How to scale early by saying no: Dan Cray, PHIZZ

0:00Dan Cray:Today in How to Start Up, I'm joined by Dan, founder and CEO of Fizz, to talk about how to scale without losing your North Star and go global. After raising capital, Fizz had the opportunity to go broad early and major international interest created momentum, but also complexity. Dan shares why returning to laser focus became the foundation for faster and more sustainable growth. This episode is a lesson in timing, discipline and knowing when to say no. So keep listening to hear how Fizz found clarity through focus and what founders can learn about leadership, restraint and long-term growth. Hi, I'm Dan Cray, CEO and co-founder of Fizz, the UK's number one selling hydration brand.

0:45You'll find us in major retailers and world Emirates flights.

0:49Dan Cray:When did you start Fizz? Got going in 2015 and the idea for Fizz came really more from an observation, a big plan of how do we build a big business. And at the time I was in Australia, in Melbourne, and was spending a lot of time working alongside professional athletes. And I basically discovered something a bit unexpected that when it came to the hydration strategy, they weren't relying on, quote unquote, a sports drink for their performance or recovery around hydration, but they use medical rehydration formulas, the types that you'd find in a hospital or if you'd had gastro, because that's what actually works.

1:24So it raised a pretty simple question, which is, well, if that's how athletes and patients, or if that's how you'd be hydrated as quickly and as best as properly, why would you not bring that philosophy to just a day-to-day life? And me, from a branding background, looking at this space, there was a massive gap there from a formula, which I didn't fully understand yet, a brand of business which my co-founders can turn some attention to most people know that water is important but they don't tend to associate it just as crucially as important across things like brain fog or feeling tired you basically underestimate the power that hydration can play in your everyday life we knew there was an opportunity um fill a gap across a brand and a formula but we didn't have a scratch of science um between myself and john and rory who are the original contests of the products and so we teamed up with a friend of ours who's a phd neuroscientist called Paul Anesthesiades.

2:14And when you know two friends and one of them's got a PhD in science, it's not a bad starting point to get a soundboard. That led to us creating a formula for everyday life. And we developed the world's first hydration tablet with a multivitamin. No one had ever paired those two worlds together. To us, it made a lot of sense. And when Paul came involved, he basically told us that, of course, that has to exist. And so, yeah, we wanted to turn proper hydration into a simple daily habit.

2:38Dan Cray:So we're both in England at the moment. We all When you get some vitamins down, you should up your vitamin C, you should look at vitamin D. And then recently, I've definitely seen the last couple of years, this rise of the electrolyte. But you were really at the forefront of bringing that in with vitamins. Absolutely. So we're at the forefront of that hydration category emergence. And I'm really pleased to see more brands pop into the space because it brings more education, understanding of it's a foundational thing and a daily life to the better. It's a really simple and actually proven scientific way to feel more awake, alive and get a bit more better performance.

3:11If the question is what differentiates us, we as a product help your body absorb more water faster, which not all electrolyte products will do. We also replenish seven key electrolytes that you would lose through sweat or throughout the day. And we deliver a comprehensive multivitamin. So it's a very scientific hydration formula coupled with a very comprehensive multivitamin.

3:32Dan Cray:So other than hydration, what are the other benefits that Fizz deliver? You mentioned brain fog, tiredness, all the good things that people who are starting businesses need. Yeah, it helps you get ahead of a problem that dehydration can cause from the hydration side. So brain performance, it could be feeling tired, just general performance of your muscles. Like if you're dehydrated, your blood is thicker and it makes you feel everything's just that much harder. So if you think of hydration as the performance side and then the multivitamin component is more the insurance side, we all aspire to eat a really healthy, fully perfect diet.

4:04And especially if you're a founder, maybe that's not ringing true with Deliveroo at 10pm at night. It's just stuck in front of a screen. It's quite aspirational to get all that you want out of food, but I think it's a great aspiration to have. So comprehensive multivitamin is just a way to cover all bases. And it's the vitamin C component for your immune system, so your B vitamins for better energy. This is an 18 ingredient formula.

4:27Dan Cray:This conversation alone is making me really aware that I'm really thirsty. So you started 11 years ago. So what point in that startup phase did you raise capital? We launched Fizz in 2015. That's probably a very similar story. Kitchen table, trying to keep the lights on and get going. In 2019, we sort of looked back on the lay of the land. That was Fizz and annual revenues were a few hundred thousand, which wasn't nothing to sneeze at. We were profitable if you considered that none of us really took a salary that was above our part-time roles that we had at university. We were selling to like a W Hotel or an Emirates airline or a Premier League football team.

