Creating Categories: Cold Brew's $0 to Premium

0:00Cumulus Coffee Company is all about bringing premium cold coffee, cold brew, nitro cold brew, anywhere where you desire great quality cold coffee, Cumulus is there. How were you able to know you weren't pursuing perfectionism and that you were already set to go to market? Well, we were pursuing perfection. I think it's really important that if we want to gain your habits, we need to earn it. And there is so much history and there is so much heritage in coffee that if we're not really amazing, we don't deserve to be part of your daily routine. What would be one piece of advice that you would give entrepreneurs for trying to create entirely new product categories?

0:44Keep your ear to the ground and really talk to your customer. Get to know your users, especially early on. Pick up the phone, talk to them, meet them, have conversations with them. make it personal.

1:03Hey everybody, thank you for listening. Today I'm speaking with Mesh Gelman, founder and CEO at the Cumulus Coffee Company, a company that is reinventing how you enjoy your favorite coffee ritual through a blend of art, science, and as their LinkedIn page puts it, a little bit of magic. So how are you doing, Mesh? It's a pleasure to have you here. Hey Andres, thank you. Thanks so much for having me. I'm excited to chat. Yes, for sure. No, when we were looking into what the Cumulus Coffee Company does, we were very interested and it stood out the fact that the Cumulus Coffee Company is a company that is going for the cold brew coffee, right?

1:41If you could give us a little bit more context about what the Cumulus Coffee Company is, I'm sure the listeners are going to love it. Cumulus Coffee Company is all about bringing premium cold coffee, cold brew, nitro cold brew, or anything, anytime you have coffee that's over ice or what people love, bringing that to consumers, people in their homes, in areas outside of the home, like offices and gyms and hotels, anywhere where you desire great quality cold coffee, Cumulus is there. Okay, so interesting. And what was that moment that you had when starting the Cumulus Coffee Company that you consider like the aha moment?

2:26When did you know that nitro, cold brew, and just cold brew in general at home was actually possible? So I think to answer that question, let's set a little context about what's happening in the world of cold and coffee and what went off for me and us here at Cumulus. So maybe just to get a little bit of background, prior to Cumulus, I had worked at Starbucks for a bunch of years. So when I was at Starbucks, when I joined the company, 35 % of all the beverages being consumed were over ice. 65 were hot by the time i left starbucks 75 of the beverages being consumed were over ice and only 25 were hot so look at that shift in six years it went from like that to that like just like that and one of those trigger moments was in 2014 when the company launched and introduced cold brew at scale and the deliciousness of cold brew and why it's so amazing and why people love it because it's smooth and it's soft and it's gentle it's very different than hot just really took off and exploded and then when they introduced nitro cold brew even more it makes it like sweet and creamy and more love for the product and when you stop and think about that the process and we could get into it later of making cold is so complicated it seems so easy because it's how cold coffee, right?

4:00But there was no premium delivery system of cold that existed. Anybody who makes cold coffee, like a company like Starbucks, does it manually. It's a very complex process. It takes expertise. It's not something for the faint of heart. And the world needed a great cold solution. So we stepped up. Okay. Wow. And when you were entering this new category of products, which are these cold brewers. How did you know what to do when I believe there wasn't a proper reference in the market for cold brewing, right? You guys are the first. We are the first. The reference, I think there is references in hot, but there isn't anything cold.

4:45When you think about, so I think the place to start is in a cafe. You walk into a coffee shop and you could literally have, it's Candyland, right? You can have whatever you want in, you know, lattes at this and that and espressos and pour overs and siphons and all these different ways of drinking coffee, a coffee shop over it. When you leave a coffee shop and you want to have a great coffee at home today, there's a lot of equipment out there that gives you the ability on your countertop to be able to have a great hot coffee experience. If you think about like a great brand like Nespresso and what they do with the capsule and the machinery, and you could go to the restaurant and they could deliver a great espresso because they have a piece of equipment.

5:34They don't need to have like a whole coffee shop experience. There are solutions out there for hot. But when you come to cold, what you can do and what you could create in a coffee shop to be able to replicate that at home. There is no system and there is nobody out there that's making a cold solution outside of a coffee shop. And that's what we came set out to do. Okay. Now, and like, I totally agree with what you're saying, because when I think of somebody making a cold brew at home, I just remember a person pouring a bunch of ice in their cup and then just placing the hot coffee on it and waiting until it gets cold.

