be pretty easy to turn that thing around and get it back to where it was, how much further you can take it. There's a lot of things that may or may not be in your control with the competitive landscape and the category that you're playing with. And TE is very mature. But yeah, I remember when Nestle Waters first sold the brand, I was kind of like, wow, that could have been interesting. I've gotten back in and done tea and coffee. But it's a whole new chapter now. You don't really look back.
[00:21:05] Ray Latif: You sound like a glutton for punishment. The tea business, notoriously difficult. Your next brand, Highbrew. arguably an even tougher category, coffee. And at the time he launched the brand in 2013, Starbucks was by far the dominant player at ready to drink coffee. They still are. And over the past six years, we've seen dozens, if not hundreds of new brands that have entered the space. All that being said, let's back up for a second. compelled you to start a coffee company? What compelled you to start a brand and why do you think the opportunity was there for a packaged coffee given what I just mentioned that Starbucks was far and away the colossus in the category?
[00:21:51] Liquid Death: You know, when Nestle Waters acquired Sweet Leaf took a much needed break. We just went over this. It was a 13-year journey, and my children were six and eight years old at the time, barely knew who dad was. I was always on an airplane. If there was ever an issue at home, they would hide behind mom's legs. I was barely part of the picture there. We, Elizabeth and I took a kind of a long dreamed about sabbatical where we took off on a sailboat out of Florida and went all through the Caribbean for almost eight months. And the kids were in kindergarten and second grade. They were a little young, but you know, timing, you don't know when you're always going to have those opportunities, so.
[00:22:37] Ray Latif: They came with you, your kids?
[00:22:38] Liquid Death: Yeah, they came with us. It was the four of us on a boat, and we took them out of school and homeschooled them. And just an incredible journey. It allowed me to really hit the reset button and go spend some much-needed time with my kids and kind of build that relationship. You know, it sounds real glamorous. It was like, oh, you took off on a yacht and it's like, you know, this wasn't a that big of a boat and it was just the four of us. So it's a lot of work. You know, my wife and I were constantly fixing things or cleaning things or trying to figure out, you know, it's all foreign places and chartering unfamiliar waters. And a lot of things can go wrong on a boat, especially with a couple of small kids. So, uh, was constantly looking for energy. I was trying different energy drinks I would find in some of these marinas that would give me the jitters or the shakes, because it just had too many artificial ingredients in them. I was always a coffee drinker, but typically one or two cups of hot coffee in the morning, and that wouldn't go down too good in the afternoon heat. I started pouring it over ice, and just kind of making a traditional iced coffee, and it was a little better. And then I was at a marina one day, and a guy was telling me about cold brew coffee, and I'd never heard of it. He explained the process. So I jumped on Amazon, and I bought one of these little toddy systems and started cold brewing coffee on the boat. And it became the beverage of choice. It was really the perfect kind of pick-me-up to stay alert and to give us that energy. Now, if you drink too much coffee, it's high in acid, you get indigestion, give you heartburn, you know, and the whole cold brewing process, it's much less acidic. You know, and I can also make it as strong as I wanted to. I'd make some pretty concentrated batches where you pour a few ounces over an ice cube in a little cup in the afternoon and there's a lot of caffeine. Little did I know I was scratching on the next business venture. I definitely wasn't thinking about how I wanted to quickly get back in the beverage business. I wasn't sure what I was going to do, to be honest with you, at the time. This was all in 2012. We came back to Austin in September, put the kids back in school, and I started doing some consulting for different startups in the food and beverage space. I think it was Expo East that year when I saw a couple cold-brewed concentrates on the market. Chameleon was there, and I think Grady's was there out of New York. I was like, wow, this stuff is great. It's just like what we were making on the boat. It's just perishable, and it's not that convenient. You've got to take it home and dilute it with milk or water or flavor it up. And that's really when, I guess, the idea was sparked. I started playing around with different flavors, and I started looking at some category data. And you're right. At the time, Starbucks was the 800-pound gorilla. It still is. But they had over an 80 share with frappuccinos and double shots. It's like there's got to be something better than a dessert in a bottle, you know, offering that was making it most of the market. And so the next thing you know, I whipped up some samples in my kitchen and I sent them over to Whole Foods, see what they thought about it. And this was all in kind of November timeframe. To my surprise, they came back and were like, hey, we're going to authorize four SKUs nationally in all regions. Can you ship by March? I was like, wow, I guess we're really doing this. It was a total rat race from November to March trying to get all my packaging and formulation and everything dialed in. But we finally shipped. We showed up on the shelves a few weeks late, and we caught the cold brew wave for the last five years just in time. Those first 12, 18 months went really fast. We picked up a lot of accounts so quickly because we were the first shelf stable kind of ready to drink cold brew coffee on the market. The space was really heating up and wasn't that hard to go get a ton of authorizations in a short period of time.
