🍄 CHARLOTTE CRUZE // ALICE CO-FOUNDER

0:00Charlotte Cruze:I'm Sam Rose, and this is Commerce is Chaos, the podcast for consumer brand founders who know that building a business is messier than the highlight reel shows. Your supplier just missed their deadline, your top product is out of stock, and your competitors somehow just launched the same thing at half the price. Sound familiar? Every week, we dive into the real problems that keep founders up at night, from inventory disasters to supply chain nightmares, because surviving the chaos is what separates brands that fail from brands that scale. Charlotte, thanks for being here. You built Alice Mushrooms into a breakthrough wellness brand, functional mushroom chocolates that are making mushrooms mainstream, which I can't wait to learn more about.

0:39Charlotte Cruze:If my notes are right, you've got three SKUs. You've got major, really cool investors, Al Catterton, celebrity backers like Zac Efron, which is, of course, near and dear to my heart. And like a thousand retail locations you've scaled to so far, eight figure revenue projections, all of the things that are sort of like the dream checklist for when I'm in year, you know, three of my startup, like where do I want to be? The first thing I want to chat with you about is category creation because you're sort of like creating this category where functional meets indulgent. And with that comes consumer education, which is always like a challenge, but an opportunity to own a category in its entirety.

1:25Charlotte Cruze:So why did you decide to do that? And what is the hardest part about developing and educating a category for consumers? And then how are you approaching that? What's your SOP for category creation? Yeah. I mean, I think honestly, like if you want to create a category, like no one goes in to creating a category without a little bit of selfishness involved in it. Right. It's like, I think more so than any other kind of business you start, you really have to love something and be selfish about it to create a category because it's easy to see like a white space in a category and kind of just have a business hat on and be like, OK, I can fill that.

2:06But to create a category, I think it has to be something that you personally want and thought of as something you buy. So that's really kind of where it all started is like my business partner, Lindsay, her background's in pharmaceuticals. Mine is in food. We're both kind of picky. And everything in the functional mushroom phase just wasn't something we would want to consume. And we really wanted something that tasted good and there was nothing like that. And so it was just one of those things like, how do we find a functional mushroom product that we want. And that's kind of where the category came from.

2:39Like it wasn't going to be a coffee. It wasn't going to be a tincture. It wasn't going to be a pill. Okay. So what is it? And chocolate was kind of that answer. And the way that we married our like food and pharma backgrounds together. But I think it's like, yeah, it's almost like you don't choose it. It chooses you, right? Like it's the product and we chased the product. And when we found the product that we knew was right, that's when we were like, okay, I guess we have to create this category. Um, and it's a little daunting, but it's fun. And when you get to be kind of the leaders and creating a new category, you get to shape it.

3:14So there's a lot that, you know, you can put your fingerprint on, um, and play around with. And I think like, it's not for the faint of heart, that's for sure. Um, and it requires a lot of patience. Um, and I think that goes with, you know, acquiring customers, you need to be patient because you need to teach them a lot. Like education, like you said, getting investors, you need to be patient because a lot of people won't have your vision or share, you know, the feeling behind, okay, this category will exist and this is the brand that will do it. Right. And then retailers, like when you're creating a category, they don't know where to put you.

3:53Right. And so you really have to be strong in your conviction, but also be willing to be flexible, right? And kind of move around to get where you need to go.

4:05Charlotte Cruze:Wow. I love so much of how you framed this. Starting with, because it's a loaded word, you have to be a little selfish. Like you have to have an opinion that you insist on sharing. And so often, you know, we're told that, mostly rightly, that being selfish is like a trait that we shouldn't indulge. But if you are trying to do something that's never been done before, and prove it to the world than keying into that and maybe even just labeling it and recognizing it. You're like, you know what? I am. I'm a little selfish about this. Like, I am going to insist on doing it. There's nicer words, you know, being opinionated, having conviction and so on and so forth.

4:46Charlotte Cruze:But I really love that you labeled it that way because, and I identify with that. Like, there is an element to it where it's like, well, I want to do this sort of selfless thing, which to share something with the world. But I kind of got to be a little selfish to get there because it's going to take a piece out of you to do it, you know? And I think like you have to know like I want this product so badly so I know that it should exist and trust that like your wants because you want something probably someone else wants it. Yeah. Let's talk about your R &D setup. So Alice started in Lindsay's kitchen.

5:23Charlotte Cruze:You've got homeopathic doctors and biochemists at the table, which is fairly unique. How did you guys go about thinking about product formulation, dealing with both functional ingredients and then all of the regulatory considerations, which I'm assuming, talk us through them, but I'm assuming that's not a short list of things. And then also having it taste good. Yeah. I mean, the taste is definitely the hardest. It really all started in Lindsay's kitchen. And like she was, I mean, the thing, I'll start with giving you a little bit of background on functional mushrooms because that really is the core of why we formulate the way that we do.

