From Garage Startup to Celebrity-Backed Brand ft. Jake Bullock

24:09So without that, so talk a little bit more about like the regulatory environment changing and if that kind of was the actual unlock that led to. Yeah, it's interesting. It's kind of like, it's kind of an amazing story from a startup standpoint of a pivot, right? We usually think about these pivots as a bunch of sort of intellectual property value that's created in service of one channel or market that then gets shifted to another, right? Or like launching like a whole new product or like changing the actual product itself. Yes, what is it that we can leverage that we've already built that has a new application in a different way, right?

24:43And I think it could be a product, it could be some sort of technology, whatever. For us, we kept the end product the same. Like that actually didn't change. Our flavors, the effect, the potency levels, everything stayed the same. If you're a consumer looking at canned lemon lavender that you bought in a dispensary in Avikini in Los Angeles, or the one we launched in Minnesota in liquor stores, it's the same. It tastes the same. The experience is the same. It looks the same, right? Now there's a couple of tiny differences, right? Hemp derived, we've added new compliance information, things like that.

25:13But to the consumer, the pivot, there was no pivot. What we pivoted was actually regulatory and compliance. We shifted regulatory structures. We said, well, if we extract the THC and CBD from hemp, Minnesota will let us sell in their liquor stores. Well, can we do that? Let's go figure out how to do that. So it became an operational exercise. Took us 60 days. We figured out we could extract the THC and CBD from hemp, infuse it in the products in Minnesota and sell them in liquor stores. And then it's like, okay, well, what other states have laws that are similar to Minnesota? Some already had them from CBD.

25:42They had existing laws on the books that regulated cannabinoids through CBD. Others passed laws in sort of the wake of Minnesota's exercise. And so we just started going state by state and seeing which ones had laws that we could comply with in this new regulatory regime. And that changed everything because, man, we could manufacture in one place and send all the products across the country. There's some slight modifications on that. There's a few markets where we have specific packaging, but for the most part, we can do that. That means we're buying in bulk. That means we're getting scale economics with the manufacturer.

26:11It means we're working with freight companies that are moving the biggest alcohol brands. We're signing DSD relationships with the biggest alcohol distributors, a beer network like Molson Coors and ABI and Spirits, like Breakthrough Beverage Affiliates. It's pretty amazing. It looks like we're now building an alcohol company. We're in 30 states. We're in liquor stores, predominantly independent liquor stores. Our biggest customer today is Total Wine. But we're in 20 states with them in over 100 locations, and they sell amazingly well in those stores. So it's kind of an amazing example of how you can pivot without actually changing the product.

26:47Yeah, that's wild. Pivoting instead of the product, you're actually pivoting your distribution channel because new distribution channels have actually opened up and you actually gives you a lot more opportunity to actually compete head to head against alcohol or rather provide an alternative to alcohol where the consumers are actually shopping or making their purchase decisions when it comes to actually purchasing alcohol, which is really cool. How is there, even in the early days, because it seemed like part of the thesis was, hey, hey, let's not, yes, obviously compete against the other canned THC products out there.

27:27But at the same time, because we're changing our dosage, we're making it a lot more accessible. It's really, it seemed like it was more so a TAM expansion or a market expansion that you're all going for instead of trying to take share away from maybe current players. In the early days, was there a particular metric that you were tracking or even just how are you thinking about making sure that or seeing, hey, actually, we're actually getting customers that normally that weren't actually in this category originally that have just expanded to this, we're actually are growing the market. Was there a way to either like track that or realize that you all were kind of doing something right in expanding the market versus taking share away from competitors?

28:14Yeah, it's a good question. And you're right that the focus was never really on share. I mean, we think about it a little bit now in the markets where our priority markets where we're focused, we think about relative market share. We do that math and pay attention to it. But it's not in the service of traditional beverage share. You think about these big beverage companies are so focused on share. That's largely because the TAM, that the distribution channels, the environment in which they can sell is pretty fixed. Like maybe you'll have a new liquor store open up in some market. But like for the most part, like alcohol is everywhere, right?

28:48That's not the case for what was happening in our category. The way we actually saw what you're describing that was working, we were winning share, was we were winning linear feet in the liquor store. So we started out and it was like, oh, you have a tiny little shelf. Okay. They boxed it off here. It's maybe like four feet and it's only half the shelf and they They have THC products and there's like some big signs warning the customers. These are THC products, right? Now we're talking about 24, you know, or more linear feet in the liquor store. And that was amazing to see because we knew it was working, right?

