[00:00:00] George Howell: More SKUs, more data, more complexity. The beverage industry is changing fast. VIP helps suppliers, distributors, and retailers stay ahead, turning purpose-built beverage data and technology into smarter decisions and better results. For more than 50 years, VIP has helped power the beverage industry. Now, they're building what's next. VIP, empowering smart decisions. Visit VIPinsights.com for more information.
[00:00:37] Ray Latif: Hello friends, I'm Ray Latif and you're tuned in to Taste Radio, the leading podcast for entrepreneurs, makers and innovators in the food and beverage industry. George Howell may have sold his company to Starbucks, but he never sold out. A pioneer of the specialty coffee movement, George began his journey in 1975 with the founding of the Coffee Connection, a beloved Boston-based chain that helped redefine what American coffee could be. Nearly two decades later, Starbucks acquired the company, but George wasn't finished. In 2012, he re-entered the retail scene with George Howell Coffee, a brand rooted in his unwavering commitment to quality, transparency, and education. In this episode, George shares how his dual passion for art and exceptional coffee sparked a revolution in cafe culture long before Starbucks became a household name. From modest beginnings to becoming a global advocate for farmers and flavor integrity, George has always played the long game, prioritizing substance over trend. He reveals the untold story behind the drink that evolved into the Frappuccino, why so many cafes miss the mark on customer experience, his unapologetic stance on flavored coffee, and why black coffee should be as revered as fine wine. Hey folks, it's Ray with Taste Radio. Right now, I am honored to be sitting down with George Howell of George Howell Coffee.
[00:02:18] Speaker 1: George, it's great to see you. Very good to see you, Ray. Thank you for having me.
[00:02:22] Ray Latif: Yes. You are an icon in the coffee space. I think anyone who hears your name knows that George Howell has a lot to do with the elevation of premium coffee in this country. In our office, coffee is sacrosanct. It's very, very important to drink good coffee here. I offered you a cup, probably not thinking that, I don't know, I wasn't really thinking as much as I probably should have, that you probably had a few this morning already.
[00:02:53] Speaker 1: Oh, yeah. I'm tasting our coffee all the time. How many cups of coffee would you say you drink every day? I can keep it fairly limited, actually. It can vary from typically two cups to quite a few. Okay. It just depends what's on the agenda for the day. And obviously you drink black coffee. Always. Well, no. When I go flying off to somewhere and it's on an airplane or driving up to my place in Maine, I'm getting cappuccinos or I'm adding milk. Okay. Because frankly, the black coffee is not worth it. How do you mean? It's generic at best.
[00:03:30] Ray Latif: Oh, I see.
[00:03:30] Speaker 1: You're stopping somewhere to get coffee. Yeah, I'll stop somewhere and get it, particularly my age, right? I need the coffee when I do a five hour drive or whatever. You don't bring coffee with you? No, because you put it in a thermos and it starts to get stale. It changes over time. So I don't like that. But the gas station coffee is... Oh God, forget that. Where do you stop? I'm curious. If I want a black coffee, I'll stop in Portland at Tandem. Okay. They're pretty good.
[00:04:01] Ray Latif: Okay, good to know.
[00:04:02] Speaker 1: And so there I will order a black coffee. Okay. If I'm stopping at any of the other stops and, you know, the DDs of the world and the Starbuckses of the world and so on, then I will get a cappuccino. which Starbucks makes a fairly good cappuccino.
[00:04:20] Ray Latif: I think a lot of people who are listening to this would be surprised to hear that you are the inventor of the frappuccino.
[00:04:25] Speaker 1: Okay, that's first correction. Okay, good correction. I cannot tell you how many times on podcasts and elsewhere
[00:04:32] Ray Latif: All the research that I've seen.
[00:04:35] Speaker 1: No matter what I say and do, I'm always given that benefit.
[00:04:39] Ray Latif: We're going to clear it up on Taste Radio today for everyone listening. In fact, that might be the title of this podcast.