6:01um we functional mushrooms they don't work right away you have to take a medicinal dose daily for about three weeks to allow the nutrients time to compound and start making changes um and like that's great but for people who love instant gratification which is like pretty much everyone at this point that is not going to cut it like we're people don't stick around with um habits for three to four weeks if they don't feel anything right away and then if that habit It also doesn't taste good and isn't convenient. It's like, okay. Like Lindsay's background in pharmaceuticals was very much, she understood how delivery vehicle and delivery method affected patient compliance.

6:41And like she saw it over and over again, that people would just quit taking pills, even that their doctor prescribed for an ailment, but because it didn't work right away or they didn't like the pill size or the, you gave them a weird aftertaste, whatever it is. So really it's like, okay, how do we make getting functional mushrooms enjoyable and something I want to come back and do every day and also give me a little instant gratification? So from the start, it was always let's pair functional mushrooms with fast-acting ingredients. So our first two formulations, we had nightcap for sleep and brainstorm for focus and energy.

7:17the sleep chocolate that has reishi mushroom, which is amazing for improving sleep cycles over time, but then also magnesium, chamomile, L-theanine, zinc, right? That puts you to sleep night one and our energy chocolate. It's kind of the same vibe. There's lines made in cordyceps mushrooms, but then also some natural caffeine and some fatty acids that get to, um, like going right away. Um, so the, that was really like what informed the formulation from the beginning is like it has to work quickly. And so it was really like Lindsay with this homeopathic doctor in her kitchen, buying capsules from the store and powders online and like dumping them out, tasting them, seeing how they work, mixing them with like chocolate she'd bought at Trader Joe's and melted down over her stove and like literally just mad science kind of vibes.

8:08And once they kind of got some formulations that they were like, okay, this feels like it works and it tastes okay. Then, you know, we took it to these bio, this team of biochemists and professional formulators who kind of put these dossiers together for us that were like, OK, here's all of these ingredients and here's what's good about them and here's what goes with what. And then we kept refining from there. And then it was just sampling and sampling over and over. And then finally, we found our chocolatiers where we manufacture their fifth generation chocolatiers. And we were like, OK, these taste like passable, make them taste amazing.

8:44Right. Yeah.

8:47Charlotte Cruze:That's awesome. I have more questions about this, but I'm getting a little bit of buzzy feedback from maybe like a phone or something. I don't think it's on my, do you want to just pause for a second and mute it? Yes. Only because you're delivering such gold. Yes. Do not disturb is on. Sorry. I forget. Okay, right. No, it's all good. It's somehow, half the time it doesn't pick it up. It somehow was. So, okay. So, so you're developing these formulas and I have a specific question for you about the efficacy of it, which is on day, on day one, you, right. You've formulated so that you can deliver something that makes someone feel something in addition to tasting great.

9:27Charlotte Cruze:But then the mushrooms themselves are compounding in effect over time. So for like your standard customer, how does the day one or day two experience of, of this product differ from like I'm a month in and I've done it right. Day one or day two, and I mean, this will go on in perpetuity because of the fast acting ingredients, you'll feel something within 30 minutes to an hour of taking the chocolate. And whether that's our energy chocolate where you're just locked in, you feel more focused, you feel more energized, you've got a little bit more pep in your step. Same with our sleep chocolate, like 45 minutes, you're tired, you're going to want to get into bed.

10:11But after about a month, it's kind of just steady state like, oh, my energy levels are already here. And so this product is going to bring it up, right? Whereas before I might have started with my baseline energy and focus levels lower. So it's like this entire just like lifting to where your baseline is in a much better place. And that's through these ingredients that just work over the long term to bring your system kind of to where it should be functioning at a healthy baseline.

10:40Charlotte Cruze:Got it. And, you know, there's so much curiosity around mushrooms and also a stigma that comes with the category. How have you helped distinguish your version of functional mushrooms with the part that maybe scares people or that feels like, you know, a little bit more dangerous, say? Totally. That's been such a challenge. And I think when we first launched, that was kind of at a core of what we were trying to do was make that really important delineation between psychedelic mushrooms and what we're selling. I think we came out of the gate really being so intentional about the brand and how it showed up.

11:21I think like if you look at our packaging, it doesn't look trippy. It doesn't look psychedelic. Right. It has a very refined, minimalist, like kind of chic branding. and our website is very considered. I think everywhere you look at the brand, at least I hope you see an element of thoughtfulness and consideration that I think we wanted to have from the get-go because that instills consumer trust. And so I think if the more you share and the more considered your brand looks, the less people are like, is there something else going on here, right? But always trying to be super forward about that and telling people off the bat, like no this is not going to make you trip yes this is really good for you and here's why um when we launched we had actually had a section on our website that was like the glossary and we designed it to look kind of like a digital library where we defined all of these kind of mushroom terms that i think people hear and get thrown around all the time but don't actually understand um and just like getting super into it with your faqs and how you're positioning yourself online And I think just like the more we've grown, honestly, it's like people don't assume when they see us on shelf at Sprouts that it's illegal, right?

