“Make It Cheaper” Is Completely Wrong, Why Every Physical Product Needs This Mentality | Josh Ellis Ep. 9

21:30Chris Cruz:it for the experience which so many people try to deter brands away because like it's just a little thing don't worry about it like move past it like it's going to be fine no one's going to think about it the perforated edge just so you know the perforated edge on the withco bottle you may have never thought about it this way but as a consumer and a user always makes me think freshness. Every time I do it, I go, this bottle feels fresher than every other thing. Cause this edge, this perforated edge thing makes me feel like something is enclosed in here that required this kind of detail. So anyway, I'll think about it differently now.

22:01Chris Cruz:Thank you. Anyway, but you, so you, so that was the visual. Yeah. I want, when I see it, I want to be curious as to what it is. So make it stand out. Right. Second thing is touch. When you grab that bottle, we plastic is very common in our industry. But to me, I said, we're going to be one of the highest priced on the shelf. So there needs to be a trust and sense of like touch. So when you touch it, the shrink's really sleek and the bottle's glass. And I was like, that's why we're choosing glass. Also, it helped with the heat pasteurization process. But before we knew that, it was about like it needs to feel quality.

22:36If I'm going to ask more, so I think about value and price. If something feels expensive, it's because the price is outweighing the value. So as we begin to add more value in someone's mind, price begins to drop.

22:49Chris Cruz:So nothing's really expensive to us. It's just our perception of its value is actually lower than the price tag. So it's like, all right, let's take people on this journey. Now it's glass. Okay, man,$19.99? It almost feels like it could be worth$19.99. My goal is for them to be like, I forgot price because I want what it is. Yeah. So the glass plate. So good. The glass plate. So important. And all right. So now we have sight. We have touch. Now we have to move into taste. There's so many companies out there that look really great. Yeah. And they feel really great. And then they don't taste really great.

23:23Yes. Same way there's a lot of companies that taste really great, but then they didn't earn your trust on the other stuff.

23:28Chris Cruz:They don't think about the bottle. They don't think about the way it looks. They're not shrink wrapping it. so when you think about taste you and you you got to think about like it's all going to be the quality of the ingredients right but when i take a quarter pound of ginger root not ginger syrup not ginger flavoring but real ginger root and crush that down and take that ginger root and pair it with fresh lime juice bitters all that it's going to taste like what you order at a bar because what actually most bars are using ginger beer so like to real really use ginger root or real agave. We have stuff with bee pollen, raw honey, lavender.

24:05I mean, the list goes on and on with these unique ingredients. It has to taste good because at the end of the day, that's what the product's all about. Like all those other senses are cool, but if it tastes bad, that's the whole point. It's a drinkable consumable product. So there's a huge emphasis on what's inside the bottle, right? So now we moved into taste. The last one is not necessarily a sensory in terms of like feel, taste, see, hear, but it was the emotional sensory of connection, right?

24:34Chris Cruz:Still so important. And that honestly is the most, to me it's the most important part because it's beneath the level. It's psychological, it's emotional, it's biological. Like, and what I mean by that is you then take this bottle, you open it and you share it with your in-laws. You share it with your spouse. You share it with your friends. You share it at your wedding. If you're a hotel or a place that use it behind the bar, you're sharing it with your guests. Once people realize that this bottle led to create more conversations, they led to connections. They led to drinking with company. They led to the backyard birthday party experience I had.

25:10Now all of a sudden there's that like last piece of from the first moment you saw it, felt it, tasted it, and then were moved by it. And I don't know how many people like are going to that level of philosophy, but I do know a lot of people, the first thing they say when they see me is like i never have people over without withco and i'm like cool so the last one is actually the thing they're mentioning like i know it tastes good people will tell me it tastes good but generally they're telling me how they're using it yeah and i already know they're using it with company yeah and you also you can have a nightcap at the end of the day by yourself that's great too but like it's interesting because i had the i have the experience

25:46Chris Cruz:where my wife was going away on a like a five-day trip and one of her gifts to me was bottle of bourbon right next to it bottle of with go like here you go for here while i'm gone yeah like enjoy this while i'm gone and have yourself and it was but it was just this idea of like it's the thoughtfulness of yes you can do it ever yes you can mix a drink you could but this has this intentionality behind it that goes okay this is curated well taken care of the product is great the experience of having it in your fridge and taking it out and having the easy use case for it It's like, okay, it has the exact put this much and this much.

