[00:00:04] Ray Latif: Hello, and thanks for tuning in to episode 89 of Taste Radio Insider. I'm Ray Latif, the editor and producer of Taste Radio, and I'm with my BevNET and Nosh colleagues, John Craven, Mike Schneider, and Melissa Traverse. In this episode, we're joined by Alex French, the co-founder and CEO For Bizzy Coffee, who discusses the brand's emergence and the story of how it became the number one cold brew coffee on Amazon for two years running. 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. I want to reiterate to folks that if you review us on the Apple Podcasts app, we will be happy to send you a T-shirt that says Taste Radio on it, and you can be the envy of all your friends and colleagues. It's a beautiful T-shirt.
[00:00:50] Alex French: It's a nice T-shirt. It's so comfortable. Super soft.
[00:00:53] Ray Latif: Yeah, when we're doing our Zoom meetings during the day, I see so many of the folks at BevNET wearing those Taste Radio t-shirts because they are the most comfortable t-shirts that you could possibly get.
[00:01:03] Alex French: There's a lot of Taste Radio twinning.
[00:01:06] Ray Latif: There totally is. Do us a favor, review us, send us an image of that review and your mailing address and the size of the t-shirt you'd like and we will get it out to you ASAP. Please send that email to ask at Taste Radio. You know, I had a lot of fun yesterday. Yesterday being Tuesday, June 9th, because I hosted Nosh's Pitch Slam 8, sponsored by 301, Inc., and New Beverage Showdown 19, sponsored by Venturing and Emerging Brands. A very, very busy, but very fun and rewarding day. We had 12 semifinalists in each competition, whittled them down to six each. Mike Schneider, as always, a judge in the semifinal round of the showdown. What are your thoughts on how the events went? I felt like the competitors, the brands were really buttoned up. There were a lot of excellent pitches and Particularly in the New Beverage Showdown, the products were very dialed into trends. They tasted great. It was very hard to make decisions about who would move on. It's probably going to be even harder to decide who is going to win the whole thing. Now, as of the publication date of this episode, you probably already know who won each competition. But when I think about how the judges evaluated these products and these brands, it was clear that taste is still pretty much the number one or two thing that mattered to these judges. You could have a great package, you could have great functional ingredients, but if the taste wasn't there, they were less inclined to say, okay, I think this brand could have a shot at really being disruptive, really having a disruptive impact on the market.
[00:02:52] Alex French: I thought it was really interesting to see how having the judging being done at home affected the way that the judges' commentary came about. There were so many instances where judges said, my kids ate all of these in a few weeks, or my partner loved this. And I thought it was really interesting to hear judges talk about how their entire family interpreted and enjoyed the product as opposed to just one person.
[00:03:19] Ray Latif: We didn't get a chance to talk to each other during the sampling, which changed the dynamic of the judging as well. So everybody sampled at a different time, and only some of us had sampled the night before, some of us sampled right before the competition. It changed a bit of the dynamic, but we still were able to play off of each other's energy, because the way that we had the Zoom call set up, you could see the other judges, you could see the contestant, It still felt a lot like the experience, although I was definitely missing the audience. It's so cool to have the audience there watching and to be on the big stage at BevNET Live. Totally. It's a pressure cooker to do it on Zoom, especially when we haven't done this kind of format before. But being up on stage in front of 500 to 1,000 people is definitely exciting, nerve-wracking, all of the above. It's definitely a different experience. But I thought everything went really well yesterday.
[00:04:16] Bizzy Coffee: Yeah, you guys all did a great job and it was fun to tune in and watch it. And I guess since when we're recording this, I haven't had my chance to be a judge. I hope I didn't suck.
[00:04:30] Ray Latif: And thank you to all the participants for taking part. Ditto, John Craven. One other thing I want to point out is that we saw some threads of functional benefits that we might be seeing more of in the future in some of these brands, notably Stress Relief. Stress Relief came up, I think, in about four brands between the two competitions as a functional benefit. It was pretty interesting. Stress Relief has appeared in forms as relaxation beverages in the past. John Craven, I'm interested to hear your thoughts on whether you think Stress Relief is a sustainable trend going forward. Great question.
[00:05:11] Bizzy Coffee: I mean, I think it's something that's been around for a while. What the outcome of the current pandemic will be and its impact on functional food New Beverage. I mean, I think it's still anyone's guess. So what we're seeing right now, just to put it into perspective, are a bunch of products that were created before all this started, too.
[00:05:32] Ray Latif: So it's kind of too early to really connect those dots, I think.
[00:05:36] Alex French: I think that immune health has been broken down by a number of brands into things like Stress Relief. So while immunity boosting ingredients and immune health may not be the number one call out on the package, I think that breaking them down into things like Stress Relief makes so much sense. And Mike I wanted to point something out. This is something that you noticed over and over again. But there are so many brands who are doing doing things that are innovative using innovative ingredients or formulations. But making sure that these brands are calling out that innovation on the package because if it's new consumers are going to need to be educated. Another thread that I noticed with Nosh's Pitch Slam is that the only product that made it to the finals that wasn't frozen was Loopy, and everything else was found in the frozen aisle.
[00:06:29] Ray Latif: Wow. You know what? I didn't even notice that. Well done, Melissa.
[00:06:32] Alex French: And no white backgrounds. The judges do not like white backgrounds in the freezer aisle. So remember that, frozen brands.
[00:06:40] Ray Latif: Very interesting. Wow. I never put that together. Mike, did you notice that? Ray, only Sherlock Holmes and Melissa noticed that.
[00:06:47] Alex French: You guys were in the middle of the storm. I was watching from a safe distance.