12:35They're like, okay, national retailers are selling it at this point. There's a little bit more trust there. So I think as you grow, you kind of start to earn that trust more.

12:50Charlotte Cruze:There are 400 stores, over 400 stores, including Irwan and Pop-Up Grocer. Am I right about that? We're actually in like 1 ,200 stores now. Yeah. Okay. My notes are old. That's amazing because what I had was plans for 1 ,000 by year end. So you're growing really, really fast, which is good. And you heard it here first. We'll actually be over 2 ,000 by year end, which is exciting. Holy smokes. That's incredible. Congrats. Wow. Thank you. So it's clear that maybe like you've found a way to overcome the challenges of having retail conversations with buyers that don't already have like shelf space clear for the category.

13:32Charlotte Cruze:How did you unlock that? How did you position functional mushroom chocolates? What was really hard at the beginning? And what did you do to solve that so that now you're growing at a pace that's like literally twice as fast as what I thought it was? Yeah. I mean, I think the category, there's just been a lot of tailwinds behind it. And we're lucky that we've had some some folks come in before us with these really large, you know, mushroom coffee and mushroom supplement businesses that have like honestly done a lot of the heavy lifting on education and category creation, at least just from like functional mushroom supplements as an idea.

14:08So I would say like it's it's been great timing. Like the last couple of years, I think retailers are starting to get hip and more and more mass retailers are like, OK, I have a functional mushroom set now. And so anywhere there's a functional mushroom set, like Alice should be there. And we have just built so much traction kind of on our D2C business and just marketing wise and brand recognition that it's become kind of an easy, not easy, but like a more straightforward sell to have Alice come in if you have X, Y, and Z other brands. So it's really a rising tide lifts all shifts with everyone in the category, which is great.

14:49Um, and we, you know, we just look really different from everyone else in the category. So we definitely stand out. Um, and I think that's been a huge advantage to us as kind of like this brand that maybe you're, it's your first time trying functional mushrooms and you don't want to, you know, completely change your routine or you're a little bit intimidated. Like we're a really easy entry point. Yeah.

15:12Charlotte Cruze:And I think you've differentiated with the chocolate, you've differentiated from powders and gummies and into something that, you know, people are sort of buying in a different and maybe more impulsive way, which is such a great combination of that impulse buy, but plus something that's a little bit like more forward looking and like long-term for health benefits. So I think you've sort of like unlocked a really killer combo there. thank you so when you are set in the store where are they putting you now is it with chocolates is it with functional mushrooms is there a place for all the functional yeah I mean that it's the age-old question right um at Sprouts we're in their supplements aisle um and they do a lot of functional mushrooms so we're kind of around a lot of the functional mushrooms within the supplements aisle.

16:03You know, we're in a lot of like specialty, like Air One, they have a functional mushroom set. So we're there, but they also secondary placed us in their sleep aisle and in their focus and energy supplements and their sexual wellness supplement. So there's kind of a lot of different places we can sit. We also have single servings of our chocolate. So those are really fun because that price point makes a little bit more sense kind of in chocolate or at checkout as an impulse buy. You know, if our 10 most retailers sell it for like 30 bucks, right? Like you put that in the chocolate aisle, you know, people are going to laugh you out of the grocery store, right?

16:40Like next to a$5 bar of chocolate, they see your thing for 30 bucks. It's like, that doesn't make sense. But when we have our single serves in these smaller kind of trial sizes that go for like $2.50 or$3, that makes a lot more sense. So we do a lot of work around pack size to try and get us into multiple places in the store for discovery and for people to find us.

17:03Charlotte Cruze:And I think that that makes such an important point, which is that customer discovery for something like this demands skews of its own. Because something like that, spending that amount of money or even just running an experiment of that magnitude on your own body. Like, how am I going to react to this? Forcing someone to overcommit as they might for like an entire bottle of a supplement is really, really hard and it slows the adoption curve. But if you can format your product in a way that makes it easy for someone to try it once and see how they feel and then maybe like step, you know, two or three times into the bulkier purchases than especially for something where it is slightly more expensive and it is going to have maybe a slightly unpredictable effect on your body.

