MALK’s Path to $100M in Revenue

0:00None of us ever know. If any of us knew how to really get to the end of the rainbow on trying to measure true impact of any one thing, you'll be there forever. Hey everyone, welcome to Shopify Masters. I'm your host, Shuang Esther Shan, and this is your companion for starting and building a business. If you strip all additives in plant-based milk, you get Malk, a clean alternative beverage using all organic ingredients. Ryan Rouse, Malk's president, has mastered the art of scaling direct-to-consumer food brands. You probably try some of his work at Factor, a food delivery app acquired for over$200 million, or Heike Snacks, where he served as chief marketing officer and then CEO.

0:45We are here to chat with Ryan on his strategies that are scaling Malk to nine figures. Ryan, welcome to the show. Thank you. Thrilled to be here, Schweng. So happy to have you here. We are all big fans of Air One smoothies. We've tasted the magic of Malk. So excited to get an understanding of your background and how you got here. Maybe walk us through your career a little bit, starting at Factor and how that has really shaped your experience and your approach to scaling D to C. I spent 14 years in finance before starting Factor. And I think it's relevant because many people these days start a business right out of school.

1:24And I don't think there's a right way to do this. I think there's pros and cons to both. But I sort of cut my teeth in the corporate world before starting Factor. But in 2012, really, it was a friend of mine from college. It was his idea, right? He had done a lot of the heavy lifting on the initials, sort of, what's the idea? What are we going to do? Started Factor, and that was a direct-to-consumer-only business. There is no other distribution option, not Amazon, not retail. And so it forced us to learn a lot about direct-to-consumer. you know really all of it brand building you know traffic seo email all sort of the toolbox of direct to consumer um and we learned the hard way you know we we used a lot of our own money we used some outside capital as well in the early years but we really couldn't go we didn't have the money to go hire very experienced people in critical portions of our business so there's a lot of learnings you know to be had throughout the entire experience but long story short we did figure it out.

2:23And we went on to scale that brand. I left in 2017. It went on to have an exit in 2020 that you alluded to. HelloFresh acquired it. Really, really good outcome because we didn't raise a lot of outside capital. Everybody made money on that, which was great. And then, you know, since leaving Factor in 2017, I've been a part of a lot of different consumer brands externally, internally, You alluded to the high-key experience, but the long story short is I've been a part of either in-house or out-house in an advisory or consultancy or internally on a lot of different traditional CPG brands, food and beverage mainly.

3:02And then I joined Malk about 14 months ago. So I was brought here. The CEO, Jason, is actually a friend going back about six years. He was a critical portion of really helping scale Malk. And, you know, when I came on, it was to help lead the commercial side of the business. So sales and marketing, I think, and the data portion of the business to really, you know, take us from a brand that was very, very fast growing, had a fantastic product, great brand, great following. But, you know, what is it going to take for us to get from, you know, the 50 million, let's call it, to 250 or 300 million?

3:38Yeah. Well, so much to unpack here because I like what you mentioned, right? There is no right or wrong path to build a business. And your story is unique because I think it's important to highlight those who've worked a long time in corporate, had the foundations, and then got into scrappy startups and helped them to scale. So from those experiences, what are you taking from them to build into Malk? I think there's a really beneficial baseline of business understanding that comes from the corporate world. I think it's very common these days to hear on social media people not talking positively about corporate.

4:22There's obviously just entrepreneurship is very popular and owning your own destiny and all those types of things. And obviously, I'm a big believer in those types of things. But there's a lot of benefits that can be had from starting in the corporate world to learning what it takes to hierarchy at business. basic communication skills, calendar management, those things are not taught in startups. And I think they can be really, really helpful. Also, and this can be good and bad, I made really good money in that career. And so I was able to sort of set myself up to then take a shot in a startup with the money that I had made up until that point.

5:07And the downside of that, I guess, is that you go from making really good income with no kids to then a startup that in my case, making$0 for close to four years and putting your money in and then you have kids. So there's a lot to unpack there too. But the punchline is to the question, I think there's a lot of benefit to getting your feet under you as it relates to some basic business acumen, communication skills. I think you learn what you're good at and what you're not good at more at 28 than you maybe know at 18. So that maybe the opportunities that you see that you think you could really succeed at would shift during that time.