6:13And it's like, is that the best way? No, it's not. Not only is it not the best way, there's so many problems with that cup of coffee. First of all, like it's lopsided. In order to drink something cold, you're making something hot first. And that doesn't even like sound normal. Like you don't do that, right? You don't like put the thing in the freezer to put it in the oven, right? So why would you put something in the oven to put it in the freezer? It doesn't make any sense. Okay. that's number one second thing is that when you pour it over ice right first thing that's going to happen you have this hot coffee you want a fresh cup of coffee you make a hot cup of coffee you pour it over ice and like the ice starts melting and it's still not cold so you put in more ice you know what's happening to your coffee it's getting watered down so that's like problem number one it's like just doesn't work right think about the thing that's like a cup of coffee what if you want like an ice latte you pull a hot espresso shot and you do the same thing you're putting it over ice you're trying to cool down with them it's like it's it's like you're scratching your right ear with your left hand it's like just upside down right and like when you take a step back and think about it this is this behavior that we're doing and it's like wait it's it's like it's wrong it's fundamentally the wrong way of approaching it how do you stop so then the question becomes, how do you start with cold coffee?

7:32And that takes us back a step to understanding how is a cup of coffee made? And is there a fundamental difference between a hot cup of coffee and a cold cup of coffee? And that in lies the difference between a cold brew and a regular cup of coffee. Let me explain. When you take a hot, when you extract, you have a coffee bean, you're from South America, some of the best coffees in the world. And now you want to extract to flavor, some basic chemistry. You either apply heat to it or you apply heat and pressure. When you do that, the flavor comes out of the coffee bean into the cup. But here's the interesting thing.

8:13When you hit a certain temperature of heat, when it interacts with that coffee bean, it creates this volatility and it creates the acidity in coffee. You ever taste the coffee and you feel like it's biting so you put in sugar you put in milk you put things in because it's like got that bite that's actually a chemical reaction that happens but if you take coffee and you soak it in water and that water is room temperature or it's cold and you wait 18 hours you wait 24 hours the flavor seeps into the water and you have a cold brew and when you do that You never have a chemical reaction and the coffee is very smooth and it's really delicious and it's very mellow.

8:59It doesn't have that bite. Maybe even if you like sugar and cream, you put a little bit less in. It's just a whole different experience. The way you extract the coffee is completely different than cold. and mesh when you were creating this this product that um cumulus is that cumulus the company creates how were you able to know you weren't pursuing perfectionism and that you were already set to go to market like what marked that moment when you were like okay we're ready and this is the product we want to put out well we were pursuing perfection i think it's really important that if we want to game your habits and we want you to go from that morning bite that you're used to every morning that you look forward to, we need to earn it.

9:49And there is so much history and there is so much heritage in coffee that if we're not really amazing, we don't deserve to be part of your daily routine. And we need to earn our spot in your day. so we needed to do perfections you know we did for five years we worked on it before the world knew about it because what we needed to do was we had a list of problems that we needed to solve for which is how do we do this on demand right how do we get this 18 hours down to under a minute how do we get you the most premium form of cold brew which is infusing it with nitrogen which creates a sweet and creamy, explosive flavor all over your mouth.

10:34If you ever have a Guinness beer, you know, that's the same idea. But normally, how do you infuse something with nitrogen? You need a nitrogen source. Cumulus, we source the nitrogen from the air that you breathe. What does that mean? There is no gas tank that you have to take out, put in, that runs out, doesn't run out. As long as there's air on this world, this air for us to breathe, there's nitrogen for cumulus. That was the other thing. And then the last thing we needed to figure out is how to pull an amazing espresso shot that's cold that you're able to use to make great lattes, great cappuccinos, and of course, espresso martinis.

11:16So that's like, that was like really, really important. And we wanted it to be beautiful. We wanted the design to fit into every environment, no matter if it's your home, your office, whether it's a spa, it makes no difference where we want it to be elegant, on demand, no friction, super convenient, and the highest quality possible. And unless we were able to do all those things, we said we're not coming to market. And actually, I was also wondering, how were you able to determine a price range for this product that didn't actually have any competitors in the market? Like, how were you able to determine the proper pricing for that?

11:54I think that when you build a product, right, there's an inherent cost that goes into it. Right. And that really dictates the value and the pricing. Right. Now in the world of super luxury, of course, you know, some of those very big famous brands, they can add premiums just because, you know, it's limited. There's seven of them and It's on the runway in Paris and yada, yada and things like that. In our case, we set out to build a very high quality, well-designed product, which is made to last and to be reliable for you to use it constantly. It's all about that repetition perfection. And when you approach things that way and you build the product and you do it from the bottom up, the price that comes out of it becomes the commercially reasonable price based on what it costs to build.

