Advice Line with Andy Dunn of Bonobos

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26:38Welcome back to The Advice Line on How I Built This Lab. I'm Guy Raz, and my guest today is Andy Dunn, co-founder of Bonobos and a new social app called Pi. Andy, what do you say? Should we take another call? Let's do it. I can't wait. Hello. Welcome to The Advice Line. You're on with Andy Dunn from Bonobos. Tell us your name, where you're calling from, and a little bit about your business. Hey, guys. How are you doing? My name is Alex Supak. I'm from Glenview, Illinois, which is just outside of Chicago. So, hi, Andy. What's up, Alex? I'm the co-founder of Broda Beverage Company, which is an alcohol brand that uses real ingredients and high-quality production methods focused on transparency.

27:13So, we offer truly unique and fresh flavors while providing a better-for-you experience. All right. Let's talk about this. Thanks for calling, Alec. Tell me, what is the beverage you make? Yeah. So our Trojan horse in the market is the traditional lemon, honey, and ginger vodka. It's a Polish alcohol. And the way we make it is we zest the lemons, peel the ginger, infuse it into the vodka, filter it out, juice the lemons, add in a raw honey that we're getting from Michigan, blend it, age it, bottle it. So no preservatives, none of the weird stuff. And so tell me a little bit about how you, where this idea came from.

27:50I'm assuming, based on your last name. Maybe there's like a family connection here. Yes. Yeah. My last name is very Polish. Both of my parents came from Poland. Um, and this is my uncle's recipe. Um, and so his nickname was broda, which means beard in Polish. That's the name of our company. Uh, it's cause his wife and kids never saw him without a beard. So everyone called him that. Um, but yeah, it's, uh, it, he, he got the recipe from, from his father, from his father before him. And, uh, he taught my brother who is 12 years, uh, my senior. and then I kind of got messing around with it and I've always had a little bit of an entrepreneurial bug and and here we are a couple years later.

28:27If you don't mind me asking how old are you? 24. 24 so you are this is this your this I'm assuming this is your first company right? Yes sir yeah. Congrats and and tell me a little bit about how you got off the ground. There's there's a lot of roadblocks with alcohol but it started off kind of my sophomore junior year of college, just trying to figure out if this is a viable product for the market. Joined an incubator program at my college, SMU in Dallas. Won a couple pitch competitions that gave me some confidence. And then just kind of studying up, figuring out what licensing you need. Find a correct co-packer, which took forever because no one wants to use real fruits and raw honey.

29:07And they want the easiest way to make it. Definitely no aging processes because that takes up time and resources. So, yeah, there was a steep learning curve, and it took about two years before we could actually get onto shelves. So our co-packer is local to Chicago. So they buy a vodka from a big guy, and then they distill it one more time. But then they let us come in and do all the fruit processing ourselves. So me, my mom, my dad, my friends, girlfriend, everyone's coming in, and we call it a lemon party. And, yeah, just juice a lot of stuff. Got it. Give me a sense of where you guys are right now.

29:43You say you launched it about a year ago, and it's all direct-to-consumer. Are you selling in stores? And if so, what kind of revenue are you looking at in your first year? We're mainly in stores. In Chicago, the Chicago area? Chicago, yeah. That's where we're launching right now. So we're in stores like grocery chains, also mom-and-pop liquor stores. We're in a couple liquor chains as well. And then restaurants and bars because that kind of helps build up the brand name. We do have online sales to 44 states and our revenue is around$95 ,000 right now. $95 ,000, the first year pre-cable. That's great.

30:20And tell us what your pain point is. What's your question for us? Yeah. So our question is, I'm not sure if you're familiar, but the alcohol industry is one of hidden ingredients. So we want to know how we can effectively educate consumers about this issue while positioning our product as both a better for you, transparent and more delicious alternative. Okay, I want to bring Andy in. I've got a lot of thoughts about that. Andy, I know you don't drink anymore. I still drink. I want to drink now after hearing Alec talk about this. And I'm going to try this. So I will give you my feedback as somebody who does enjoy a drink.

30:55Andy, first two thoughts about Broda. First, I love the brand identity. And while Guy was talking, I was looking at your Instagram and your site, the branding, the story. You're doing a pretty good job. I feel like you're kind of good at this, like building in public storytelling about the ingredients. Your followerships are lower than I would guess. It's a nice looking grid. I'm curious, why do you need help with the storytelling? It looks like you're good at it. Yeah. I mean, it's because when I'm doing tastings, I do at least two to three tastings every weekend just to try to get it out there.