[00:04:44] Speaker 1: George Howell is not the creator of the Frappuccino. Let me take credit for saying that. Why has everyone gotten that wrong? I mean, again, it doesn't really seem like something you would have created. What they bought was the name. Okay. Very simply. And the name was my marketing person at that time, really a brilliant guy, Andrew Frank, who came up realizing FRAP For New England, that's a standard drink. Frappuccino, that simple, right? But the rest really has a history starting in the early 80s through the coffee development group that was coming together to really help support the burgeoning specialty coffee industry, which was still in its infancy. In there, they started talking about an iced drink, which involved simply intense coffee, sugar, milk, put together, put in a granita machine.
[00:05:40] Ray Latif: What is a granita machine?
[00:05:41] Speaker 1: Like granita drinks that you'll see in the Italian locations, where the drink is churned round and round and round. So you keep a very super smooth, crystallized drink, typically using fruit. But here, in this case, it's with coffee. And there were several articles that I noticed back in the 80s written on this. And then in 1984, they tested it out in the Los Angeles Olympics. And it was very successful. And I was aware of all of that because the one thing I do is I read a lot in terms of what's happening today. But it wasn't until the late 80s that I visited an espresso company that was since bought by Starbucks, but at that time was independent, that had a granita machine and they were making that drink. I tasted it for the first time and said, wow, this is definitely going to be very popular. So we brought back the concept, which is those three ingredients. Back here, I handed it to Andrew Frank, my marketing person. He put together the right ratio of sugar, milk, and coffee. And you need the right amount of sugar so that you don't get the heavy crystallization and it becomes a very smooth, creamy type drink. And Frappuccino was born.
[00:07:06] Ray Latif: It's as simple as that. So what you were serving, I think is probably significantly different than what is currently served at counters at Starbucks. That's correct.
[00:07:16] Speaker 1: All Starbucks got really, they got the name Frappuccino and they applied it to what some folks were developing in Los Angeles. We're now serving at our cafes, the original. And if you want to taste what our Frappuccino at Coffee Connection tasted like, try it. Okay. Although you're not calling it that. No, we can't.
[00:07:38] Ray Latif: No, no. The original. Yes. Coffee Connection, your original chain of coffee stores that were eventually acquired by Starbucks. Yes. When you decided to launch your first cafe, Was your background already in coffee? Not at all. Was it a passion project?
[00:07:55] Speaker 1: Yeah, it was. A little complicated, but I really come from the art world. I dabbled in painting, but I really felt that I didn't have a talent enough to really be significant. And then I started representing certain artists, indigenous artists from Mexico, the Huicharica. And I was exhibiting that art on the West Coast where I, my wife and two children were living at the time. Around 1974, I really, with a small trust, I really felt the need to come back east and do something. We had to make more income, growing family, third kid on the way. I wanted to exhibit the art, but exhibiting indigenous art in the 1970s does not make you money, period. That's a love affair. End of story. And by the way, that art is still exhibited in our cafes today. But in any case, came back east and realized that the coffee was dreadful. here, just dreadful. It's in the West Coast, especially the San Francisco, Berkeley area, where specialty, as it's called, coffee was really born with the beginning of Pete's and other roasters that started getting much higher quality coffees that were coming in through, I have to name her, Ernick Knudsen, a story in its own right, an extraordinary woman who started as the secretary of a coffee company. and became its owner in a number of years, right? And revolutionized what was available. But in any case, we decided, hey, we saw the success of cafes, these specialty cafes starting to happen on the West Coast. Let's do it there. And I can exhibit my art on top of that, or the art of the Ouija Arica. So Lori and I embarked on creating the Coffee Connection.
[00:09:50] George Howell: More than 70% of new CPG products fail, often over margins founders never fully understood. Outsourced accounting can close that gap for good. Visit belasolutions.com slash BevNET for a free small business accounting guide from Belay.
[00:10:07] Ray Latif: Artificial intelligence is reshaping every corner of the beverage industry. But where is it creating real value today? Stay tuned till the end of this episode for a bonus interview when I sit down with Andrew Krizis and Lucinda Awkwad of VIP to explore how AI is moving beyond analytics to automate decisions, improve efficiency, and transform the three-tier system. Entrepreneurs often are successful because they're doing things that other people didn't think of doing.
