Bill Shufelt - How to Build a $800M+ Non-Alcoholic Beer Brand

29:11Beer started to taste good, and so John took the homebrew setup to... We just stopped for a second. I just find it so... You guys didn't even have a product in it, and it didn't even taste good, but it's just the thesis of just the opening in the space. Yeah, two grown people who were like months invested into this, years even, had both quit their jobs. And John has said up front, we are never launching unless it's amazing. And so the beer does start to taste really good, though, like 40 batches in upside down starts to taste good. And John's like, okay, we're really onto something now. We still have a lot of work to do on process, but like, we're going to get there.

29:47And so he takes the homebrew kit to his parents' garage. So like me and him are moving back even further in our careers here. So now we're homebrewing in his parents' garage, not even our own warehouse. And we're bottling beer that I can drive around Connecticut and hand sell to retailers for when we do have distribution. and then we start the construction project and like do all the concrete, build the tap room, throw in the tanks. For context here, who else is working in or on the company? It's you, him, and because it seems as though you're the construction worker, the salesperson, the production, you're everything.

30:19At that point, just us still. Right before we launched, we brought an incredible assistant brewer for John, a guy named Andrew, who was with us for quite a while. He went back to get further education we still keep in touch with. and then pete joined us on the canning line and pete's still with us to this day um right around his seventh anniversary now true testament to culture there you go baby yeah and um so very lean team um we're basically running the whole brewing operation and packaging with three people including john and then i was the whole outside world um and that was until about six months after we launched.

30:56And then we grew to six people by the end of 2018, 25 people by the end of 2019. And then we added 100 people in 2020. And at that point, what? Are you guys e-com? Are you in stores? Yeah. So 2018, we're on the market for six months and we launched nationally on e-commerce and in Connecticut and Massachusetts in brick and mortar distribution with great distributor partners. And then 2019, we went out to about six states. Most distributors at that time were still saying no to us. It was really hard to crack open doors at that point. But the data started to look really good in 2019. So in 2018, me and John could not get anyone to talk to us, couldn't get any meetings.

31:47And by anyone, do you mean investors or distributors? Or end buyers? Anyone, okay. To even get people to sample the beer, I had to do such gimmickry around like, it wasn't just, hey, do you want to taste this? Would you bring it in? It would be like, no. Give me a gimmick or two. Would you just say it was alcoholic? I would do things like, I would walk in and be like, hey, what if I told you your best-selling beer in 10 years is not on your shelf, it's a quarter of the calories of this really great selling beer but like when you put it on your shelf people are going to look at my store finder and come to your store because no one else has it around and i'd like do this big lead up and like be like are you ready to taste it and i'd taste it and they'd be like wow that is really good and you say that's 45 calories and like go through the whole thing and i'd be like and it's not an alcoholic and they'd be like okay like and and this is you hand-to-hand combat in the beginning like you're doing the selling correct yeah and um or i would do things like go up to people in the parking lot and ask them to like trail me in and be like pretend to overhear what i'm saying and like so there were like all sorts of gimmicks and um it was tough like i so in that first six months after we launched i was doing a lot of events like because no one was walking to the beer shelf looking for non-alcoholic beer i knew if i just if we just made the beer and put on the shelf our company would die within six months.

33:16No one was walking to that part of the store looking for it. They'd given up on that 30 years ago. So what I did was I had to drive people with no marketing budget basically to that shelf. And so I set out every weekend, I would go, I'd do my best on social media throughout the week, but I would go to races where there was anything from 5Ks to Ironmans to ultra marathons and hand out hundreds of beers and talk to people person to person. The best of the best doing this. You probably remember some of those people's faces from this day. I remember there's names that I remember from 2016, 2017. It's so crazy.

33:56No, when these people, I wouldn't need like people throw around the words like community and like, like it's some like software plugin that can like scale community for you. Can't. When we talked about community is like people we have met in person, told about the company, like changed their lives in many ways. And like these people who I met in person in 2018, 2019, 2020 at events and exchange emails with over the years and stuff, like I love seeing their name pop into my inbox. But also when like we get like mildly bashed on social media, I recognize so many of the names that jump into the mud pit and do our bidding for us also.

34:34And it's like really gratifying. I mean, it's the ultimate form of leverage too, that you're the quote unquote founder and CEO and you're in the mud. You're literally doing the guerrilla marketing on the ground floor and you're getting good feedback too. People are probably telling you what they like, they don't like. Yeah, it was so easy to market the product because I would have loved to be running those races anyway. And like, so I would get there early, set up, run the 5K route, run the half marathon route, run the Spartan race with the first loop going around. And then I would be like muddy and sweaty behind the booth with the same metal on that everyone else got.

35:08and sharing beers. Is this allowed? Like the race, the people running the race, the directors, like did they allow this or did you just? Yeah. Well, a lot of the races I would just run with the sanctioned group. I'm not fast. So like I'm like, I love running. Like if you gave me six hours on a Saturday and my family wasn't around, I would love to go for like a four hour trail run. But at the same time, you're never going to find me on any podium. I'm like a 10 minute miler. I just love being out there. And so I'd have to start these half marathons like a good hour before like when one of my favorite races this pain to pain trail half marathon in westchester here every year and i've been sampling there since 2018 and i always show up set up my booth and get out there at least an hour before but like the winners are so much faster than me that they're like catching me towards the end and like people on the aid stations are stuff like yeah i'm like not me don't work yeah but um i but like at the same so So going back to where I was, like hundreds, if not thousands of beers every weekend.