29:19Because these are highly managed from a sailing square footage standpoint. If we're winning share in the store, we're winning share of the overall sort of social beverage wallet. But then it was really interesting to see what are we taking share from? What's dropping off the shelf, right? And so there's a kind of a couple of interesting things that happen. One, our case is more valuable. So the pricing is higher on these products than your average craft beer or RTD, you know, kind of like cocktail product. And so that means that even at like ISO, like same velocities, you would prefer our products over similarly selling craft beer because we're going to be delivering more margin dollars because the case is more valuable.

29:58So then, but then you look at the velocities and you say, wait, we're also, our velocities are higher. Even like our worth performing SKUs are performing better than like the average craft beer. So then it's like all of a sudden we start chipping away at largely underperforming craft beer and underperforming RTD, right? The top RTDs are doing pretty well. Although we go toe to toe with, with, you know, the high noons and the long drinks and the cut waters of the world in terms of our best SKUs, whoop their best SKUs. So that's, that's like pretty good. Now, our big problem is we're available in, you know, 120 total wines and they're available in a hundred thousand, you know, places across the country.

30:30So we're still way smaller on an aggregate basis because we don't have as many retailers or on-premise or all those other things. But we're seeing, to your point, that change, that transformation. It's really becoming, we think, a new category. People talk about non-alc as a category. I think it will become a thing, but I think you will very quickly see these THC drinks eat non-alc. Just like we've seen, to some degree, RTD really eat at spirits, you're going to see THC really eat at non-alc because it's just a better version of that product, of what consumers are looking for when they grab non-alc.

31:02So I guess, I guess to dive a little bit deeper on that, um, and obviously you're not biased, but, um, in terms of, in terms of, uh, cannabis infused or THC, uh, beverage product, even just microdosing products, maybe in, in general that are beverage, do you think that who, if you put that maybe in one bucket over here and then the other bucket is maybe non-alc, um, um, non-alc, what do you think will be the alternative for, for consumers? What do you think will be like a larger market overall in the next like 10 years? Yeah. I mean, look, it's hard to predict these things. I will, I would tell you that my hypothesis is that THC will be bigger than non-alc.

31:41Now I could be wrong about that. Why would I be wrong? If there's some other compound, some other adaptogenic, some other, you know, nootropic that actually delivers a buzz that people feel. But there has to be, but, but I think to your point, there has to be a buzz in order for you, or there has to be something, there has to be that for you. I think so. I mean, look at it on the alcohol side of things, right? Like people buy alcohol, like a lot of alcohol. Everyone talks about, oh, you know, it's like the rates are down, young people are drinking less, you know, all these categories down, which is true, but it's on the margin.

32:11We're talking about like single digits percentage declines. You know, millions of people drink alcohol every day. It's crazy. So, you know, it's not down in that sense in terms of its control in the zeitgeist. And the reason is because of the buzz. What's actually happening here is you're finding alternatives that are emerging, like can like others, THC drinks, other, other mild intoxicants that are providing real alternatives and real alternatives means you actually feel something from them. It's probably good for me to have like, you know, a hundred milligrams of ashwagandha every day. Um, but one, actually, none of these products have a hundred milligrams because it tastes horrible.

32:43Uh, and two, uh, I don't really feel the effect of that. Like I'm not getting that immediate feedback. So it doesn't function socially the way I need it to. It doesn't function in that sort of altered state the way if I want to unwind, like it doesn't serve any of those goals. And so the best goal that I can see that these non-health products are doing today is, you know, you pay quite a bit for a little bit of sugar water and it keeps you from drinking alcohol. It's like a social thing. You're like, okay, well, I'll drink this instead. And that's good. That's like, don't get me wrong. If you're drinking a little bit less booze, it's probably going to be good for your health.

33:13But you're not getting that full experience, that like the highest experience of a social beverage requires buzz. yeah that's that's really interesting and i've been thinking about that as well in terms of the importance of buzz or or is the buzz important um uh period i mean thinking about and it's just myself like so i stopped i stopped drinking i stopped drinking around 2014 um just because honestly just really it just made me sick uh really bad hangovers it's not to say i haven't been I haven't been buzzed since I have or you know I have had drinks since I certainly have but in 2014 I remember like that that time like going to a bar and being like I just want water and I that's just kind of like what the norm kind of came for me and didn't really for me just uh I just I don't know I'm maybe I just had stomach issues every time I had I had alcohol but um Um, uh, but to me, when non-alc, um, when some of the more non-alc brands kind of came in, I would taste it.