[00:06:52] Ray Latif: That was the first time we've had a semifinal for Nosh. And I thought that added an interesting new dynamic to it too, to have so many contestants. Definitely. It added a level of diversity to the entrepreneurs that we saw and also the innovation that we saw. You know, I think we mentioned this last week, over a hundred brands applied to take part in the competition. And, you know, after yesterday it was down to six, but really happy that we were able to include more folks in this edition of the competition. And I think it's something we're going to continue doing going forward as well. As John Craven mentioned earlier, a lot of the brands that we saw in the Showdown and Pitch Slam had launched before the pandemic. And we saw a lot of product launches over the past year, so many so that IRI, the market research firm, called it a blockbuster year for product launches. Our very own Brad Avery, our staff reporter for BevNET, wrote about all these product launches in a recent article on BevNET. It's a fantastic piece on trends, data, and research that IRI has provided. Just to note, that story is only available to subscribers of BevNET and Nosh. To get access to it, and the rest of the exceptional content produced daily by our editorial team, subscribe today. It's very easy. Head to the upper right-hand corner of either site, Babnett or Nosh, hit the subscribe button.
[00:08:17] Alex French: That article is one that anybody in the food New Beverage industry would be really encouraged to read because they talk about the gains that food New Beverage will see over the course of this year versus other areas like transportation, hospitality, clothing, that kind of thing. So it's good news for this industry.
[00:08:35] Ray Latif: Indeed it is. You know what else is good news for this industry? BevNET and Nosh Virtually Live happening on June 23rd and 24th. So much to talk about with the show. A lot of new elements added. John Craven, what are some of these things being added? Yeah, I mean, it's pretty crazy. We've got, I think, 50 plus speakers and over 30 sessions now.
[00:08:57] Bizzy Coffee: And jeez, I don't even know where to start with. What are some of these things being added? But, you know, we've got
[00:09:05] Ray Latif: just a ton of stuff going on, some great main stage sessions, if you will, and things like investor speed dating, lots of breakout sessions. It should be a really, hopefully, engaging two days. I'm looking forward to it.
[00:09:23] Alex French: The agenda is up on our site now, and there are so many topics that revolve around COVID and the changes that we've seen in terms of how it's changed the consumer, how CEOs can maintain work culture from a distance, the current state of CBD and THC. There's a ton of really immediately pertinent information that we'll be discussing over the course of those two days.
[00:09:46] Ray Latif: And we're kicking off the program on the main stage with a panel called the Black Experience in the Food New Beverage Business, which will be addressing one of the biggest problems in our industry, diversity.
[00:09:56] Alex French: This is not content that anyone in our industry is going to want to miss. We're watching brand owners, retailers, investors, service providers, and suppliers all sign up. And you can sign up too as soon as you subscribe. So if you go to BevNET.com, hit subscribe, you can register for the event. And we also have some really great sponsorship opportunities. If that's something you're interested in, you can email sales at BevNET.com.
[00:10:23] Ray Latif: That's a great point, Melissa. Sponsors will have the opportunity to educate, network, and meet with potential new clients. Once again, the best way to attend the event, register for the event, is by subscribing to WebNet and Nosh.
[00:10:36] For Bizzy: guessing your margins, that's risky. Belay Financial gives CPG brands the clarity to scale smarter, faster, stronger. Get your free inventory ebook by texting TASTE to 55123 and start making data work for you.
[00:10:56] General Mills: Tune in at the end of this episode for an exclusive interview with Matt Lin of Belay Solutions. He sits down with Melissa Traverse to break down the biggest inventory and accounting mistakes CPG founders often make. You'll learn how to bring clarity to your numbers so you can scale with confidence.
[00:11:15] Ray Latif: All right, it's time to get to our interview with Alex French, who, as I mentioned at the top of the show, is the co-founder and CEO For Bizzy Coffee. A brand of bottled cold brew concentrates, bagged coffee, and multi-serve ready-to-drink beverages, Busy debuted in 2015. While the brand has undergone a few iterations in its product offerings and faced a number of challenges amid its development, Bizzy's data-focused business strategy has remained consistent throughout the years. That focus has supported the growth For Bizzy's Bagged Coffee, which has been the top-selling cold brew product on Amazon for two years running, and its recently launched multi-serve drinks, which are sold at Target and Hy-Vee expanding into a range of other retailers later this year. In my interview with Alex, he spoke about learnings from his experience at 301, Inc., the venture arm of General Mills, and how it impacted the creation For Bizzy, why buyer presentations are as important as the product itself, the dangers of being underfunded, and offered valuable advice to entrepreneurs about how to win on Amazon. Hey folks, it's Ray with Taste Radio. I'm going to call right now with Alex French, the co-founder and CEO For Bizzy Coffee. Alex, how are you? You know, I'm doing really good. Thanks, Ray. How are you doing? I'm doing pretty good. You sound really energized. You must be drinking your own product. You know, we are believers in the product. I think, you know, we're enthusiasts here. So yeah, we drink a lot of the coffee. Very nice. I noticed something just before we hopped on the mics that I didn't notice before. On your LinkedIn profile, you note that you're an Ironman. How long have you been doing it? When was your first Ironman? You know, I really, I just did one. It was kind of a check the box sort of thing. So I've done my fair amount of marathons. I've probably done those since like 2013. But yeah, that was the first one and probably the last one. We'll see. or perhaps 2013 what we do in career wise in 2013. 