How Successful Leaders Raise Money, Build Lean Brands & Connect With Consumers

0:10Hello, friends. I'm Ray Latif and you're listening to the top podcast for the food and beverage industry Taste Radio. This is a special edition of the podcast, which highlights interviews with six founders, creators, and innovators who joined us on the show during the first half of 2023. Let's kick things off with Tara Bosch, the founder of pioneering Better For You candy brand, SmartSweets. In this clip, Poulterman episode published on January 17th, Tara spoke about why the brand's early growth strategy was built around, quote, patient urgency, why the company prioritized a lean business model and highly specific annual objectives, and the value of first mover advantage.

0:58A term you've used to describe the development of smart suites is patient urgency, which on the surface sounds like an oxymoron, but it was so critical, that term, to how you built the business. Can you explain what you mean by patient urgency? What it means to me is running like hell every single day in the sense of having an urgency that you're just doing everything you possibly can in every given day. So when you're going to bed at night and staring at the roof. You're like, you know what? I did everything in my being today to move this forward. And then at the same time, having the patience to keep the context that you're working towards something that's not going to come to fruition overnight, that's going to take 50 days, a hundred days, a year, two years of patient urgency to really bear the fruits of of what you're working so hard on in the day-to-day.

2:04But that was something that really helped the squad and I keep the context that in the times when it would get really hard and that sort of thing, that if we just kept remaining steadfast and had the patience, that the dedication and discipline in the day-to-day, we would begin to bear the fruits of and really celebrating the wins and all the small moments was a huge part of that as well. And, you know, being sort of ahead of the game in terms of non-sugar or low sugar candy, I mentioned that I grew up, you know, and tasted some of those types of products and they weren't very good. Now you can go into a grocery store and find a lot of different products and there's even more coming to market.

2:48Was First Mover Advantage with a great tasting product, you know, a key pillar of the eventual success of SmartSweets? Absolutely. I think being a first mover is certainly helpful. I think you have the gift of time in the sense of you have whatever extra chunk of time that is to really hit the ground and to make progress, build your distribution and brand awareness, all of the things. So that definitely was helpful. I think though, in combination, just really being obsessed with having a value proposition that can't be out exceeded. That I think was just as important because even early on in SmartSuite's journey, there were products that launched into market that's intent was the same as SmartSuite's.

3:42But when we just stayed true to our value proposition and what we really felt was creating the most radical value for the consumer, At the end of the day, I think that's really what carried us through a lot in our growth. But being first was certainly helpful. Now, a phrase that I often hear from founders, but I think is somewhat misunderstood, is building the plane while you're flying it. Taken literally, it's impossible. Taken with a grain of salt doesn't sound like the best idea, but it is an apt term to describe the development of smart suites. how do you fly with an incomplete jet it was a super delicate balance with looking around the bend and this is kind of i guess what i mean by building the plane as we were flying it for us because we would look around the bend and be like okay what what is working right now that is going to not work any longer in three months or six months whether that was a system or that we needed a new team member, whatever the case was, always asking ourselves that question and looking around the bend was so beneficial and served us so immensely well so that as we rounded the corner on those things, we had invested in different things just enough so that the systems and all of the things, the plane didn't break.

5:11We were able to continue flying and then continue looking around the bend and making our bets and our hypothesis and what we need to build around the bend so that we're set up to continue flying. What's an example of something where you invested just for three to six months and realized that you would need to take a different tack? How did you go about planning for growth and planning for the future? Yeah, the concept that we used in our Candyland brand language was reverse executing. And it was kind of just peeling back the grand vision, which is to be the global leader in revolutionizing candy.

5:55And then it would be all of us sitting together as a team and peeling that back and being like, OK, what does that mean 10 years from now? What does that mean five years from now? OK, so that means we need to be the leader in North America and US and Canada first. okay, so that means that we need to be in XYZ and have this XYZ brand awareness. So really peeling back those layers was extremely helpful to become very, very specific and to be able to make one-page plans that had really clear, concrete things that we were working towards. That was kind of how we peeled back the layers. And then I guess just funneling into that was all of the executional stuff, like having commands that we could scale with and things like that.