31:31And, you know, repeating the pitch over and over, everyone seems to be shocked with the fact that, oh, there's an ingredient list on the back of this bottle because you're just not trained to look at it. And the problem is a lot of people are trying to be healthier during the week. But when it comes to the weekend, I call it informed unwinding, you know, trying to understand what's in your drink, but nobody knows all these hidden things because they're not required to share them. So that's kind of what I want to get at because obviously our flavor is different, but how do we also explain that the actual contents are different as well?

32:05Interesting, because I sort of my instinctive reaction is to say, I'm not convinced that people who are going for a drink are that worried about the health implications, even if they might be healthy, and they might work out and they might go to the gym every day. There's all kinds of, you know, swirling, conflicting information about alcohol in general, it's been coming out over the last few years. To me, the idea of trying to make the case that this is a better option than another cocktail because the ingredients are healthier or cleaner or whatever words you use to me, I'm not sure that's going to be the best argument to make because I think at the end of the day, people are consuming based on what they like, on the taste.

32:48And that to me is your strongest argument. Right. Can I give a counterpoint on that guy? Please. Because I think actually if I hear you make that argument, like here's the deal. The problem with vodka is it's so competitive. Very competitive. Right. It's so competitive. And so if you're going to stand out, what if it is the case that for the Gen Z demo that Alec is in, because I don't think you're going to switch older people who are stuck on – now Grey Goose is what Absolute used to be for the grandfather generation. Yes. Given that it's a generation that is more plant-based and more sober, curious and all that, for the component of that group that wants to go out and have some vodka on a Friday night or have a couple of nice cocktails with dinner, maybe this is a differentiator.

33:37So maybe part of the way to break through the noise here is to go on this really difficult journey of getting the consumer who is predisposed to care about ingredients to care about ingredients in this category, which I agree with you guys, a category where normally, hey, you're putting ETOH poison in your body. Who cares what else is going into it? Well, maybe that can evolve. I don't know, Alec. Does that resonate with you or how are you thinking about it? And I'd like to say that I think both of you guys are right in a certain way. So the reason that we don't put the ingredient label on the front, like RX bar, for example, is because we still want to have that fun, you know, sexiness within an alcohol brand.

34:15It's more of like, to Guy's point, it's not the most important. Obviously, flavor is most important. But what's really part of our backbone is the ingredients. And I've talked to many people that when they hear, oh, raw honey, like, wow, like, you know, if I don't drink often, but if I do, like, I would love to have that. or it's just kind of, we're trying to make them ask the question themselves. Like, do you actually want to know what it is that you are drinking? So guys, I'm all in on this. I'm all in on the ingredients, you know? So for example, I was just looking up here on Claude AI. What's raw honey good for?

34:50It's soothing for coughs. What's ginger good for? It's good for digestion in the stomach. Maybe it's not on the packaging, but I would encourage you that maybe it is on the front. I don't think if you're going to be known for something, be known for it. Be loud and proud. Put it everywhere. Communicate those benefits. I don't know. I think it's kind of fun. You know, I just had a thought here. And this is like a wild kind of just throwing spaghetti at the wall here. But it might actually stick. Because you mentioned this idea, Andy, that, you know, lemon and ginger is great for digestion and honey for the throat.

35:25And like, you know, and so what if you took a risk here and try to think of your competitors not as the cocktail that people are going to have at the bar, but as like Jägermeister or Frenet, you know, one of these sort of digestives, right? And you kind of create a Broda shot culture. Like do a shot of Broda and you go to and maybe you're doing this already, but you go to the bar and you pour a shot. You're like, you know, prost. What do they say in Polish? Na zdrowie. Right. And you boom and you shoot that at the bar and everyone's going to throw via. Totally. And it means for your health in Polish.

36:02The one thing is that with with alcohol, you have to be very careful with, you know, saying healthy versus. That's why we say better for you, because at the end of the day, don't say it, don't put on the label. You could just say it when you're at the bar. Yeah. Yeah. And one of our best accounts is actually a bar in Lincoln Park that does now is doing three dollar shots. It used to be seven, but it's been doing so well that they're making it their special. And in Polish culture, that is also how you drink it. You don't mix it. You don't dilute it. Oh, this is amazing. There's a million alcohols to compete with, but in the shot culture, there's like five.