36:10And I'd be driving somewhere within three hours. Then I'd get back to Stratford, open our tap room at noon. And we'd have visitors at the tap room. And I was the bartender, at least for the first six months there, talking to people directly about our beers on tap. And then, but it started to happen slowly. At first, the velocity was not great at stores. No one wanted to talk to us about non-alcoholic beer in 2018. like we could not buy a conversation but like the most ironic thing happened as we turn the clock into 2019 you have sober october and like you have joe rogan talking about non-alcoholic beer in fall 2018 in sober october 2019 dry january you know everyone every year previously had been like doing sober or uh dry january where like typical like healthy reset people give up drinking for 30 days and like it's a good kickstart to the year well previously when it was like people searched like what to drink during non-sober october there was like nothing there literally and all of a sudden there were these a few pr hits where people um who searched during dry january like what to drink during dry january it was like there is actually a great non-alcoholic craft Brewery now.

37:28And by the way, you don't have to live 10 miles from it. You can order nationally online. So like for the first time ever, non-alcoholic or beer was available for purchase online nationally. Really quick. When you guys look at your sales, are you seeing, is it every single year? Is there uniformity like October in January? Is that a big thing? I've never been a part of this. I'm just curious. So generally it's the biggest beer holidays for alcoholic beer are the same biggest weeks for non-alcoholic beer. So 4th of July, Memorial Day, Labor Day, like the winter holidays, all of them are huge beer holidays also, except January.

38:06January is like this, like really like the water's warm, like really low CAC introduction period for customers. And so we accumulate a ton of customers in January, but they don't go away. They're like, oh, I love this. I love how I feel. I didn't realize I could drink great beer all week, every week, and feel good the next day at work. And so we find a lot of our highest retention month of the year of customers is January. By highest retention, you mean the stickiest LTV over time? Yeah. If they come in in January, those are your best customers. They're most likely on a percentage basis to stay with us forever.

38:43Yeah. So 2018, absolute crickets. But we come around to that first dry January and all of a sudden, everyone's looking for non-alcoholic beer and finding it for the first time. And at that point, it's complete white space. It's old archaic brands that are just throwing in their mix, a non-alcoholic, but they're not really pushing brand or dollars behind it and you guys. Yeah, so there was this, it was lagers. It was a super boring category, no innovation. And all of a sudden, this category had IPAs, Golden Ale, Stouts. John was basically launching a new beer every Monday. It was like, I would say offhand, like, John, do you think we can make like a really hoppy double IPA or like hot summer months?

39:24He was like, what do you think about making some like fruit stand sour beers that are like super refreshing? So you guys were dropping product every Monday. This is like what streetwear does. Yeah. And so I was getting our community. We had no marketing budget, but like by word of mouth, people were starting to say every Monday at 5 p.m. Athletic launches a new beer. and people were just waiting at their computers. And we would sell out of these limited releases online in like 30 seconds every Monday. And so all of a sudden we went through the winter into 2019, into the spring. And we went from like absolute crickets to like barely brewing, not that often, to we were so out of stock and out of capacity.

40:05It was laughable. Like we had this like national online community and then our local stores couldn't buy enough. We couldn't make enough. And like, we had totally outkicked this brewery that we thought was going to be good for at least five years. I'm very interested because a lot of my buddies come from the finance background. I've always been intrigued by can they or will they make that jump into entrepreneurship? A lot of these things that you're saying, I mean, you didn't come from Ecom. You know, you spun up a website. When you were doing those races, like, were you thinking CAC to LTV ratio?

40:37Or were you just thinking like, this is common sense to do this? or was it just your only option because you had no resources? I was thinking like a thousand true fans. I got to be out there talking to people, make a thousand people fall in love with what we're doing. A thousand true fans, Kate Kelly, amazing blog posts. That has come up on every single podcast so far. I love it. It's like, it is like if you can - Champion one-to-one. For sure. And that's why I was like also kind of glad fundraising was so hard because like our angel investor team ended up being almost 70 people and I did 120 meetings.

41:09but like that group of like 70 ambassadors for our brand was so good for like a word of mouth sprint out of the gate. Yeah. So let's talk about those. So it looks like you had 70 yeses, 52 noes. You have a great product. Now you have some momentum. What did that look like that process? Yeah. And it was probably way more than 50 noes. That was basically just my CRM sheet that I was like trying to track responses. But yeah, so John and I were homebrewing all day during the day and I would go out and do fundraising meetings at night. Generally, I'd drive somewhere within three hours of Connecticut and either have a dinner or meet someone in person.

41:47Very often, there were dinners of five to 10 people, and I'd be so excited about it and get five to 10 no's or just no feedback whatsoever.

42:00Fundraising's hard, and people are funny about money, And I didn't want to like follow up with people like crazy. I really wasn't outbound on any friends or family. I'd figure they would hear about it and know about it. There's such like expectation and asking that I didn't want to make former colleagues, friends, family like uneasy. And I also, it's a big emotional burden to take capital from people you care about. It's one thing when you like don't really know a person, you care for them for sure. but like they're making eyes wide open investment totally proactively on their own versus like a family member writing a big check that you know they may or may not they probably wouldn't have made otherwise and so the i love our angel team um a lot of it is friends and family but the uh the burden of like being the shepherd of that capital is enormous too what do you think the biggest mistake people make when they're raising specifically on the angel rounds um i i think it's so important to get the right investors in every stage like goal alignment time horizon alignment expectations of the journey what they're getting into is so much more important than um you know the valuation and stuff like that like at every round of our company i don't think we've ever taken the highest term sheet um and sometimes significantly not so to get the right investor of the right alignment or people we really liked.