[00:10:41] Speaker 1: That's right. It's really seeing the opportunities before you.
[00:10:45] Ray Latif: Yeah.
[00:10:45] Speaker 1: And acting on them.
[00:10:47] Ray Latif: And also giving the customer what they want. And I think specialty coffee or really any premium food or beverage category, really any premium industry, there's an important aspect of it that isn't always followed as much as it should be. And that is customer service. I feel like specialty coffee and customer service should go hand in hand. They need to go hand in hand. And it always surprises me when I go to a high-end coffee shop and the customer service is not there. Because I enjoy the coffee, but the experience is downgraded, or my perception of this experience is downgraded because the person was standoffish. You know, sometimes you encounter baristas who just, uh, they have a chip on their shoulder where they think they're better than the customer. And that's right. It's like, okay, fine. I'm never going to come back here. I'm just, you know, there's, this happened in San Francisco. I was in San Francisco last week. There's like, you know, there, there are five coffee shops all within, you know, two blocks of each other. And if you're going to, you know, be a jerk to me, I'm sure I can go somewhere else and get as good a coffee experience, at least from a liquid standpoint. Totally agree. How did you teach your employees to invest as much of their work in the service aspect as they did in the actual preparation of the coffee?
[00:12:03] Speaker 1: Well, I have to say one of the advantages was we were selling stuff that was so superior to everybody else that we sort of often had the pick of the litter. Not that we didn't have on occasion bad service. have people sick and not coming in, any number of reasons that create a moment of bad service, right? But we really had people who actually felt that they could be proud about what they were selling, you know? And here I was behind the counter. I mean, I was behind the bar. My wife was doing the cafe part and I was doing the retail. So I talked about the coffee a lot. They wanted to learn, right? And they were drinking the black coffee quite a bit, and it was black coffee. I wanted them to do it that way, to understand that's the drink we're selling, right? The milk and all the rest of it, people may want it, that's great. So we serve high quality milk and all the rest of it, but it's the black coffee. But I think it's the pride and, you know, as Coffee Connection grew, I did feel that we really had to treat people very well. When Starbucks bought us in 94, we had health insurance for our employees that was every bit the equal of what Starbucks was offering. Many of our programs were very similar that way in terms of benefits. And Starbucks at that time was way ahead of its time as well.
[00:13:27] Ray Latif: So treat your employees well and... 100%. That's the key to good customer service and making them feel like they're a part of the business as opposed to just working there.
[00:13:36] Speaker 1: That's exactly right. Yeah. I mean, I think that's really critical. And again, there was that pride and we have that now. We're going to have new packaging that will be, once again, educational in a way that no other coffee bag is. You know how you have the bags that give you three words like grapefruit, this fruit, and the other thing and so on. They're all forgetting, including myself, that there's a particular flavor that we're all forgetting 100% to bring up. Coffee? Coffee. A hundred percent, right? Yeah. So if you ask a customer who's not been to our cafe or our type of cafe before and they're looking at all of this and you say, what are you looking for? And you suggest maybe you'd like to start with a coffee, coffee, you'd be surprised how many people say, yeah, I want a coffee, coffee. I don't want a grapefruit coffee.
[00:14:31] Ray Latif: I don't want something that tastes like sea moss. In fact, I don't know what sea moss tastes like.
[00:14:36] Speaker 1: So all our bags will show you what we feel is the proportion of pure coffee flavor to the fruit or other substances we mention.
[00:14:46] Ray Latif: I'm glad you brought this up because I think we're at a point right now where consumer brands have overcomplicated things.
[00:14:55] Speaker 1: Yeah, yeah, yeah. I totally agree. And let me, I have to bring that because it's a pet peeve of mine. We all put altitude down. how high the coffee is because it's understood that generally speaking, the higher the altitude up to a limit, like 6,000 feet, 5,000, maybe higher now, that's where you get the higher quality coffees. They take longer to mature, they produce more flavor, generally speaking, right? Why is it that everybody insists on giving you meters? Fair point. I mean, insane, right? At least we still put the altitude, but we at least put it in feet. Right. And I don't know another roaster who does that.