2013, I think I was just, I was at Best Buy and I think I was transitioning over to General Mills. So Best Buy, I was on the supply chain side as a demand forecast analyst. I also had a little consumer product startup with my same business partner, Andrew, called The Lifty. And it was a snow sports accessory, which got me really excited about marketing and branding. And so I was looking for a way to get into that. profession, so then there was a job that popped up over at General Mills on the Cheerios team, oddly enough, and so I went over there. Cheerios, great brand, iconic brand. You, however, as we talked about prior to this interview, had a little bit of a rogue streak in you. Tell me about that. Tell me about, you know, why General Mills was both the right fit and I guess in some ways the wrong fit for you. General Mills is an amazing company and the culture is such that they really demand the best out of people. And so I kind of got thrown into the only job in marketing you could have without an MBA. And so it was fantastic. I got to work around really, really smart, really hardworking folks, which certainly elevated my professional career. But with that, there also was a culture of up or out. So you either get promoted to manager, or you get promoted to the street. And with that can cause people to make, I don't want to say selfish decisions, but ones where they're going to look out for their own best interest over that of others. I happen to be someone that's very quantitative and kind of let the data speak. And so the specific rogue thing is they were launching a product and my role was as analyst to review data and put together, you know, an analysis of performance and kind of future trends. And I had put together a review and an analysis and sent it out to the team without it getting, in air quotes, approved by upper management. And it kind of ruffled some feathers there. So with that, you know, I was realizing to myself that Cheerios is the biggest brand there. It's very diplomatic and bureaucratic. And I, as an entrepreneur at heart, really didn't didn't fit that mold and this was 2014 and I had been a year on the Cheerios team ruffled a couple of feathers But generally had a fantastic time within that team but then this was right when 301 Inc was launching which is now notoriously as their venture capital division and But when I had applied, it was in transition from actually an internal incubator of startups transitioning into that venture model. So I met over with John Haugen and Pete Spranz and the team over there and just had a fantastic time getting to know them and was fortunate enough to work on that team there. So that was a fantastic experience. It's interesting working with 301 Inc. I can assume that you were exposed to a lot of entrepreneurs. Did that exposure enhance or, I guess, jumpstart your interest in starting your own business? You know, I had really always kind of been an entrepreneur at heart. And so ever since I was a kid, I've been, you know, selling beanie babies, mowing lawns, kind of that typical service provider hustle. But once I got into that world, it became more apparent how big and how much scale there can be, and specifically how much these big corporations were kind of losing share to the startups. And I had been, as I mentioned, I had a startup called The Lifty that had failed, and so I was kind of looking for my next little side hustle, and seeing just kind of the dollars and the scale and the big wins that these food entrepreneurs were having certainly made me think specifically about getting into that category, certainly. coffee, you got into as crowded and as challenging a category as you could, especially when it comes to cold brew coffee. I ask entrepreneurs this often, which is, you know, when you were concepting this idea, how did you assess the category? How did you assess the category leader? You know, for better or worse, we were very early into cold brew coffee. And so I had actually read this book called The Four Hour Workweek. A lot of entrepreneurs will hear that name and have a nice emotional connection to it. And it talks a lot about just kind of maximizing your time. And they had this concept of the virtual assistant. And so we were actually looking for kind of a side hustle, if you will. And when looking at different categories, we wanted to basically have a simple site that would leverage search traffic and then basically monetize that traffic by selling products through affiliate links. And so that was the original kind of concept. And so as a data person, I just looked at the amount of search volume for these keywords like how to make cold brew coffee, cold brew coffee recipe. And so I had this kind of data quantitative metrics of, wow, there are millions of people that are just searching for this category. And it was growing 300% a year. And this was back in 2014 when we started to make it ourselves. And so I had this quantitative kind of market size of, wow, there's a lot of people going after this. And then while I was specific on the Cheerios team, I actually sat next to someone that was in Consumer Insights on the Wheaties team. And I had access to all of this qualitative data. So what are these big macro trends that are shaping the food system? I think It hit all the qualitative macro trends we were seeing. And there was this quantitative search traffic that we knew people were very actively searching for this product. And they were searching for how to make it because there was this kind of unmet demand. And specifically, what we learned is that people typically will try their first cold brew at a coffee shop, and it tastes fantastic, but it's very expensive, depending on which city you're in, $3.50 to $7. And then they immediately say, well, I've always made coffee myself. The $7 cup of coffee is outrageous. And that was the kind of the impetus for us to say, you know, not only is it expensive, but as you start making the product yourself, it takes 18 hours to make a true cold brew, at least that's our preferred time. And most people are just too busy to make it, especially when you can just press a button and have a hot cup of coffee in seconds. And that really was kind of the impetus for us. You're hitting on a lot of trends. At the same time, do you know who that consumer is? Because it's still a relatively small market, even now, cold brew, in comparison to the rest of the coffee market. How did you know who that consumer was and how to market to that person? That has been a constant learning journey for us. And so when we started, you know, my initial strategy to figure this out was just going to Instagram, look at the hashtag cold brew, see who's posting about it, and then just go look at that person's profiles, do that for 50 to 100 people, and then you try and identify what similarities. So we knew that that person typically lived And a city, generally speaking, they were a millennial. A lot of them had a dog. They liked to be outside. So we could start to profile that individual as kind of the brand champion, if you will, or the early adopter. But as we've seen over time, now that the category has matured, You know, 64% of Americans drink coffee every day. And that's a huge market. And a lot of people drink it for different reasons. As an example, older folks like it because it's lower in acid and it's easier on their stomachs. And high schoolers like it because it's higher caffeine. And so really profiling that consumer is a little bit challenging because you almost have to be all season tires while still maintaining kind of that brand champion. That's certainly something that we've learned over time. And early on, we've done pretty well on Amazon. So early on, now you can just look in your profile and it tells you who's buying at age, income. But three, four, five years ago, that wasn't available to us. So what we would do is we would put stickers on our