[00:26:33] Ray Latif: You mentioned this before, the industry has changed so much since 1998 when you launched Sweetleaf. Was the experience for those first 12, 18 months with Highbrew similar to that Sweet Leaf in that it was a rat race? It was a lot of bootstrapping. Did you have to learn the business all over again? What was it like in comparison to your first rodeo?
[00:26:55] Liquid Death: You know, I think there's a general playbook that you can follow for most brands. You know, the landscape does change quickly along with the necessary tools that you need. It was definitely a lot different. The early days of Sweet Leaf just didn't really even know what we should be doing. You know, so once you have a lot more years of you know, falling down and getting back up and understanding what works or doesn't work. It definitely accelerates the learning curve, and Hybrid was a big acceleration. I also hired quite a few folks from the early Sweetleaf team. I should say, early on at Hybrid, I hired a lot of the later folks Sweet Leaf that really helped, you know, accelerate the whole launch process. And we built out a national DSD network in 12 months. You know, when I did that at Sweet Leaf took me almost 10 years.
[00:27:45] Ray Latif: How much did the name David Smith, as the co-founder Sweet Leaf, play into your ability to get those authorizations, to get that distribution?
[00:27:57] Liquid Death: I don't know how much that really helped. You gotta have the right product in the right space at the right time. And hybrid came together really well for all of that. There was definitely a shift going on in the coffee space and it was starting to heat up. And I remember back then I mean that summer in 2012 there was McDonald's and Dunkin Donut commercials doing summer long ad campaigns on iced coffee. You know you could tell that there was this new kind of shift of, wow, coffee can be enjoyed cold too. It's not just a hot beverage in the morning. So I think a lot of it has to do with that. I mean, my name, you know, it probably helped a little bit getting some people to return phone calls that I used to take 12 months to get them on the phone. I think the experience and the Rolodex definitely helps when it comes to recruiting and raising capital. is having a good reputation and delivering for other investors previously, that definitely helps on the money race front. But yeah, I think a lot of it just has to do with the right product in the right space, more so than the person behind it. But it helps. I'm not going to downplay that too much.
[00:29:10] Ray Latif: Well, you said earlier you made a lot of mistakes at Sweet Leaf ones that you really never wanted to make again. Did you make those same mistakes, though, with Hybru? Were some of them just unavoidable?
[00:29:19] Liquid Death: Yeah, you always make mistakes, right? We all make mistakes, and I think that's just part of learning. There are so many things that are simply outside of our control. Try to think of an example. In 2016, there was a shortage on production, and my co-packer started allocating us product. We quickly had to find new sources of production to the point that I even started producing product overseas and shipping it back to the US. You know, it's like you can never put enough time into your supply chain before scaling the volume. I think most entrepreneurs get in this business and you're just, you know, you're doing everything you can to put the formula and the package and the marketing and everything together and then go call on all the accounts and get distribution and get it on the shelves and actually start seeing it show up in stores and being sold and you're high-fiving each other and you're excited about getting the thing off the ground. And then you're doing all the pull strategies and trying to build velocities and all this stuff's going on. But then if you do everything right and it starts working and velocity start climbing and more authorizations and more doors start coming on. Typically what happens if everybody if you're winning all of a sudden you just get totally knocked down on. wow look at all these orders and how are we going to make this much product and we can't do it in our kitchen anymore or however we're doing it is however anyone is doing it is probably not optimal and then you start trying to go through the growing pains of of building out more volume and And I think High Brew, early on when we launched Salted Caramel, the salt content in it was a little high, and it was creating some of the particles to coagulate in the bottom of the can. And it's like, damn it, we can't have this. You can't sell this stuff out there. It's got a little sludge in the bottom. And those kind of things, no matter how much experience you have, I think they continue to rear their head, and you just got to try to continue to live to fight another day.