12:53And that really is what dictated it to us. Of course, we had to think about what would the consumer be willing to pay. So at the beginning, before we started, we actually went ahead and we did a lot of consumer testing. We did it in a real world environment. We went out, we put ads out, we did different price points and we learned, we learned what is the right price? What is like too cheap? Maybe if it's too low, you get the wrong customer. People buy. Like you have to make that just like it has to be like just right. And it took a lot of work to land on ultimately not only what the product costs to make, but also what is the price point that a customer would be willing to pay.

13:37And one of the big things that we learned was that the quality of the cup of coffee is so amazing. Today, people are spending five to eight dollars for the same cup of coffee in a cafe. And if I could get that now for a fraction of the cost at home for like a few dollars, I have a great cup of coffee that is cafe quality or better at the push of a button in my house on demand. Yada, yada. How could I say no? Exactly. Like, why not? You just have to be able to see it as an investment and understand the losses you're having in the long term just buying cups of coffee every single time from a shop because it does add up.

14:18It really does. It creeps up on you. You know, you're like, and then you buy for three friends and you're coming out$26. You're like, what? This also takes me to another question. Like I have, I have pop in my mind right now when you were telling me about it is how have you been able to educate your consumers about a product that maybe they don't even know they need? It's not easy. And I think that's important to know, right? It's not easy. You have to play and be disciplined to make sure you don't get lost in how much, you know, because you've been living the product, then you got to start from the beginning, right?

14:53So how do you do that and bring that along the journey? I think the way you do that is by really understanding what problem you're solving for the consumer. And when you understand the value proposition of what you're doing, you use that to talk and to educate and to explain. And then if they're able to make their buying decision at that point, that's great. If they need a little bit more education, they need to learn a little bit more, you go ahead and you start slowly peeling the onion back and teaching them more. You don't want to overwhelm. There's a lot going on. So you're just all like, okay, how do we do this slowly?

15:27Do you have any metrics that you deem important for measuring the product market fit in this consumer appliance space? I would say that the most important metric is really two things. The first thing we look at is that because we're a new category, right? Well, we're not a new category, but we're a new product that maybe, like before you heard about it, you wouldn't even know that it existed or that there was a meat for it. The first thing we look at is that people discover Cumulus. They make the purchase and they get it home. Do they understand what they got and do they actually keep the product or do they return it?

16:08So we watch our 30-day window of return very closely. as an indicator, are we doing a good job educating people so that when they get it, they know what it is? Because we don't want to get the wrong customer. It doesn't help us. It doesn't help you. Early on, somebody bought a machine and they sent the message in, I need to return it. We were like, why? They're like, it doesn't make hot coffee. We're like, yeah, it's a cold coffee machine. But where did we go wrong in our education that they didn't realize that it's like Cumulus crafted for cold. And obviously the message wasn't landing. So that's number, that's the first thing you watch, but most importantly, Cumulus, we're a coffee company, right?

16:52And it's, are you buying our coffee? Are you coming? We have eight different coffee varieties, you know, proprietary capsules, patented system that only like, so it's not only about the machine it's you have to buy our capsules of delicious coffee that have been from the time we pick uh the cherry at the coffee farm until it's in your cup every single step has been designed for cold so we watch and see are you using it do you like it are you how often are you increasing your coffee consumption and do the the little capsules you're mentioning that you guys have are those um is the is the machine only functional with those or are Or can you also use it with other brands?

17:36No, it's a closed system, which means that our machine only works with our capsules. And the reason why that is is because there's a very specific process that goes into designing and making the coffee inside the capsule that can't be replicated. Remember I said that it takes 18 to 24 hours to make cold brew? So the question that you didn't ask me is that how do we do it in a minute? That's your question. You're asking me the wrong question, Andres. You are completely right. Now, how do you do it in a minute? Exactly. What's going on here? The answer's not as exciting as the question. But the way we do it is actually we do small batch brewing at our factory.

18:24We actually do that 18 hours. We do that at our facility. And then we take the liquid and we have a proprietary process on how we take the water out to reduce it to a very, very special, almost like a concentrate. So inside that capsule, it's not coffee beans. You open it up, you take your screwdriver, your hammer, and you open it up. You're not going to find coffee powder in there. You're not going to find coffee beans in there. You're going to find our magic liquid in there. So that's why only our capsules work with our machine, because it's a whole system. Okay, now I understand. And that way you can certify that they're going to get a great cold brew once they start using it, the machine and your capsules.

