[00:00:05] John Craven: The path from idea to successful beverage brand is lined with thousands of details and decisions. BevSource will support you at each step by adding data and expertise where and when you need it most. From formulation to sourcing and production, our full suite of services and custom support from a team New Beverage experts empower entrepreneurs and give them the resources to win. Start your journey to success with BevSource. Visit BevSource.com and get connected with our team today. And now, Taste Radio Insider.
[00:00:43] Ray Latif: Hello, and thanks for tuning in to Taste Radio Insider. I'm Ray Latif, and you're listening to episode 41. This is a special edition of the podcast, which highlights interviews with six founders, creators, and experts who joined us on the show during the first half of 2019. A quick request, if you like what you hear on Taste Radio Insider, 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. Let's kick things off with Benjamin Witte, the founder and CEO of Recess, a sparkling water brand infused with CBD and adaptogens that's generated an incredible amount of buzz since its debut in 2018. As part of our conversation featured in episode 24 of Taste Radio Insider, Ben explained why Recess is marketing a solution rather than an ingredient, and why he believes that today's brands are quote, built on your phone.
[00:01:40] Benjamin Witte: I really have never looked at Recess as a CBD company or New Beverage company for that matter. I really look at Recess as a recreational wellness brand. We create products and experiences, both digital and physical, to help you feel balanced, centered, and inspired so you can be your most productive and creative self. So taking a step back to like, again, when I kind of started working on the idea, When I started using CBD a couple of things were immediately clear to me. The first was that I felt better when I started using these compounds daily and to me I viewed them as a productivity enhancer. It was something I took in the morning and throughout my day to be more productive. It was not something I used at the end of the day as like a sleep aid even though there is kind of a use case for that. It was immediately clear to me that the compound itself was fascinating and it was going to be because of the macro trends of society that CBD had been kind of bubbling up as a solution to help people feel kind of balanced and centered. But the applications at the time or up until now, frankly, oils, tinctures, gummies, vaporizers, were not going to be the mainstream vehicles for the compound. And that CBD and adaptogens were increasingly going to become like the next whey protein or caffeine, just functional ingredients that are commodities, frankly, that are just going to be put into everything in the grocery store for better or worse. And that the big opportunity for CBD, the biggest opportunity by far in my opinion, is ready-to-drink functional beverages. To me, it's obviously the next energy drink size category. And I think for my strategy, I believe in kind of marketing the solution and not the ingredient. You know, I started looking at a lot of the CBD brands in this space and other categories like oils, tinctures, gummies, and they're just marketing CBD. And if you look at, and I look at CBD as frankly like the equivalent of caffeine or taurine to Red Bull. It's merely an ingredient that unlocks the feeling. The perceived effect of any type of functional product or supplement or food is a combination of the efficacy of the functional ingredients and how they interact with you personally. But arguably more importantly, it's your expectation about what they're going to do to you and your connection to the brand. And, you know, one of my ways I think about marketing in New Beverage space today, or the CBG space, or just walking into any grocery store, it kind of reminds me of, like, the Microsoft Apple ads, where Microsoft is marketing memory, gigahertz, the features, storage, things like that. And Apple has always marketed, like, how you feel and how you use it. And I look at that's kind of how CPG marketing is today, where it's all organic, non-GMO, 50 grams of protein, you know, 30 grams anti, you know, all this stuff. And I'm just like, it's recess. Like, it's just like one idea. And I think that stuff is increasingly table stakes. And increasingly, especially given that I think brands are built on your phone today and through experiences, that you have to market the feeling and the emotion and have an emotional connection with your community and your audience. And that's what I look at in creating. You have to create something that someone wants to take a picture of. I would argue that the can's obviously beautiful, but I think the reason Recess is working is our narrative. It's like a complete thought that just makes sense, right? Where, again, I always come back to our tagline, an antidote to modern times on the side of the can, that's kind of a ridiculous thing to do, but it sets the problem state. Like, what are we solving for our community and our consumers? And the name Recess, very clear value proposition that we're offering, which is, You know, giving you an opportunity to take a recess throughout your day.