[00:15:37] Ray Latif: It's such a good point because, look, why are you making it more difficult for the consumer? Why are you making it more difficult for them to understand? Sure. Yes. Okay. If we break it down, yes. Meter, three feet, fine. But why are you making them do the math? And I think the point of reference is so important. Yes. I think the point of reference for a lot of coffee is, okay, it tastes like this, or you might get notes of that. And they do this in the whiskey and wine and beer world as well, and in all kinds of beverage and alcohol. But at the end of the day, I think people just want coffee, or they just want beer, or they just want wine. Wine's a little bit more difficult, but anyway. The simplicity of great is, I think, where we're coming to right now. People know something is great almost by the fact that there's less to talk about. The key quality in whatever it is that they sell is that it is premium or great or specialty. It's going to sound like I'm saying, well, dumb it down. I'm not saying that at all. I'm saying that you have to take a different tack to getting people to try this product.
[00:16:40] Speaker 1: I cannot tell you how many places serve aged coffee. One of the things we do in education these days is we do seminars, and we're going to increase that, but one of them is we have a bag of the same coffee, two bags of the same coffee, same harvest, same farm, and one of them we keep in the warehouse airtight in a bag, the other one we have frozen, and we roast and brew the coffees the same day and serve it side by side. And the difference is night and day. I call it an inoculation.
[00:17:16] Ray Latif: I mean, I think just what you're talking about, even if you just said, and I'm sure you say this to your customers, we freeze our coffee beans to lock in the flavor that you should expect from what the farmer intended to give you. That's exactly right. Yeah. And I think that's a really simple message that goes a long way. Yeah. And, you know, when you're talking about trends and forecasting trends and, you know, what's going to be the next hot thing in coffee, I mean, I'm sure that doesn't mean anything to you because great coffee is always going to be great coffee.
[00:17:45] Speaker 1: That's where I am parting ways to some degree with some of the trends going on because it's There was a trend in the 80s, in the early 80s, of flavored coffee. You remember that, right? Sure, of course. And you'd walk by a mall and you'd smell the cafe a mile away. Yeah, hazelnuts. That was awful, right? Just awful. Well, now they're starting to flavor coffee again, at origin. Okay. By taking the green beans and you have to ferment it, you have to take the fruit off and everything else. And while you're doing that, now you can add pineapple to it and all these other things. Wait, what? Oh yeah. So we're getting infused coffee now, green, that's sold then to roasters here who are beginning to sell it. So this is one of the trends that are happening now. I think it's terrible. I'm not going to sell it, period. But you also have new experimental processes that will emphasize a particular flavor note that's found in a coffee, but to the exclusion of other aspects. that are winning in that coffee, right? Sort of psychedelicizing it, but also losing some of its breadth and depth in doing so.
[00:19:03] Ray Latif: I wouldn't be surprised if we start to see Starbucks embracing that trend or incorporating some flavored beans into their
[00:19:09] Speaker 1: Well, they need to do better than putting olive oil in their coffee.
[00:19:14] Speaker 2: Yes, yes, yes, yes.
[00:19:36] Ray Latif: George, it's very evident your passion for coffee, and I get the sense that you're always wanting to learn. You're very much a student of coffee as much as you are an educator of coffee. And you said something interesting earlier when you talked about, I read everything I can about coffee today. Yeah. As opposed to what happened or what was going on with coffee 10 years ago, what might happen with coffee 10 years in the future. That's not necessarily the way a lot of founders I've spoken with think about their particular industry or category. A lot of them are pulling from the past. A lot of them are thinking about the future, but you're thinking about what's happening on the ground right now.