19:10Okay, now it all makes more sense. The light bulb is going off. Now, going back a little bit to your past, Mesh. In terms of, we checked out your LinkedIn and we saw that you had several ventures that you founded and that you've done. And how has your approach to building a consumer brand evolved from like your first venture to now? A lot. Okay, that's what the audience is going to love because they'll learn from your story. When you go on this journey, for me, the red thread has always been always stay curious. The day you're stopping to be curious is going to be a very big problem. As long as you're curious, you're going to be open to seeking to learn and understand, and that will just make you better in whatever you're doing.

20:07So when something doesn't work, it's really about being very curious the entire way through. And for me, another thing is I always like to find somebody that is just entering the workforce or younger and listen to how they're thinking and to what they're doing because they represent the future. And like every year as I get older, right, that person's getting younger, right? The person entering the workforce, that gap was growing. And now I'm like, oh my God, I can't believe how big it is. Now I want to hang out with the young people. I don't know if they want to hang out with me, but I want to hang out with them because here's a fun, great story.

20:49Okay. So last night, my son comes back from sleepaway camp. He's 14 years old. And he's like, hey, dad, what's going on? What I miss? What's happening? He loves what's happening in Cumulus. He's like all into it and everything like that. Let me show you something new that we're working on. He goes, what's that? I said that, you know, some of the people that we call on are like these, like, you know, bagel shops or restaurants. And it's because we have the machine and we want to make a demo. We want to do that. How do we do this in an easy way? We came up with this great idea. We're going to get like a little transit van and we'll retrofit it into like a mobile coffee shop.

21:30This guy will pull up in front of the store, quickly make a delicious coffee because the whole system's in the back, right? And run into the shop and show it to the guy and she'll drink it and she'll come out, she'll look at it and voila, we'll have. So we're designing the truck. We're designing the van of what it's going to be. This is what I tell my son. So we pull up the picture, the first render. I show it to him on my phone and he's like, dad, I don't know, right? And it's like, I'm not sure. I'm like, why not? He goes, you know, gives me some feedback. 14-year-old kid. Two minutes later, he comes back to me.

22:07He goes, dad, this is what I think you should do. And he opens up his phone. He takes, opens up the phone. He went to AI. He went to a tool that makes images and he put in a prompt and he said, I want to have a truck. I want it to do this. I don't want it to look like I'm an old company. I want it to look like I'm a cool modern brand, but at the same time, I don't want it to sound like it's like geeky and I don't want to be cute. I want to be, and he writes his whole, he's 14 and chat GPT. I don't know if it was chat GPT. I forget which software he was using spits out the van and sends it to me.

22:45Right. And he did that in three minutes. How did I do it? I spoke to my designer. We had a meeting, we had a conversation and think, you know how much I learned from a 14-year-old kid right then and there about. So I love, love, love learning from young people. Oh my God, that is so cool. And what a head on his shoulders your son has. That's so nice. And Mesh, still talking about your past. I know that before you started the Cumulus Coffee Company, you were, as you mentioned, working in Starbucks. But when was the exact moment when you were leaving Starbucks and you had this idea of the Cumulus company, but what made you finish betting on it all you have, just saying, hey, I'm going for this?

23:32It wasn't intentional, I'll say that. I was one of those people, and I actually don't remember, but I stopped drinking hot coffee. I don't know what happened, but it was only cold. And I would say about maybe eight months, nine months after I left Starbucks, I couldn't get this idea out of my head about how I would like throw down a hot espresso shot in the morning just because it was the fastest thing I can get in my house before I got my day started. And then I go running to the cafe to go get a great cup of cold. I'm like, why can't I just get it at home? And like, it was like really frustrating me.

24:08And then like, it was like, oh, it's like I need it at home. And then I was like recognizing that even in a cafe, one day you tasted this way, the next day it was a little bit different because it's such a manual process and the consistency and the quality wasn't always exactly the same. And I was like, you know what, let me, let me see, let me see, let me start tinkering. Um, and I would say for about the next two years, kind of like worked with, uh, a dear friend who's an industrial designer, then worked with mechanical engineers. Can we actually create the solution to be able to do this? Can we build something that could do all these things that we wanted to do make a high quality product on demand you know the comfort of wherever you are yada yada although that list of like things and i remember that moment when we had that you like when i had my first nitro cold brew where we were pulling the nitrogen from the air without gas and it was creamy and sweet and delicious i was like we did it it was like we got it and two years later two years later we said this is this is it this is what it's going to be the cumulus coffee company was founded and the rest is i mean not the rest is history now we're up to today we got to make history we got to make the history okay oh my goodness that is so cool and i know you've mentioned um how about how this machine is providing people the experience of what they could get in a coffee shop it's making it easier for them to do it at home but um do you have any type of specific marketing to compete against people who are just buying like against the convenience of just buying cold brew at the store like is there a certain i don't know procedure or or way of talking about the cumulus coffee company and its machines that that you're implementing I think that there's a lot of today more than ever, we expect the highest quality of everything.