36:39Yeah. Right? Right. That's what you want to do. Broda shots. Okay. I guess the Polish people haven't had it wrong since the 16th century. No, no. And that's a part of the story, which is so cool. And got to be careful. Obviously, this is a heavily regulated industry. Very much so. And all kinds of surgeon general's warnings coming out about alcohol in recent. But I think that, look, human beings have been fermenting and distilling grains and fruits for thousands of years and consuming it. And it is part of human behavior in general, most parts of the world. And so I think that focusing on the traditional side of it, how it's consumed, it's very much about community.

37:23It's very much about being together. And you're selling an experience. You're not selling a product. That's what I think you've got to focus on. Yeah, 100%. Alec Nastrovya. Nastrovya. Broda Beverage Company. Congrats, man. Good luck. Thanks so much. I appreciate it, guys. Nice to meet you. Great to meet you. Keep going. I know. It's very wise that you gave up booze. And I will say I have massively reduced my consumption to maybe like a glass of wine a week now, really. And I sleep much better. And now maybe Broda shots. I know. Broda shot at night. But Andy, you know, are you 50? You're not 50 yet, right?

38:0446. Yeah. So once you're, I just turned 50, and even 46, at that point, your body is just like, nah, I cannot do these things. Oh, it's different. No, my doctors told me I'm going to die in five different ways. You know, you have that appointment and it's like, oh, wow, I'm not going to live forever. How do I prolong? The beauty is you can turn it all around your 40s. So if you are under 45 and you're listening, you can abuse your body, but then it just has to end. It must end. It must. All good things come to an end. All right. We're going to take another quick break, but we'll be right back with another caller.

38:43Stay with us. I'm Guy Raz, and you're listening to The Advice Line right here on How I Built This Lab.

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41:33Welcome back to The Advice Line on how I built this lab. I'm Guy Raz, and today I'm taking your calls with Andy Dunn. So Andy, let's bring on our next caller. Let's dive in. Hello, welcome to The Advice Line. You're on with Andy Dunn, co-founder of Bonobos. Please tell us your name, where you're calling from, and a little bit about your business. Hey, Andy. My name is Sabrina Nass. I'm the founder of House of Biscotti, based in Philadelphia, PA. We're a biscotti company that's obsessed with reinventing the biscotti. So no more sad-looking biscottis in glass jars near the counter that look untouched and unloved.

42:06At House of Biscotti, we're all about fun flavors, fun packaging, and a very tasty biscotti to pair with your morning coffee. I love it. Sabrina, welcome to the show. Thank you, House of Biscotti. Okay, so it's a great idea. Tell me how this came about. Are you a baker? Did you have a business before? Tell me about it. No, no, no, no. None of the above. My background is actually in tech. I used to write code for a living. Now I'm an engineering leader focusing on the AI space. And the reason why that's so relevant to this story is because during the pandemic, I desperately just wanted to do something in between meetings.

42:40And I realized walking to get a cup of coffee was a great new habit, like fantastic new habitual act. But very expensive. Quite expensive, indeed, especially if you purchase a croissant or a Danish, which then led me to the decision that maybe a croissant every day is not the healthiest. And this is where I decided it's time to reinvent the biscotti. It's the perfect treat. You can dunk it. You can save it for later. It won't go stale like a croissant. And then to point back to my tech experiences, I've worked on a lot of great engineering teams that included studying how customers engage with their favorite products.

43:15And what I learned from those experiences is that people love habits. People love romanticizing those habits. And what better habit to elevate than pairing your morning coffee with a biscotti, right? Okay. And so this is, is this your full-time job now? No. No, you're still a coder. You're still doing this work. Okay. This is your side hustle. Yes. I enjoy health insurance. Yes. Okay. So, and tell me how, so are you making this in like a commercial kitchen space that you're renting space out? And so you're making them all yourself? Yep. Yep. Scotty's are the weekend. Baking, fulfilling, manufacturing, sending invoices, cold calling, all of that good stuff.

43:56Awesome. And where are you selling right now? So we're available in over 20 distinct stores and coffee shops across the U.S. Wow. We've definitely not scaled to a big box retailer, as you could assume. I would like to make like a few key decisions before approaching that route. And there are reorders, which is another, you know, good signal. But this might be the perfect segue to my question. Yes, please. Please ask your question. Okay, super. What I'd like your all's help with is figuring out first discovery of eatbiscotti.com, which is the website. And then second, how in the world, once the customer's actually on the website, how do I increase sales?

