Advice Line with Bill Creelman of Spindrift

27:22Like same feel, same softness, everything. But we just swap out the designs. I love it. All right. So you started this as a high school project. How old are you now, by the way? I'm 25 now. Just graduated from college two years ago, and now I'm living up in Cambridge. Okay, so this is what you're working on 100 % of the time? Oh, yeah, yeah. I took it from high school into college at UConn, and from there, I entered a bunch of like Shark Tank type grant competitions, and UConn gave me$19 ,000 in funding to get the brand started. And when I finally graduated a few years later, I decided to take that leap and make it my full-time job.

28:09Amazing. Congrats. How are sales? What do you expect to do this year? So this year, we just broke$140 ,000 and we expect to do$300 ,000 by the end of the year. I found that 80 % to 85 % of our yearly revenue comes from the holiday season. So we're in a good spot. Nice. And where are you finding most of your success? I mean, it's direct to consumer, but I imagine you don't have a huge budget to do ad spends. Are you doing in-person events? How are you getting the word out? Yeah, a lot of it is the digital marketing, meta, Instagram ads, all that. I just started doing that and it really helped Kona Brand jump up and start to scale.

28:54But since the start of Kona Brand, since I got my first flannels in, I've been doing craft shows, music festivals, weekend markets, anything that I can get my hands on to kind of get the flannels into the hands of the people. Cool. All right. Before we dive in further, what's your question for us? Yeah. So last year, one of my main focuses was finding a marketing manager. And I interviewed 12 people. I eventually found one person that I thought was a great fit. But after a month, I found we didn't partner too well. So we parted ways. And since then, I've been very hesitant to hire again. How do you think I should hire the right person for a part-time role that's usually full-time, like a marketing manager, without burning cash momentum?

29:43Because I don't have the budget to afford a full-time hire. And you're probably just buried under everything. You're doing everything yourself. You're collecting the boxes. You're shipping stuff out. You're doing all the packaging. Plus, you're trying to run a business. Okay. Okay. Bill, this is a perennial challenge for early-stage entrepreneurs. You're doing everything and you need to hire somebody, but you also can't really manage somebody because you don't have the time to do that. And also, you have to find the right person. And it's really hard. Where do you start? It's really hard. And I have to say, just off the top, it seems like you're doing everything right.

30:20You're being really smart and conservative and not spending money that you don't have. A couple of questions, I guess, just to help answer that. One is, you're going to do$300 ,000 in sales. It sounds like a lot of that revenue is going to be generated by DTC. Are the shows and your event sales 50-50 with DTC? What is the breakdown of the sales between the two channels? Yeah, it's pretty cool. So last year, I would say that my online DTC sales compared to my show D2C sales were about 50-50, maybe a bit more leaning towards the in-person shows. But since starting my online marketing, my paid ads, it's completely switched.

31:11I'd say it's about 75-80 % online ads and then 19-20 % in-person events. And then I just dabble a little bit in wholesale. Okay. Selling to stores. Yeah. And how is your supply chain? If your business were to 10x next year, would you be able to support that kind of growth? That is tough. I'd say that cash flow is another one of my big problems because I am cash flow positive. I'm profitable. But because I buy in bulk all at once, it takes a huge chunk out of my cash flow. and leaves me scrambling for a little bit until I start selling those flannels again right away. So I don't think I could handle a 10x scale like this time next year without taking outside investment, I don't think.

32:09Zach, you mentioned that you want to hire like a part-time marketing manager, right? So let's just kind of dive into this for a moment. I mean, is there a specific thing that you need that person to do? Or what would their priority be? Probably to run the social media aspect and the paid advertisements. I'm a very numbers-oriented, analytical person. I do not have much of an artistic brain. Do you need a creative? Yeah, creative brain. So that's been a huge struggle for me. And I feel like my time is better suited towards the business aspect of the business rather than the creative. You know, again, you're a couple hundred thousand dollars in sales.