5:52And maybe you've got a little bit better clarity on that if you were to wait a little bit longer. And I think like looking at your career after banking, you've chosen businesses that have scaled beautifully, but you also impacted that future because you were there to shape it. So I view it as like the nature nurture question of direct-to-consumer, right? It's like, yes, you chose great companies to be a part of, but you also were there and was able to implement strategies to help it reach that point. So I guess when we're talking about Malk, what is it about Malk that was attractive for you? And what are some things you're hoping to do to help it grow even more?

6:32Yeah. Yeah. Great question. You hit on a really important point, which is the product, the opportunities that you choose are going to have a much larger or outsized impact on your success trajectory than anything else. That's just plain and simple. The best operator, the best marketer, the best direct-to-consumer tactician cannot outpace a product that doesn't deserve to be on shelf. You've got a headwind versus a tailwind. You've got all those things. It's a massive tailwind. So dovetailing into your question, what I saw in Malk was a fantastic product that deserved to be on shelf. In other words, there was a value proposition to milk.

7:25It's a little bit different now, but at the time, there was no organic and clean label, simple ingredient, plant-based milk on shelf. And the consumer clearly wants that as evidenced by our growth and the growth of that subcategory within the larger category. So when you step into any early stage business, it's safe to say that a universal truth is that it's chaos. us. There are a lot of things just not done. That's just part of early stage, right? There's so many, you could look around the room, so to speak, and identify 25 things that should be done better. That's early stage. So if you take that as truth, and those are probably the things that I think some of those things I can help fix and or scale and or improve, for it to be growing as fast as it was and to have the type of distribution and retail that it already had when I got here, despite a lot of those things in the room that had a lot of room for improvement, was really interesting to me.

8:29It is a retail-only business for the most part. We have a shelf-stable product that we launched last year. So we've got a small Amazon business, small e-commerce business on Amazon. But for the most part, it's retail. And in the retail game, typical better-for-you brands, healthy health and wellness brands, start in the natural channel, think Whole Foods and Sprouts. And then the hope is that you can bridge the gap to more conventional retailers like your Targets and your Kroger's and your Albertsons. And they had made that jump with their core products. So all those things added up to a situation where I felt like my superpower comes in the form of sales, scale, brand messaging.

9:14and there was room to improve those things. But even without, even at the level that they were at, to see the type of traction they had gotten was really, really exciting for me. And then my thought in my head anyway was, if I can add these things, right? It's a fairly boring category, milk. It just is, that's fine. It's fairly sterile. So what if we added some energy and excitement and curiosity? What if we became less boring? Would that help? And that was sort of the hypothesis I have going in is if I can help bring that through team, through some of my superpowers, then what will that do to the trajectory of the business?

9:50Yeah. I think it's also interesting to think about this category from the lens of the consumer, right? For so long, we just wanted milk alternatives and we didn't really care what was going in the milk alternatives. And then there was this shift during COVID almost that people were highlighting all of these additives were actually causing different issues that they didn't notice before. And actually, Malk has been there all along with ingredients you can recognize, you can read, and you can understand and didn't have all of those additives. So how were you reacting to also the consumer's realization and also maybe change the way that you've presented the brand to consumers?

10:33Yes, it's a really good point because most new brands in food and beverage are better for you brands, right? They're healthier than the incumbent on shelf in some way, shape, or form. And especially entrepreneurs who we are by nature optimists and typically passionate about health and wellness, that's the journey that got an entrepreneur to start a brand in food and beverage, traditionally, typically. And because of that optimism, I think that we believe that the consumer has evolved their thinking in every category. The reality is it's just not true in every category, right? And some categories are further along on that slope.

11:16Some are behind and some just aren't there yet. And some will never get there. Some categories, for whatever reason, the consumer is just never going to care enough about a clean version of that thing to start paying with their wallet. So I say all that to say, this movement in plant-based milk that you alluded to has been a massive tailwind for Malk. I wouldn't be arrogant enough to say that Malk created that, but we're certainly participating in it. And we are one of few brands on shelf that actually adhere to those things that the consumer has now cared about. So big backdrop to the answer.