26:21Chris Cruz:It's like your story from when you were there. What was there a hurdle with the brand that you had to go like, oh man, this, we got to figure this out because it's, it's, it's messing with the brand and it's hurting us. Yeah. there is a level in the like the stages of this company that actually so a lot of the early parts of entrepreneurship like the seductive nature of entrepreneurship the romance of entrepreneurship for me is always in the earlier stages like when it's you and it's like you're a folding table at like a fold-out table at a farmer's market and you see that person have that moment and they buy it like that is almost like the romantic side where you're like oh it's starting to work yeah for us we're in an industry that you get to a certain point where it becomes so dependent on other organizations other decision makers and for us that could be distributors yeah like we can take it so far but when if we're going to launch into 1100 stores or 500 hotels i now am relying on somebody to do their job.

27:28And honestly, they're terrible. Distributors, they pitch themselves as your sales rep, but they fulfill and bill. And sometimes they don't do a good job with the fulfill. You can be like, Hey, we just launched in 1800 stores. We need you to deliver. Then they don't. Or when they do, then they hit you with like 50 to$60 ,000 worth of fees. They were not that we're in the, the, the small print.

27:51Chris Cruz:Yeah. So I think that's been one of our biggest things is like getting to the point now where we're so reliant on these massive organizations that you think would have done like a great system you think it would have well-oiled machines across the country and then you're like like no offense and i don't think anyone will listen to this from these places but you're like cool we're in sprouts and then all of a sudden you're like this is a terrible experience we're in walmart we're in target yeah that that to me was like a huge learning curve because not only is it challenge you it's a necessary evil because you need these partners yeah but then the partners are prioritizing the biggest brands in the world.

28:25They're going to prioritize Bacardi. They're going to prioritize Taramana and Casamiga and all these, that's where they make their money. So then when they see this up and coming, emerging better for you product, they're going to promise you the world. And then when you get in, they're not going to give you any energy or time. And then you're losing business and you're losing resources. I would, I mean, right out of the gate, that was the first one is just like getting to the point where it became less of a small business and more like medium to enterprise. And you're like, my gosh, the thing that actually, the growth is actually the thing that has now become in the threat.

28:56Okay. Wow. So that I think would be one.

28:59Chris Cruz:And did you guys have a way that you were like, okay, we've got to fix it. Like what was your like initial go-to strategy to overcome that distribution problem or channel right there? We're still, you're still in the middle of it. Yeah. We did. We started to find, I saw a couple of videos of yours where you were fixing the product on the shelves. Oh, I do that every day. I can go into Kroger and I'm like, hold on, babe. I go over sometimes we'll like mess up areas and I'm like these perfect facing forward because it's always in it that that's the thing is almost that takes me back to the first site right well if I'm going to miss them at the first site I'm going to miss them at yeah with company moment because it's part of that it's that first because there's that whole statistic around uh around the idea of a person picks up your product in retail the percentage of them actually purchasing that product is astronomically higher like they're they're upwards up to 75 percent more likely to buy your product if they pick it up off the shelf in the retail because all day long we're fed ads all day long like hey check out this product here's a photo billboard like you know we see thousands of pieces of advertisement every single week to the point where it's like what can you trust anymore versus yeah you're right having that in-person experience like if i text you i was like love you bro that's one thing if i'm with you i give you a hug i'm like i love you bro yeah There's a different level of perception and perception.

30:16That's a funny example. I mean, that's great. That's what came to mind. Yeah. You're going to feel like I feel more connected to you in that moment than a text. Though they both are meaningful.

30:23Chris Cruz:And I think in that moment, what I loved about what you were doing, it was not like a battle card like this brand sucks and our brand is great. You were doing this moment where you're going, we have an espresso martini that actually uses espresso versus people who like I didn't realize it was that was actually a reality. to you guys almost pulled the curtain back to go, we're not trying to trash these other brands. We're just trying to tell you why we actually stand behind our product. And it was this moment, again, connecting with what you guys were doing because the authenticity around your product, it didn't feel like you were doing something weird in the store.