32:58You've got a neat product. Right away, I'm a fan. I'm a New Englander. Fisherman chic is right up my alley. And so, you know, I always think the founder should do as much as you can early on, even if you're not comfortable doing it. I bet you're great selling the product. You know, only you can talk about it the way you do. And you're going to be uncomfortable. But, you know, sitting behind an Excel spreadsheet is not going to help sell more Kona. And so, you know, I would really encourage you to keep pushing as hard as you can while you can without hiring. But in the meantime, be folding some of the things that can be automated, that can be outsourced, you know, third-party fulfillment, things that are just not behind the scenes, the consumer is not going to see so that you can get as much revenue through the door as you can.

33:47You know, at$300 ,000, if you bring someone in and you hire them, that's going to, you know, that's going to eat up a fair bit of your profit. I don't know what your margins look like. And there are third parties, you know, that can get you to, you know, to the next level, whatever that looks like, without having to take on the expense of, you know, the employment costs and insurances and all that kind of thing. and lastly I'll just say you know you're a young guy you probably I assume you're a little bit risk adverse you know you're not looking to you know leverage an apartment or a house you know and so I think the more you can kind of test and learn on your own dime if you will um and keep the overhead down when you do go out and raise money you'll really be in a different position of strength than if you take a big swing early on with like more and more overhead.

34:37So I think there's no question. I agree with Guy. You need help dialing up. You're in a rare category where you can build a big business online and through events. And I think as a founder, you want to be in front of the brand as much as you can. But I do think that he – I mean you are looking for somebody who has sort of chops making social media clips and coming up with sort of some branding ideas, right? Is that fair to say, Zach? Yeah, yeah. I want someone who can handle that side of the business and like maybe talk to micro-influencers and help me just come up with ideas for the creatives that go behind these posts and videos.

35:20Yeah, I mean, I wonder whether it's worth reaching out to your old alma mater, right? I mean, you went to the University of Connecticut. Clearly you were in some kind of entrepreneurship program, Maybe, maybe not, but you were around kids like that. I wonder if it would be worth reaching out to some of your old professors and saying, hey, do you know just like a red hot kid graduating that might be interested in this as their first just gig for a little bit? I mean, I would just try that out. And this is something that they could even do remotely for some time. I mean, because the reality is the tools that younger people have now to build social media assets are amazing.

35:58So I think that could be worthwhile. There's one other piece of advice I have for you, and this really sucks. And, Bill, you may have been there. I've been there. It sucks. I hate doing this. It's so tedious. But I would document as much as you can what you do. Write down what you do. Write down what works. I know you're really tired at the end of the day, but, like, write it down. Log it down. How do you write copy? What's the tone of the brand? Almost like you're building a brand Bible. Which audiences resonate the best? them what's the voice of the brand like a playbook a brand bible so then when somebody does join you even temporarily they can refer to that as you know and understand what you're trying to do i love that idea i didn't even think that i i use like chat gpt sometimes to catch my brand voice and stuff but i never even thought of like writing down my notes to use as a reference for future employees to kind of get the better.

36:56A living document, right? Yeah. Exactly. By the way, this is what a lot of brands do. Bill, do you guys have a brand Bible? Sure. Oh, yeah, absolutely. And so when people join Spindrift, they can refer to it and they know what you stand for. I love that idea. Yeah, I think exactly right. Yeah, because as soon as you identify that kind of marketing message, their first question is to be, okay, tell me now what you want, you know, what voice should I adopt? And it's going to be yours. It's going to be the work you've done so far. So get started on that now. I think that's a great recommendation.

37:30Yeah. Awesome. Awesome. Zach Will, the brand is called the Kona brand. Good luck, man. Congrats. It's a great idea. I love it. Thank you, guys. Thanks so much for having me. Yeah, I love that. I mean, who's going to wear a Hawaiian shirt in the middle of January in Marshfield, Massachusetts? Unless it's flannel. There's a lot going on there. I like that approach, though. I think it's a neat concept. New England is a really tough place to dress for because the weather seems to change every 90 days. Yeah, and if I'm remembering correctly, you grew up in Western Mass, right? I did, yeah. I grew up in the—but I live, yeah, as you could memory on New Bedford, I spent 15 years down in Fall River, New Bedford.