packaging with a promo code that says, hey, fill out this survey on our site and get 25% off your next order. And that was very effective for us to get early information. And that information not only helped us in our marketing, but also in kind of the selling into retailers. Yeah, that is an interesting way to source data from your consumers. How much of that data was a part of your pitch to retailers? It was a big part of it. We would get to the point where we would, you know, have a male and a female on a slide and we would give that person a name and an age and what their hobbies were. And then we'd have a little footnote denoting just kind of how many people we had surveyed to come to this resolution. So we do use that as much as possible. And, you know, sometimes we lean on it heavier than others, depending on, and who we're selling into and what we're selling. But I think knowing that consumer and that brand champion is the North Star and it's really important. Were a lot of these things that were implemented at General Mills and that you pulled from your experience there, or was it from your experience with the accelerator program you were with, Food X? And I ask about your accelerator program because there's just so many out there nowadays and brands wonder if it's worth their time to apply, to get involved, et cetera. I mean, what was your experience like? You know, from the Accelerator perspective, I think if you're a first-time entrepreneur, they are wonderful. For myself, I had been in corporate from 2011 to 2015, and had never really been around other entrepreneurs, and just, I don't have any entrepreneurs in my family, so I just really didn't get it. So just being around 10 other entrepreneur and companies from around the world was was really exciting and motivating and thrilling. Maybe the downside and something that I could see negatively impacting the CPG space is if there's not doors opening to distribution or specifically to capital. It can emphasize maybe some wrong moves such as focusing all of your time on fundraising and getting cash. A lot of these accelerators that I've seen and friends have been a part of generally are tech focused and is all about raising a seed round or raising an A round. where I think within the CPG side of things, it's really important to understand acquiring a customer at a low price and getting to market quickly and cheaply and maximizing margins out of the gates. Because these programs deal with such a wide range of businesses and channel strategies, they may not all apply. And so their learnings have to be somewhat all-season tires appealing to everyone. And by doing that, they may push you into something that may not be right for your exact business. As prepared as you might be from a finance standpoint and knowing who your customer is and knowing what margins you need to hit, you still need money to scale. And in some cases, you need significant funding to scale, particularly in New Beverage industry. Did you guys have enough funding? Did you feel like you had the capital necessary, not only to start the business, but to scale it early on? No, I'd say we've been consistently underfunded. You know, we only went into the accelerator because they were the only ones that would give us money. My business partner and I had spent about a year doing R&D and development and just being kind of enthusiasts around cold brew coffee. And we spent, you know, 50k between the two of us and really just had no normal That was our personal savings from both of our careers. We got into the accelerator that gave us just enough money to do a production run. We were in Manhattan, and so we couldn't afford to live, so we slept on the floor of the office for three months. And then we left, and we had a tough time raising capital for a cold-brew concentrate business. And so then we moved back in with our parents and didn't take salaries. Luckily, we have our Midwestern roots, so we're very capital efficient, so we were able to consistently scrape by. But I think having that scarcity of resources forced us into a couple of things early on that are proving to be fruitful today, one of those being launching on Amazon. Because candidly, we didn't have the cash to do free fills and we didn't have the cash to do big marketing promotions or pay any sort of slotting. And so the only place that we could really launch was on Amazon because the inventory expense was minimal, no slotting fees, and they pay you in 14 days. So, you know, we've consistently been underfunded and it's forced us to make some unfortunate decisions. But on the whole, you know, has allowed us to be very capital efficient over the last five years. underfunded, but wealthy in experience, or at least the experience that you had. You know, I often think about the presentation as being as important as the product. And we had discussed your ability to tell a story. How important is that when you are trying to land retailers. And I know you mentioned that, you know, Amazon was a great place for the brand because you didn't have to pay slotting fees that you would get paid in 14 days, et cetera. But at the end of the day, you are in retailers now. So I'm curious as to, you know, how much of what you sell into and you sell to the buyer is your presentation versus the product and brand. Yeah, I think a lot of it is the presentation and the way that you sell has to be, we got to understand that these people, especially if you're looking at selling into a big box retailer, they're in this very large bureaucratic system and their goal is to get promoted. And as long as you go in with the understanding that that is their goal by bringing you onto the shelf, you're going to be in a much better position than just trying to sell them your product. And so that being said, I think the presentation is extremely important, especially if you don't have much data. We actually had kind of a black eye as we initially went into retail because this was 2016. We were on Amazon and we were performing well. And at the time, they would basically tell us, hey, if you're on Amazon, you're against us. And it was extremely challenging. And so we had to completely change our story to basically not include something that was really important to our business and basically keeping us alive and thriving, frankly. But we had to weave a different narrative. And so that story is important, and even the structure of it, it sounds kind of annoying, but even having a four-quadrant slide, they don't want to go through a deck of 25 slides. They want really clear, compelling information. And you've got to make sure that the information you share to them, they can quickly go back and share with their boss. And so having that presentation, very professional designed with nice pretty charts and with sound bites that they can take back to their team, especially in the early stages, maybe once we're not there yet, but once you're in 10,000 stores and you've been in those retailers for two years, it's probably going to be exclusively data. But if you're launching into a new retailer and you don't have a lot of data, the story is absolutely everything.