[00:31:15] Ray Latif: We'll be back with more from David Smith after this quick word from our sponsor.
[00:31:20] Mike Cesario: They say it takes doing something 10,000 times to be good at it. With over 60,000 beverage formulations, Flavor Man is better than good at beverage development. Let us guide you through the process of getting your drink brand created. Flavor Man, change what the world is drinking.
[00:31:40] Ray Latif: In some ways, it almost feels like what you're aiming for is a consistent, almost boring process, something that you can rely on repeatable outcomes.
[00:31:52] Liquid Death: That's one of the things the big companies that you kind of envy, you know. it might not be the most exciting, but they typically have a supply chain that's so bulletproof that it just, it is boring and it just keeps spitting out consistent, good quality product. And that's what you really want when it comes to that. And that's one thing that I think the big companies, they do very well, you know, with all the processes and the checks and balances in place and the capital and the resources, but they do production well. And I think that's one of the hardest things for startups to get off the ground. And like I was saying, once you're feeling like everything else is going well, that's usually the one department that you pay the least amount of attention to that becomes very critical as the business grows.
[00:32:37] Ray Latif: Yeah, I mean, a lot of brands and I'll say media companies that cover those brands seem to be very interested in innovating and introducing new products. I know here at BevNET, we love to go to trade shows and and see new products. And Highbrew hasn't at all been afraid to innovate or iterate with its formulations. You know, why is that? I mean, is that just part of the current environment for food and beverage, where you're always having to come out with something new? Or was that sort of part of the general strategy when you launched is to, you know, have a portfolio that you can tweak and build upon?
[00:33:14] Liquid Death: You know, I'm always playing around with new formulas, probably, probably more than I should. Many of them never make it to actually being commercialized. But we never stopped tinkering around the kitchen. I feel like one of the reasons we have the best tasting products is because of that relentless pursuit to quality and tinkering and playing around with it. But you have to think about it from the retailer perspective or wherever you're selling the products. At the end of the day, how many SKUs or facings are you really going to get on a shelf at a grocery store or at a convenience store or at a drugstore? And what's that hero lineup of those top three or four or six flavors that is your best foot forward that's going to perform the most? And when you look at it with that lens, you realize that you really don't need 20 or 30 flavors. And if you make that many, you're definitely not going to see too many of them outside of maybe e-commerce or something. I think it's really important to get that core lineup done really well. And if you can keep optimizing it, and little tweaks here and there, and it keeps tasting a little bit better, not so much that you have to change anything, really. I mean, even the ingredient panels a lot of times will say exactly the same. But you know, and you're like, you know, that actually tastes better than it did. All right, let's make that change. And you're constantly trying to make slight improvements to taste. But at a certain point, more and more innovation kind of ends up being cool and neat to look at and it's on your desk, but it's not in the stores. So you gotta tame your expectations and be realistic about, you know, and sometimes when you come out with new stuff and now it's performing better than your slowest, you know, other SKUs, it's like, okay, I think we need to shift. Let's change what our total product portfolio looks like in a store based off of, again, how many SKUs can we get on the shelf and what are our top performers.
[00:35:12] Ray Latif: Given your experience, have you found it's better to convince retailers first or to convince consumers first? As in, do you drive demand from a consumer who's looking for the product on shelf, or is it better to get on shelf and that helps convince the consumer?