38:14And I remember, I mean, kind of like this story, you got a grant, right? Like, that's how you started. That's right. Yeah. The city of Fall River and the city of New Bedford both were kind enough to help me in the early days. So cool. And they look at you now. Yeah. All right. We're going to take a quick break. But when we come back, another caller, another question and another round of advice. I'm Guy Raz. Stick around. You're listening to The Advice Line on how I built this lab.

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40:31Welcome back to The Advice Line on how I built this lab. I'm Guy Raz. And today I'm taking calls with Spindrift founder Bill Creelman. Bill, are you ready for our next call? I'm ready. All right. Please tell us your name, where you're calling from, and just a line or two about your business. I'm Jean-Pierre Parent. I'm in Portland, Oregon. And in 2009, I opened Soma Kombucha. Cool, cool. Welcome to the show, Jean-Pierre. Jean-Pierre Parent. Yeah. That's your name. Soma Kombucha. Okay, so I'm assuming you sell kombucha. And where do you sell it? And yeah, tell me a little bit about the brand. Sure.

41:06Yeah. So we sell to stores through distributors, which used to be our main business, but that's dwindled a lot. We also have tap rooms. There's five kombucha tap rooms across the Pacific Northwest. The ones in Washington are kind of cool in that they're unstaffed and automated. Folks open the door with their phone and get in and help themselves and check out on their phone as well. Wow. You can literally, oh, it's like going to get cash from a cash point. You swipe your card, you go in and you just get kombucha whenever you want and there's no staff in there? Yeah. Yeah. Yeah, it's great. That's wild.

41:42Okay. Tell me a little bit about how you started this kombucha brand. 2009, you said. So you've been around for a while. A little while. Yeah. So my mom was brewing kombucha in the 80s and had some really great health benefits. And so the whole family got into it. I was teaching yoga, moved to Portland, started bringing kombucha after yoga class because people would be kind of like shy and leave class. And I thought, well, let's find a way to get people to gather up and have a little community after class. And it just went from there. Awesome. Okay. So you and you launched this kombucha brand and you've got tap room so people can go and get draft kombucha.

42:19Tell me a little bit about the business. How is it doing overall? Yeah, it's actually, it's been a rough last couple of years with pressures from COVID and supply chain stuff. We've had a bunch of, you know, distributors go out of business. We changed our packaging a couple of times, which was really challenging and lost us a bunch of shelf space and stores. Sales at the tap rooms are down and all of the expenses are much, much higher. And so, yeah, I was doing a million and a half dollars a year for several years. And the last few years, that's really been dwindling. I started contract manufacturing for other beverage brands in the last six months.

42:59And that has brought its own challenges. I also do beverage development and R &D for other brands, which is great. But it's just kind of like a one-time project when we do it. But yeah, so I'm really looking for the next step. Cool. Well, lots of questions to ask you. But before we get to them, what question do you have for Bill and I? Yeah, well, so the four revenue channels that I just mentioned, I'm wondering what you guys think is the best channel for me to focus my efforts on. Got it. Okay, cool. Bill, a lot of challenges here, right? The business that was doing a million and a half a year, substantially down.

43:38There are a variety of reasons why that happens. questions thoughts uh yeah no it sounds i mean i my parents were product hippies in the 70s and 80s and you know i i love hearing your hustle it sounds like you love the space and so it's a little bit of like how do i make a living and so i totally relate to that it's a hard business low margin business super finicky i guess a question like where where do you see yourself in 10 years, you know, what, like, what would success look like, you know, on the other end of this? Yeah, well, I would like to be doing less jobs, and be doing a better job at the ones that I'm focusing on.

44:19So I'd like to either cut some things out, or I'd like to get some more help. I definitely would like to not be stressed about making payroll every two weeks, you know, and paying the rent. And so, you know, I mean, I could do a lot of different things. There's a lot of different things that I do well. There's some things that I don't do that well. And, you know, also, I've recently become a solo father of my eight-year-old special needs kid. And I just, I really just need to be able to make this company work so that I can punch out and focus on his needs. That's a, that's a lot going on, especially in being a solo dad, I guess without going into all the different margins and sort of the structure of the four businesses, like which, which do you have the most confidence in today?