[00:20:11] Speaker 1: Why? Yeah. Well, again, because I'm really rooted in that, I mean, let me go back to, I sold the company, Coffee Connection in 94. I was invited a few years later to become a quality consultant to Brazil, working with the United Nations and the National Coffee Association, not National Coffee, the World Coffee Association. And It was called the Gourmet Project, and this was to zero in. It was five countries involved, but I was involved strictly with Brazil, to produce higher quality that could then sell to this burgeoning specialty movement to get higher prices, because farmers very often are having to sell coffee at below the cost of production. I mean, this was becoming a miserable job in the 90s and going into 2000. So I spent two years going to Brazil a whole lot, traveling through the farms and so on, becoming familiar with how things are done there and so on. At the end of two years, when the project was concluding, I just refuse to do the typical thing, which is write a long manual explaining how it to be done and all the rest of it, and walking away with a big piece of paper and nothing really done at all. So instead, short report, but let's have an international competition. Let's bring in coffee roasters from around the world, from Asia, from Europe, from the States. So that's what I'm about. was suddenly realizing that the source of the great coffees I'm getting come from really driven craftspeople. You can talk to 10 people who make shoes. One of them might be one who, despite the fact that they're only not making any more than the other one, is making a great shoe because they care. and I want to buy from that person. The same thing with coffee. We're looking for those relationships. This organization that we call Cup of Excellence started that way, and that's what it's looking, to connect roasters to farmers. And I'm still dedicated to that. That's what I will always be dedicated to. That's the excitement I have. I still travel, and I'm 80, to these countries. I go with my daughter now, who's taking over the purchasing of coffee, but we go together. to Kenya, we were there just a few months ago, Guatemala last March, talking to farmers, seeing how it can improve cross pollinating, because what we see in Kenya may not be done in Guatemala or vice versa. So there is that interchange and we learn a great deal that way too. And it keeps us up to date in terms of what's happening, climate change wise and all the rest of it. But I'm dedicated to them like I was to the artists back 50 years ago. Yeah. Right. Same thing. And that's what drives me more than the money.
[00:23:08] Ray Latif: I mean, it's a beautiful business you've created for yourself. The way you live seems to be in parallel to the way you work. And I think that's really important. You can't be one thing for eight hours or 10 hours and something completely different. We often talk about work-life balance on the podcast and it's so difficult, but I think personality-wise and just what makes you content and happy shouldn't be exclusive to one thing or the other, right? Right. Yeah. And if it makes you happy to work with these farmers and make it clear that you appreciate what they're doing and you pay for what they're doing.
[00:23:48] Speaker 1: Exactly. I mean, a lot of the coffees now, when it reaches a certain price, like our Kenya, Mahmuda, for instance, We fly it. Screw putting it on a ship and waiting two months. When it's 10, 20% of my cost to begin with, I'm flying it because I get it in much quicker, it's much fresher, and I have guarantee that it's not going to age, not even slightly. So yeah, it's doing things the right way.
[00:24:18] Ray Latif: I would describe you, George, as a successful entrepreneur, as a successful founder. And I often wrap up these episodes by asking a founder how they define success, how they define a life's work. And certainly you have a long way to go still, because there's a lot more cafes you can open, a lot more coffee knowledge you can share with this world. But how do you define success?
[00:24:43] Speaker 1: I mean, the first success, the actual experience of it is sharing what I know, you know, with a customer. One of the things that I still am wrapping my head around is how do I get more people to drink black coffee? And I know that's not necessarily the answer you might be looking for. You want it broader. I'm not looking for any specific answer. The more people I can get onto black coffee. Yeah. And drinking it more like wine. And I recognize it's much more difficult to do because you've got to brew it. Wine, you just pour it out of a bottle. You've still got a ways to go. You can take the greatest coffee in the world and destroy it in five minutes while you're brewing it. Right? So I realize that. But To the degree I can get people to think black coffee and to drink it and taste it, that would be fantastic for me. You know, as long as my life is good, I don't have to be the millionaire flying on my private jet, right? That's not what I'm after. And I'm far from that. It's more that sharing and setting up cafes that people go to because they can't get that elsewhere.
