Be More Patient To Be Less Wrong. It's A Hella Good Strategy.

0:10Hey folks, I'm Ray Lateef and you're listening to the number one podcast for the food and beverage industry Taste Radio. This episode features an interview with Eddie Simeon, the co-founder of Fast Drawing Mixer, Bitters, and Soda brand, Hella Cocktail Company. Get access to limited swag and exclusive content by becoming a Taste Radio VIP. It's easy for you to join that group of very important people. Just head to tasteradio.com slash VIP and take one minute to sign up. The story of how Eddie Simeon and his two best friends turned a hipster hobby into a multi-million dollar business is, dare I say, hella good.

0:54Eddie, along with Jomari Pinkard and Tobin Ludwig, are the founders of Hella Cocktail Company, a brand of premium crafted products designed to democratize and elevate cocktail culture. Launched in 2011, Hella Cocktail Company markets botanically-inspired bitters and mixers, along with ready-to-drink sparkling aperitifs admired for their flavor and versatility. The products are currently sold in over 20 ,000 stores, bars, hotels, and restaurants across the U.S. Over the past 12 years, the co-founders have pursued a thoughtful and occasionally unorthodox growth strategy that prioritized strong unit economics and profitability.

1:35Eddie describes the approach as one in which the company has been quote, willing to be more patient to be less wrong. Last year, Uncle Nearest Ventures, the investment arm of Uncle Nearest Whiskey, and is focused on funding minority-founded, owned, and led spirit companies, acquired a$5 million stake in Hella Cocktail Company. In a press release, Uncle Nearest CEO Fawn Weaver praised the team of African-American, Mexican, and Jewish founders for quote, bootstrapping this brand for a decade, never compromising on quality or messaging. Indeed, it is a hell of a good story. And in the following interview, Eddie chronicles the company's development from blending bidders in his Brooklyn apartment to the brand's first retailer, spoiler alert, it's a furniture company, to the synergistic relationship with Uncle Nearest and how the strength of Hello's three founder team has been the backbone of its success.

2:33Hey folks, it's Ray with Taste Radio. Right now, I'm honored to be sitting down with Eddie Simeone, who is one of the co-founders of Hella Cocktail Company. Eddie, great to see you. Great to see you. We're good to be here. Hella Cocktail Company, you guys have been around for some time. I think people might be a little surprised that you launched the company in 2011. That's the year I started with BevNet, actually. Oh, interesting. That puts it into perspective. Yeah, we founded it in 2011. We'd actually been making bitters as a hobby for a number of years before then, too. And that's why a lot of people still know us as Hella Bitters.

3:04Really? Yeah. It was Hella Bitter Bitters. And then it was Hella Bitters. And then it was Hella Co. And then it's Hella Cocktail Co. Was it when you introduced the mixers that you became Hella Cocktail Co? That's right. Or Hella Co? Yeah, I remember that. Because, you know, we wanted to be able to have products with potentially higher velocity and put the brand in different spaces and participate in different cocktail occasions. Yeah. So something that wasn't too inside baseball when it came to, you know, quote, mixology. But of course, one of the things we learned first about bidders is just not just the market size, but also the product velocity is quite low.

3:39And so we found that as bidders guys, we actually had a pretty great reputation amongst bartenders. And so we wanted to scale that credibility into mixers. Let's back up for a second. I mentioned you're one of the co-founders of Hella. You have two other co-founders. Give us a bit of background on how you guys met and why you decided to start a bidder's company that evolved into a holistic company surrounded around the idea of cocktails. Yeah, man. Well, the whole thing started as a hobby. Tobin is my co-founder, Tobin Ludwig. I met Tobin through a mutual best friend. Tobin grew up in New England and I grew up in California, but our friend moved from Amherst to Berkeley.

4:18And so Tobin would come visit him during summers. And that's when I met Tobin. So it was actually freshman year of high school that I met him. We would have a blast hanging out every summer. But when I moved to New York, eventually in 2007, Tobin was already there. So it was kind of like best friends at first sight. And that was actually when we started making cocktail bitters as a hobby in our apartments in Brooklyn. And it remained a hobby for a number of years. Were the bitters for cocktails or was it for another reason? They were totally for cocktails. Our first formula was like a citrus-based bitters formula.