44:35My sales on the website are pennies. Got it. Okay. Andy Dunn, come on in. Here's a hot take, Sabrina. And this is so cool because it's a category everyone knows, but no one owns, which is so intriguing, right? You don't usually have a category where there's just no one owns biscotti. No one owns biscotti. That's going to be Sabrina. So here's my hot take. You can't increase sales on the website and you shouldn't try. I'm being a little bit cheeky because I think over time you can. What I would probably do is just focus on subscription because the unit economics of non-subscription... I mean, by the way, no one's going to subscribe.

45:15But given that you're talking about it as a habit, I think what you should aim for is subscription. By the way, later, if the company is really big, it's going to be an Amazon subscription, right? Or in a Walmart subscription. But I would put all my energy into wholesale if I were you. Let's go get Whole Foods. What's the skew that Whole Foods wants that's maybe exclusive? Let's get Walmart. Let's get Amazon. Let's get Albertsons. Let's get Target. Let's go after all of that. And most importantly, let's get you working on this full time because we can't build a big brand if you're not full-time.

45:46So what would it take for you to be able to go all in on this? Is that something you want to do? And what would it take to do that? What kind of revenue or what would the step be? Yeah, that's a good question. It is something I'd want to pivot towards full-time. The milestone that I wanted to hit this year was, and this is very helpful feedback thus far, The milestone I wanted to hit was sales on websites so that when I have my pitch deck or when I go to get external funding or investors, I have a beautiful slide that says like I was able to unlock some minimal traction online. That's been like my focus this year because I put so much focus on just building and bootstrapping and launching last year.

46:31Is there a number that you would need to hit before you would – because I'm assuming that you probably have – I'm giving your credentials and what you do. You're probably paid well. You probably have a good benefits package. Like that's hard to leave. It is. Do you have savings? I do have a lot. I am so grateful for making the decision as a 19-year-old to go the tech route. So I do have savings. I guess I'm thinking a lot because I'm kind of an intrapreneur as well at work. Like I do pitch some of the harder products to ship. And I always think of the pitch deck. And the thing that's been blocking in my mind is when I go into those meetings to pitch or even a cold call email, I just feel like they're going to ask about online sales.

47:20And if I say it's just been like my parents. Oh, no, no. Just say you don't disclose. Oh, I don't disclose? Say we've got a lot of momentum. We don't disclose our numbers. Okay. I love that. That means I'm not doing any sales. I hear that all the time. Thank you, Andy. Don't disclose. But what I would do is do enough that it's growing. So you could say we're growing 20%. We don't disclose numbers, but we're growing 22 % month on month. One thing you should do is look at pricing a little bit because price matters online. And a lot of times entrepreneurs price to the margin rather than the market because they say, we need this margin.

47:58But sometimes that doesn't matter if the market doesn't emerge. So you need a price that's compelling, even if you take it on the chin, on the margin in the near term. When you build a lot of demand, you'll get that back. So it's okay if you're unit economic negative or break even now to establish the market and you will need to win on price later. I don't care what else your story is. You will need to win on price to be compelling in the grocery channel. No one's going to be like, oh, it's premium biscotti. I'll pay 80 % more. You've got to be like head to head. In fact, I would want you to be the least expensive biscotti on the market with the best brand.

48:38If you think about why did something like Warby Parker work or Harry's work, it's because they price disrupted Luxottica and Gillette respectively. So it's this weird thing where you've got to be cooler and better and cheaper. If you want to break through and build something that's not just a niche brand. Yeah. And as I thought, you've got a price problem. So you've got, I'm just checking your website. It's 14 bucks for 8.25 ounces. It's a bit expensive. And La Dolce Vita Classic Italian Almond Biscotti with a kind of a cool container. Although my wife would point out it's still, you know, single as plastics is 40 ounces.

49:15Yeah. For$13.82. So I think you've got to dream bigger on what this would look like at scale and be willing, you know, do all the work to figure out. Take it to the chin. Yeah, big time. Yep. No, I wrote down that sentence, least expensive biscotti with the best brand. Yeah. I think that's a great idea. I would also, and I'm sure you know about this, Sabrina, I would look at that, you know, that famous biscotti you get from, they sell all over Italy. It's called Antonio Mattia. Yeah, I know what you're talking about. It looks almost like a bag of coffee, but because it's perfectly stacked with biscotti, it might even be cheaper than the packaging you're using now.