[00:05:31] Ray Latif: Next up is Madeline Haydon, who is the founder and CEO of Nutpods, a fast-growing brand of non-dairy unsweetened creamers made from almonds and coconuts. We spoke with Madeline for an interview featured in episode 16, in which she spoke about why a focus on high-quality customer service has anchored Nutpods' thriving direct-to-consumer business and helped it become a top-selling brand on Amazon.
[00:05:55] Taste Radio: You take the route and you take the doors that are open to you. And for us, it was online. It was such a great way for us as a small unknown challenger brand to get our story out, direct to consumer. We could test our pricing a lot faster than Unify's 90 days, you know. We could figure out, are we talking about our brand in a way that resonates with consumers? and get all of that immediate feedback. Like, is there enough French vanilla? Is there not enough French vanilla? You know, do we want a little bit more of the dark chocolate or the orange? And you get all that instant feedback that you can't get through any type of like spins or IRI.
[00:06:38] Ray Latif: You mentioned 6,000 reviews across SKUs. That rhymes. Is that a success metric that you look at? Is it, we've got this many five and four star reviews. What are the metrics of success in D2C that you care about the most?
[00:06:55] Taste Radio: So I'll tell you why reviews are really important. Number one, the fact that we as a teeny tiny marketing budget, you know, company has been able to get to not only the number of consumers, but the important part is the number of engaged consumers. I buy a lot on Amazon Prime. I've probably written two reviews in my life. And so to me, it talks about like the cult following or how beloved a brand is when you can get like 6,000 people to write back and to talk about what they love about your brand. And I think we take an immense pride, you know, in the fact that we average 4.3 out of 5 stars. That's kind of like that new hot, you know, restaurant where all of a sudden it's like you have that social proof after thousands of reviews. And it's very telling. We're able to mobilize this community that not only likes NutPodge, but they love us and they share about us.
[00:07:54] Ray Latif: What about if a bad review comes in? What's the impact of that on NutPodge and then also on your soul?
[00:08:00] Taste Radio: Number one, you need bad reviews because if you see a brand that only has good reviews, like they're scrubbing it for the poor reviews. And number two, that brand is really doing a disservice because you're not hearing how to improve on your brand. Now sure, we get people that try us after Coffee Mate or their lifelong Coffee Mate and their palate is trained towards like, you know, a lot of sugar and they go full steam with nut pods where we're completely unsweetened. And by the way, unsweetened means unsweetened. There's no monk fruit, there's no stevia, there's no erythritol, there's like nothing. And it's not for everyone, but you have to know, like, you're not going to get everyone. And you have to be open to hearing what your customers really think about your product, because don't you want to know? Like, don't you want to know so you can improve upon it and know what people you belong with and what people you don't belong with?
[00:08:49] Ray Latif: What about an example of turning a hater into a lover?
[00:08:52] Taste Radio: Customer service. So, you know, sometimes you'll have someone where it's like, you know, like my product came and it was damaged and like, you know, I'm really unhappy. And, you know, you turn around, you're like, you know, sorry for that experience. We're going to go ahead and send you out some new product. And here's this. We have very strict protocols with customer service because What I'm building is not just a brand that has a look and a taste, but it's an experience. And part of that experience is like how you can turn someone who's unhappy with your brand to saying, you know what, they have great customer service, by the way.
[00:09:32] Ray Latif: We'll be right back after a quick word from our sponsor.
[00:09:35] John Craven: Nothing slows New Beverage entrepreneur more than getting swallowed up by production details. BevSource will help you create and execute upon a custom operation strategy so you can focus on building your brand. Whether you're a first-time entrepreneur or an industry veteran, BevSource can help make your beverage dreams a reality. Visit BevSource.com to learn more.
[00:09:58] Ray Latif: Let's continue with Ryan Lewendon, a partner with influential CPG law firm, The Giannuzzi Group. Ryan joined us in episode 23, and as part of a wide-ranging interview, he offered his perspective on why networking is all about building relationships and spoke about the dangers of treating equity as, quote, too much of a currency.