34:17And, um, and again, this is someone that is not looking for, is not drinking or maybe looking for alternative to drink. To me, I, I didn't, I was just, I would just still have water, like sparkling water or something else. I wasn't really that attracted to a non-alc because I wasn't kind of searching for that flavor ever, um, again, but, um, but again, that's just my own. that doesn't mean anything actually that's just like my own kind of behavior um i do drink can i really do like it um um in terms of the in terms of the feeling but also but also the also the taste too um i really really enjoy the taste um and and i'm really excited because y 'all recently did is this recent that you or just like an older product the the powder that you all launched it's actually a liquid um yeah liquid oh i know it's very often confused for powder because it looks like it could be in a packet which is powder but it's actually liquid and it matters because we affectionately call them our roadies but you know in in stores they're liquid packets roadies that's right and they um what's amazing about it being a liquid is you you tear up in the corner you pour it in and it immediately dissolves like you don't you know with these powders you have to be like scraping at it with a spoon and trying to get it into the corners to like dissolve doesn't that doesn't really work the liquids are amazing i'll bring like a roadie into a concert you know You get like a big beer, like a tall boy beer, pour the roadie into the beer.

35:37And it's amazing for two hours. You don't have to go back to the line. You don't need another drink. You feel great the next day. So there's all sorts of fun applications for these people take them on planes. They take them on hikes. But what we just launched this summer is we launched our naked version, which is unflavored, unsweetened. So zero calories, zero sugar, zero homeovers. And that has gone nuts, people. I mean, it was four times what we were expecting the sales. It's already sold out. We're trying to get it back on the site. but and into retail as well, because it's just so popular.

36:03People want to add this stuff to drinks that they already are making. Maybe it's a non-alcoholic drink. Maybe it's an alcoholic drink. You know, people do that as well. But it enables them to kind of choose how they want to consume it. And then also, you know, doesn't add any sugar or if they're worried about added sugar or any calories, if they're worried about calories. Well, to that, how did you and Luke approach product innovation? I imagine the early days, it's also tough with SKUs because you actually have dozens of SKUs that you don't even want in that you have different packaging that you have to comply with different states.

36:38So you have different types of packaging for each state. But I guess, with that being said, how did you approach different flavor profiles and then as well as what actually makes sense to launch that's quite different in the naked high point? Yeah. I mean, look, in the beginning, we were always guided by this idea that we were creating something that was innovative in and of itself. So we were not going to go find a category that existed and try to make a version of that that's infused with THC and CV. That was not what we're going to do. And that was kind of exciting and freeing, right? Because it gave us the ability to say, well, what, like from first principles, what, design a drink, what do you want to drink, Jake?

37:14Like, let's have that conversation. And there were, you know, if you think maybe seven years ago, one of the things that we were astute observers of were these flavor trends. They would go in kind of cycles and so you know everyone wanted spirulina and their smoothie or whatever you know there was like these en vogue ingredients and so we were like okay how do we identify what is en vogue versus what is like uh going to become a new classic right the people like will actually drink and there were some we had some indications there was this there was this rosemary water that was on the market in the uk we were obsessed with we were like there's something so fun about drinking rosemary this is crazy we have to figure out how to incorporate this into our drinks and we did and was with grapefruit and it was inspired by cocktails that people make with grapefruit and rosemary.

37:54So we got a lot of inspiration from DIY cocktails and cocktail menus more broadly. But we had this theory that if people are trying to make this stuff at home, they must really want it. There's something there, right? They can't be wrong. If there's a hundred lavender lemonade recipes online, like there's something to lavender lemonade. Let's go figure out what that thing is. And you know, your initial reaction to that is like, well, wait, is it going to taste like soap? Like I don't really, I think of lavender as like something that's in the bathroom. And we played with it. And we found out actually, no, if you, if you were really careful and restrained in your use of a lavender extract, it could be really beautiful.

38:25And it would play with aromatics of lemon juice, particularly if that lemon juice came from Sicily, which is, you know, the greatest place in the world to get lemon juice because of the soil, the volcano Mount Etna has changed that soil and it allows it to be much more aromatic. It pulls back on, on the acidity. And so, um, you can really let that, that, that, those floral notes of the lemon shine and they play amazing with the lavender, throw an organic agave vector from Mexico from some sweetness that lifts the whole thing up. And all of a sudden you have this amazing drink. It's 35 calories.

38:53Uh, you know, it's a third of the lowest calorie alcoholic drink. It's light, refreshing, and gives you this, this, this really wonderful floaty buzz. Um, that was kind of how we approached it. And we, we stayed in the lab and we would work on flavors until we got them right in almost to like a comical degree. Like we would be like, well, wait, we added one lavender drop and it got better. But what if the right answer is actually half of a lavender drop? Let's try that. And so we'd run it all back and see if was it better or worse, better or worse, almost like an eye exam. And we've all these magical things happened with that approach.