[00:25:52] Ray Latif: Well, I have an idea. I remember when I, well, I think it was at Dunkin' Donuts they went to for the first time, maybe in my life. And I asked for a cup of coffee and they said, how do you want it? And I said, regular. I just want a regular cup of coffee. I didn't think to say black. And the coffee comes back and it's loaded with cream and sugar because that's what regular meant. That's what regular meant back in the day. If you wanted a regular coffee, it was just a sugar bomb and milk bomb. How about if we start describing Black coffee is George Howell. If we say, I want a George Howell, and they'll be like, oh yeah, I know what that is. I want a black cup of coffee. Then your legacy would be cemented. I know.
[00:26:31] Speaker 1: Well, I've thought of that. You've come in, no milk. I'm sorry. We just serve coffee. We just serve George Howell style. But we'd be out of business in a day. So far. And we have to do things right. And there's a moment to have a great cappuccino and so on. Let's face it.
[00:26:48] Ray Latif: George, it's been such a thrill to sit down with you and chat with you for this past hour. I can't thank you enough for coming in and for sharing so much insight and knowledge, not just about coffee, because that's been amazing, but about your experience as a founder, as an entrepreneur and what you've learned over the years. Once again, thank you so much and really appreciate the time.
[00:27:07] Speaker 1: As you can tell, I love talking about coffee and it was great talking to you, Ray. Thank you so much. Thank you for the opportunity.
[00:27:16] Ray Latif: That brings us to the end of this episode of Taste Radio. Thank you so much for listening. Taste Radio is a production of BevNET.com, Incorporated. Our audio engineer for Taste Radio is Joe Cracci. Our technical director is Joshua Pratt, and our video editor is Ryan Galang. Our social marketing manager is Amanda Smerlinski, and our designer is Amanda Huang. Just a reminder, if you like what you hear on Taste Radio, please share the podcast with friends and colleagues. And of course, we would love it if you could review us on the Apple Podcasts app or your listening platform of choice. Check us out on Instagram. Our handle is bevnettasteradio. As always, for questions, comments, ideas for future podcasts, please send us an email to ask at Taste Radio.com. On behalf of the entire Taste Radio team, thank you for listening, and we'll talk to you next time.
[00:28:06] Speaker 1: you
[00:28:18] Ray Latif: VIP has quietly powered the beverage industry for more than 50 years, trusted by more than 2,800 distributors and 1,400 suppliers. They have defined this industry time and again, and in this era of AI, they're leading the way. Today, we're joined by VIP CEO Andrew Krizis and Head of Sales Lucinda Awkwot to discuss where the industry is headed and what customers can expect next. Andrew, it's great to see you. How are you? Good. Thanks for having me, Ray. Lucinda, how are you?
[00:28:48] Speaker 3: So great. Excited to be here.
[00:28:50] Ray Latif: Yes. And our audience is excited to hear about VIP's capabilities with AI because it is a topic that is top of mind for so many founders at this point. Andrew, as I mentioned, VIP has been around for over 50 years. Your background is pretty interesting because you bring so much to the table as CEO. How did you come to VIP?
[00:29:11] Speaker 4: Yeah, great question, Ray. And I think it does go back to the legacy of VIP. So I'm incredibly passionate about the beverage and alcohol industry, the broader CPG industry as a whole. So I spent the last 12 years plus working at Nielsen IQ, working with many of the suppliers that could be listening to this, distributors and retailers. It was about five years ago that I first interacted with VIP and it's actually a partner to Nielsen IQ. And so complimentary partnership was created and I got to know the company a little bit. I got to see the value of what VIP creates in the industry and how it helps support the three tier system. And I was just blown away also by the people. by just the caliber of the talent, how respected they were in the industry, how much knowledge they had across the three-tier system. And so once I started to get to know the company a bit more, I saw just the opportunity for the technology to do so much more across the industry. And with AI, as we were talking about becoming really important and accelerating every day, every week, I started to realize it's a huge moment for AI and technology and more investment to come into VIP, really help our clients, help the suppliers, help the distributors and retailers, and transform how operations and the day-to-day work is getting done. So I just saw that as a great opportunity, both in the technology and AI side, leveraging all of my data background and knowledge in the industry, but then joining a group that has an amazing culture, an amazing team, and a ton of passion behind it.
[00:30:30] Ray Latif: Lucinda, when you came to VIP, you also came with a ton of experience. Just talk a bit about your background in this industry.