43:25I do think the biggest mistake people can make is like investor misalignment of goals, not communicating really clearly about that before getting into business together. In what sense are the terms? Financial terms or timeline terms? Yeah, timeline, business goals, expectations on like profitability versus revenue growth, things like that. I think people get into a lot of trouble with like preferred chair structures, things like that. um also boardroom alignment um you know i i've had a lot of friends who are founders who've gotten pushed out of their own companies for like really small plateaus and sales you know like every business is going to go through peaks and valleys and we've been incredibly fortunate athletic where we've actually had all like really good board continuity we've added board members over the years but all of our board members from my 2019 board of advisors are still with us uh, five years later and they've come into like pretty tough.

44:20Like I know from the outset, athletic looks very lower left, upper right, but like we've had great board meetings where we have been in like fairly difficult situations, uh, COVID like interest rates going vertical, um, all sorts of different things. And it's great to have a board room where you can talk through challenging things and come to great solutions and be all united. Let's get some big call outs. So you raised 50 from General Atlantic, but then the celebrities are big too. You got Carly Closs, Darren Revelle, David Chang, Lance Armstrong, JJ Watt, Naomi Asaki, Blake Mikowski. Everyone always says you need strategic partners, strategic investors.

44:59Why don't we call out one or two and tell us kind of like a big learning or something that you've really, really leaned on them for. General Atlantic is a big, big new sexy one. Yeah, they're pretty new and They are great advisors, super patient. I would say, so a lot of companies in this economy are like somewhat shell companies in terms of like thin layers over contract manufacturing businesses or whatever. John and I made the decision that we want to be long-term employers and build real manufacturing. So like building real U.S. manufacturing is a capital intensive business where we've built three breweries now.

45:42We're building our fourth that'll be done mid-year of 2025. We've put somewhere 125 to 150 million in hard assets in the ground and then invested way beyond that in our people and building the category. I was looking at a machine out there and Chris said that it was 275 ,000 pounds. I was just thinking about how much money that probably cost for sure and Each brewery we think is so large until we build the next one and it's like two and a half times the size and speed And I mean this place is running 24 7 to for context for everybody because you guys are maxing out capacity And it's really exciting because we go to our retail partners like say a walmart or someone like that Who's like a u.s company also and they're like you did what?

46:27like you, like you have a team of 300 people and you've put over a hundred million into the ground in the U S and like, it gets our customer community, our retail community so excited that like we're actually investing and clearly future oriented. So, um, but like having an investor team who's really excited about building actual hard assets and manufacturing and, um, doing that exponentially is really expensive too. Um, so, uh, we've tapped into a lot of experiences there. Um, Um, one of our, so I referenced one of our great angel investors, but really like our whole group of angel investors has been so supportive through this journey.

47:06I thought we had very quickly go from angel investors to institutional investors. And actually our angel investors came back three rounds in a row and helped us build. Um, and we were really lucky because the speed we were able to move at a business with this like really supportive group. um so shout out to all our angel investors then we brought an alliance consumer growth who's like a premier cpg private equity investor and they've seen us through quite a roller coaster of like profitability and scale and everything and so really nimble great private equity firm let's get grounded there so like what type of conversations and feedback would you get with someone there yeah so um i came from finance and thought i like had all this financial and operating expertise and And I was like, oh, I don't need any financial help.

47:54But the difference between like financial statements for a publicly traded company and an operating model from a true manufacturing business with like all these arms and tentacles and everything is night and day. Like the depth of a true operating model is so deep. And shout out to Alyssa, who was their CFO at the time. I would just like kind of data dump the models and financials I was working with. And I was like, this is where I'm at. but like a partner like that helped look over my shoulder and really get complex very fast on our business and also um it's a big thing too for a firm like that to take it in stride when our ambition grows and we're like actually that next brewery isn't going to be a hundred thousand barrels it's going to be 450 ,000 barrels and we need to raise three times the capital we thought we did on the next round but for partners to like hold hands and take that in stride is huge um and then um kirk dr pepper led our next round and uh you know huge company i think it's like a 50 billion plus market cap but like the people are so approachable and nimble and it's like a really good people culture and so the connectivity to like connect with people in their company and learn about different things a lot of below the line things like logistics supply chain things like that is super helpful there.

49:17And then very recently, General Atlantic has been a new partner and really talking about like long-term growth there. They've seen hundreds of companies grow at scale on an international scale that we admire. So yeah, they've been great so far, bringing their perspectives. So you mentioned a hundred million plus into the equipment and the facilities. Being vertically integrated, I can imagine is a huge competitive advantage. I'm not even sure if these other companies are or they aren't, but what type of pluses has that been for you? Yeah, so non-alcoholic beer is a very contract manufactured category and a very imported category.

49:56So it really requires a lot of totally different brewing equipment than traditional beer. And so most people, rather than make those investments, outsource. And then there are a lot of companies in the category that are basically sales and marketing companies who outsource all the production. And so Athletic going the opposite way and deciding to do everything from ingredient selection to selling at the street level ourselves has been a really competitive vertical advantage. Just from a controller perspective, like you can do whatever you want whenever you want? Yeah, nimble, responding to supply and demand, being able to make whatever batch sizes we can.

50:35You know, if demand surges or comes in lower than expected, we can adjust much quicker without paying contract brewing penalties. Or if we were in a contract brewing portfolio, we probably wouldn't be the top priority for that customer. So if their top priority was having a great year and needed all the capacity, we'd probably get pushed to the side. And then in running your own manufacturing, it can be great if you are doing it excellently. But if you're doing a sloppy job at running your buildings or aren't that great at it, it can actually be much, much more expensive and inefficient than outsourcing it.