39:24I think the reason that others haven't been able to replicate that, so many people go in to their formulation processes, designing for an equation. It's like, it's got to have this much calories. It's got to have this many nut carbs. And I need this for that. And, and, you know, I can't be above this level for cost. I mean, we, we tried working with formulators and they all like fired us because they were like you guys won't listen to us. They wanted us to use stevia and monk fruit and erythritol. And they wanted us to use with other natural flavors. Cause they're like, well, you can still put natural on the label.

39:51Like, and it's like, okay, but like, have you tried this lime with other natural flavor, like extract? It doesn't taste anything like lime. Like I can get something that tastes exactly like lime. It's called lime juice, not from concentrate, freshly squeezed, right? Like that's actually how we approached it. And so in some ways we benefited from not knowing anything, like a CVG vet would be like, you guys are not going to make it. You're not going to have gross margin. You're not going to be able to scale. Like we didn't know what we didn't know. Right. So we designed almost like commercially impossible products that we loved.

40:20But our view is like, if we're going to fail, let's fail with something that we love, that tastes amazing, that we want to drink every day. Let's not fail because we create an average product that hits all the cost metrics and hits all the, you know, net carb metrics. That doesn't make any sense. I think that philosophy really served us well. The original formulations that we launched with are still the formulations today. Grapefruit, rosemary, lemon, lavender, blood orange, cardamom. And then we have a rotating set of seasonals, which are amazing. You asked about Naked High Boy. Part of the reason we did an unflavored, unsweetened version in the roadie liquid packet is because we refuse to use stevia, monk fruit, erythritol, any of the fake sugars.

40:59We were not going to go down that road. And people actually, despite wanting no calories, they want sugar. Like they're, they don't, they don't want sugar free. They want the sweetness. Maybe they don't want added sugar. Maybe they don't want cane sugar or fructose corn syrup. Okay, great. But like they want sweetness. And so it's really hard to deliver somebody's sweetness at least from our perspective and not do it in a way that feels natural. And so we said, great, you can use a naked high boy. You can pour it in your diet Coke or your, you know, ice blue slushy. And we won't ask any questions.

41:28Yeah, no, that's, that's really interesting. And I also really appreciate the fact that you use sugar. I mean, personally, like Sevia, sometimes my stomach just doesn't feel so great after having products with Sevia in them. Again, that's just me. What was your - It's really awful. Yeah. Yeah. It's like, I'll try products and I really want to love the product. Like everything else by the taste is great. but then after a few minutes, I just don't really feel that well, um, afterwards. So, um, yeah, I think that there's kind of an interesting, uh, balance is kind of going on right now. Um, what, so gross margin, cause of course, beverage, as we kind of pointed out really tough category, you have to kind of get the scale in order for, to get, to get any type of EBITDA.

42:17What was your approach to growth, gross margin? How do it, how does it compare to alcohol and is THC the, like, is THC an expensive part of the actual product? Yeah. All good questions. It can be an expensive part of the actual product, the THC, but we're microdosed. So if we're making 100 milligrams. 100, then it would be, but you're doing too. Exactly. So that helps us. It's also cheaper to make than beer, right? It requires no fermentation. This is like a batch mixing process. So this shouldn't sit in tanks. Honestly, you don't even really need tanks. You can do this all in line. So that helps as well on the manufacturing front.

42:52To your original question, we sort of ignored gross margin for the first three years. For better, for worse, right? The company needed to raise a lot of money to fund its growth because we weren't we weren't driving real meaningful gross margin. I mean, pretty low percentage gross margin for the first three years, if any. But we were trying to make it a thing. Right. We're building a brand. We were we were getting distribution. We're doing all these other things. And so at some point it became clear that we needed to focus there. And once we started focusing there, we saw real gains. I mean, gains from the scale, obviously, that came from the expanding distribution channels and new markets and liquor stores in a number of states.