5:06So we had really good credibility of who was trusting the product. And that was where our money was coming from. But outside of Amazon and maybe Ocado, it hadn't really had any penetration. And we didn't have capability really to push into becoming a household name. So we made the decision that when we thought about what do we want out of this business, we had quite lofty aspirations to become a household name. We decided that we would do a capital raise. And so that went on a whole journey, finding the right investors. And yeah, it was a really tough time as well, because about two weeks into that decision, one of the co-founders, Rory, was diagnosed with bowel cancer.

5:40And we all lived together and were running the business together. He's gone back to Australia and since recovered. But yeah, I mean, it was an incredibly tough moment, the year of 2019.

5:51Dan Cray:And John and I that sort of took on the task of securing investment. We closed around in the start of COVID. Actually, our partners were very honourable to still go through the deal at a time where a lot of people were backing out. And then, yeah, we set about from that accelerating growth, getting listings in the likes of Sainsbury's, Tesco, Boots, getting a business which the last three years has been running profitably and growing more than 80 % beyond yet. And so from starting the business to doing the raise to now, what would you say your North Star is? What is the vision for the business?

6:23we always had the vision of being a hydration brand and bringing hydration first solutions to everyday problems that was the north star i guess the interesting thing is when someone gives you a couple million pounds and you have let's say not had that before well you've never had it before because you've basically had to work on marketing budgets that were minimal to next to nothing so the power of earned media was sorry let's just say that again for those that

6:48Dan Cray:were not listening at the back the power of earned media is everything and for those that don't know what that is paid owned and paid is advertising owned is your own real estate and earned and as i say our pr clients is it's hard it's pr you're getting coverage on other people's platforms it's hard but i think that should be the most important thing because it's just by the company we keep and have other people tell your stories that people trust already like that that to me was everything and that's why you look at our sales strategy back in the day was it was a hybrid between sales and marketing because if we could sell to a w hotel and w hotel was giving it to models at fashion week or an Emirates airline is giving to a first class passenger like that is credibility we can take that logo and that name to the next retailer giving them the product immediately establishes I guess trust you know the early nods to who we are as a brand.

7:37Dan Cray:Epic sampling as well talk about target audience Well it's great when your sampling comes with revenue. Yes I mean but that is definitely like a hustle phase I guess of the business and then you know when someone cuts a check for a couple million pounds and sets about shared ambition for lofty revenue targets, then it's difficult because you need avenues to scale. So, you know, obviously online is one way of doing that, you know, for a price pointed product, eight quid for 20 tablets. It's not a huge basket. We're not talking something that's like a hundred pound perfume. So D2C for us has never been a huge percentage of our business.

8:12It has meaningful contribution, but retail was where we needed to build. And in order to build in retail you've got to get people to say yes to listing you so it can take a bit of time to to get those listings and to get the number of doors or to get the SKUs in to prove that you can actually sell so that that pressure let's call it maybe led to making some decisions to find new avenues for revenue so like I said our focus was to be a hydration brand you know by nature of us having relationships with whether it was the Sainsbury's or Tesco and then having the context of a co-founder and best mate have a difficult health scare, turned our attention to the thinking, well, maybe we could be more of an all-encompassing wellness brand.

8:53And it led us to developing a pre and probiotic gut capsule, which, while intense, and credit to Paul, again, to the science behind it, was best in market, was reasonably priced, and was a trending category.

9:05Dan Cray:But it wasn't really to the core of who was Fizz. We got listings in multiple places and was contributing at a time And where the turnover for the business was maybe less than a couple of million. It was delivering 100, 150, 200 grand and growing. But made the tough decision to cut it because it wasn't who we were. We did a whole brand piece of where did we want to take the brand? How do we want to position ourselves? And everything was coming back to the old Investor Dex. You look at the original ambition. It was hydration, hydration, hydration. And we were starting to veer left into this all-encompassing wellness brand.

9:35And so we made the difficult decision to say, no, our true north is hydration. Yes, we can have other products beyond our core product, but there have to be a hydration-led first solution where that has meaningful contributions scientifically to whatever the problem is. There are a lot of areas that you can turn to, whether it's energy, immune system, even gut health, but we produced this in a capsule format that didn't inherently bring any hydration element to it. So we cut it. When you're a founder or you're a young team, it's difficult to turn away from the thing that's still putting money in the P &L.