51:10And so that's everything from quality to sourcing to everything. And so every one of our teammates has to be so good at their job for this to actually be an advantage, which they are though, luckily. Which I think is, what I think is so ironic is conventional wisdom says, hey, before you buy into inventory for t-shirts, you want to drop ship t-shirts, you test it, see what works and then you buy into the inventory and i feel like with you guys you probably should have sourced it out first before doing this but you got lucky because no one wanted to do it for you so you just said fucking i'm gonna do it myself that was the business plan was originally contract manufacturing before i met john and um eventually a lot of things routed us towards like it was like okay this is actually a very proprietary process we have we want to protect that like kind of like the coca-cola trade secret it.

52:00So we want to make it all ourselves. Then on quality, like this is actually a very difficult process and non-alcoholic beer is really sensitive. And we want to hold ourselves to quality standards that are just heads and shoulders above the industry. And so we could only do that in our own walls also. But going to a very specific time period in our history in COVID and like 2021 really had just as bad supply chain challenges as 2020. We had huge advantages in that like our business wasn't super fragmented and we weren't going through a hundred agencies, a hundred different producers, things like that.

52:37It wasn't like, okay, the product's getting made, ship made here. And then 3PL by this company and this company, it was, it actually all happens right back there. You know? And if there's a hundred pieces, just if one or two is MIA because of COVID, then you're out. Yeah. And so if someone got sick, we would just have that team go take a paid break or like paid week off or whatever. And we'd bring in the other shift, you know? And, um, so we got through COVID and moved really fast in that period. So I think two big advantages of COVID where we had a vertical business basically where we controlled so much of it.

53:13And then our e-commerce business, we were our first in beer e-commerce. And so those are two really lucky things where most corporations stood still in that time. And we went vertical. to put a bow on the investor stuff. How do you communicate to them? Are you giving them reports, monthly reports, quarterly reports? What does that look like? So one of my favorite things in this journey has been the gratitude of that team that supported us to build those first couple breweries and get going. You like sending those numbers. Well, I loved, not all my updates have been great, but I love sending those updates and keeping them on for the journey.

53:52some investors were really formative in those first conversations they were like in in those angel investor meetings they're like this is as much about betting on you I love the idea I hope the product's good but um they're like what I absolutely don't want is just not to hear about much and have it be out of business because like a lot of people can be actually really helpful if you just share your challenges with them which I do um and so for the first four years I wrote monthly updates to the investor team. Wow. And so 48 monthly updates and then I went to quarterly beyond that. And what does a monthly update look like?

54:28Yeah it's like you know KPIs, financials up top, progress, what's next, challenges and then industry PR and headlines and stuff. But generally giving like a well-rounded quick snapshot of where we're at as a business and I can't tell you how many times people have picked at something in that and pulled on an incredibly helpful thread or made a great introduction or like, I didn't realize you were looking to do that. I have all these connections. And so as our investor team has grown to over 120 people now, they've been some of our best supporters and connectors. So let's talk about you for a second.

55:06You went from monthly to quarterly, because I would imagine going from 25 employees to 250, your role and responsibility as a CEO has changed dramatically. I did hear from Evan though, before that you're still getting in the nitty gritty and you're going to those Excel documents and do your own PowerPoint. Oh yeah, for sure. I dropped in Evan in a meeting earlier today that I'd been building this like side model over the weekend. Love it. So what would you say as a CEO, what would you say right now today is your core role? So in many ways, I'm a master of nothing. Like this is the idea. Come on, man.

55:42Don't say that. You're a world-class generalist. Well, the idea of athletic came from me and my life. It was inspired by that. And I love being a generalist. John, as a co-founder, was like really technical. But the amount both of us have grown with the business has been enormous. And this learning journey has been the best interdisciplinary, most fun I've ever had. And John has been right along there too. The amount we've grown together. and he definitely has technical chops. I would say he is a real expert in so many things, but myself, I'm like more a generalist and I'm here for support. So the early story of Athletic is Bill and John, but since then, the talented people we've had walk in our doors every day is unbelievable.

56:29Like our head of food safety and quality is a former regulator who for some reason decided to join our team. We had people join our brewery in really early days from breweries that were like a million times our size walking into it. It's almost like, like that example there, someone going from one of the biggest breweries in the world and deciding to walk into our 10 ,000 square foot Stratford brewery is almost like feel the dreams where it's like, where like this person unbelievable, like totally unexplainably walks out of the cornfields into our brewery. And, but like these amazing teammates have done that time and time again.

57:07And as we've built a great group of people, it's attracted even better people every year. And so now when I try to like butt into conversations and stuff, I'm talking to such an expert usually that's like, Bill, I really appreciate you like trying to stay up to speed and learning. But like you're the optimizer, find the problems and optimize. But then there are things too, where like John and I inherently have like tens of thousands of hours and energy and lessons learned in this business. So like me sitting in the background of a marketing meeting or a sales meeting or something can be incredibly helpful and be like, oh, I've actually seen that this didn't work for that reason.

57:42Or this is the insight I had in 2022 on that. I'm not sure if it's still right, but like, this is the survey I ran at that time. And, or so like that stuff, like there is a lot of ingrained knowledge. And I think also as the 30 ,000 foot guy, you can be incredibly helpful too on like helping people zoom out or when people are like really good specialists they often don't see the ripple into other departments or forward and backward in the business so we can be helpful there i would say though like the reason it is so tough sometimes is there's a certain level of complexity toxicity anything where usually someone doesn't feel comfortable like we are big in decentralization.