[00:30:37] Speaker 3: Yeah, thanks, Ray. So I like to say I was born and raised in the beer business, but I got here as soon as I could. Started when I was 21 with Boston Beer Company. I've worked in all three tiers of the three-tier supply chain over the last 20 years, and I showed up to the first day to the VIP office here in Burlington, and I felt like I should be asking for autographs because VIP is the only set of data and the only set of tools that I've ever used on any of the three tiers. So it was really remarkable to see the team of people that has built such an incredible organization and really built from the ground up over the past 50 plus years that VIPs existed. So I'm honored to be here a part of the team now to help carry the sales team into the future with all this new agentic work that we're going to talk about.
[00:31:23] Ray Latif: Andrew, let's just start off by talking about where the beverage industry is headed right now in broad terms and why AI is such a critical strategic investment for founders and businesses.
[00:31:33] Speaker 4: You know, I think about whether you're a small supplier or distributor or a large supplier, you know, the beverage alcohol space. You could be only have a few people at your company or hundreds. At the end of the day, everyone's looking for efficiency. Whether you're three people within your company, you're stretching yourself to try to do five jobs. Or again, you're a larger company with maybe 10 people in the finance department. You're all trying to find better ways to do what you're doing so you can drive more product to consumers. So AI is just coming at this perfect moment over the last six to 12 months where everyone needs it. Everyone needs it for similar reasons, front efficiencies, whether it's helping you run some reporting, it's helping you with pricing, it's helping you optimize something. At the end of the day, there's never enough hands and arms within a company when you're building a brand. And I've experienced that, you know, working with hundreds and hundreds of founders over the last 12 years in my past role with Nielsen IQ. And I see that with VIP. So I think all of the industry, both suppliers, distributors, retailers are looking at AI to try to understand how can I drive more efficiency? How can I drive a better delivery of my service or product to the end customer? And how can I do it in a way that's going to set me up for success? But now many people are taking it in different ways. You know, AI isn't something that's just intuitive and you throw on a chat bot and all of a sudden you're up and running. So it's really interesting to see how suppliers are leveraging AI, how distributors are leveraging AI, retailers, et cetera. And there's some fun nuances between those three.
[00:32:56] Ray Latif: When it comes to spending money on AI or otherwise, founders want to see a return on investment. And I'm curious about how you measure return on investment when it comes to AI. And also, there's so much hype about AI at this point. Where does hype meet reality? Lucinda, can you tackle both questions for me?
[00:33:14] Speaker 3: Yeah, great questions. So I think I'll tackle the ROI question first, because I think it will address the buzzword as well. But I think when you think about AI, I was thinking back to all these different technological advances and how they've impacted the industry all the way back to when we used to have rolls of quarters to get on the payphone, and then all of a sudden, cell phones helped to make us more efficient. Same thing with printers, and then the internet, I think of AI in the same way. It will give us the ability to enable all of our teams to be that much faster, that much smarter, smarter by way of better insights from the data. So if we're able to take a sales report, a sales ranker, and extract out the insights that much faster and distill down to the actual accounts we should be spending our time in, that to me is an instant ROI. There's also back of house applications. We think we talked with our distributors about some of the features that are most important to them as we're building out our new agentic platform. And it's things like avoiding the fat finger on the order. We don't want 10, we want one. We don't want 100, we want 10. And so giving the teams the ability to capture those things in advance, I think is where we see the ROI. It also empowers our retailers to make better orders. So think of predictive ordering in an e-commerce platform like Connect. There is so many great things that we can do to empower across all three of the tiers using all of our agentic features that we have in place now. So if I'm a retailer, if I'm a distributor, if I'm a supplier, that's how I think about the ROI. And it really enables the humans to be better at their jobs. So that in itself, I think is the buzz. I encourage people to think about AI as more of a tool and a way to do their business, a way to go about seeking the outcomes they're looking for versus this buzzword of a tool. And I think when we all begin to embrace it much more, we'll see that firsthand as well.