4:48We took a look at some of the other bitters on the market. And basically, we're like, we don't love the ingredients list on this product. And it seems relatively simple to make yourself. So we just started kind of like putting together our own DIY batches of cocktail bitters. You were a clean ingredient before clean ingredient was a thing. I guess so. We just loved doing it. We were very competitive with each other when it came to making food and beverage. We would do pizza dough. We did cookies. We used to make our own ice cream from scratch. And so bitters was just like another thing that we would do as pals.

5:22And it was like infinitely shelf stable. So we would just like give it away as gifts. And so you might receive a gift of bitters from, you know, Tobin and Eddie for your birthday or for Christmas or something like that. But as the hobby got a little bit bigger, we couldn't afford to give it away for free anymore. So we started charging our friends for it. I forget that in 2010, 2011 in Brooklyn, And that's when the hipster scene was probably at its peak. And I think there's probably other folks that were doing DIY stuff like you guys were. Did you end up making pickles too? Remember pickles? Oh, absolutely.

5:54Yeah. No, it was all on the heels of the 2008 financial crisis. A lot of like really smart, up and coming folks found themselves without work. So there's like a lot of CPG brands that were born after 2008. Yeah. Yeah. It was a vibrant community of people just doing food stuff. There were incubators. There was parties. there's like ways to like get involved with your own project as an entrepreneur. Were you guys involved in the incubator at Long Island City? That used to be the Pfizer building? We never did Pfizer. We were in Long Island City with Badass Organics for a while as a co-packer. And then we joined the Hot Bread Kitchen community in Harlem.

6:31That was actually our first commercial kitchen space with hot bread. Your third founder, Jamari. Yeah. You met him how? That's a wonderful story. So it's 2007. Tobin and I are now very close friends, having reunited after a fantastic childhood running around Berkeley, California. You cemented it with bitters. Well, we were doing a bunch of stuff. We were blood brothers. We were bitters brothers. And one of the things that we loved to collaborate on was actually video production. Tobin was pursuing a career as an actor. I was pursuing a career in creative media web development, and we would look for gigs on Craigslist for music videos.

7:14Jomari's younger brother is a musician. And so Jomari and his brother actually hired us to produce a music video for them. And that's how we met. You can actually see the video online. What kind of music? It's hip hop. Oh, nice. Yeah. So we shot the video in Queens in Jomari's neighborhood. And that's how we met Jay. And that was long before we went pro with making beers. We'll have to put the name of the song in the show notes or maybe a link to it. What's the name of the song? It's called If My Hood Could Talk. If My Hood Could Talk. Yeah. That's a cool name. Yeah. It's a story about the first person perspective of Ravenswood Queens.

7:49Okay. So I always say this, it's one thing for folks to have an idea. It's another thing for folks to execute upon that idea. You need a brand, you need a business plan. Typically you need a business plan. You need a path to production, a route to market strategy. You need all these things that people don't necessarily realize until they actually do them. Sure. What was your process of creating a brand and business? Well, we are a pretty lucky bunch because we have very complementary professional skills as three co-founders. So even though we did have that entrepreneurial seizure that resulted in us thinking that we could start a company from scratch.

8:26Do you say entrepreneurial seizure? Yeah. I've never heard that term. Yeah, that epiphany that you have when you realize I can't do anything else. I can't be happy if I don't try this. Typically, I hear a light bulb. No, no. It's more of a shock to the system. Gotcha. But we also had the business discipline of Jomari's experience at business school because that's when we reached out to him to talk about bidders when he was back in New York City from going to school. So he took a look at it through the lens of his background in finance, product market fit, And he looked at bitters and was like, you mean to say that there's a ingredient for cocktails that's in every grocery store, hotel bar in the world?

9:04And there are very few brands competing for that space. Let's take a close look at it. The name Hella, it's a, I don't know, how would you describe Hella as a word? Well, love it or hate it, people like saying it. Hella is an adverb. It means extremely or very many of. This is in the Oxford Dictionary? It is actually in the dictionary. So you can be hella late to the party or you can eat hella tacos at the party. So Hella Cocktail Co. is all about celebration. And so we believe that everybody wants to feel invited to the party, but doesn't always feel included in the celebration. And so we exist to offer elevated choices in every cocktail occasion so that people can feel inspired and confident to celebrate as themselves.