11:50But what I would say is Malk, before I got here, relied heavily on that messaging. You're right. The reality is this category of plant-based milk, alternative milks, started with a few brands that, and this could be said for really any trend, right? Their main message point was it's not dairy, right? Wasn't talking about what was or what wasn't in their milk from an ingredient perspective. It was just not dairy, and therefore it's healthy. Gluten-free has gone through that. Keto has gone through that, whereby that in and of itself does not mean it's healthy. For people who can't handle dairy, sure, it's maybe a bit healthier.

12:32But at the end of the day, the ingredient deck will speak to whether a product is healthy or not. And it just not having dairy in it isn't enough. But that is how this category started with brands saying it's not dairy, therefore it's healthy. To your point, don't know how or why, but the consumer started turning the label around, turning to the back of the label and saying, actually the ingredients in here aren't healthy necessarily. And so there's pros and cons to that if you have a product that actually is a clean label, organic, simple ingredient product in that category, because some consumers tried it under that premise and then got put off by it because they felt like they were lied to, maybe a little bit.

13:16And so maybe they move away from alt milk or plant-based milk in general. But I say all that to say that certainly the trend is going in our direction where the consumer does care about the subcategory of clean label in plant-based milk. So milk before me really focused on that element. This is what's not in the bottle, right? We don't have gums. We don't have fillers. We don't have oils, right? It is just the water, the almonds, the salt in the case of our almond milk. Like when I got here, I felt like we had an opportunity to add in this concept of taste, which sort of sounds like a, of course you would do that.

13:54But when you're in it, it's hard to read the label from inside the bottle, right? And so when you get here, you say, you know, the thing that people care most about with food and beverage is what it tastes like. That is what they care the most about. Is it good? Ours is fantastic. So we don't have to just rely on the fact that what's missing does matter from our bottle, but what's in it also does. And so we have a lot more creative assets now. We made a big push into messaging, to highlighting taste on messaging. And we made a big push into a lot of our creative assets to show the liquid, to show the liquid pouring into a delicious matcha or a coffee or a bowl of cereal or a glass for that matter.

14:38because while what's missing matters, and we talk about that a lot, what is not on the label matters quite a bit. Yeah, highlighting the taste, it sounds simple, but it is a big shift in the mindset of building the brand, right? So now you have this direction. How are you relaying that direction into other aspects of the business? Yeah, a lot of it, you know, at the end of the day, as you start building out sort of brand assets, and I mean internal facing assets, It's like, what is our messaging hierarchy? Who is our customer? What do they care about? And that changes by channel, right? The natural channel customer cares about different things than the conventional customer cares about.

15:20But what you want to have is a internal facing document, call it a brand Bible. There's a lot of different names for it that really highlight the message points that you want to convey. Then you decide by channel, by creative asset, how much space do you have? How many of those you want to talk about? The label is a great example. The packaging, right? You can't say all those things at the same time. So you have to pick which ones matter. So for me, it's about a lot of the heavy lifting can and should be done on the creative assets itself. If it's a video, if it's an image, you can and should take some of those things on your brand Bible, on the things that you want to convey to the customer and have it baked in implicitly in the creative asset.

16:07So that anyone, anytime looks at something, it's subtle, right? But I happen to have someone that leads our brand efforts who is phenomenal at this. So love him for that. That's Barrett. He knows how to do that. Then you start talking about words, you know? And so then it's really just the, what channel is this on? Who's the audience? Which of these things that we know are our pillars of communication and our value proposition, Which do we think matter most on this particular asset? And that's based on who it's going to, how it's being used. And then you sort of just plug and play, if that makes sense.

16:39Yeah. And it's like, once you also have that brand mindset, it's how you elevate it, you know, even through socials or different posts and like highlighting the right user-generated content to make sure it reflects back as well. Yeah, totally. We have the luxury of a lot of people create UGC with our product, right? Obviously, we're paying for some of those, but we're not paying for a lot of the things that people see. For example, like Glenn Powell from Maverick. He's been in a lot of movies, but he's very, very popular. Everyone knows who Glenn Powell is, but he was on a segment, What's in Your Fridge?