10:04Dan Cray:I was going to say that this is where the no comes from. in the sense that you're having to walk away from a product that's making revenue. How did you master the art of no? Well, I think when we started, yes, culture was everything. It's founders, it's scrappy, it's someone shows you a lick of interest and you say yes. That even got us into like freshers and university area, but it's like an eight pound product to someone who's probably not spending that on their well-being for a month. Things have maybe changed the last 10 years. But I took over as CEO in 2021. And I think that came with a shift of one, higher people around me with the right experience in FMCG brands.

10:45And two, maybe shifting the narrative a little bit from yes culture to no culture. Because yes culture got us really far to begin with. And it got us to an exciting early stage brandish where someone was willing to invest. But yes, culture was leading us into decisions that weren't right for the business. The trimming of the range was a big moment. In 2022, we also decided to switch off international markets as well, which was a big no moment.

11:13Dan Cray:What was the split at that point between domestic and international? Well, this is exactly the metric that led to the no decision, because the split was 95 % of revenue was coming from the UK, 5 % maybe from overseas. but we were easily spending 20-25 % of our time chasing that 5%. Yeah. From an ego perspective, or not ego, let's call it ambition, we had a lot of early interest from website orders that were going all around the world, Emirates Airlines flying us around the world. You could have asked me in 2020, where in the world can you buy Fizz? And we'd sat here proudly and say South Africa, Hong Kong, UAE.

11:44And not an untrue statement, but we wouldn't have had any meaningful level of sales in those markets. And we didn't exist properly here in the UK as well. You wouldn't find us. You'd walk around the streets of London and say, what's Fizz? and 99 people out of 100 would say I've never heard of it. Still a lot more to go from our sides, but our market awareness in London is now about 38%.

12:02Dan Cray:It's really hard though because when you're starting and you're making it up as you go along and you don't know what you're doing, you've never done it before, the market may not have seen you before, you are scrappy and you are going to make loads of mistakes. But I think people who I've interviewed who started straight out of education say that it's brilliant because ignorance is bliss, they don't know any other way. and people like me who started after a 20 year career working for the people who was very strict and had big guideline books and all sorts of things it's like there's a lot of nervousness around doing things incorrectly or making mistakes and messing up but i think anyone starting a business will say this is just get very comfortable with completely fucking up on a regular basis and you'll be fine oh yeah rejection and developing resilience is like it's going to be top of your list of either wanting to achieve or just recognizing that you're wrong if you're going of succeed you're going to have to live with those two bedfellows three r's rejection responsibility and the roller coaster and actually if you if any founder was truly honest i think this podcast is probably turning into it should rebrand to experience what you get after you need it or the three r's because it's deeply uncomfortable and no one really talks about that when they're glamorizing entrepreneurship and that i'm a founder and i'm self-employed and it's hard It's really hard.

13:19Dan Cray:But then also you're making mistakes in front of your team that you've recruited. There's so many things that you have to bend and flex with. How have you become used to that feeling or do you just learn to live with it? That's a good question. I think I've always had a good worth ethic, which helps naturally bed you into overcoming problems. And having advertising gives you quite a broad experience of working with different characters, let's call it. So nothing prepares you for scaling a team unless you've done that before. In what way? Just it's like, you know, even if I look at like the plans, they're not easy to necessarily produce, but you look at the data, you gain some insights, you look at what you want to achieve.

13:59It's laid down some priorities across a few metrics and you go, right, cool. This is what we're going to focus on. Let's go and do it. What do we need to go do it? Okay. We need these type of people to add to the team. And then inevitably the hiring process can be difficult. you've got team dynamics you've got someone who goes through a life-changing event like a co-founder

14:18Dan Cray:getting bowel cancer like you just can't write what's going to happen next because it's a people thing and it's not unique to being a founder like anyone who's managing a team of more than a couple of people is going to feel the difference of managing and building teams than it is just building the business because you can't escape either one unless you're doing something with AI agents. People are human and I was going to say unfortunately it's not unfortunate at all it's wonderful but people can have sick days or bad days or opinions and they don't always do what they say they're going to do and even if you don't recruit a team you're going to be working with clients and they're also people who have opinions and bad days and sick days and all sorts and it's the juggle and a couple in our business the journalists that we work with as well and you've got three pools of people oh god everyone keeps telling me to get a dog because i don't need anything else that needs something from me.

15:09People are complicated. So it's negative. It just makes things, it's not going from A to B in a straight line. No.