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[00:31:14] Ray Latif: Well, one product that you could sell really well and that retailers seem to love were your shots, the Bizzy Coffee shots, a two ounce of high test cold brew coffee. I remember when I first saw that product, I was like, wow, this is great. I haven't seen a product like this before. And it's well branded. It tastes pretty good. And then I shared that with some friends and colleagues and they all went crazy over it in the end. The shots no longer exist. But let's let's back up for a second. Why did you initially get into the shots business? So kind of going back again, our original plan was people are too busy to make cold brew coffee and they want a high quality product. So that's always kind of been our North Star. And we were selling a cold brew coffee concentrate at the time. It was a two to one shelf stable concentrate. And I had mentioned consumer learning and consumer insights is really important. And so we would ask these consumers how they're using our product. And what we had learned is that a lot of them would just be too busy to even make the cup of coffee. And so in the morning, typically, these were going to be our millennials that are working out in the morning, they would just basically pull off the bottle of concentrate and take a shot of it. And this was knowingly. And so we thought to ourselves, wow, they're just taking shots of this stuff. I've heard of this brand called Five Hour Energy that does a billion dollars in sales. I think we can sell that dream to people. And logically, it still fit on all of the primary theses of sugar-free, lower ingredients, quick, coffee-focused, but we were going after this huge category of five-hour energy. So it felt very logical and intuitive in the R&D refinement of the idea side of it. as you kind of mentioned we had really great success right out of the gates with gaining placement because Going back to the story. We had no data. We didn't even have it on Amazon, but everyone Got the concept of a healthier five-hour energy that was coffee forward. And so we got a ton of placement way more than we should have. And, you know, we didn't have the knowledge or the resources to support it. And with the lack of resources, among some other fundamental reasons, yeah, the product no longer continues today. Investors were also really interested in the shots. Again, this goes back to the question of how much capital do you need? It sounds like if everyone wanted to invest, you would have the capital you needed, but you didn't. You know, why were you underfunded at this point of the company? Yeah, we had gone out and our revenues were not very strong when we went out to raise capital. We were going out and we were raising a million dollars, which from really a first-time entrepreneur, not in an entrepreneurial world, felt like a ridiculous sum of money. And so, you know, you run your models and you think a million bucks is going to last you forever. And so we had raised just about that much, not thinking we needed any more. Again, our pre-money evaluation wasn't sky high being in the Midwest and with no former kind of track record. So we got a modest valuation and raising any more capital than that would have just been far too dilutive and kind of lacking motivation for us. So we took in the money. And as I mentioned, we had just scaled so big, so fast. We got into a thousand stores and these were kind of pieced together. We got into a thousand stores in, you know, 60 days. And then we had done a lot of learning. And what we found is it was a shelf stable product. It was at the check lane, but kind of this insight was that by the time someone got to the check lane, they had already, if they were looking for a coffee or an energy substance, they had already purchased their product. And we weren't a better for you five-hour energy in the sense that we were taking share from five-hour energy. We were actually taking share from ready-to-drink coffee. And so by the time we had learned that, we figured out that we needed to be in the cold case. And at that point, we had already expended the majority of our resources on, you know, kind of POP merchandising material and the stands. And it became almost too expensive for us to make that switch. And because we didn't have enough cash to support it, the sell through wasn't there. So then going out and raising additional capital would have been a challenge. And even though, I mean, I remember going to Expo West and the first day it opened, we had the year we had launched, we had a line of seven VCs, you know, waiting at our booth. And then come the next year, you know, there's not a soul to be found. That'll happen in our business. You raised a million dollars. I wonder if you can articulate how much of the million was well spent versus poorly spent. You know, I'd say in the time, you'd look back and you'd say it wasn't well spent. You tried a bunch of things and none of them really worked. Like certainly the PLP felt like the right move. Everyone was doing it. But the second that you realize you got to be in the cold case, that money you might as well just lit on fire. But we did do a lot of things that have helped us today, things like testing different ads on social, driving to the website, testing different audiences through marketing on Amazon, through Facebook, you know, learning the sales process, learning the distributors. So, you know, without having that nuts and bolts experience and rapid scale, I think we would be at a disservice today with, you know, that was a ton of education that came extremely fast. And fortunately, it didn't fail us. But, you know, it did set us back, you know, 18 months in the life cycle of the business. If you're set back 18 months, that's got to be a real bummer. I can only imagine how upset you must be because you're like, OK, well, we started this brand two years ago and now it's almost like we're six months in again. At that point, why not just move on? I mean, you've got the corporate experience. Clearly you have enough experience on what it takes to source data, source good insights. It sounds like you could have been a great marketing executive somewhere. Why get back into it? Why dive right back in? You know, there's probably two major things, one of them being Midwestern, fiscally conservative as a culture here, and I had taken money from people that probably shouldn't have given it to me, and just that feeling of losing their money And we had a little bit of cash in the bank, you know, not much, but enough to really like skate by for another six months. Just kind of throwing in the towel wasn't really for me as we kind of opened the call talking about Ironman. You know, quitting is not really an option for me. Like, we're going to finish this thing. So that was one. And then two, you know, candidly, the ego, having been at General Mills, Best Buy beforehand and ending at 301, Inc. You know, I felt that if I were to have failed, you know, just personally as a career, that would have just been so embarrassing that I just couldn't, I couldn't handle it. And so we fought through and, uh, we dove back in and we kind of went back to our original thesis of, you know, being on a mission to make the best tasting cold brew coffee possible and, and going after that great price, great value for that at home occasion. And, and we, and we dove all in. dove all in into what? Focusing very specifically on multi-serve products for the at-home cold brew coffee consumer. We had, as I mentioned, we had launched originally with a cold brew concentrate, and we had seen in