58:25And I love it when people just make decisions and run with things and like we learn lessons and get better, but we're much faster as a result. But there's a certain level of challenge of problem that needs more and more sign-offs. And so, you know, there's probably five to eight things on any given day that rise to my desk and is like literally break my brain that they're so unique and weird and challenging and fun. And, you know, so I appreciate that too. So you're clearly a hiring specialist. I think you are. What would you say are the top things that you look for when you're hiring? Is it a checklist with your core values and culture?

59:01How are you hiring people? Where are you finding them? Are you using recruiters? What's your strategy there? Well, so really early in the company, we were trying to identify for really good generalists, independent problem solvers, optimists, people who could identify challenges and solve them and not people who have tended to not do as well at athletic are people who identify something and come back and be like, what's the next step? We also have like tend to have a lot of viewpoints on hiring processes. Like, you know, the old adage of like hiring slow is one of the truest things. And you tend to know when things aren't a fit also for like any number of reasons.

59:43No fault to people's often. but going back to Blake Mycoskie one thing he told me he was like continue to sit in on all the interview processes you can the second you lose touch with that like entry level culture like being people's first touch point with the company is the second you're going to lose the whole culture and I definitely took that to heart obviously you guys have had great success in the US you've expanded elsewhere UK and Canada are the two big ones from what I saw How do you know where to go? Very often listening to our customers in many ways, like you can feel the like heat and the pull to a new area.

1:00:24Canada and the U.S. are relatively borderless. And so that has gone really well and not been that challenging. We have an incredible team of six people in Canada now. And very much brick by brick, like we've been so lucky to get people to lead these new areas and do it from a grassroots style with like very limited resources to start. And then every year we layer in more resources till you turn around four years later and there's a real business there and a real budget and a team and real. So that's a lot of fun. As you get farther and farther from home, it's definitely tougher. We're selling in the UK and a little bit in Paris and France now.

1:01:04And that's starting to go really well. And we went there because customers were asking for it. You know, we've got this deal with Arsenal where we're the official non-alcoholic beer of Arsenal, which is one of the top Premier League teams. And that was because fans were emailing us saying like, Directly emailing you. Yeah, literally to Bill at athleticbrewing.com. We want better beer at Emirates Stadium. And I was like, we should look into this. And we did, and it's been a great partnership. But the UK has been a receptive market so far. We're just like, you know, building from grassroots up. So what I'm curious about is...

1:01:41traditionally, I always liken things back to apparel because that's the world that I come from. When you go internationally, you just hire a distributor. I'm curious with this, are you going distributor or is there new SG &A? Are you levering your internal resource? Are you using the back office? What does that go-to market look like when you go into other regions? Yeah, a lot of, it depends, like everything, unfortunately. The answer to a small business is like nothing's easy. And so it depends everywhere you go. Very often we can like stretch our like headquarters resources to scale into new spots.

1:02:17It's tough to get distributors far from home, but also distributors just make the deliveries. They don't actually make the sales. So like we actually need people on the ground to make the sales, call on big corporate chains like Tesco and Waitrose and all those. So it's a resources intensive battle and like retailers want to feel the love. Like you got to be walking in the door. You got to make sure the beer looks good on the shelf. And we have made the mistake before of launching far from home with very little resources. And just because beer is going out the door, we assume it's getting to the right place and everything.

1:02:53But I, so for example, in our UK business, um, not that probably like 18 months into the launch, it wasn't going as I would have hoped. And what does that mean? Just not good sell through. Yeah. Not great sell through. and um you know earlier we talked about how when we launched in the u.s um people hadn't been shopping that shelf recently it wasn't an exciting shelf so why would they walk over to it and i went out and i sampled in the u.s and built that business from the ground up and like we actually drove people to those shelves and um i we visited a lot of stores like our average salesperson in the U S visits about 500 stores a quarter.

1:03:31Um, and so, um, when the UK business wasn't going as I hoped, I went to my wife, I was like, you know, why should I really expect it to go any differently? Like I haven't been over there for any significant amount of time. And so we, as a family went over for a month in 2023, shout out wifey again. Yeah. And we had a blast with it. I visited a ton of stores, did a lot of sampling. Um, we have a great group of teammates over there to who are, I don't want to make this like the bill show, but it was so helpful to see the shelf and we're like, the beer may have gotten delivered to that store, but it's literally not on the shelf or it's still in the cardboard case, which blocks the label or stuff.

1:04:11Like there's all this stuff where like, you know, the beer gets delivered to the store. It sits in the back. It never makes it to the shelf. So your sell through looks terrible, but no one in the store is actually putting it on the shelf. And that's just brand education and just the small details. Yeah. And And so you have to visit the stores and build from the ground up. And so launching even whether it's a new country or a new state, like it is like a slow going freight train, but like it takes three to six months for that word of mouth, people sitting on the shelf to really get going. And then whoosh, it grows.