43:25but also just from smarter process improvements, right? Being able to manufacture with a little bit more notice is helpful. It's helpful with our partners. We can get orders, we can get them pre-sold, and then we can go build a real forecast, then we can produce that forecast, something that looks more or less like a quarterly. We're still pushing to get to that schedule. We'll have months here and there where we need to have additional production as we grow. But those things really help because it allows you to align your purchasing. You can do it at scale. you know all those all those things that really get to get exciting with beverage don't really kick in at least they didn't for us until your past kind of like a 40 million run rate and so you know it's starting to get fun we're seeing that fixed cost leverage we're seeing that scale getting gross margins up to 50 was a big win for the business and like I said it should be it should be cheaper to make this stuff than beer so you would expect us to have better gross margins than beer probably more akin to rtd cocktails well do you do you tend to price um to beer meaning meaning in terms of how you think about pricing do you think of it uh because of course you are in the in liquor stores or where where people want to purchase um a beer and and wine and alcohol is that is that kind of how you think about uh pricing it's probably how we will have to at some point, but fortunately today, uh, consumers are willing to pay off for these drinks.

44:48Um, and I think it's part of it as novelty, right? They're new, uh, they're interesting, but also people are kind of like, wait, I can buy THC in my liquor store. Like this feels like I shouldn't be able to do this. So like, I'm actually not gonna ask any questions about the price. I think some of that's happening too. Right. Um, uh, and look at the end of the day, this should probably look a lot like our TV, I think in terms of where pricing nets out in like a more steady state environment. But again, it's beverage, right? So the reason we can't have lower prices today is more to do with scale economics.

45:18We're still on that like bottom rung of the alcohol map, right? We're on the top rung maybe of the cannabis drink map, but we're at the bottom rung of alcohol. So there's still a lot of efficiency and savings to come from dramatically increasing our scale and pricing, I think we'll move along with that. Like, you know, it would be our goal to want to invest in price over time where it makes sense, right? To be competitive with the alcohol products that we know our consumers are thinking about, right? Right now, you know, the way you think about it is more just let's look at the category shelf and say, okay, this is a premium product.

45:48So we're going to be priced a little bit higher than the average. We've got Sicilian blood orange juice, Sicilian lemon juice, organic agave nectar, right? Like we're the quality of the product commands a slight premium, but we don't want to be left in the dust either, right? So it's a balance. Got it. Got it. So you can actually sell right now premium to - We do. Yeah. Yeah, there's a premium there. That's also what makes the case more valuable, right? So when you look at velocity numbers in this category compared to alcohol, and you have to look at a store by store number, right? Because I'm an aggregate.

46:19It all gets washed out by the fact we're in such few locations relative to alcohol. But when you look at it on the store level, it's actually pretty remarkable what we're seeing from a dollar velocity standpoint, because that case is more expensive. I know you raised a lot of money throughout the course of can. And I'd imagine in some ways you have to because you probably don't have too much access to debt markets considering the category as well from the inventory financing side or anything. So you kind of had to raise your equity. But talk a little bit about your fundraising process. Obviously, you have a number of celebrities kind of involved in the cap table and also funds as well.

46:59What was your approach to fundraising? How did you think about value add from either a fund or any person that was interested in being involved? Yeah, all good questions. We have had to raise a lot of money. It's a combination of being startup beverage, layer on top of that natural beverage, layer on top of that highly regulated active ingredient. Your point about debt is exactly right. There is not like a well-functioning sort of working capital. We have some, but it's a solution. Yeah, exactly. Not like if we were a software company, right? It would be a totally different conversation. So those have all created really challenging dynamics.

47:36And I would add a final one, which is traditional venture is hesitant to step into this category, right? If you think about it, if you're like a big growth fund that would be looking at a beverage of our size and scale, you're kind of saying, well, we don't have to invest in companies that might be banned. You know, like there are enough companies out there to invest in that don't have a threat of banning, even if that is really, really small, right? Less than 1 % of a chance. And we actually think, you know, the writing's on the wall and it's all headed in this direction. And there's so many positive signals.

48:02Like, it's still like, I think, constitutionally really hard for these sophisticated growth investors to get comfortable until they see, you know, a lot of evidence that nothing's going to change. And so you don't even have that as an option, which should be the right kind of like health. It's like a healthy functioning venture market should work. Now, at the early stage, I think there is a lot of opportunity and there's capital being deployed. It's largely because there's a lot of capital there to be deployed. And so, you know, we were, I think, lucky in some ways because we started in sort of zero interest rate environment and were able to manage and run the business for a few years in that environment.

48:36So raising capital at the time seemed really hard, but looking back now, it was way easier than we realized. And we were able to raise money from investment funds that had mandates around cannabis or infused beverages or social beverages, things like that. we were able to raise money from big consumer funds that were willing to take the risk and get into the space. Also high net worth individuals and celebrities, like you mentioned. Celebrities really found us in Los Angeles and they fell in love with the product. They wanted to be part of the journey. So we were really open to bringing those folks on and have been amazing investors into the business.