45:14Like, is there one that you feel you, you have a real heart for and, and are energized by? Well, six months ago, I definitely would have said tap rooms. I love building them. I love, interacting with customers directly. I love how nimble the flavors are and just being able to make something and put it out. And we curate other wellness products. And so I'm really passionate about that. But my local business neighbors, tons of them are going out of business. Like I said, our sales are down. I've never really done any marketing and I've started doing that. And I haven't really seen that move the needle.

45:52I opened a tap room in Seattle, which I thought was going to kind of save everything. And that's just barely breaking even after eight months, which is shocking because none of the other stores, like they all after three months were profitable. So I'm just, I'm a little unsure about where to put, you know, my limited energy and resources. What about the margins on the R &D or the contract manufacturing? Yeah, on R &D, they're high. On contract manufacturing, they're low. But there is a lot of contract manufacturing work and it's very consistent. It comes with its own challenge as well, just managing the expectations of founders, especially if the product is kind of unproven and they give it to me and I follow the instructions and it doesn't turn out like they expect.

46:43And now I'm kind of financially on the hook for that. And so trying to mitigate those potential pitfalls. Is there any, I mean, if R &D and contract manufacturing are fairly robust, would it make sense in any way to sunset the other businesses, the tap rooms, for example? yeah i would be open to letting go of the brand which is selling into stores like that has become increasingly challenging you know and we're competing with larger and larger companies which are getting into the space and you know shelf space is getting really expensive as i'm sure bill knows yeah i had the same same thought again i i really relate to the situation we have an expression here called simplify to amplify.

47:32And I'm not sure there's like a better example than this of like, we really need to distill it down into like its most simple form and then build it back up, which sounds like your instinct here. I mean, if you're making money on the consulting side and you're sort of keeping the lights on, paying the bills with, you know, some of the contract manufacturing, you know, that's probably not the destination, right you seems like you really have heart for building a brand you want to get back to the growth years you know maybe that kind of brings it back to zeros or at least to baseline and then allows you to start to build back up again i i had 15 years of you know trying to figure it out or similar amount of time to you before we really were able to focus and so i i guess my my early advice would be around distilling it to the simple one or two things you can do and do profit comfortably, and sort of quiet, you know, any of the expense overruns or the noise that you could then, you know, begin to rebuild.

48:35Yeah, I agree. I mean, we've done so many episodes of the show where the founders had to shut down part of the business and was painful, right? Bill, you had to do that with one of your early products. And then ultimately, it made sense. It was sort of the obstacle that was preventing the founder from flourishing or the business from growing. You When I think about what you do, Jean-Pierre, I don't think about kombucha. I think about probiotics. I think you're in the probiotics business, the gut microbiome business, if you will. Even though there may be more competition in kombucha as a product, the probiotics business is actually growing.

49:15You see this in yogurts, you're seeing it in other products where people are really promoting probiotics and the gut health side of their products. And I wonder whether if you start to think about you and your experience in probiotics now 16 years in, that to me seems like a pretty interesting consulting gig, you know, where you've got small founders, small food companies, brands looking for help and advice on how to think about and produce a product. Is that something that would fit into your wheelhouse? Yeah, kind of. The thing that has set Soma apart from other kombucha brands this whole time is that we have billions more probiotics because of the special long fermentation process that I do.

50:07The thing is though, is that the lab grown probiotics that people are used to in capsules, those are really different than wild fermented product. I believe in wild foods and wild fermented products are going to be a lot more beneficial, but it's bit less easy to quantify in terms of probiotics. And so, you know, and it's interesting, it's always been my focus is the health side. People are always, I feel like people are really focused on the taste and they want something that they can drink that happens to be good for them. So we focused on the taste too. And I've won Best Kombucha in Portland a bunch of times because of that.