[00:35:28] Liquid Death: It's both. I like to always try to take the perspective always from the consumer's shoes when it comes down to the product's attributes, the flavors, The reason for being, there's a lot of retailers and distributors out there that have really strong opinions of what you should be doing or how you should do it. But at the end of the day, it's just another opinion. And it's really your core consumer that should be driving that type of decision making. When you talk about the cart before the horse or the whole catch 22 of do you go after the retailer or do you go after the consumer? It's both. I can remember Clayton and I in the early days, we would go into Whole Foods and sit down and have lunch and fill out a bunch of consumer request cards and turn them in and make it look like everybody that was there that day has been asking for Sweet Leaf tea. We knew what the hell it was.
[00:36:20] Ray Latif: Would you be writing with different hands or different pens?
[00:36:22] Liquid Death: We would try every kind of handwriting and different pens and sit there and fill out 20 each and make them look like they were really from different people. But that stuff works. I mean, it's like when you're tenacious and you won't take no for an answer and you keep getting every door closed on you, get pretty creative on what else can we do here. But if it's a good retailer and you get on the shelves, that's a huge plus. I mean, that's a lot of exposure and now people can actually find it. It's not like you forcing them or having to go physically talk them into going to some place to find it. That's a big step up in your business model. And now you've got to focus on that retailer and make sure you support them with everything you can to hit your par levels and thresholds and build more awareness. So I think it's all the above. You can't really go at it one way or the other. It's kind of hitting it from both sides.
[00:37:14] Ray Latif: So Hybrid was in its sixth year, and I wonder if you thought you'd be in this place at this point, if you thought it would, if you thought you'd be more successful to this point, less successful, where the brain would be in terms of sales, revenue, distribution. I mean, I guess, are you satisfied with the progress that you've made to this point?
[00:37:35] Liquid Death: I am, I am. I'm very proud of what our team has been able to accomplish. For the most part, when I look back five years ago and say, what are your goals and plans and aspirations, we're tracking to where I thought we'd be. I think you can always be a little more optimistic. I thought we'd be a little bigger by now. But for the most part, we've always come in pretty close to forecast. And we typically budget very optimistically. So it's hard to hit really high expectations year after year. For the most part, we've tracked fairly well. I will say, you know, now in this day and age with, as you mentioned earlier, there's hundreds of brands literally in the space now, you know, that definitely slows things down and you have to retrench a little bit and focus on, you know, what does the next five years look like and tame some of your expectations. But growth is still happening and we're already starting to see more momentum for 2020. like I said early on it's it's about the journey and if you're enjoying it. Then you know you keep going with a smile on your face and you're having fun. If for any reason it gets a place where it's not enjoyable, then you know you got to take a hard look at it, it's time for some kind of pivot but right now we're still having a blast it's a it's a really fun industry as you know, I didn't think I would get back in the beverage space. Especially the non-alcoholic side, you know we're we're distribution can be such a grind but Here I am, on the second chapter in coffee instead of tea this time and still having a blast doing it. So I have a hard time picturing myself doing anything else.
[00:39:18] Ray Latif: It sounds like you're having a lot of fun. I hear about the Christmas parties over in Austin and they sound like they're pretty fantastic. Aside from having fun, what really motivates you?
[00:39:29] Liquid Death: A good challenge, a desire to win, building great teams. It's pretty special. and how lately it's been keeping up with our consumers. What terrifies you? Man, the environment, global warming, trying to make our industry more sustainable.
[00:39:53] Ray Latif: How do you as a brand owner and how do you as an entrepreneur help move that needle in terms of sustainability and progress when it comes to environmental protection?
[00:40:07] Liquid Death: You know, we always take a look at it from a packaging perspective or a process in the production. How can we do things as efficiently as possible with the least kind of road miles on a truck as possible? You know, recently, in the last two years, we forged a relationship with a cooperative down in Columbia where we buy all our coffee from called Delos Andes. It's a direct trade relationship where we give some of our proceeds back to the to the coffee farmers, and that's a different kind of sustainability practice, but it really helps these guys work a little less and make more money. Some of that money also goes back into making just sustainable efforts on the environment with cleaner water going back into their rivers after the production of the coffee beans. And some of it also goes to helping the younger generations want to stay in the farming business altogether, because there's more and more kids in these communities that want to move off to the big city and don't want to grow coffee like they watch their fathers or grandfathers do. So our direct trade relationship with De La Sandys is probably how we practice this the most in a lot of different sustainability efforts and try to make sure that it's a strong future for coffee farming. But, you know, with any CPGs, there's a lot of packaging and there's a lot of different types of materials that you can use that come at a cost. And we try to do all that as efficiently as possible.