the market that multi-serve RTDs or multi-serve cold brews were growing very quickly. Everyone had gone after the single-serve space, and after our failed shot products, we made the strategic decision never to get into single-serve products again, and so just went all in back on where our roots were, why we originally started it, and had relaunched that cold brew coffee concentrate in a different format with different pricing that we knew would work on the retail shelf. So we basically reformulated, repackaged, repriced the whole product, did a label refresh, and then put it back into the world and just went kind of all in on that at-home occasion. I got to think as a retail bar, if you're pitching to a retail that you've already been in, they're like, okay, well, I remember busy when they were a cold brew concentrate. And then I remember them when they were a coffee shot company, and now they're trying to become a multi-serve RTD company. And at all stages, they had good insights. They had good data and they seem to be. Pretty intelligent guys, but at a certain point, I'm sure there were some buyers who were just like, look, you keep evolving, keep changing every 18 months. You know, am I going to see something different in 18 months? How did you convince folks that this was the product after all your learnings, that this was the product that was going to make it, and this was the product that they needed on their shelves? You know, it's funny you say that because there was about two meetings where that exact same thing happened. And I got the FaceTime, but they said, okay, we started with the concentrate and now you're on the shots and now you're back on the concentrate. And it got to the point where the only thing that worked was data. And we had kind of fought through this challenging time where no one wanted us because we were in Amazon. And then it got to the point where if you're number one on Amazon, we have to have you. And so I was able to then go back to what I knew would move the needle no matter what, and that's sales data. And so we put that presentation together. We really just put our heads down candidly and just drove as much volume and demand online, things that were in our control as we possibly could. to make sure that we did have that number one bestseller tag. Because at the end of the day, that means you make more money than anyone else on that platform. So we drove that really hard to make sure we had enough traction, at least with our local retailers, to go back to them and say, hey, you know, we screwed up a couple of times. These didn't work. But look, this is working perfectly in this channel. And what do we got to do to make this thing launch? We'll sample, we'll do whatever it takes to get back in. And that's what we had to do. And this is something I mentioned in my intro that Bizzy Coffee has been the number one selling coffee brand on Amazon for two years running. I certainly don't want to gloss over this because I'm sure a lot of people won't want to know the answer to this. How did you do it? Yeah, I think I get this question a lot. And there's a couple of really important things to note. And the one is how I kind of opened our call here today, Ray, is that there are millions of people searching for cold brew coffee. And the thing about Amazon is it is a search engine. And as long as you are rooted in that understanding of how to sell products on the site, you're 90% ahead of everyone else. This isn't a marketing channel. This is search. And so the key to being efficient is you have to start with a very small micro niche of things that are gonna have a very high conversion rate. For a specific keyword, for us, how to make cold brew coffee or coarse ground coffee beans, things of that nature. And so you go after a very small segment of search and then you optimize your profile for that and you do that using keywords, during pictures, You want to get the pay-per-click advertising to make sure that if you don't have any reviews or you're not ranking very high, your product can still show up. And as long as you have good pictures and a good product, you'll naturally get to get into that organic placement. And then once you have that for your small kind of niche keywords, then you can start expanding into larger keywords, like for us, cold brew, which is a very large one. But the key is really to focus on the search aspect of it and optimizing for a very specific thing that a consumer would be searching for. Something that you were looking for when you were doing your research on that category. And once you can just really nail that, then you can expand into the broader segments of consumers and start taking share from other categories. Well, that's excellent advice. And thank you so much for sharing that. Now, a lot of people would think, okay, I'm doing really well on Amazon. You know, this is my bread and butter. I can just stay on this site and I'm going to have a successful brand. That's not the case, right? I mean, Amazon has to be at this point, an important part of your business strategy, but it can't be everything as you and I discussed prior to the interview. Yeah, I would agree 100%. You know, there's a lot of things changing in the world of Amazon today. There's companies that are buying Amazon businesses, strictly FBA, and they'll come in and say, OK, you're going to be worth two to three times earnings. which if you look at the broader landscape of business is extremely low. And the reason that that multiple is so low is because it is so risky to have all of your eggs in the Amazon bucket. As an example, we've had our profile shut down randomly for things that are out of our control. And that has a significant impact on revenue as well as your net profit. And that's something that's just out of your control. And to me, that's absolutely terrifying to have such a high level of concentration in one customer, especially one that can, if they just decide or someone accidentally hits a keystroke, your cash machine can instantly go to zero. So for us, we are now at the place where we want to leverage that to get into all of the other competitors to them and leverage that success and the cash flow to learn. Because I believe that what Amazon has done is the future of retail. As an example, Instacart, I saw hired the former CRO of Amazon to build out their ad engine. So how Amazon works is probably how Instacart is going to work. And that's probably going to trickle down to the rest of them. So getting ahead and learning that, I think, is absolutely critical. Plus, the cash flow is fantastic. But it's very risky to just have all your eggs in that one basket, which is why we're looking to now diversify as broadly as we can. When you're diversifying, what do you think about the future in terms of a balance or a mix of e-com, online retail versus brick-and-mortar retail? What should it be? Is it like a 25-75, 50-50? You know, I think the value, a lot of it depends on your product format. So if you're a perishable liquid, like as example, our 48 ounce ready to drink line that we rolled out at the end of last year, that product cannot work online. You know, we'll see what happens with Amazon Fresh, but generally speaking, that product line just doesn't work. So that one has to be in retail. Now, I think retail can be fantastic if you have very strong relationships and deep pockets. But I'm always of the camp of how do we control our destiny? Because you could be in, let's say, Walmart chain wide, and there's a new buyer, and he doesn't like your brand or had an issue with your salesperson in the past, you could just lose all