30:59Chris Cruz:It felt like you were being authentic to your brand. Well, and the funny thing is a lot of the products on the shelves are also distributed by the same distributor, but because they're so much bigger in terms of volume, they're prioritized. prioritize it's almost like you have like this little edge about you where you're like man there's competitors of ours that are doing 102 million 100 a year yeah with something that the average consumer read the nutritional label and someone explained it to them they'd be like i make all these healthy decisions in my life and then i'm going to drop the ball here yeah and so there is that there is a little bit of that like man i still know if it's happening with products that are subpar, then it can happen with one that's trying to like raise the bar.

31:42Yeah. Like that actually is done right.

31:44Chris Cruz:Yeah. One thing that I think I've learned over time is your differentiator may or may not be the thing that works. Like you think it's going to be, but then when it doesn't happen as fast or there's so much resistance, you're almost like, what does it cost to actually educate someone at the highest level of something better? You can do it on social but like when you're talking about you know we'll get into a thousand retail stores and then they'll come back and say hey the bottle next to you is doing five bottles per store per week you're doing two you need to you guys need to get the number up and i'm like that's a household name that's been around for 20 years it's going to take time and it's just it's wild the cost of getting that education at the highest level and how does a brand think about like how When you guys are thinking educating the market, I think that is a part on the show that I would love to even see a little bit of your thought process on.

32:36Chris Cruz:How do people look at educating the market on their product? What's the way that you guys are testing doing R &D around educating people on a product? We could do a better job with it, but I honestly think it's, for instance, with retail trial, right? Like trial meaning like getting customers to try it. the way that's built now is ultimately in the digital space like yeah we we weren't ready to go into the retail the way we did because once we got in then it was like shoot how do we educate a customer right like if they're not if a celebrity didn't show them hey go buy my product here and they had that influence they need a reason when they go in that store to want to buy the product right for you to survive in that store it's not enough for someone to just stumble across it So how you do that is honestly massive amounts of money that we have never raised enough to really drive that pre-awareness going into the store.

33:34So you almost have to do it at an organic level, you know, through TikTok, through Meta. You have to build that. Like if I get a customer online that then becomes a repeat customer, when they go into the store, they're buying it. Yeah. Right?

33:46Chris Cruz:Do you guys do what's the ratio to e-commerce to retail for you guys? In the beginning, it was, you know, back when I was bought that box van and was driving liquor store to liquor store, we were doing like, you know, five grand a month. Like there was there was no money being made. And then when COVID hit, a buddy of mine who actually had an agency here in Franklin named Chandler Welling, he I couldn't afford to run ads. And we had this amazing relationship that spurred up from he invited me out to L.A. to an e-commerce conference, came back, was like, dude we got to get going i'm like i can't afford it he's like i'm just gonna do it we'll figure the rest out later yeah and then that next month it was like 65 000 online the next month 80 000 and it just the e-commerce kind of took off we're in covid we weren't home like one day because of covid we were packing boxes we were hiring all my friends that were losing their jobs like hey come pack yeah because everyone was stuck at home and because we weren't spending money out we were then spending money to make being at home more luxurious or like yeah people were spending money and they were drinking yeah um and so it was mainly e-commerce um and then i was like guys this buyer behavior is going to change like we absolutely through like e-commerce we were selling millions of dollars worth of product i'm like there's going to be a shift and those that aren't prepared will go out of business and a lot of founders i know did go out of business so i was like what are we going to do i'm like let's build out the wholesale side okay and that shortly after that getting an email from target to our website was pretty wild i was like hey we want to bring you that's a big day we want to bring well we thought it was jam we're like oh we get stuff like this all the time just maybe let's follow up on that one yeah so they were like can you guys handle this and i'm like absolutely you know just like a lot straight up alive but i was like yeah we're taking this chance yeah they didn't put us in the beverage section they put us in the gifting section because they rotate that every six to nine or six to twelve months i was like i don't care if they give us a parking spot to sell it up we're saying yes yeah yeah we're gonna write we're gonna grab this bowl by the horns and see how far we can go so that really shifted it to probably closer to 50 50 how did target find out about you they tell you i don't know you don't even know they just were like we want to put it in the gifting section we're like absolutely and also i knew like this is going to get companies like sprouts to pick up their phone companies like kroger whole foods because you have a little bit of leverage now to say hey we are in here and a lot of these retailers want what the other competitor has so i think i i said yes to it more for if we want to get into retail and we can have this logo next to our sales deck or a pitch deck this is going to take us places and it did ultimately yep so it became about 50 50 and then it was really the i would say 2022 when i started thinking like hey this started in the bar what if we take it back to the bar think about the places not you're like high-end cocktail bar but think about these places that turn and burn cocktails especially national accounts right like j alexander's buffalo wild wings chili's like somebody's like mid-grade that are just like they need to make the same drink the same way in the same amount of time regardless of bartender training like it doesn't matter if it's the busboy or the manager anybody can make a withco drink and it's going to be the same yeah it's their first time or their hundred time so that's when we really started uh focusing on like let's go after national beverage accounts that have margaritas on their menus old fashions espresso martinis um and that really opened up kind of like the third silo of the company which would still be wholesale but today it's probably like 80 20 80 b2b wholesale and 20 e-commerce it's just i mean e-commerce is such an expensive endeavor yeah uh with just advertising and amazon fees What's interesting about what you're saying for me is when we're looking at holistic branding and we're thinking about all the different elements of it, when we talk about even brands that think like movements, right?