9:50And so, you know, Hella is this positive, outward-facing expression of that confidence. Was that always the positioning of the brand? When you started out, did you feel like that was the ethos of the brand or was it something else? And I ask because the branding was significantly different than what it is today. The branding felt, and forgive me for saying this, a little bit more in your face, perhaps a little bit more masculine than it does now. Maybe more hipster, going back to the 2011 days. Sure. Sure, yeah. Yeah, we really did bring it full circle with this brand position of inclusivity recently.

10:25But I'll say one of the things that we didn't love about cocktailing in 2006 and 2007, way back in the days, was in order to go get a thoughtfully made drink, you had to go to Death & Co, Milk & Honey, you know, which is no longer around, Pouring Ribbons, Attaboy, these like high-end speakeasy environments that feel a little bit elitist. those spaces don't represent everybody. And so we didn't love that about the cocktail scene way back when. We wanted to make sure that cocktails were accessible and fun and inclusive for everybody. And so even though it wasn't so structured back then, that was one of the primary motivating factors behind the brand.

11:04You guys have been, and this is just me, observing a very patient group of founders, a patient company. Certainly one way to put it. Yeah, well, I think that you've been thoughtful about your process, about your progression and your development as a company. And when we chatted a while back, I had written something down that you said, and it's just stuck with me. And it would be great for you to expound upon it. So I'll just say it here. You don't want to be on a long road to a small house. Yeah. I don't know if that's your phrase or if you heard that somewhere else, but it's a beautiful line.

11:45And you've been on a long road, though. That's true. You've been on a long road. But the house, I think, that you're after, it's a bit bigger. And it's in your sights nowadays. Yeah. Yeah. Well, we've always been driven by the upside. Of course, you know, everybody who sets out to start a venture and not a project or a family business, believes that someday you'll capitalize this organization through investment money, outside money. And that implies some financial outcome at the end of everything. That was the most elegant way of saying, we're going to try to sell our company for a hundred million dollars.

12:23Someday. And it's that someday component where all the magic happens as an entrepreneur. Right. And so like you and I are sitting here at Expo West right now, appreciating this moment where how many people are here right now? 70 ,000. Running these companies is so fun. Yeah. I knew early on I had an executive assistant position at MTV. I thought I was going to be in media, right? I wanted to be in media. I ended up doing a lot of work in commercial media, but I was sitting at a desk as an EA, and I was watching all these people come into the office and pitch their television shows. And I said to myself then, I want to be those guys.

12:59I want to be pitching my thing. I don't necessarily want to be on the receiving end of other people's ideas. And so this is Tobin and Jomari and I always felt the same about that. And so it's the excitement, the experiences, the journey itself. That's what we're going to look back and remember when we do this. But of course, success financially is one of the driving factors of this. You don't have to rush the process. Typically, when we do see brands that are trying to grow too quickly, the outcome isn't so great. and being mindful of your resources, being mindful of what you're selling, the fact that you are still always and should be trying to have strong unit economics and hopefully profitability.

13:42It seems like these are things that you were chasing and going after early on. Yeah, and it wasn't always popular to think about it that way. We are culturally very financially rigorous as a company. And we had to be because we've been a cashflow business for a long time. It isn't until recently that we took in any equity dollars, any money from the outside. We did a round in 2018 with a group of angel investors who really believe in us and are kind of like in it for the long journey. But by and large, if we weren't cashflow positive, the question of how to fund salaries was always on the table.

14:17And so you're right. A lot of businesses are able to get into the game and through a network or through experienced team, founding team, or an amazing functional ingredient that's really hot, are able to raise a bunch of money and are trusted to expend that capital trying to prove an idea. And we've really never been that way. And it's allowed us to, yeah, meander a little bit. We started off in a pretty esoteric corner of the beverage industry. It's been quite iterative. That's why we've launched so many products. And perhaps we're just very lucky that the macro trends of drinking have kind of taken a step in our direction.