1:04:43Like the word of mouth definitely pulls from there. And by whoosh, you also probably mean supplemental marketing resources. Like you're going into the UK and you invest in Arsenal. Yeah. And like a little bit of success begets like a lot more resources needed. And yeah, it's people, it's marketing, it's more distribution and like point of sale and everything like that. Let's go back to the people. I want to, spanning, it's you, it's John, you bring in the assistant brewer. As someone that it's crazy to think that technically you're a first time entrepreneur, you are technically what were those big hires that fundamentally changed your business what were those inflection points um like literally everyone i walk around these buildings and it's we have a lot of teammates um who have i i'm just doing the math quickly but i i think we have over 120 teammates who've been with us more than four years now um or but like a lot of those are five six seven and uh when i go to like our west coast brewery we opened that brewery in march 2020 and we have a ton of continuity out there and it's almost like there's almost like a second founding story out there and it's so fun to talk to all those teammates who are on the ground when we bought this brewery 3 000 miles away quadrupled it and like now we bought the one across the street and we're scaling that up for quick context for people listening when we walked in here in the lobby on the screen was happy work anniversary i saw four years five years six Probably it was like 10 different people on there.

1:06:17Yeah. And so like in so many ways, it's like the story of these amazing people walking around our building. Great. Let's go to giving back. I didn't know what a B Corp was until I was on your website. I was an S Corp, C Corp, and LLC guy. I want to dive right into the two for trails and let's get a masterclass on anything B Corp because I have no idea what it was and I purposely didn't look any further. Yeah. And so we actually weren't a B Corp when we launched, we were just doing these things. Um, and so as John and I were thinking about what we want the business to be, like one of the earliest business ideas I had in athletic was like in building a long-term sustainable company, wanted to be like a good member of the communities we were doing business with and like build true community.

1:07:03Um, shout out to like, um, you know, I came into this business with like mostly financial skills and like a lot of big ideas a group of people who helped me bring that all the life in a way like heard what i said and helped think about it was our creative and branding agency at fairfolk out of boston and they've been with us for seven years we still work together every day um but john they're one of the founders of the agency was like you have like you care so much about this business and this business plan has so many things they're like you've got to construct it so it's like an onion that people are peeling back layers and every like even if they're three to five years into their athletic journey are still discovering things they didn't know and so that's kind of been our ethos is to just generally be like good members of the business community the communities we do business with and like everything we say inside our walls is true outside our walls and vice versa and it's like really easy to do business that way and as we were thinking long-term, we wanted to make every teammate of Athletic a shareholder from day one.

1:08:08And then we provide 100 % benefits to our employees. And then we had this big environmental program called Two for the Trails, where generally our goal is to enhance outdoor access for generations to come. Like very broad mandate to give us a lot of flexibility, but the goal was 2 % of sales up to$2 million a year would go to just trail and park organizations, trail building, trail cleanups, helping people get outdoors. So it could be anything from like an urban bike park to like a backwoods trail system to Yosemite facelift, rebuilding rail trails. And is that a personal passion of yours? Yeah, I love the outdoors.

1:08:46I think like just getting outdoors and being active and like people moving a little every day is like a key part of health. And I think if we protect green spaces and people's ability to be active and get outdoors and be healthy, that'll be very world positive in 10, 20 years. And so this program though, the way it compounds, we've only been in business seven years. Originally 2 % of sales was very small. It was like$5 ,000. We were one check to the Appalachian Mountain Club in 2018, which was really fun and meaningful. But the next year, I think it was like$30 ,000. But now it's up to$2 million a year.

1:09:23And we're up to like$6.3 million donated over six years of business. And so as we look back in 10 or 20 years, this program is going to be like a hugely impactful environmental grant that just like reloads every year. Last year, I know we made 211 donations with that$2 million. This year, I'm sure it's about the same. So it's a really fun and impactful program. And kind of tying that back to the B Corp, we're just in business doing these things like being athletic, being good employers, being good members of the community. And I turned to John in 2020. I was like, you know, I think we're doing everything a B Corp is supposed to do.

1:10:04Like we should probably just apply. And so we applied to be a B Corp around like 2021. So there's just like certain like numbers and metrics and benchmarks that you need to hit in hiring and donating money to charity. And then you can be a B Corp. Yeah, it's like a set of standards in doing business. and how much of did you lean on Blake from is Tom's a B Corp? I believe so um but he he loved that part of our mission um I would say uh JJ Watt another one of our investors like loved the impact of our business um you know JJ Watt uh famously raised I think it was like 65 million for the hurricane in Houston relief.

1:10:48But he is the most authentic, nicest guy. Him and his wife are extremely charitable. Actually, the first time I met him, I'm sure you wouldn't mind me sharing this, he was actually wrapping gifts for charity in his living room when I walked in the house. So he's the nicest guy. So I think a lot of our investors over the years have really taken pride in athletics, positive impact on the community and the world. Amazing. I know you're deeply passionate from a giving back perspective on the entrepreneur side. I know you started making some investments I saw on LinkedIn. I'd love to know when you're evaluating investments.

1:11:22We were talking about a Christmas tree company off camera before. What do you look for in investments? I probably should be more formulaic about how I do it and like what standards I uphold. But generally, I think it shakes out to the same place of like, am I proud to be involved in the companies I invest in? Um, do I want to support the founder? Do I believe in the founder? And like, it is, it is so hard to be an entrepreneur and a founder and like have a successful business that like, I really look for those people who are like forces of nature and have really differentiated approaches. And like, I know angel investing is like a really low probability game.

1:12:03So I like really want to be proud in what I invest in and be confident that like the journey is going to be like fun and meaningful. and I'll, so yeah. Amazing. All right. So we're going to fire off some random questions and then we're going to get into the rapid fire. We're around the corner. Um, what about the name? I feel like the name athletic brewing, like you go to a bar and you say, I want an athletic. It just, it resonates with the psychology behind like doing something healthy as opposed to drinking beer. How'd you come up with the name? Exactly. Like you said, that was a big part of the battle like when i had stopped drinking i was at a bar looking for a non-alcoholic beer and like good options it was so hard to ask for and so stigmatized and i really wanted the name that cut through a lot of that and so it's impossible to have a word that'll be like perfect for everyone but a huge percentage of the population considers themselves an athlete in some way like we like to say everybody's an athlete in their own way whether that's like actually being like uh like a like a sports athlete or being the best at microsoft excel or video games or whatever um so i wanted a word a lot of people could relate to but there was like undeniably positive crossed borders was easy to understand like in a loud bar would be an easy bar call too If there's a hard sound at the end of words, it's much easier to cut through noise too, supposedly.