50:45I've been so focused on kombucha and fermentation that I could certainly, you know, move into other wild fermented products. But it's kind of its own beast. Yeah. I think you're right on about wild probiotics. I mean, you're looking at brands like Nancy's Probiotic Yogurts. There are all these brands I'm seeing where there's a real emphasis on wild probiotics. It could be a really interesting next step for you. Yeah, I agree. I mean, in some ways, like the world is starting to open up to the way you've been thinking about it for this whole time. Yes. I think it's a really exciting time, but I do think that simplification process, you know, even if there's an opportunity right in front of you, it's going to be hard to see it if you have four or five different, you know, records spinning at the same time.

51:38you've got an eight-year-old at home that's going to want you know needs attention too so i just you know the more you can quiet kind of the noise and and not be so divided you'll be able to i think i mean to really be opportunistic with whichever the ideas you decide decide to go big on interesting so you think that consulting and r &d should be what i what i focus on well i i just i I empathize. You know, I just picture the early days of like, you know, as much as you want to do certain things, the reality of keeping the lights on, paying the bills often kind of wins the day. If that's where the margin is, you have a consistent revenue stream.

52:21Maybe you sort of pause the other businesses where there's more risk, more uncertainty so that you can really focus on, you know, what Guy said is, you know, this probiotic, this real like where where is wild probiotic going? It could be a version of what you're doing. It could be something different. But it's hard to evaluate that until you really settle, kind of calm the seas, so to speak. Yeah. Absolutely. Absolutely. Jean-Pierre, looking forward to hearing how it goes. Keep us posted. Jean-Pierre Parent, founder of Soma Kombucha. Good luck, man. Thanks for calling in. Thanks, guys. Really appreciate it.

52:57Bill, lots of interesting challenges out there. I mean, you know, it's like – and you were there. I mean, you were selling smoked fish, right? And you're like, this is interesting, but it's not really moving the needle. And then it was like, oh, but these – because you started to sell these flavored salts for cocktails. And then that was the thing that was getting traction. And you're like, well, maybe I shouldn't be doing smoked fish and jams and maybe focus on this thing. You know, the passion can cloud your decision making. I love food. You know, my weekends and my weekdays look very similar.

53:35But you need to almost be of two minds. One is what do I love? The other is what's going to be a good business. And it can be really hard to see those clearly at times. Yeah, for sure. Bill, before I let you go, if you now, knowing what you know, you know, you started in the late 90s, right? And literally had a fishing boat off Nantucket. And here you are, you know, 30 years later. God, does that sound crazy? 30 years later, if you go back in time, knowing what you now know, what's something that you would be able to say to your past self? Well, it probably would have been some of the advice that we talked about today.

54:17Like, don't try to do everything. You know, I took, I think, a lot of time to get to where we are 30 years, as you said. And, you know, some of it was valuable, but I think a lot of it probably could have been solved by not trying to wrap my arms around every problem, being more selective early on and really trying to solve the big problems, knowing that there was going to be a solution on the other side. I think it's so easy to get caught in, I need to solve all 10 problems equally, when the reality is it's probably one or two that is holding the business back. That's awesome. It's founder of Spindrift, Bill Creelman.

54:54Bill, thanks so much for coming back on the show, man. Thanks. Nice to see you, Guy. And by the way, if you haven't heard Bill's original How I Built This episode, you've got to go back and check it out. We will put a link to it in the podcast description, the show notes. And here's one of my favorite moments from that interview. I knew where the risk was, or at least I thought I did. But ultimately, there's just risk embedded in between the coolers and going up against the big soda guys and trying to do something really different in terms of the ingredients. All of that just was going to be challenging.

55:30So, yeah, it was terrifying. 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. And 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.

56:19And we'll put all this in the podcast description as well. This episode was produced by Carrie Thompson with music composed by Ramtina and Bluey. It was edited by Andrea Bruce and our audio engineer with Kweisi Lee. Our production staff also includes Chris Messini, Alex Chung, JC Howard, Casey Herman, Sam Paulson, Catherine Seifer, Neva Grant, and Elaine Coates. I'm Guy Raz, and you've been listening to The Advice Line on How I Built This Lab.

56:53If you like How I Built This, you can listen early and ad-free right now by joining Wondery Plus in the Wondery app or on Apple Podcasts. Prime members can listen ad-free on Amazon Music. Before you go, tell us about yourself by filling out a short survey at wondery.com slash survey.