[00:10:19] Kara Goldin: To me, networking is more about establishing relationships than it is about getting something tangible in return. So, you know, I think the most effective networking happens when you're doing something you enjoy with people you enjoy. And I think I've been successful at it in this industry in part because this industry, I think, is generally full of, like, really positive, great people, and it's very collaborative. And, you know, they're people generally that I want to be around. But I do find sort of if you go into networking or a situation where you're going to network without an agenda, without looking for some immediate sort of benefit, and just getting to know the person, getting to know, you know, who they are, what type of person they are. you know, finding a little bit more about them, you oftentimes find some better synergies than what was immediately apparent on the face. And that's what allows you to develop a deeper sort of connection and relationship. I find if you sort of go in with like a real set goal of, you know, hey, I'm going to get three sales leads or, you know, I'm going to, you know, meet three investors who are interested. You kind of spend the whole time like you're pitching people and they don't open up to you that way. And you don't get that sort of more lasting connection. I'd say one mistake that really founders make a lot when they're getting going is they treat equity as too much of a currency, right? I mean, most companies, when they're starting, they are cash strapped and they are cash poor. And it's kind of easier to give away equity than cash because, you know, equity is a sort of amorphous thing at that point that's in a little bit ways made up. But you oftentimes can't get that back. And oftentimes, the people you meet sort of when you're really, really early on, they either over promise and under deliver, or for no fault of anybody, they find out it's not the right fit. Right. And so if you take on a salesperson from who has really, really big company experience and, you know, has lots of great connections and is, you know, overseeing the continent of Asia, you know, in terms of sales, and comes and wants to help your sort of fledgling CBD brand. And, you know, they were used to making $500,000 a year, and, you know, they'll work for $100,000, but they need 5% of the company. And people cut that deal more often than you'd think. Oftentimes you find out that sort of what's being promised can't be delivered, you know, until 10 years from now in the company's growth cycle or can't be delivered without sort of a, you know, a staff of other employees, you know, that you can't afford. And when those breakups happen, oftentimes that equity just either can't be reclaimed or you have to cut it. And that equity is the most expensive at that point. You know, it's also I see lots of people sort of partner up with, you know, four founders. They all kind of throw in. And everybody's kind of got equal stake. And nobody makes sort of any provisions for what happens if somebody decides to leave the business or somebody doesn't hold up their end of the bargain. And, you know, when you split up equity sort of four ways and then either You know, 25% of it or 50% of it isn't holding up the end of the deal. At that point, you find yourself in a situation where there's just not enough equity to go around, especially when you consider dilution in there. So it's sort of cutting bad equity deals from the early stages, especially on the sweat equity side, that I see really sort of hamstring founders. And maybe it's not the end of the company, but it really does hurt their sort of future earning potential in terms of what they're personally going to take home.
[00:13:46] Ray Latif: Next is August Vega, the founder and CEO of Malk, a super premium brand of organic nut milks and the winner of BevNET's New Beverage Showdown 10. In an interview from episode 30 and recorded at Expo West 2019, August spoke about why she envisioned Malk as a billion-dollar brand from the outset, explained why data has been critical to the company's development. You'd started Malk with a plan to be a billion-dollar brand. Why was that important to you? Why were you starting out with such a lofty goal?
[00:14:18] John Craven: I believe that we really are in control of our own destiny. And why shoot for a low bar? If I'm going to go for it, I'm going to shoot for a high bar.
[00:14:30] Ray Latif: That's a pretty high bar.
[00:14:31] John Craven: It's a pretty high bar. Yeah, it really is. But go big or go home. I mean, I think we're seeing a pretty big evolution in the plant based space, though, not just, you know, from a dairy perspective, but in meats. Obviously, it's everywhere. We're in the mecca of it right now.
[00:14:48] Ray Latif: When you're considering innovation, you know, how do you assess an opportunity to attack a white space?
[00:14:53] John Craven: I come from a data background through the clean tech. So our business is very data driven. So we incorporate a lot of data into our decisions and decision making. But we also get a lot of requests and really track what our consumers are asking for.
[00:15:10] Ray Latif: But where do you get the data from when you're a small company?
[00:15:13] John Craven: We are a small company, but we invest in data. We've had Spins data for years, even as a really small company. But we get a lot of data from the grocer level, actually from our brokers. We demand a lot of data and then we take consumer surveys really seriously and really try to get our consumer feedback.
[00:15:30] Ray Latif: When you say you demand a lot from your brokers, how do you get them to listen to you?