[00:41:37] Ray Latif: One of the interesting things you talked about earlier was that when you wrapped up Sweet Leaf, you had two young kids that you said you didn't see very often, always on a plane. Has that changed? I mean, has your perspective on family life and work-life balance changed since then? And if so, how?
[00:41:56] Liquid Death: My perspective has definitely changed, you know, and I would say I do a better job of that balance today, but I think it's the never-ending battle with everyone that's trying to manage a business and a family. It's hard to ever feel like you're in perfect harmony and balance. I feel like I'm always leaning one way or the other, and mostly it's towards the business, you know, and trying to trying to turn it off when you do get home and be present with your kids is always, sometimes it's hard for me to turn it off. It's just, it's always on.
[00:42:28] Ray Latif: Even now, you're still 24-7?
[00:42:29] Liquid Death: Not 24-7 as in, you know, phone calls and emails and traveling, but you're constantly thinking about how you could do things better or different or a new strategy or a new initiative or When I walk through, I love to walk retailers and check out everything that's going on in a store. I'll go grocery shopping with my wife and I get lost and she's trying to find me for 45 minutes. It's just hard to turn the business off. I might not be actually trying to work. You kind of live and breathe this stuff.
[00:43:09] Ray Latif: Totally. I find myself in a, whenever I go on vacation somewhere, I'm just like staring at a beverage aisle or a snack aisle and taking pictures. And I'm like, why am I doing this? I'm on vacation. This doesn't make any sense right now, but store checks, you know, it's, it's, uh, it's the lifeblood of the industry.
[00:43:25] Liquid Death: You put yourself in my shoes and we go on vacation and I've got to go check out a little bit from every channel. Look at that weird grocery store. What is that? Are we in there? Let's go check it out.
[00:43:33] Ray Latif: Yeah.
[00:43:34] Liquid Death: It's, uh, I love retail. You learn a ton. You know, that's probably some of the best advice for any younger entrepreneur out there is spend a lot of time at retail. When you're sitting in the stores and watching and studying consumer behavior and asking them questions, you know, why they picked this up or didn't pick, I mean, it's just, you can learn a ton just hanging out in a grocery store for a couple hours. There's just almost all the answers to what you're trying to solve for lie within those four walls of that store.
[00:44:06] Ray Latif: So seeing what you're seeing in grocery stores and thinking about ways that you can improve upon the brands, if you could snap your fingers right now and change one thing about Highbrew, what would it be?
[00:44:22] Liquid Death: Bigger than Starbucks.
[00:44:23] Ray Latif: That's a good answer. That's a fair answer for sure.
[00:44:30] Liquid Death: You didn't say it had to be realistic.
[00:44:31] Ray Latif: Now, yeah, billions more in sales, billions period in sales. That sounds pretty good. On that note, well, I wish you so much luck in getting there, David. You know, you have a pretty remarkable story as an entrepreneur, and I know that folks listening are going to get a lot out of this. So thank you so much for sharing your story and hope to catch up really soon.
[00:44:55] Liquid Death: Absolutely, Ray. I really appreciate the time and the opportunity, and I look forward to seeing you again soon in the near future.
[00:45:01] Ray Latif: Indeed. All right. Thanks again. Have a good one. That brings us to the end of episode 179. Thank you so much for listening, and thanks to our guest, David Smith. You can catch both Taste Radio and Taste Radio Insider on the Apple Podcasts app, Stitcher, Google Play, SoundCloud, and Spotify. As always, for questions, comments, ideas for future podcasts, please send us an email to ask at Taste Radio. On behalf of the entire Taste Radio team, thank you for listening, and we'll talk to you next time.