17:19We knew nothing about it. All of a sudden, he opens his fridge up and malks in there, which is cool. So those types of things are happening regularly where you're just there. We didn't seek that out. We didn't try to pay for that. We just, that was a placement in a very organic setting where we're like, holy cow, like they're in our, that's in that person's fridge. That's pretty cool. Yeah. Yeah. Well, that is so cool. I mean, I obviously mentioned at the top of the show about Air One and their infamous smoothies, but there's so many content where people are trying Air One smoothies and they're reading out the ingredients and they're like, and it has malk and things like that.

17:56So there's just so much impact that the brand has had in social media in the way that people are interacting with it in different ways. Totally. Erewhon is a constant jumping off point for communication. It's a topic of conversation in the industry, generally speaking, right? Because everyone in CPG knows the Erewhon smoothie thing. And so I'm asked about it a lot, right? Is it impactful? And the way that I answer that is always the same. I mean, none of us ever know. If any of us knew how to really get to the end of the rainbow on trying to measure true impact of any one thing, you'll be there forever.

18:37What I love to deploy from a marketing or growth perspective are things that generate revenue and have a brand awareness element to it. Now, again, how much it has of each depends on the thing. How much can you tell and or measure depends on the thing, not always 100%. But Erewhon Smoothies is one of those things where as a retailer, they carry our product. People buy it off their shelves. We make money, revenue and profit from selling product inside of Erewhon. Cool, right? They're less profitable than another retailer that doesn't have this smoothie thing going on, right? But that's okay. We're measuring it differently because we're saying we also believe that they have this, what many would consider marketing lever that we can pull with the smoothies that just generates a lot of conversation in the marketplace and generates a lot of brand awareness that we can't put our finger on exactly how much it's generating for us.

19:39but we don't have to because we believe it's true and gut has to play a big part in this game of business it just has to it's inevitable and we know we're making money by selling it on the shelf there so we don't really have to because it's hard when you are choosing to do maybe a brand awareness type of initiative where there is no point of sale element there's no ability to track whether it's been successful or not from a dollars and cents perspective so your entire rubric that you would use to measure the success of that is just gut. And that's hard. So to me, if we can add some analytics, some revenue, some point of sale to anything that we try to do, but we also believe there's some brand awareness elements to it, it just makes it easier to assess whether or not it was successful or not.

20:25And also to that, right, they are such a powerful retailer. They They can choose any brand to use anytime, but to maintain that relationship, I guess, yeah, like tell us a little bit how that relationship even came to be and how you maintain it for them to constantly be using Malk and showcasing the brand. Yes. Heather Seiler is our VP of sales. She was a very early employee at Malk when Jason got here. So there's sort of two, you know, from 2020, I guess I would say this sort of the scaling phase of Malk. And so I chalk it all up to her. Heather formed that relationship with executives at Erewhon.

21:07She has owned that relationship and she has, you know, it's sort of old school. Like a lot of this retail game is old school. It's getting a little bit harder because of brokers and intermediaries in between the true buyer and, you know, the brand. But in the case of Erewhon, it was very much old school. Like Heather built that relationship, established our value proposition, and then has continued to nurture that relationship so that we have a very, very strong personal relationship there. And look, our product sells. I mean, relationships only go so far. But that's the short answer is that Heather built that relationship with the people that matter at Air One.

21:44She has continued to nurture that relationship. And because we've also had success selling on their shelves, they understand that we stand for something. We have a true differentiator. That gets back to our initial conversation, whereby if you really have a value proposition in the marketplace that people care about, it provides that tailwind that makes a lot of things easier. Because now we don't have to sell Erwin as hard, I guess, to include us, because they know they're a customer. And when a retailer comes to you and says, this is our customer, this is what we care about, and we fit, it's easier.

22:21We are a perfect match for their customer. They care about health and wellness. They don't want bad ingredients, but they also want it to taste great. Then it's just, you know, yes, all the relationship matters. It matters a ton in the building and nurturing of that. But also the other side is, does your product have a value proposition that matches with the cares of the consumer at that retailer? Yeah, it's very exciting to hear kind of behind the scenes. Obviously, a big part of the business, retail. There's some direct-to-consumer sales with being on the marketplace, with Amazon. but you've recently launched a site on Shopify, kind of leading you down a new path.