[00:15:36] John Craven: I think that really explaining the story that you're trying to tell and having everyone understand the mission, understand how critical it is. Things move kind of slowly in grocery sometimes, but when it comes to not having the information you need to make, you know, whether it's running a promotion or a price change or whatever, that can really affect you down the road. And so for us, it's really important when we engage with a broker or anyone on our team involved in sales or interfacing with our consumer, it's really about, we need the information that we need to also give proper information to the buyer so they can make educated decisions. Because they're not in the business of just analyzing malk all day long, right? So the more information we give them, the better off everyone is. And really setting that up from the beginning, I think is really important.
[00:16:30] Ray Latif: We'll be back in a flash after a quick word from our sponsor.
[00:16:34] John Craven: Beverage entrepreneurs, are development and production issues keeping you up at night? Don't take a pill. Call BevSource and let us help you with some of the stress-inducing tasks that can eat away at your time and energy. From formulation to sourcing, inventory management, and supply chain optimization, our team of experts has your back. Visit BevSource.com and get the rest that you deserve.
[00:16:57] Ray Latif: We'll continue with Chris Hollod, a venture capitalist focused on early-stage consumer brands, who we spoke with in episode 29. As part of our interview, Chris explained why digital strategy is at the top of his list when evaluating brands, and also explained why he believes that his job requires him to predict innovation.
[00:17:18] Kara Goldin: When I used to share deals with people back in the day, it was send the website, send the investor presentation. Now it's simply DM a link to the Instagram page. And I tell every brand this, I say, I judge you within the first two seconds of looking at your Instagram page. And I think it's the most important piece of the puzzle, aside from the actual packaging itself. But most of the time, the package of product is in the mail to me, so I haven't seen it or tried it yet. And I have to make a judgment off of Instagram. And if they're not active, if they're not posting, if the message isn't coherent or cohesive or compelling, it's just, again, I don't have time for that. So I think digital strategy is massively important. Do you think that that, I guess, are you implying that that is sort of you know, a symptom or sign of how they run their company? Or is it just that something like an Instagram page is or you know, digital is that important right now? Yeah, I think it's I mean, it could be both primarily the latter. because it's the first front-facing interaction that a customer has with your product, aside from the impulse, right? When you're walking up and down aisles, there's the impulse buy, and then there's the education and looking it up afterwards. But you see the transition from Instagram becoming a marketplace and the direct-to-consumer aspect of it. I just met with these guys, Verb Energy, and I love what they're doing. It's a low-price point, caffeine-infused, two-bite bar. And you can click through photos on Instagram and buy it quickly, or you can buy through text message once you get to know them. Again, it's very streamlined. So I like that interaction because I think it embodies and personifies the physical brand through the digital elements. You know, as a venture capitalist, you have to pursue innovation. And that's why I've transitioned away from tech into CPG, because it's my job to not only follow and facilitate innovation, but to predict it. I think, again, it comes back to intimacy and urgency. So if I open up an Instagram app and I'm inspired in that moment to initiate a new behavior in my trend or my daily ritual of, hey, I'm going to give up coffee or I'm going to give up beer. I want a sense of urgency and I need to buy now and understand now and there's always some sense of education. So if I say, wow, I got to walk down to Ralph's or Kroger or Publix and figure this out and go through the aisle and weave through things and then have my phone in one hand and Googling things, that doesn't work. So I think you want to capitalize on the moment, leveraging technology to really sell your product to the end customer.
[00:19:51] Ray Latif: Wrapping up this episode is Kara Goldin, the founder and CEO of flavored water company Hint. Kara knows a thing or two about building a brand around a successful e-commerce strategy. Approximately 40% of the brand's $100 million in annual revenue comes from online sales, a majority of which is from its website, drinkhint.com. We spoke with Kara in episode 20 for an interview in which she discussed best practices for e-commerce and why data from online sales is critical to understanding Hint's audience.