49:56And I like that guy, the packaging not being plastic. So there might be some wiggle room in there to win on packaging and product. Anyways, this is cool. Yeah. That's really helpful. So ditch e-commerce. Great. Ditch e-commerce. Ditch it. It's stupid. No one wants to invest in it either. All the money is going into profitable wholesale-led brands now, not into D2C brands. Fascinating. So you'll raise more capital on better terms if you want to over time if you get the omni kind of wholesale-led equation working, especially in CPG. Yes. This is really helpful. Thank you so much. Sabrina, thank you for calling in.

50:34House of Biscotti, good luck. We're cheering you on. Quit your job. Resign tomorrow. Okay. Thanks. That's advice you're going to give. I'm not going to give a tech mogul that advice. She's like a coder. She'll be fine. She's earning hundreds of thousands of dollars a year. Yeah, her next job. She should keep it for now. Keep the job for now. Keep one foot in house of biscotti. And then over time, when the water level on that goes up and on the other side starts to go down, then you jump ship. All right. Half-built house of biscotti. I can get behind that. Something like that. Yeah. Yeah. Andy, I mean, hopefully we didn't just like destroy a bunch of businesses today.

51:16I think we did okay. I mean, it's so fun seeing these folks. They actually, all of these have interesting potential. Yeah. Well, I think that if in the end they make it, hopefully they'll, you know, they'll remember this moment. Andy, before I let you go, you know, now knowing what you know about business now and having all this experience, if you could go back and give yourself advice, not necessarily around the mental health challenges, but just about like, you know, operational advice or, you know, or decision-making advice, what do you think would have been helpful for you or in the early days that you wish you kind of knew?

51:55Yeah, I think it is that just to worry a lot less about what other people think. I think for a long time, I wanted to be liked so badly that I was not able to make the tough organizational decisions fast enough that I needed to make. Like Iponobos, we didn't do a layoff until our 12th year. The truth is capitalism at times requires layoffs. It just does. You hire more people in good times, things change. You got to be surgical and the company emerges better for it. So I feel so free to worry less because I know these things pass. I think the other thing that goes side by side with that is just telling people the truth earlier.

52:45So in a non-defensive way, saying things like, gosh, I got that work and it just wasn't good. Like that was bad work product. And just saying what I think without being mean, without ad hominem attacks, which some entrepreneurs get into, it takes a lot of work and focus to say, I'm just going to do what's right for the company. I'm going to say what's on my mind. And gosh, that is saving me a lot of cycles compared to Bonobos. We did a lot of spin for me wanting for those characteristics of candor and courage. Yeah. Makes a lot of sense. Andy Dunn, co-founder of Bonobos and also Pi, an app that helps users find and organize live social events and develop new friendships.

53:32Andy, thanks so much for joining us. Thanks for having me, Guy. And by the way, if you haven't heard Andy's original How I Built This episode about how he built Bonobos, you've got to go back and give it a listen. It's a great episode. We'll put a link to it in the podcast description. And here's one of my favorite moments from that interview, how were you able to kind of stay optimistic? I mean, were you just looking at projections and saying, this is going to be fine? Stay optimistic? What makes you think that I was optimistic? I was defiant in the face of a terrifying reality. Companies don't die because the companies fail.

54:09They die because the entrepreneur gives up. And that was the approach. Just keep the lights on, keep growing. and that's what we did. Thanks so much for listening to the show this week. Please make sure to check out my newsletter. You can sign up for it for free at GuyRoz.com. Each week it's packed with tons of insights from entrepreneurs and my own observations and experiences interviewing some of the greatest entrepreneurs ever. And if you're working on a business and you'd like to be on this show, send us a one minute message that tells us about your business, the issues or questions you'd like help with, and hopefully we can help you with them.

54:47And make sure to tell us how to reach you. You can send us a voice memo at hibt at id.wondery.com or call us at 1-800-433-1298 and leave a message there. And we'll put all this in the podcast description as well. This episode was produced by Catherine Seifer with music composed by Ramtin Erablui. It was edited by John Isabella, and our audio engineer was Sina Lafredo. Our production staff also includes Alex Chung, Elaine Coates, Casey Herman, J.C. Howard, Iman Ma 'ani, Chris Messini, Kerry Thompson, Neva Grant, and Sam Paulson. I'm Guy Raz, and you've been listening to How I Built This.

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