23:00Talk to us about that process. Yes. When I got here, because we don't have a direct-to-consumer or e-commerce sales channel available to us, or said differently, one that we choose to leverage, it's refrigerated beverage. It's expensive to stand up anything and ship directly to the consumer. We may one day, never say never, but that's a distribution thing i still believe wholeheartedly that a lot of the direct-to-consumer toolkit can and should be used no matter if you actually sell direct-to-consumer so what does that mean when i got here we had a we had a site on on wordpress we weren't building an email list right and our site wasn't shoppable which I can understand if you're coming in and sort of maybe a little bit not as open-minded that you would say well why would we do those things if we sell in retail and I would argue that those tools are necessary to build a consumer brand regardless of whether you sell on direct-to-consumer or not so Barrett who I brought up earlier I brought I'd worked with him in a previous journey we know like and trust each other at least I hope he likes me We come from that world, and so we immediately decided that we needed to start to incorporate a lot of direct-to-consumer tools into Malk.

24:26First and foremost, website. Build it on Shopify. Why? Because it's just the best. It just is for all the reasons that if you know it, you know. We know that people still come to your site to do research regardless of if you sell there. right if someone hears about your brand whether it's through ugc from erwan or glenn paul's you know segment on whatever show that was or a friend their neighbor they're going to go to your website they're going to do their research on your website and i don't think we were putting our best foot forward from a brand messaging perspective now we are but to us there's some good technology.

25:07Advancements are our friend in some cases, right? And so we now have the ability, we have a store locator. That's great. You know, people, if they're going to do their research, they're going to figure out where you sell. And if that matches up to where they live and where they shop, we've also added the ability for people to add to cart right from our website. So using something like smart commerce, we're able to then have people, it's geolocating their IP address. It knows which retailers we're not only available in, but also in stock in, that's near the IP address of the user that's on the site.

25:42And it will immediately pop up the.com of that retailer and they can add right to cart, whether that's Instacart, which is sort of a catch-all, but or a target.com or a walmart.com or a Kroger and et cetera, any of the retailers. So we now, what does that do? A couple of things. It reduces friction for that user, right? To be able to add something to their cart. Obviously it gives them a breadth of availability around them, which they may not execute against them. I.e. they may not buy on site at that time, but they now know where we're available and hopefully that matches up with where they shop.

26:17But also it gives us a data point to the point I was making earlier. rarely do you have a full breadth of dollars spent over here and revenue-driven over there. It's very rare you have a full through line. If you're direct-to-consumer only, that's the only time in which you have a through line. And even then, it's murky, right? We spent on ads over here, and it drove these kind of sales. It's not as uniform and elegant as that. But in retail only, you don't have that. And so this gives us a data point that says, we drove traffic to our site. How long did they stay there? How many added to cart?

26:55And even though we can't see the final purchase again, we're making decisions based on incomplete information all the time in running a business. So the more information we do have, the better able to make decisions we are. So that gives us a look. It's like, oh, this many people added to cart. And so now we can start to sort of adjust platform spending, amount of spending around a metric, at least. That's not the Bible of metrics. It's not the end-all be-all, but it's something. It's a lot more dynamic and actually having data to be presented from the site. And to your point, this is not something easily shipped.

27:33So linking them closer to retailers, closer to delivery services, it's such a cool solution. And it's so creative to think about direct-to-consumer and e-commerce in this way. Yeah, I do think that, you know, what I was saying earlier, so then we started an email list. We did a lot of the things that if you're in the direct-to-consumer universe, these are the first things that you do. Table stakes, yeah. Table stakes, 100%. I think they're table stakes no matter where you distribute. So the fact, that's one of those things, when you say what was interesting to me about Malk, look, I don't think building an email list is going to bring us from 50 to 250 million, but it's not going to hurt, right?

28:12A connection with our consumer, sending out content. These table stakes things, I think, regardless of whether you sell on that channel or not, are the DTC isn't only about selling on a sales channel, I guess is what I will say. It's about connection with your consumer and whether you actually use it to send product to the consumer shouldn't remove the fact that you should connect with your consumer through that. So I think that there was a ton of value in us pushing into what many would consider to be a D2C toolkit, even though we don't sell D2C. It's really about community building, awareness building, connection, research again with the consumer.