1:13:30I generally just wanted to like blow away the stigmas of the category though and make it a positive aspirational name. All right, it's lightning round time. I'm going to fire away a bunch of randoms. Awesome. Let's start. Yeah, take a little drink first. I'll try not to be so windy in my answers. No, you could be windy. Best hike in the United States. Oh, wow. I'd say my most memorable hikes I did in back-to-back years with my brother was the Presidential Traverse and the Pemi Loop in the White Mountains in New Hampshire. They're like really technical. One of them was like 22 miles, one's 14 miles.

1:14:09I think the Pemi Loop was a 33-mile day, 14 hours. Is this running or biking? Running? Ran where we could. It's like so technical and so many rocks and stuff that there aren't many free steps. I also love the mountains of Colorado too. There's a lot of like much more wide open 14 ,000 foot hikes you can do. What's a trail that you guys renovated? Why don't you give one a shout out? Interesting. A really cool story and one of my all-time favorite stories of this program was, I think in 2019, the main Hudson Trails program was not going to open for the summer. They didn't have enough funding. They had like a$50 ,000 shortfall.

1:14:48And we said we would fund the first and last$10 ,000 if they could get there. And this program gets tens of thousands of kids out into the woods every summer on this like long Hudson trails system. And they hit that goal with a big portion of it coming from athletic. And so that was like the most fulfilling one in my eyes because we got tens of thousands of kids outdoors. Legendary. Favorite flavor of athletic? Run wild. our it's like our classic ipa and it just goes well with so many foods whatever style of beer people like on our website athleticbrewing.com we do launch about 50 different beers a year so like at any time there's like exciting limited releases going on there what is john walker's superpower wow um a lot and it it might be learning because it's turned out that like anything I've ever put on his radar, like two to four weeks later, he comes back and seems to have like a total mastery of.

1:15:47And so whether like he came in with a brewing background and like very technical welding and things like that. But as we like talked about financial concepts over time or fundraising concepts or anything, like he would ask me a lot of follow-up questions on things. And all of a sudden months later, we'd just have mastery of all these concepts. So that might be the greatest surprise that you got out of all this. thinking that he was just the product guy and now he's bringing you like business acumen and it seems like ops if he's if he's thinking in that in that framework of how to like a problem solver yeah no incredible on the culture side on the hiring side as a collaborator he's good at the marketing side um and so yeah really just as a friend like someone i can drop all sorts of random ideas on that we talk about shout out uncle john uh how many athletics a week don't lie I I'm probably like 20 to 26 I would say I'm like three a day generally um usually like the afternoon work day or lunch beer the drive home from work beer is like a really sneaky awesome beer I have a 45 minute commute um so the drive home from work beer is one of my favorites the dinner beer like relax really quick I don't know if this should stay in the final cut or not but like if you're drinking this while driving, can something happen there?

1:17:05Depends on the state. There are like six states where athletic is considered alcohol, but in most states, non-alcoholic beer is not regulated as alcohol and fine to drink and drive. But there are certain states like Michigan, Georgia, Mississippi, Idaho, and a couple others where there's either an age or it's classified as alcohol. So definitely look at your local regulations before enjoying that awesome commuter beer. And then my last one is, you know, after I put my son to bed and I, I usually like these days, like my early entrepreneurial journey schedule is much different than now. I still work a similar amount of days, but I tend to have like really good family blocks mixed in.

1:17:51And then I'll start work again, like 730 to 10 at night or 11 at night, or depending on what I've going on, 4am. but like having a beer after everything is quieted down I just dive into projects is like it's so relaxing too because like with alcoholic beer in my old career if I had an alcoholic drink you're going to pay for it in the morning and the brain stops to work you like realize you're not doing your best work and you eventually shut it down where like a lot of nights at 11 o 'clock if I had a button for six more hours I would be like I'd be like pressing that button single hardest part about being a CEO i i tend to like anything john and i've ever come across on like the business side or like technical challenges or financial challenges hasn't been that stressful like we can work through anything um i love the book the obstacles the way and like just that mindset but like the people stuff like i care about our team and our people so much and like you know when people do stupid things or short-sighted things or um yeah it can be uh the people is like what weighs on me for like weeks and months where like any acute business challenge is in and out of my head in six six hours the biggest mistake you've made um we asked the tough questions here you know i'm it's like such a cop-out but i'm like honestly grateful for my mistakes because like this is a learning journey and like every mistake we've made, we've learned from.

1:19:23I think the biggest mistake would be if we ever like stopped learning from those mistakes. I do wish I had, like we've always had decent idea of our unit economics, but like I would say our financial discipline wasn't necessarily where it could have been earlier. Like we chose to go really fast and invest out in front of the category and everything. um it took us bringing in an exceptional ceo three years into our like actual commercial journey um so he's been with us almost four years now um but like that was a great turn to um have an incredible partner on the financial side who didn't wasn't just a no person wasn't just clamping down the growth but like really helped us get on top of our financial picture i would say the same thing with me i'm on an eight-year journey and looking back the first like five years and not even seeing you know marketing and cogs as a percent of revenue i didn't even look at my core inputs as a percent of revenue until year it might even be year six it's actually embarrassing to be frank with you yeah and as i was saying before there's an enormous difference between like a well-functioning operating model and like you may think on paper this is theoretically how your business is running and should be run but like there's a big difference in like monthly closing process and like closing out actuals and different things and um having a great cfo and controller has been so key last question before the last segment uh best piece of advice someone has given you um i i do think um you know some of my best advisors have been really good at like extending my line of thinking like getting out of the six inches in front of my face and saying what do you want?