17:53Charlotte Cruze:It's like, you know, give yourself some room for it. Right. And I think that's also where we stand out in functional mushrooms as well. It's like I said, like we do formulate for instant gratification. So we're kind of that only functional mushroom brand where a trial size actually can make sense because of the other ingredients in there. And people will try it once and be like, oh, okay. Whereas, you know, if I just were to take a serving of Lion's Man one time, I'd be like, I don't know. Yeah. That's a perfect segue to another question that was on my mind, which is just you've got like the most creative and rad marketing and partnerships.

18:30Charlotte Cruze:Vintage ice cream trucks, Coachella and Florida Mall lingerie. Who's driving those partnerships and what path has worked best for you for driving trial as well? Yeah. Honestly, all of our partnerships have come about pretty organically, which has been fun. You know, the ice cream truck, that was my business partner's like real kind of genius idea. She was like, always saw Alice with an ice cream truck. So we rented this 1969 Chevy, like, beater ice cream truck from this guy in Long Beach and wrapped it and drove that around. And that was super fun because that was just a way to get the brand out into the wild, right?

19:10talk about that education. It's like we're an e-com brand without a storefront. Lindsay and I, I moved in with her in Venice for like five weeks and we drove that truck around and did like 30 activations. And a way to just like get out and meet people and be on the street and take this kind of logo or brand they've seen on Instagram and then bring it, bring it to you. And we're there and we're talking about it and you can try the product. Um, Florida mall came around really organically too. That one was so fun. We did a, um, right around when we launched our sex chocolate, We did a lingerie collaboration with them.

19:40We just wrapped a partnership with The Last of Us, the HBO show about Cordyceps mushrooms, where we did a custom illustration with the show's IP on our tin, which was really fun, of our brainstorm chocolate. We've done a bunch of really fun stuff like that. And honestly, for us, it's about, you know, kind of getting it to what we chatted about earlier is like that level of validation for this brand. I think the more customers see larger brands that they already know and trust putting their stamp of approval on Alice, it makes it a little bit less scary. Right. It's like, oh, well, like working with HBO, they must, you know, be trustworthy.

20:19They're working with Florida Mall. They're working with, you know, XYZ brand. And I think all of those things just help build brand awareness for us and build consumer trust. Yeah.

20:29Charlotte Cruze:Okay. So you actually just described like a really amazing go-to-market playbook. And I'm going to play it back for us. So format for trial. Make it easy for customers to try your product. Take advantage of rising tides. And that might mean the way that you're choosing a category or building a category. But that certainly has advantaged you guys. find great partnerships where in a rising tide like effect, somebody else's brand equity can help elevate yours and you as a startup can help to make them cool and stay current. That's what they're getting out of it too. And then, and this is my favorite, don't underestimate the ground game because you in that truck on the beach or anywhere else in LA, just meeting customers, telling your story, learning about your product from their feedback to you and getting the word out is like, it's so hard to overstate how valuable that is for a business.

21:31Charlotte Cruze:Totally. And I think like in your - That's Charlotte's go-to-market strategy. Yeah. And I think in your first couple of years, like the answer is yes, always, right? Like - Yeah. I don't do them as much anymore because I would perish. But like in our first couple of years, Lindsay and I were doing every trade show, every kind of sampling opportunity we got. And, you know, in our respective cities, we're pulling the tablecloths together and the tins and the product display sheets and going out there and just talking ourselves hoarse about the product. Because I think those, you know, you have three, if you go to a market, right, and you talk to 300 people and tell them about your product, they're going to go tell four people each.

22:11her, you know, and like that stuff, it's, it's time consuming, but in those early days, it really moves the needle. Yeah.

22:19Charlotte Cruze:Yeah. Incredible. I mean, like, and it's so interesting because, uh, people talk about virality as this sort of like mysterious, you know, like, how can we get there? And it's just like, you know what, just all you have to have is one person tell someone else about your thing at like a, anything more than one ratio and you're, and you're there and just keep, just keep repeating. And it doesn't have to be, it doesn't have to be expensive and it doesn't have to be mysterious. It's really just like, go talk to people. Right. And then ask them to talk to more. Yeah. What has been the hardest thing about building this business from scratch?

23:02Ooh. How long do you have? we got time um i think i mean there's there's a different answer for every hour of the day um i think you know lindsey and i are both first-time founders so it's what do we do right how like you you're making it up as you go and so i think um that is an exercise in self-trust and in trusting your gut um which are things that you know sometimes come easy and sometimes really don't. And so I think it's about trusting yourself, trusting your business partner. Like those are the things at the end of the day that are going to take you the farthest but are scary. And I think that's like pretty fundamental to it.

23:48And I think, gosh, outside of that, I mean, it's just like problem solving constantly. And I think you just have to be really down to be like, okay, someone just dropped a really big problem in my email. How am I going to figure it out? And like take a beat, take a breath and know you're going to figure it out. But there's a million different challenges, but they all kind of get distilled down into those two things.