14:56But we have been very thoughtful about the way that unit economics and the margin structures of the three different subcategories of the business support one another. And I think it's that symbiosis in profitability from bidders to mixers and now bidders and soda that allows for us to fund growth with profit generated through higher margin units. I've said this to a couple of the founders. And so forgive me listeners, if you've heard this before, I don't say it very often, but you have a very sophisticated understanding of your business and your category and where you're going. How have you learned this business?

15:31Have you educated yourself about how to run a beverage company? Wow, thanks. That's a huge compliment because we are fairly autodidactic, self-taught as a group. Listen, I came to the table with a lot of operational expertise. Tobin came to the table with a lot of bartending and culinary expertise. And Jomari came to the table with a lot of financial understandings, like financial acumen. Those things combined have allowed us to essentially solve every problem that we've been confronted with, you know, knock on wood. And I think when our skills are interconnected and we're able to behave in a collaborative way as a trio, really amazing things happen.

16:15We met the Delta Airlines team at a trade show. We didn't know anything about working with an airline. We didn't know anything about how the three-tier model impacts the ability to market alcohol on an airplane. But we learned it. And then we became the preferred cocktail mixer of one of the largest airlines in the world. And you've worked with a lot of different retailers or, I guess, sellers of your products. I don't want to call it Delta retailer if they're not. But you told me that West Elm was your first retailer. Is that right? Yeah. And you've worked with some large restaurant chains as well, TGIF.

16:50That's true. You're in Whole Foods. You're in a lot of different places. Was your channel strategy always just get it where we can get it? I wouldn't advise it. I envy people who have one product format with five flavors and an early adopter for their product. And then they create a marketing strategy that's a series of concentric circles around that epicenter of use case. We have never been that way. What have you learned about where to sell your product? I mean, and where your product fits best, because to going from West Elm to Whole Foods to TGIF to Delta, I mean, you're kind of all over the place.

17:26I mean, even if the product fits in all those places. Right. Yeah. Well, the core insight is elevated choice in the cocktail space. This is especially true now more than ever, but even back in the early days of our business, people were looking to express their identity through the cocktails that they choose to drink. That's why West Elm started selling bar spoons, cocktail shakers, cocktail books, and cocktail bitters, right? Because people wanted to take the mixology experience that they saw at those fancy cocktail bars and recreate it at home. And that was the primary value proposition of the brand back then was to upgrade your craft cocktails.

18:06The cocktail occasion has grown so big now that it includes people who don't drink alcohol at all. We've created a portfolio of products that can successfully meet people wherever they are along that continuum. And so whether you have a large food service program where you're looking to lower the barrier of craft cocktails for, you know, a large labor force of bartenders who don't have a ton of bartending experience, or you need a single serve ingredient for a flight attendant to serve a craft cocktail in an airplane, or you want to connect with people who like are more on the enthusiast scale of cocktailing and They know about different spirit types.

18:44They can tell you the difference between bourbon and rye whiskey. We have something that can engage anybody along that spectrum of interest and curiosity. I had guests that you'd heard before that the RTD beverage game is pretty tough. And you had a, I would think, pretty sustainable business in bitters and cocktail mixers. Velocities are not high for either of those. you're going to get a lot more turn, a lot more velocity for an RTD. But RTD is a tough, tough game. Yeah. Why did you feel like you needed to get into that space? Well, we have been backing into larger spaces, Ray. We started off in bidders.

19:26The addressable market of bidders is quite small, but it was something that we could learn quickly. We could be well-established within a community of bartenders and influential voices within the cocktail space and then graduate to the next scale up, which would be mixers, slightly higher velocity, much less education required to tell somebody about a margarita mix than an aromatic bitters. Then we learned how to do that. And so bitters and soda and entering into the sparkling RTD space is a natural progression of taking what we've learned, taking what we've mastered and applying it into a space that's a little bit larger and a little bit more competitive.

20:05And I think we're actually going to continue along that trajectory of graduating ourselves into bigger and bigger spaces as the company's better funded and as our skills at operating our own business improve. Having that larger presence is also, I would think, more attractive to investors. Certainly. Let's talk about your most recent funding round. Pretty high profile. I think a lot of people, well, a lot of organizations, media organizations picked it up. Talk about your relationship with Uncle Nearest. Yeah. Man, timing is everything, isn't it? You can't talk about Uncle Nearest without talking about Fawn Weaver.