of that distribution. So I think it's important to diversify. I don't know what the right answer is yet because we're heavily heavy on the e-commerce side, less so on the retail. But we are making that big push into retail again this year, as I mentioned. So I think it would be a good 50-50 split seems right without having any real math behind the answer. And those retailers, I mean, we briefly talked about this before. Those retailers that you're looking at right now, how do you think about your retail strategy for this product versus ones in the past. I guess what I'm asking is, does the merchandising opportunity matter as much as the retailer itself? Yes, I think you kind of nailed it where this is a multi-serve, ready-to-drink product. So just by the nature of that product, it's perishable. The distribution of it is cold chain all the way, and it's sold in a location where people are bulk buying. It automatically limits where we can sell. So we're not selling to gyms. We're not selling to convenience stores. This is a grocery item. And so we certainly do focus in that channel, grocery, mass, conventional, but we're focused on that not only because that's where the most logical consumer play is going to be, but it's also very helpful from a distribution standpoint. You know, this is a low priced, perishable, very heavy item. And so the price that we sell a pallet for is going to be generally lower than, let's say, a single serve ready to drink product. But it weighs just as much and it costs just as much to ship. So for us, we're really trying to find larger accounts. that we can put in a very strong program with that we can reduce our freight costs to make sure that we're profitable out of the gates with every retailer instead of launching, losing money. And that was a learning lesson from our shots where we just took the distribution. We were in that venture capital game of drive revenue, raise more money, drive revenue, raise more money. Who cares about burn rate? We're now with kind of what we've learned. we are certainly more selective. And so we may present to a retailer, learn what their fees are and not move forward with them because it doesn't fit kind of our financial model. So the venture capital model is challenging for some brands, but if a venture capitalist was listening to this podcast and said, hey, you know, I'd be interested in funding a Bizzy Coffee. What would you say to them at this point? I mean, how do you talk to investors now, having learned what you've learned over the years? You know, I'd love to take every conversation. I think they have so much better understanding of the market and price, and they see so many more deals. You know, at the end of the day, I'm in one business. And so I love to speak with anyone. If anyone is listening, would love to have a conversation. you know, to trade notes. But we certainly would. We're entertaining everything. You know, we are profitable. So that capital raise is not really critical to us anymore. But, you know, we're at that next level. We are a manufacturer as well. And so it's a slightly different financing mechanism than, say, someone that's co-packed, that's building out a sales and marketing vehicle. You know, we're also doing some other things on the manufacturing side that might have a different kind of cost of capital and such. I didn't know you guys were manufacturing your own product. I've talked to a number of entrepreneurs in the podcast, and I'd say nine times out of 10, they're saying that no one should open up their own facility, that it's a money suck, that it's very challenging, and that despite the challenges of working with and finding reliable co-packing partners, that's the better route. Why'd you guys launch your own facility? You know, we're probably in a unique situation where my business partner, best friend Andrew Healy, he was in manufacturing. He's a mechanical engineer. He worked in a clean room environment doing med device manufacturing. So that's actually one of our biggest strengths is we have the ability to create a great product at a great price with, you know, he had experience working for Medtronic and 3M, so very high quality standards and making sure that, you know, we can make a great product. So there's also the category that we're in. If you look at, you know, our competitors in the multi-serve space, You know, they're very large global companies and the majority of them do manufacture themselves. And that's because the way that the margin structure is, is such that it's generally a lower margin product. Again, you're shipping very heavy, perishable items. And so by manufacturing ourselves, we're able to get to a good margin structure. And because Andrew has experience in that, there's less of a learning curve on the manufacturing side where someone who's just jumping into it might have a little bit more of a challenge. Really, really enjoyed our conversation and think there's so many great takeaways for our audience to implement and to incorporate into their own business strategies. So thank you so much for sharing everything you have today. Yeah, of course. Thanks so much for having me, Ray. All right. That brings us to the end of episode 89 of Taste Radio Insider. Thank you so much for listening, and thanks to our guest, Alex French. Please subscribe to Taste Radio on the Apple Podcasts app, Spotify, Stitcher, or Google Podcasts. 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.
[00:53:17] SPEAKER_??: you
[00:53:23] Alex French: Hello, I am Melissa Traverse here for the Taste Radio podcast, talking about some of the biggest tension points that CPG brands and founders face when they're scaling a brand, and those are financial accounting and inventory management. I am joined by Matt Lynn, inventory accounting guru from Belay Solutions, and he is going to shed some light on all of this that is going to help everybody out quite a bit. Matt, thank you so much for joining us today.
[00:53:53] Bizzy Coffee: Thank you for having us, Melissa. It's great to be out here at Expo West and it's great to sit down and be able to chat this because it's kind of a passion project of ours, working mainly with CPG brands and hoping to help them scale.
[00:54:05] Alex French: It's been such a pleasure chatting with you and the team and learning all about what you do over there at Belay Solutions. Can you tell us a little bit about yourself and what your role is and the kinds of solutions that Belay gives to CPG brands and founders?
[00:54:21] Bizzy Coffee: Yeah, absolutely. My role with Belay, I'm actually our inventory accounting manager. I run our inventory department, so we work with CPG brands, taking them from spreadsheets, putting them on inventory management systems, and really helping connect their tech stack between their sales online marketplaces to that inventory management system, even down to their financial systems like QuickBooks. Belay overall is kind of an outsourced accounting firm. And with that, we're helping teams. We have different levels with bookkeeping, controller level work, even high level into CFO type items. So we really help those brands in any way that they need financially. And then I just have a subset of a department where we're really just laser focused on inventory.
[00:55:03] Alex French: It's certainly a complex topic and there are plenty of places to go wrong. Let's start by going right and start super simple. Can you tell us what some of the biggest red flags are that would help a founder understand or, you know, the person running a brand understand that it really is time to get some help with some of these areas?