[00:35:08] Ray Latif: Obviously, technology is moving faster than it ever has before. And it's incumbent upon VIP to provide technology that is keeping up with the times or in this case, keeping up by the day.
[00:35:19] Speaker 4: Yeah, I think you're spot on with it's evolving every day, every week, new models come out, Babel 5 came out for the second time. So it's a constant. It's been great. I've had a few conversations just recently with some distributors and suppliers. And when we talk about the investments, one of the things that came out clearly from our clients was they are interested, they are getting pressure to use AI. And so initially, you know, whether you're a founder on this call, a supplier or distributor, the thought process was, let's just take Jett, GPT, let's take Claude, let's just turn it on for everyone. And like, let's go get some insights. And you can get some gains and insights there. But ultimately, those clients came to us and said, hey, for us really to take advantage of this new technology and capability, we need VIP. We need VIP to do this within all the business processes because VIP is so foundational to the core operations, whether you're a distributor, whether you're on the supplier side, looking at your inventory and depletions. And so that's where we took it upon ourselves to say, let's look at the marketplace. Let's look at all the different providers out there and take a hard look at ourselves. And we made the decision to make a really sizable, significant investment into a new architecture with AI and an agentic first decision. And what that allows us to do is actually create not just agents and AI on top of legacy products, which again, that still adds some value, but it doesn't change the game. And so we said, let's go down the path of actually building for the next several years, not for the next two months or three months, because the new models that precede something, but we need to have a new foundation. So VIPs made the biggest investment or one of the biggest investments we've ever made as a company. And that's gonna allow us to have a magentic first platform, bring in many different types of data and create agents on top that again, aren't just giving you some insights, but I like to say are doing work. They're doing work for you as a supplier. They're actually making decisions on your behalf within certain guardrails. And then they're able to communicate for you. If you're a supplier, actually having these agents do work for you, communicate to your distributors, to your trading partners on your behalf. Again, I go back to my first point. Everyone needs more arms and hands, right? You never have enough people when you're a small player or a large player. And so actually being able to do some of that work, communicate digitally to distributors, whether it's pricing, whether it's something related to inventory, whether it's shipments. And likewise, distributors having agents that can interpret and engage and make decisions on their behalf and then communicate to their trading partners. That's where we're going as VIP with AI. We think we play a really central role into that core operational element of how the three tier system works. But we were also cognizant that that takes real investment. It's not just lipstick on an existing product and putting in a chat bot and saying, oh, everything's AI. It's really looking at the foundation of what's needed So much has changed just in the last six months, where whether you're a software or data company, what you had built maybe two years ago, even 12 months ago, almost becomes irrelevant from an architectural standpoint, just because the last six months. So that level of investment is something we're fully driving towards and working with a lot of clients on both the distributor and supplier side of how we bring this new platform to life. And at the same time, though, we're still investing in our existing products. That is not stopping. So I think of it from a VIP standpoint, as we're going down both paths, we're investing in existing products, putting AI on top, kind of what I was mentioning with many others in the industry. But we're also going after this whole new architecture and whole new platform. And that's what's really required long term of the three tier system.
[00:38:43] Ray Latif: Whenever I talk to founders, operators about who they choose their partners, it really comes down to trust. And I think when you're talking about AI and the evolution of this technology, it's really important to trust your partner. And it seems like the level of expertise that you guys can provide to companies is just unmatched at this point. So I highly encourage folks to get in touch with the team at VIP. Lucinda, what's the best way to do so?
[00:39:11] Speaker 3: Yeah, thanks, Ray. We are so excited to hear from all our customers. We're getting questions every day, and I do think the best way to reach out to us is vipinsights.com. And go and submit a form, request a demo, send in a question, and we will be able to get back to you. But our sales team is talking with all of our customers all day, every day about this, and we're really excited to bring everyone more.
[00:39:32] Ray Latif: Outstanding. Well, Andrew, Lucinda, thank you so much for taking the time. I'm really excited for the future of AI and VIP's ability to help companies address this technology in a really effective way. So thanks again, and let's definitely stay in touch. Great. Thanks for having us, Ray.
[00:39:47] Speaker 3: Thank you, Ray.