20:41Fawn is the CEO of Uncle Nearest, a true visionary, and she's really a storyteller. So if you don't already know about the Uncle Nearest story, a great place to start is her TED Talk about the origins of Uncle Nearest. But Jomari caught word through the black alcohol community that there's this brand called Uncle Nearest out there. And there was this person named Fawn. And eventually, I think Fawn invited Jomari to apply for funding through her venture division. It took about a year for us to develop the relationship. And what we learned right away was our business is aligned at every value. It's a transformational partnership.

21:22And for me, the definition of a transformational partnership is one that aligns at every level of the organization from core values to unit economics. And so it made a lot of sense. And Fawn is using her reach and her access to capital to make an impact in the intersectionality between equity, inclusivity, and alcohol. And with our value proposition of inspiring confidence across the imbibing spectrum, it just makes a ton of sense. The dollar amount, the actual amount of the investment seemed to matter. It signified something that investment in minority brands isn't$100 ,000 here, you know,$200 ,000 there, $5 million.

22:08Am I reading into things too much? No, you're not. You're tapping into this insight that a lot of diverse brands feel, which is people of color are over-mentored and underfunded. And so that$5 million mark was a signal to the industry that not only am I backing Hella Cocktail Co. because they're a smart investment, I'm showing you an example of a brand that was able to bootstrap their company from zero to a$5 million Series A, despite the headwinds. Now, when Hiller was speaking with Fawn for the first time, Jamari more specifically, it wasn't just Jamari. You were a three-person co-founding team.

22:53How do investors, or I guess, how did Fawn evaluate the team of three versus say one or even two? You know, it's not typical that you see that many co-founders of a company. Yeah? She loved it. Yeah, she saw it as a threefer. Yeah, so the - Is that in the Oxford Dictionary? Yeah. No, she saw three diverse men building something together. And I'll never forget this. She said, this is the feel good business story that America needs to hear right now. And that's what she was so excited to get behind. Has the investment sort of changed your perspective on how you're building the business? No, it hasn't.

23:34The allocation of funds is essentially going to fuel the same thesis that we've had for years. There is a approach to growth right now where it is about a doubling of everything. So yes, bitters and sodas, the big growth opportunity that 12 ounce sleek can we in many ways see as the future of the company. But you know, I went to the hotel bar last night after the show, and there was a bottle of our smoked chili bitters sitting there on the bar. There's an immense opportunity for us still in bitters and in mixers that's untapped. And a lot of that has to do with consideration and awareness. It's hard to acquire customers now and send them into retail.

24:14It's even harder to acquire customers and send them to your website and afford that supply chain. And so we're driving profitable pathways for customers to find the brand online and buy us in store. And we are going to tell that story through all three verticals of the business from bidders to mixers and bidders and soda. The profit margins behind each will allow for us to then reinvest into awareness and growth. And yes, by and large, the awareness and growth component is going into making sure Hella bitters and soda is front and center in the exciting, innovative component of what's happening in the beverage overall and cocktail in specific, which is low and no alcohol imbibing.

24:58The culture that you've created at Hella, the culture that you, Tobin and Jamari have created feels very specific. And it almost feels like the three fur. It's almost like the three musketeers. You are as one, you work together as one. Does that mean that you are on a day-to-day basis coordinating the direction of the company and making the decisions that you have to make on the ground and sometimes on the fly? Or is there delegation of resources and roles that has just kind of come out organically. It's such a special dynamic that we have between the three of us, and it's something we don't take for granted.

25:37When we can be hyper-collaborative, it's so seamless between the three of us. But of course, as you're rightfully observing, you can't evaluate every opportunity through consensus. And as the company's gotten bigger and bigger, I have found that each of us has matured and evolved into larger roles and become somewhat further apart from each other operationally. Each of us has a lot more autonomy within our divisions of the company. So Tobin in operations, Jamari in sales and strategy, myself in marketing. When it comes to large financial decisions, strategy and partnerships, we're still consensus oriented.