37:48Chris Cruz:They don't think like a normal business. They think spreadability. They think about how does this message get out further, faster to new places? Even the way that you are thinking, hey, this buyer behavior is going to change. Your product was stable. You had proven that the market wanted it. You had proven that it was actually good and that people would pay for it at that premium price point. The quality of the product was there. Then you saw market behavior changing. And then you saw, again, there's something about when a leader is willing to make these risks with their team that I think is so important on these movement-type brands that are like, hey, we're going to push something forward that's going to challenge the status quo, that's going to challenge what everybody's doing.

38:27Chris Cruz:You can't, it's like, you'll hear people say, we want to challenge the status quo. We want to be disruptive. But I look at them and I say, who has the conviction? yeah where's the person on your team with that conviction to say i'm gonna stomach the change and what i'm seeing over and over again in your story these moments where you're like hey the guy says if you show up here every day every week i'm gonna do this willing a leader willing to risk it to rally their team towards this is such an i would dare say overlook because people romanticize the founders but it's a quality that doesn't need to exist that needs to exist it doesn't mean you need to be famous it just means you need to have this conviction in you to believe that and so you're seeing it again where you go hey there's another market we should go chase that because your products are solid now you're going after it another way if you had to if you had to think right now about these individuals who are looking at their brand they're going all right on a if you had to sit with them if you were that guy going hey we're gonna meet every week you're gonna do these three things what are the three things you're gonna tell them to do right now with your brand that regardless of whatever their product is something that kind of applies to multiple lanes here or maybe it's something you're even internalizing right now where you're like these are three things i'm thinking about right now first and foremost which is more of a on the individual side than the product side but the individual is what's behind the product is don't do it alone find a community whether they're in similar stages prior stages or they're beyond the current stage you're in and talk about the pain points talk about the things that you're experiencing not just in the business but as the entrepreneur the weight you hold the money that you need that you don't know how to find like that's my biggest piece and I waited a little too long to do it but now it's something I do every day I'm like I've got my guys girls different founders that I can call and I'm like I need 200 grand in like six days to pay a bill who's doing short-term capital who's doing this also i feel really lonely and fearful right now yeah are you experiencing that too i know you were and i was there with you and you just have this like camaraderie connecting point to me that's number one because you will isolate and then there'll be disconnection in your marriages your religion your relationships your whatever you believe like it will affect everything if you're not staying healthy and choosing ways of you know connecting with other people so that'd be number one i would say number two this one's this is just coming to top of mind is like figure out a silo that you can build and create sustainable growth in first because it's very easy and we did it this way and now we're like trying to do three build three massive verticals at once with a small team and limited funds.

41:15But I would say like find that vertical that makes the most sense, that can make the most amount of money, that you can find the people to help do it. Build that and become known in that space, whether that is maybe you're a service and you're like, hey, we serve everybody. You're like, no, you don't. Go find that niche that says, hey, we know there's 50 people that struggle with this problem and we can start there. You're going to have, you're going to build your confidence, your belief system, you're going to have money coming in. And then you can go, hey, we found out that we could also serve this.