49:10We treat them like investors and they are. They sent us checks to participate and be equity holders in the business. So that's kind of cool. To your question about what do you look for in the value add side of things. I think there's a couple of answers here, right? Like there's like the cynical answer, which is like, venture investors don't really provide that much value. You know, they'll try to sell you on it. And a lot of what they try to sell you on is their network. Oh, we'll get it. You know, it's like, okay, that's fine. But has that been true for you all? Has that been true for you all with your cap table?

49:42You know, I would say we've been really lucky to find good partners that have, you know, tried to help the business in the ways that they can, but it's more a point to founders that like, don't have high expectations of, of your investing, right? Like it's the, the goal here is not that you take their money and they also run your business or transform your, right? Like you're mostly taking their money. Um, and, and you want them to be supportive and helpful and understand the strategy. And like all of those, those check boxes as you're, as you're dating a potential partner are important, but I think there's so much pressure put on these venture investors to be like wildly helpful.

50:15It's like, I don't actually need you to be that helpful. Like, you know, I can probably get interest to most people. Most people can these days, right? With technology and LinkedIn and things, it's not that hard to find people. And, you know, what you can really do to help me is a set of specific things, right? Maybe there are certain relationships that you can manage because you manage them better, right? When I talk to growth investors today, I'm very interested in how you manage Kroger, Albertsons, Costco, Walmart, Target, Whole Foods, right? Like that, like, Like how many brands have you gotten in there?

50:46Who do you know there? How do you manage the sets? Like what are the processes there? Like that's going to be really valuable for my business in the next two years, right? So, you know, more tactical things like that, I think you can use as selection criteria. But, you know, I think a lot of times folks come in and say, oh, well, I know this person. I know that person. I know this person. Like I'll intro you to them all. Like that's not really value add, you know? Maybe it speeds you up a little bit, but it's not a ton. So I'm not entirely sure if that's true of everybody. I bet there's some great folks out there that are really value-add.

51:19But I would say that be really focused on your strategy and what you want to do with it and find the partners that believe in you and support that strategy. And that's all you really need. Take their money and then go execute. No, totally. Totally. And I, well, I'd imagine too, on the, on the value add side that, um, what else that could be valuable on the money side is, Hey, when we're raising the next round, if you can also maybe exercise your, your pro rata option. So it doesn't actually look like, you know, you actually don't believe in our business. That would also be on the, on the money.

51:51Downstream access to capital is the single most helpful thing an investor can provide. I completely. What does success look like for you in relation to canned being acquired by a big alcohol company going public or remaining independent? I get asked this question a lot. And I always struggle with the answer because they feel to me like, regardless of any of those outcomes, selling the business to a big strategic, taking it public, continuing to operate it. It doesn't actually change to a large degree what we're doing every day. There's some slight modifications, right? If we're keeping this thing independent or running it as a public company, you may make some slightly different bets in terms of like, you know, down the roadmap from a product standpoint or a growth standpoint, you might choose slightly different partners if you knew who your potential acquirer was going to be.

52:39But we're not, you know, one of the benefits of this business today is there are a lot of potential acquirers, right? You could tell yourself a story about beer, you could tell yourself a story about spirits, you could tell yourself a story about big multi-state cannabis operators, tobacco operators, energy, non-alc, right? Companies that have gotten pretty big. There's all sorts of potential acquires. So in some ways we're sort of burdened and also freed by that, right? So there's not a ton of strategic decisions that you would make other than build a great business. Like what does it actually take to build a great business?

53:12If you build a great business, then someone's gonna wanna buy it. There's gonna be pressure to take it public, I imagine, finance it that way or continue to run it independently. And like we've been talking a little bit about, beverage gets really fun when you get big. Like the hard part is the beginning. Yes, yes. And so, you know, I don't want, I want to stick around for the fun part. No, it makes, I guess also, you know, I guess to maybe piggyback on what you said, success, what it looks like is whatever's kind of in some ways best for can and actually keeping can, you know, running. Is that being a big, is that being acquired?

53:47Is that going in public? Is that remaining independent? What success is is actually what's actually maybe best for the business or what you think is best for the business. Not to say a big company might then shut down CAN or something, but what you think in the moment is actually the best decision for CAN moving forward. Yeah, I think that's right. If CAN fulfills its mission, how will American drinking culture look different in 10 years? It's a great question. When we launched CAN, we had this idea. We talk a lot about, you know, what is our mission? What are we really trying to accomplish here?