26:15We want theater-like sound. We like theater-like picture. We want to have a cycling studio in our living room. Like, we want everything to be amazing, right? So, like, when I think you go in and present that, like, concept to people and you're like, what do you need to do with the effort you need to put in to get amazing in cold and then the like they go like you know what you're right i can't do that i can't you mean i could with cumulus like and that's kind of like the that's like kind of the path that we take people on that journey about it's like you deserve because you could do it in so many things you deserve great quality cold you know efficiently effectively without having to compromise at all and that was kind of like that's like the unlock okay now i love it and it also it also places um the machines and the whole company as a whole as a premium brand and it just speaks for itself saying that hey if you want the best you gotta then just be willing to to pay for the best because here it is it's now available and it's and it's it's real so if anybody wants cold brew at home then they only got one place to go we hope so now i love how you guys have patented everything you've done because that makes it yours for real and there's no no what's it called no fear of the idea being stolen or whatever um so it might take a while for somebody to find another way to make cold brew yeah you know that would be the biggest compliment that means that it's working right Exactly.

27:55They really would be. And okay, before we finalize the podcast, Mesh, because I know I have gotten almost to the top of our time, what would be one piece of advice that you would give entrepreneurs for trying to create entirely new product categories such as how you did it? And what do you think you could tell them that would keep them from wasting years of their life? Don't? Oh, that's a good question. But the most important thing for me, and if this is helpful for your audience, I would encourage them to do this if they're not doing it already, is really A, be vulnerable and keep your ear to the ground and really talk to your customer, whoever that customer is.

28:45don't hide behind you're running a d2c brand you're running a software company you're doing something you're you're building an app it makes no difference you need to have users right and get to know your users especially early on pick up the phone talk to them meet them have conversations with them make it personal make that you know everybody who's starting a company A lot of us have aspirations of grandeur. We want big. We want massive. But do it one at a time. If you bring that one at a time approach and say, hey, if I could take Andres over here, who didn't know about Cumulus, now is a little bit curious, maybe sent a message, asked a question.

29:29And instead of responding with a macro through a CX system, pick up the phone as the founder and say, hey, Andres, how are you doing? It's Mesh. You had a question. Tell me. Let's talk about, what are you curious about? What could I do? What could I tell you about Cumulus? And you might tell me, oh my God, this is the most dumbest thing ever. What a waste of fine waste of money. That's good for me to hear. I need to know that. Or I might learn something where like I was on your website and I don't really understand. And you've got to talk to the customer in person, real, real, not just do a panel one time, get out, make it real.

30:13It has to be authentic and have real conversations. and it's totally in tune with the other advice that you gave during the episode which is stay curious so always remember to stay curious and curious about your consumers so that you know and you can learn from them and i also love how you're mentioning that that it's easy as if i had a question that that you would call and pick up the phone and i could speak to the founder it does go a long way having a another human on the other side feeling and acknowledging what you have as the question or issue that's preventing you from buying, I think that is something that would close the deal completely with a niffy customer.

30:51So very nice. I love that. I love that. And I hope the audience takes that home as well, if they're listening to us right now. And before we leave Mesh, I also wanted to give you the opportunity to just let the audience know where they can look for the Kimo's company machines, where they could find the little capsules you guys make, just provide them a little bit of direction if they're interested in all this of course if you love cold brew nitro cold brew cold espresso espresso martini you got to have a cumulus in your life and the way to do that is cumuluscoffee.com it's the best way or google us cumulus coffee you should find us um instagram social media website whatever it is you know be curious check us out come in and And if you want Andres, we thought that your audience might appreciate, but we prepared a special code for them for a special offer for your audience.

31:53It's Future 15, which is, you know, the future of consumer marketing. So Future and 15 % off their purchase, you know, so they could come ahead and maybe just help them get over that hump and, you know, get involved. It's delicious. It's fantastic. I love that. That's amazing. And that was the little prize we had for anybody in the audience who listened to the whole podcast. Now at the end, you have your Future15 coupon code to use in the Cumulus Coffee Company website. So don't hesitate to go and try it out. And check out if you like anything of what they have to offer. And make sure to just input the code, Future15.