41:44Then it's the discernment of knowing when have you mastered the first silo before you take that on. And that's just something I think you're going to have to learn on your own. But I would say like hyper-focused on, to me, it's sustainable, profitable growth. We followed neither of those for so long and it about killed me. Wow. In more ways than one. But now we're in that direction, but it took a long time. so that'd be probably number two is just you can't do everything find the silo that makes sense build that when that's sustainably at a healthy place then move to the next if it makes sense in your business um it's funny because i'm trying to think of one but i'm sure there's a

42:28Chris Cruz:hundred what if what if if i know because i'm following your train of thought here what if this person goes okay yes one yes two and then they're like but i really don't care about how it looks it doesn't really matter to me like they're they have this approach where they're just like the product is awesome let the product sell itself what what are you saying to them because you have a little bit of an obsessiveness on this visibility element to a product that's also quality but you you care about how it shows up on the shelf yeah how are you coaching them up to change the way they think about that it'd be industry specific product specific or service specific.

43:05What I mean by that is there's brands, there's companies out there that make millions of dollars, super profitable. And you don't know, they don't have a logo and that works for them.

43:14Chris Cruz:They're like, I'm a roofer. Like my brother is a super successful builder, contractor, been doing it his whole life. He's never had a voicemail, a website or a business card. And he is stressed with the amount of level of work he has. Totally. Great. That works, right? He doesn't think like I do. And he's like, I don't care to have that. Right. So that makes sense for him now somebody is in a space where they have a consumer package so good maybe it's a consumer package product it's a service and they need to have something that when i think about brand which i don't know if you're going to ask me like what does brand mean to you but like what comes up for me we'll wrap it up here i love this i love where you're headed so go ahead and go for it when i think about brand it's not what the company says it is it's how it makes people feel when they're present with it and absent from it.

44:04Meaning like when they're in, when they're experiencing it, they're going to have a way they feel. And then when you're not there to tell them how to feel, they're going to have an experience about your brand. Right. It's to me, it all comes back to the emotion and the feeling. So I would tell somebody, if you're selling a service or a product, it's going to have to connect emotionally with that person with a pain point. Um, cause at the end of the day, you're adding value in your business, no matter what it is. I would say if you don't think that way, but you're in a product or industry that needs it, go find somebody that does think that way and have them sit with you and go, my product's great.

44:42And this is who it's for. There are some people out there that think like me, like in a, in a different world, I could be a designer only because I can see it. I actually can't really do it. I can't do an extent. But most of my thing is seeing it and then finding somebody.

44:57Chris Cruz:Yeah. Like when I work with a designer there, I go, I'm either going to be your best client because it's going to be crystal clear. Yeah. Or I'm going to be your worst client because I'm going to have a lot of opinions. And every single time at the end, they're like, you're the best client because you gave me 90 or you brought it 90. And then you gave me 10. You gave me the trust of the 10. And collectively we had a hundred. I would say to that person, like it probably matters more than you think, but it's okay that you don't understand how much it matters. It's not your job to go try to make a logo.

45:29If it, if you don't know what it's supposed to look and feel like, go find somebody, you know, go to a coworking space, get on, use AI, use chat. Like that would be my encouragement. It's like, know if you need it. And if you do know that it may not be you to

45:43Chris Cruz:do it and then know that there's people that can help you do it. Love that. But I would say it's just it can't just be a logo the logo has to have meaning like we all like i tell people a lot of times i used to say this a lot is i'm like what we do is sell a non-alcoholic cocktail mixer why we do it is to bring people together one beverage at a time to me the second one's way more important but they're both needed yeah because you and i are probably more emotional heart-led guys that connect to that first that second thing for sure but then like there might be somebody that's like that sounds cool but what the hell is it you're like they need that information too um so true man but it's yeah and that's the thing is when i think about brand it's like when i'm with you and we have with co you're gonna feel it but then when i'm not with you brand is you still feeling that a moment of connection without me in the room yeah with you and your friends and i feel like it it needs to represent itself without the founder being there to tell you.

46:41Chris Cruz:I love that. Or being on the website, like once it's in your hands, you now are going to go represent what Withco means in your life because it's who you choose to enjoy it with. Yeah. So that's amazing. Well, bro, thanks for being on the show today. I appreciate it, man. It was awesome. It's therapy. I love, it's just therapeutic because like sometimes you have all this information and then when you bring it out and then you have a conversation around it, like it's like, you know, podcasts sometimes for me, you're like the host is helping hold up mirrors that you need to see in yourself or things that you need to be reminded of true it's true i love it yeah man thanks bro