54:21And we kept coming back to this concept of, well, we're really changing the way people socialize. Like, that's the big idea is like there has been a monoculture for 100 years, how we socialize. And it's one way and it looks the same and it's behaved the same largely for those 100 years. And what we're trying to do is we're trying to, in sort of a subversive way, blast that monoculture to bits and, and, and products like ours and really only products like ours, I think can do that right in providing people, uh, alternatives. And then the future state we want is not one where alcohol goes away, right?

54:57We would often talk about there being beer, wine, and can at every social occasion. And that really stemmed from this idea that, you know, 30 years ago, you pick up some beer, you pick up some wine, you have a party, right? You know, maybe the guys drink the beer more and the gals drink the wine more that maybe that changed a bit. All that shifting, right? We saw this with, with hard seltzers. It was, you know, pretty broadly applicable across, you know, sort of gender and age range. It was kind of amazing. People like these things. And then RTD cocktails came in and they're like a better version of hard seltzer.

55:24And so then it's like, wait, now people are all grabbing high noons and actually you don't even need beer and wine. You can just bring high noons and it's a party. And so like, what does a party actually consist in? And, and, and I think what we want that to, that component of that to be is can, right? Now you have to pick up this product because you've got your friend that doesn't drink or, you know, they're sober for this month or, you know, it's, it's a sober October. Okay, great. Who am I picking this up for? Right. And maybe everyone's doing it. Maybe some people are, but it's, it's now to constitute a social event.

55:51You actually need this option, uh, this, this alternative to alcohol to really make it a party. And that's, that's our vision. I think we will get there faster than 10 years. Um, so maybe I should be more greedy. Maybe in 10 years, you know, this will be a category that's, that's akin to the size of RTD. I think it's possible. Got it. Yeah. That's, that's, that's great really really excited for um for the next few years look like um we're gonna do a lightning round if that's right i'm gonna ask you a short question and then and then we're gonna do short responses um and then we'll conclude is that all right sounds great cool what is what's the most underrated skill and by the way i mean if it's also longer that doesn't necessarily have to be short but what's the most underrated skill or habit that helps you succeed but gets rarely talked about?

56:36Ooh, humor. Humor. Love that. What's the biggest misconception about cannabis beverages in one sentence? Ooh, I think it's that they taste like the way cannabis smoke smells. They don't. Many of them can taste amazing. That's great. That's great. Is there any one celebrity investor story that you can share that shocked you? My favorite one is going into the Goop offices in Santa Monica. We started the company in Venice Beach, meeting Gwyneth Paltrow and some folks from her team and pitching her on the business. I mean, it was amazing. It's a beautiful office. It's this major media CPG empire that she's created.

57:19And you're like in this meeting. And she's also this crazily famous Academy Award winning actress. It's sort of like, all these things are happening at once. It's like, this my real life? And we somehow convinced her to invest. I think it was an amazing, beautiful mind math that she has on evaluating products. And I think it was our liquid packets of roadies that really got her. She's like, I can see myself pouring these in a cup of tea before bed and drinking them. And it's like, great. Okay. Come on board with us. This is going to be amazing. That's awesome. Love that. Love that. What's over the course of Cannes, what's the biggest thing you've changed your mind about?

57:58It's hard because there's so many things that we've changed. I would say recently one of the biggest this year was we launched a 10 milligram. I mean, we were the brand that went to two, right? We cut it and divided by 50. We weren't going to be in the high dose. And we believe 10 is pretty high, right? But there was such a clamoring from consumers. And we got to the point where I was sitting there thinking, well, it doesn't seem fair that people that want to drink 10 milligrams of THC should have to have bad tasting versions of those products. Like we can make them a great one and maybe we should, because the thing is they wanted our flavors.

58:29They wanted it to be canned. They wanted the canned blood orange cardamom in a 10. And we're like, oh, it's a different brand. It doesn't make sense. Marketing 101 is telling you this doesn't work. But we ultimately changed our minds on it and said, look, consumers want this. They're the early adopters. We kind of ignore the early adopters to some degree as a business because they're the highest potency, kind of like, you know, higher tolerance folks. And we said, great, let's make them the higher boys. We did. And they love them. What's the craziest mistake you made while scaling CAN that taught you the most?

58:59Oh, God. We made a bunch of mistakes. At one point, we tried to spin off our marketing team and make a joint venture with a video production firm in Hollywood. And it was going to be this great engine of brand growth. And it made sense. I promise you, at one point, it made sense, but it did not work for all sorts of reasons. And so that was probably the most obvious mistake. We had to unwind it. And thankfully, we were able to unwind it. And it allowed us to focus, I think, on what we were really good at and what the business needed. But that was kind of a fun triple backflip that we did not land.