[00:20:22] Chris Hollod: You know, we started small. I mean, you know, we've built this, we have a pretty significant direct-to-consumer team now that it's not just one guy. It's, I don't know, our team is, that team is probably 16, 17 people. So I get, I get phone calls, I always laugh, I get phone calls from like billion-dollar brands like saying, you know, we've now figured out that it's not really worth like driving all our revenue through Amazon because You know, while it's a great channel for us, it's like we don't get any of the data. And I was like, yeah, I mean, I get it. Like, that's where I was five years ago when I was talking about this. And I love Amazon still to this day. We drive tons of revenue through Amazon. It's great, but I think whether you're a $500,000 brand or you're a billion-dollar brand, I mean, start small. And, you know, I'm not going to lie, like, Facebook is king still to this day. You know, if you have a little bit of money, you put it on Facebook ads. I mean, that's like step one, right? You launch a website, a small website. Don't worry about like content as much as like maybe there's a founder story in there, but just make it really simple to transact. You know, I came from the tech side. I was at AOL and running their e-commerce business, so I have a little bit of experience with sort of knowing what kind of websites, like, transact and what don't. And again, the consumer, if you have, if you start with, like, the consumer controls your destiny, make it easy, right? Think about your own life. If things, I don't know, in my life, like, if things aren't easy, then they just don't get done these days, right? People are really busy, and you have to make it, Like, people don't like to read anymore either, so make pictures, like, very simple. Spend money on photography and, you know, basically, like, a very basic story and super easy to check out. You're wasting your money if you think, like, oh, I'm just going to go build a website and, you know, you found, like, this great website developer who's going to charge you a half a million dollars to go and build this killer thing that doesn't even transact really well. It's not simple. The back end isn't set up in such a way where you've got a dashboard where you can actually see like, you know, not only emails, but also, you know, demographic data, where people are coming from. I mean, that's, you know, the beauty of online. That is like what I started to realize again, like having come from tech. And coming into this business, it's like I basically had shelved my tech life and then walked into this business and thought, okay, I'm now trying to get product on the shelf at Target and Whole Foods and Kroger and whatever, and the only measurement that I had that said that I was successful was how much I was actually selling. Which was very frustrating because I knew from my tech days that there was a lot more data that those retailers were getting on my customer, but I couldn't get them. And maybe if I paid millions and millions of dollars and I was a category captain, if I ever got to that level, maybe. But I couldn't even afford Spins data. And even with Spins data, you're not going to get the emails, right, to be able to have conversations with these customers. So I think, like, that is the thing that, frankly, like, I just really believe a lot of, you know, food New Beverage companies don't even know what they're missing because you, like, have so much information about, you know, who this customer is. And, you know, today, Like most people who are gunning to get on the shelf at Whole Foods, for example, the Whole Foods shopper, according to Wall Street, is this female who's in her 30s and discretionary income and has got some kids. But nowhere, for example, do they talk about that there's guys living in the house, right? And we know, for example, from selling into tech companies where there's no women. There's a lot of people drinking Hint, right? But if you look at the data coming from Whole Foods, for example, it would say that Hint is a product for females. But what we see online is that there are lots of men who are buying our product online as well. And maybe they go into Whole Foods and, you know, get lunch really quick and grab one bottle, and they may not be considered, like, heavy ring at a Whole Foods, but they're having eight bottles a day at Google. And so then they're coming online and they're buying this product and we're actually able to see that they're not only buying our product online, but they're also coming from, you know, Barry's Boot Camp. They've just booked their workout probably. We don't know that information, that level of detail, but it also starts to help us to figure out like what brands potentially we may want to work with. And who is this, you know, it paints a great customer journey for, you know, outside of our own brand of what we should be really looking at in terms of, you know, co-marketing and how these people are thinking about our product.
[00:26:01] Ray Latif: That brings us to the end of episode 41. Thank you so much for listening. And thanks for our guests, Benjamin Witte, Madeline Haydon, Ryan Lewendon, August Vega, Chris Hollod, and Kara Goldin. Tune in next week for episode 42 when we're joined by Rick Field, the founder and CEO of pioneering pickle brand Rick's Picks. Please subscribe to Taste Radio Insider on the Apple Podcasts app, Spotify, Stitcher, SoundCloud, or Google Play. As always, for questions, comments, ideas for future podcasts, please send us an email to askatasteradio.com. On behalf of the entire Taste Radio team, thank you for listening, and we'll talk to you next time.
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