[00:55:24] Bizzy Coffee: Yeah, absolutely. I think some of the early red flags is just everything is chaos. So when they're looking in their financial software, maybe they don't really have an accounting background, and they're kind of just piecing it together and doing their best. And what they'll see is that reconciliations take forever, if they even happen. They have a lot of transactions that don't get coded, or they just put them into placeholders to just get rid of it so it's not an eyesore. they'll notice they have revenue but no cash or they notice that they have a good amount of cash but their blind spot is really seeing the vendor invoices that are sitting there just needing to be paid and so they just lack that clarity that's going to really be around the corner.
[00:56:01] Alex French: You know, you were talking about one of the red flags that comes up that I think makes so much sense. When somebody asks you what your numbers are and you can't come up with the right number, that's a big problem because that's something that you really should be able to share with decision makers who, you know, you're ideally looking to do business with. What should you be able to call up at a moment's notice?
[00:56:25] Bizzy Coffee: Really at any time, you should be able to know an accurate margin. It's amazing how many founders we end up talking to that they can tell you their revenue numbers, they can tell you their selling price, and then the minute you start talking about cost or their cost of goods sold, they just get a deer in headlights look. So really it's very hard to tell, am I even making money? or if you don't know your entire landed cost. Maybe you know what the freight cost is, the duties separately, but you're not really getting that as part of your unit cost. So it's really hard to tell. Am I even making money or am I losing money from the very beginning?
[00:56:58] Alex French: And do you recommend that founders are able to call up a margin by channel?
[00:57:03] Bizzy Coffee: Absolutely. And depending on the number of products and channels, you kind of want to know what are your best sellers, which ones are making the most and which ones maybe you're not making as much. But especially if you're branching out and you're doing D to C with B to B, absolutely want to know that.
[00:57:20] Alex French: Gotcha. You mentioned that when things feel really chaotic, that's probably a red flag. I would say that it probably almost always feels chaotic if you're running a CBD brand. And I know this may be hard to quantify, but is there a revenue number? Is there a number of doors number that would help a brand understand whether or not it makes sense to bring on a partner like Belay? Understanding that so many brands are bootstrapped or they might be tight for cash. What is that friction point?
[00:57:50] Bizzy Coffee: 3 3 3 3 3 But as you're growing, as you're getting into those six-figure revenue numbers, and especially as you're approaching seven, you want to make sure you've got good financials. Because as you scale to that point, most likely you're going to be looking to raise capital. And investors, the first thing they're going to look at is your books. And are they clean? And do they show a clear picture of your business?
[00:58:23] Alex French: You know, another area that folks might look to to organize some of the chaos are their systems. So many folks stick with Excel spreadsheets for a good amount of time. How do you know that you need to outsource some of your accounting to an organization like Belay Solutions versus maybe signing on to a Synth7 or NetSuite or something like that?
[00:58:46] Bizzy Coffee: Well, that's actually something we really help with when it comes to that cost question. That's something that trips people up. And sometimes if you just have a turnkey business, you buy and sell a finished good, you can maintain with spreadsheets. And we've had clients with million dollar revenue that can do that. But we see so many brands nowadays are using contract manufacturers. and they're just sourcing certain parts of their product. So when you start talking cost, they have no idea exactly what their unit cost is. So that's where we come in and we kind of understand, we'll speak with the customers and the clients and get their needs. And then if we think they're ready for a system, then we'll help put them on that system so they can get some of that clarity. And it's not something we force on anybody. There are plenty of times where founders come to us and we'll tell them bluntly, you're not ready for it right now, but we'll let you know when we think you are.
[00:59:32] Alex French: That sounds like excellent advice. What should a founder or somebody running a brand look for in an outsourced accounting partner? Are there certain checklist items that they should make sure that their partner be able to execute or be able to help them understand?
[00:59:49] Bizzy Coffee: Absolutely. I think one of the keys, there's, there's a lot of outsourced accounting firms out there. Some focus on service-based SaaS companies, but if you're a CPG founder, you really want to make sure that your accounting firm has CPG experience. I would ask them, you know, what kind of brands have they worked with? And even beyond that industry specific, because there's so many subsets of CPG. And that's something that I think is great about what we do with Belay is that we kind of run the gamut. It's kind of like the insurance commercial. We know a thing or two because we've seen a thing or two across a broad spectrum.
[01:00:18] Alex French: Probably getting references is always helpful, right? Absolutely. All right. So this all sounds great. I think we have a really good understanding of would it make sense to hire an outsourced partner? You know, what some of the things you should be looking for are. What does offloading this kind of work mean for the brand? What can this do for lightening the load of a founder or lightening the load of a brand operator? Like, how does that help them in their everyday business?
[01:00:48] Bizzy Coffee: It just tries to really help quiet the chaos. So what we're looking to do is just take some of the weight off that founder's shoulder, let them focus on building the brand, building the business, getting that exposure. If you don't have sales, you really don't have anything. So we want them to be able to focus on that while we take care of your back end office work. And we can just present that to you on a monthly basis, you can help make decisions, you can take that to investors. And really, you can just focus on growing your business.
[01:01:13] Alex French: I feel like I felt founders and the folks who are running brands collectively sigh a breath of relief just hearing that. How can people learn more about Belay Solutions?
[01:01:24] Bizzy Coffee: So people can text TASTE to 55123 for their free inventory guide to get started.
[01:01:30] Alex French: Matt Lin, Inventory Accounting Guru at Belay Solutions. Thank you so much for joining me here at Expo West. It's been such a pleasure to chat with you and learn about what you all do over there to help founders and brands with their financial accounting and inventory management. For everybody else out there, thank you for listening to the Taste Radio podcast. I am Melissa Traverse and we'll see you next time.