1:21:08Like, what does that decision in five years look like? What does that decision in 10 years look like? What do you want the path to be to get from here to there? Forget the daily distractions. I think that sort of big picture thinking is like, it's so rare when someone flies in with a piece of advice and is like, do this now. Like the best advice is just people who make you really think and look at things through a different frame. I think a longer, a longer term lens. Yeah. Very Very often, yeah. Favorite book or podcast and why?

1:21:41So many. I tend to follow guests and podcasts, but I love the Founders podcast. My favorite podcast. I can't get enough of that. The stories, David's Energy. I like the All In podcast for my current events. I like Rich Rolls, very inspirational. uh patrick shaughnessy um invest like the best for financial um there there's honestly so many i listen to though like guest dependent there's a whole nother range like lex fridman joe rogan tim ferris um and then there's a whole nother group for health like peter atia and andrew huberman and stuff so um i wish there were more hours in the day for the podcast i love my commute for that reason.

1:22:28I also read a ton. I try to read every day. I once heard that like 20 minutes a night of reading adds up to 30 books a year or something like that. So I'm generally obsessed with reading biographies as mostly what I try to read. I never read biographies until I discovered Founders about a year ago. The first episode I listened to was Ted Turner. I don't know if you listened to that episode. This guy is a savant from another planet. He's done a million things. and then I bought the book and read the book and I've been hooked on founders ever since. It's amazing, yeah. For people listening, it's a guy that's dedicated his whole entire life to reading multiple times biographies of Rockefeller, Carnegie, Bezos and it's just him talking by himself.

1:23:12And yeah, I love doing those really, really slow and then saying, how can I use this in my business? Yeah, I think that's probably my favorite podcast. How many of those have you listened to? Yeah. At this point, 25. Yeah, I didn't find it until two years ago, but I'm like 200 episodes in, which I guess maths out. I got rookie numbers. Which maths out, you know, two a week or something like that. Last question. An entrepreneur or a brand that you want to give flowers to and why? It can be anybody. Wow.

1:23:46This is a big shout out here, Bill. You could take 16 seconds. We can cut right now. Um... I, I'd say two things in my like kind of everyday stack, um, momentous supplements. I like trust the team there and their sourcing. So like a lot of my daily nutritional stack from protein powder to everything is momentous. Shout out to CRO or founder. What's his name? Uh, Jeff Byers, like incredible founder, former NFL player, just like a force of nature. And then, um, Um, someone I played high school football with, uh, founded, uh, Roan, the clothing company, Nate Checkets. Oh wow. We didn't know each other at that point and didn't know each other for probably 15 years after that.

1:24:33We did play sports direct head to head on rival teams, uh, through our high school career. But like, I like became friendly with him and like Roan is probably like half the clothes I wear. It's like not only incredible gear, but incredible culture as a company. so it's one of those companies like you find out a little about and want to learn more about and generally great people and great stuff you're going to generally laugh when i tell you that we have i think it's 171 target guests and we have it by state and in connecticut we have check it's in you that's so that's so funny that you said that he's a great person like he's uh yeah i love supporting his company you're at an amazing time um i want to say thank you for the hospitality uh it's a beautiful, beautiful brewery.

1:25:17Chris gave us a nice tour. I'm generally excited to see what happens with you guys. I think the sky's the limit. Something that really blew my mind, it's a stat that we didn't talk about, is when you had that idea, it was 0.3 % of the market. It's now 1.5%. But in certain channels I read, it's up to 10%. And to think that it's not going to blow through that. Let's end with that. How big do you think I thought it can be? Well, like you were saying, that first like 2 % has been pushing a very large boulder from a standstill and it's been incredibly difficult. But now all of a sudden it feels like the water's warm and we're on this, it feels like there's this tidal wave just offshore still.

1:26:03And so zero to 2%, incredibly difficult. But like some Some of those retailers and channels that bought into us the earliest, you know, Whole Foods was a big part of our discovery story. In natural channel grocery nationally, non-alcoholic beer is already more than 10 % of all beer sales. In certain grocers, non-alcoholic beer is 15 % of all beer. And so that would extrapolate to like$15 billion at retail. but in my head like I see it going I think the 2 to 10 % of beer is going to be incredibly fast 20 % is going to be an easy one I think and then I don't want to lose all credibility and say how far beyond that I think it's going to go but I do think like it just makes sense with people are not drinking alcohol 99 % of the time they're awake why wouldn't great non-alcoholic beverages be more than 50 % of the pie over time And so I think people are still sleeping on, most people think non-alcoholic beer is going to three to 5 % of beer.

1:27:05And in our heads, we think it's going 10%, 10 times that. Amazing time, man. Where can they find you? LinkedIn, Instagram, social, where can they find you? Yeah, athleticbrewing.com, LinkedIn, anything. So yeah, social media. We've got all of our latest and greatest on mainly Instagram and athleticbrewing.com. Thank you. Appreciate you, man. Yeah, thank you for coming. This was a blast. Cheers.