15:16Dan Cray:And for you, you had the £2 million check. You then scaled and took the business in a direction that you have now pulled back from in the prebiotic capsule. How do you now assess whether an opportunity is strategic or just distracting? Good governance, which goes beyond shooting from the hip. So that can come from people. So a savvy finance director to add some skepticism towards whatever P &L moment we're going to rock the boat with. It could come from the fact that we've got a category manager whose job in the business is to not just be selling fizz, but to be looking at the overall category and its performance and our role within that.

16:00We still pay the salary, but it's meant to have a largely independent of the world of hydration and the potential that it could be untapping. People knowing what the North Star is and having good people is probably the first step to making sure that you stay on track to the North Star. That's definitely the first step. And it's my responsibility to make sure that we have the right people and that when I want to introduce a growth project, it's also in keeping with art. So I'm not going off-piste, which I think over the 10 years I've gotten better at.

16:28Dan Cray:I think when you've taken investment as well, And there's a lot of, I mean, it's certainly common in the co-working offices that I use. Everyone's, oh, you're going to go after a raise. You're going to scale. You're going to sell. And it's kind of like beating the chest founder ego attached to that bragging right, as it were. But then no one again really talks that often about the negatives about taking investment in the sense that you might have some pressure now from somebody else that you didn't have before. Or do you think it's a common fault of founders when they get investment that they feel huge pressure to scale at pace and they make some mistakes with that?

17:01I know very few founders that achieve their revenue goals from their investor perspectives. So inevitably, most people I think who raise are going to feel pressure and maybe in an environment where even if they're doing really good things, they're not living up to the expectations that they sold. That doesn't mean that the value that they sold out wasn't correct to be realized in future years, but it might just take a bit more time because inevitably, like I said, you've got a plan in place and there's a lot of things as to why it doesn't come together as quickly as you think it could. Oh, yeah.

17:33Dan Cray:Founder hours, like dog age. You think, oh, I can achieve these 50, 100 things today. No problem in my waking hours and forgetting that you need to sleep, eat and exercise. It's, yeah. The perspective of time, I think, also helps if you've come from Australia, because I think distance perception in Australia, you're like, oh, I'll fly seven hours for two days. No problem in England. You'd be like, what? Whereas in founder hours, it's the same. I've just flown back from the Middle East last night and the whole team's asking me this morning, They're like, oh, are you feeling jet lagged? I'm like, guys, it's four hours.

18:03Like, why would I be jet lagged?

18:04Dan Cray:That's a bus journey. That's fine. Yeah. I love that. So you've given, you've expanded globally, pulled back into the UK. At what point do you think you might go after a global expansion again? Or is that just not on the roadmap right now? We've scaled the business from turnover in 2020 of 250 ,000 to last year closing just shy of 11 million. We've done so profitably off of a single raise, which is a huge credit to all the team behind me a building and the international pts strategically we cut it back in 2021 but the ambition for the business to put hydration led solutions into the marketplace i'm restricted to just thinking we'll be a uk business the uk still remains the core and the focus and yes we're the number one seller but it's a booming 105 year on year growth category so we want to make sure that we are fueling that incremental growth and building it that out but it is time to start seeding the brand.

18:57We sell it to Emirates Airlines. We do a level of trade with the Middle East. We're building out distributors in that part of the world. We've got a launch coming. My home country of Australia later this year coming into their summer, which will be a very exciting moment. And I'm keen to see that come to life. So yeah, we have an international expansion plan across the next five years as to how and where we want to take business.

19:16Dan Cray:But you feel it's more shored up this time? You feel confident it's in the right places with the right product? Yeah, I think if we were a bigger business and a different, more conservative mindset, you would just constantly be disciplined. But we're not looking for, you know, 5-10 % year-on-year growth. We're looking for a baseline of 50 % for the next five years. So that's going to come with staying disciplined to the yes and all-star and understanding your golden goose. UK market needs to retain a lot of focus. But you've got to start planting seeds for some bolder bets. Look, are all of them going to pay off?

19:48Probably not. Are they all going to pay off as fast as we put them down into the five-year plan? Probably not. But I mean, if the history tells you anything, then probably not.

19:58Dan Cray:But you've got to try. But you've got to try. And I think this is the nature of the beast is like when we're in the game to try our hand at a few things. And if you're trying your hand at things that make sense to your true north and make sense based on you have the resource to do it and you're not adding too many priorities and yet the team has the bandwidth, then you're in a good place. I found that it was really weird last year. I think we'd hit four and a half, five years. And I suddenly thought we have the bandwidth and the budget just to play a bit and just test stuff. And we'd grown the business.