59:36Wow. What's one mindset shift that completely changed the way you operate? One of my favorite ones is I came from sort of a culture in all my prior jobs. I was an investment making analyst, management consultant, a private equity investor. That was a very sort of interrogative culture, right? Like you're coming with information. Somebody's trying to get that information out of you. And you're almost like in conflict as you sort of debate or go back and forth on this information. And I think what I've realized in operating a business like HAN is so much of what I do every day is actually about trying to learn.

1:00:12I'm more of like a scout. There's a great book called The Scout Mindset that goes into this, where it's like, how do you learn about the situation, the dynamics, what's going on, asking questions in the right way to get that information. If you come in really with like an intense interrogation style, folks tend to like clam up and they, as a result, are less likely to actually give you the situation, the information, the dynamics that we need to make a really good decision as a team. So I would say that that's a big shift thinking about it. It's not my job to pull information out of people as much as it is to create the circumstances that they feel comfortable to offer that information.

1:00:44That's really helpful. Looking back, what's one thing you wish you knew before starting? Oh, my God. if honestly so many things like beverage economics um uh yeah it's it's it's kind of crazy like there's so many things that we didn't know that we know we probably wouldn't have even started this company or we would have done it differently right we would have like started a supplements brand and then we would have like built it to 80 gross margin and like you know 10 million online and then we would use that cash to launch the beverage like there's a lot of better ways to build a beverage brand than just make an amazing product that's expensive and no gross margin and then just force it onto the world with like zero interest rate venture dollars.

1:01:23But it worked to some degree. And so, you know, I'm glad we are where we are, but we probably would have never done it if we knew some of those, the answers to some of those questions. Do you think you could have started Can't Today considering the current environment? We probably could have started something similar to it. I think we would have made a set of products that were as good from a flavor experience standpoint. I don't think we would have the brand. I think there's something magical and valuable in what buying can says about you. And it only comes from the history. It only comes from the music video that we did three summers ago as a pride campaign starring all these drag queens.

1:02:03Or the holiday video that Kate Hudson and Baron Davis did for us a few years ago. The product collaboration we did with Tovlo, the music artist that was Peach Pashamate and featured all these amazing video clips of her and her butt, which she wanted. And then we like were kicked out of dispensaries in San Jose because they said that it was like too salacious. Like those things like those things all add up to a sort of a zeitgeist, like body of movement around this brand that maybe someone that just discovers us this week will never know. But the people that were our very first customers, our most loyal customers that have been doing that like frontline word of mouth marketing for us.

1:02:41That's what got them so excited and engaged around the business. And that just takes time. It takes showing up. It takes being in communities and markets and working with your partners face-to-face, which is really hard to do on an accelerated basis. And if we started today, we'd be starting over fresh on that front. Yeah, that's totally fair. Totally fair. Finally, what's one book that's inspired you personally and one book that's inspired you professionally? Oh, wow. Great question. My favorite professional book is this book by Don Keogh. it's called, I think, the 10 commandments of business failure.

1:03:18It's quick read, you can do it on like a short flight. But I met with him, he was at the time, the chairman of the board of directors of Allot & Company when I started my first job out of college and was just blown away by his knowledge and experience and many of it in beverage, actually Coca-Cola and some others. And it's a fantastic business book and really reminds you like of how, how there are very many ways you can fail. And that's actually quite easy. And it's how you learn from those things and prevent those mistakes going forward that really builds you as a business leader. So I love that one.

1:03:56It's one that I go back to and remind myself of quite a bit. And then, I don't know, there's so many great books that have affected me personally. One of my favorites is The Sun Also Rises. I think there's like an amazing, not to be like in crazy tripe about all this, but I do think that there is like a, there's something about that time and place in the world and how people were behaving and what it really meant to be social and the way that they communicated with each other. I laugh a little bit because so much of it, there's alcohol is such a feature in that world. And so I sometimes like to wonder like what it would have been like had you had products like canned, you know, at the turn of the century, after the First World War.

1:04:41It's kind of like a fun thought experiment. I really, thank you so much for these. I think we've had a couple of folks mention the 10 commandments of business failure. I don't think we've had anyone mention Center Rises. So very original. And that's amazing. Jake, thank you so much for your time. It's been so much fun. I've enjoyed it. Thanks, Mike. Thank you. And there you have it. It was so much fun having Jake on the show. Jake, thanks for coming on. Thanks for tuning in. check out the newsletter at theconsumervc.com. And thank you to Glimpse, our episode sponsor.