6:41Being really clear about what you wanted to do, being really clear about your objectives. Can you talk a bit more about that? Because I think that's such an important point, is not just knowing what you want to do, but being super specific about it. so we would annually make these one-page plans and on them they were just super super simple but they were very specific about each department and then overall as a company what it was that we were going to achieve and it would get down to be like as specific as noting like the average velocity in every retailer across the board that we were going to achieve or what new partner was going to come on board and how we were going to execute that partnership and what success would look like to us with that partnership.

7:36And so having very few, I'd say it was always like three to four max, but specific items, it allowed us to all kind of rally together to know in the day-to-day what we were charging towards and to bring that to fruition. I also want to go back to the point of running lean and staying lean and being focused on costs and expenses. Now, you had mentioned that you brought on, essentially within the first year and a half, a COO and a CFO. These roles are not cheap. I think anyone listening would know that. So when you talk about running lean, what do you mean? What were some of the things that you could pull back on that you could reduce in terms of expenses to achieve the kind of margins and profitability that you're chasing?

8:30Yeah, it was definitely a balance. Even like the head of finance and CEO that came on board, they came on board at probably like half of what the market rate would have been. And we compensated for that in equity. So all the team members that we brought on board had equity, which to me was incredibly important that everybody knew that they were owners in the company and that they really felt that sense of ownership. and from that stemmed dedication and loyalty to the mission and all of the things. But that was really helpful also from a team perspective in terms of running lean because equity did make up for what a lot of standard salary would in those early days, as well as we had an amazing bonus program.

9:20So if we were executing and hitting and achieving our goals, then that would also compensate for the lower base salary people we would have. So we'd find creative ways like that to stay lean on the people front. And then on other fronts, I mean, it was really just of the mindset. We would often say like, okay, how can we hack this or look at things from a perspective that a lot of tech startups kind of would and kind of how they ideate. And then the other part of it was just having the conversations with people, with our retailers. We would get creative and we'd be like, hey, we literally cannot pay for a free fill right now.

9:59However, what if we do a giveaway on social and we push our partnership through our e-news? And so that was a big part of it as well, just building great relationships.

10:15Next up, we have Allison and Stephen Ellsworth. the co-founders of fast-growing prebiotic soda brand, Poppy. In a clip pulled from an episode featured on May 30th, the Ellsworths spoke about the professionalization of Poppy's organizational structure, the decision to hire a CEO from outside the company, the drivers of the brand's remarkable trial conversion and repeat purchase rates, and their perspective on how entrepreneurs can make the greatest positive impact via their brands.

10:50Understanding that you need to go from where you were when you launched Poppy in March 2020 to an organization that is aiming for 30 ,000 doors by the end of 2023 requires an understanding that you need to professionalize at every level. What did Poppy need, you know, past that first year? What did Poppy need in March 2021? Because that first year, so much of the business was direct to consumer. or so much of it was Amazon, just because of the pandemic and just the difficulty in getting into retail. But how did you know and what did you think you needed to have throughout the organization and at different levels of the organization to get to where you are today?

11:33We just needed more structure, just like you scale supply chain, right? You've got to lay down some processes and structure as you scale the organization. So I think that that was the biggest thing that we, you know, saw as an opportunity to really professionalize the organization. We wanted to make sure that we have the right people on board. When you're, when you're young and you're starting up, everybody in the company has a relationship with the founders. So it's easy to like instill that in them and get them all fired up. And they're, you know, they're on mission, they're working for a purpose.

12:06We're building something together. And so I think people, people feel that. They see that. It's like this tight-knit group. And as you scale the business, it's just not scalable. While we want to work with everybody and get to know everyone, we get to know them, but we don't work with them. It's just not the way you scale the company. And so I think that that was the biggest thing is just providing that structure so that people can ultimately be held accountable. We're no longer in this small situation where people are just fired up because they're working for the founders. They're now looking at Poppy as this once-in-a-lifetime career-building opportunity.

12:42So it's a bit of a different dynamic. And they're here because they believe in what we do, but there's also an element where they believe that this is a great opportunity for them as well to build their career. I would say just for context, Poppy had two employees in February of 2020. And that was Steven and I. Now, three years later, we have 100, you know, and then on top of it, we're growing at a rate that nobody really is seeing, including Rohan. We're growing faster than buy vitamin water and Red Bull, Monster. No one's seen this kind of growth from zero to three years in such a quick time.

13:28So to put those processes in place so early on was really effective in allowing us to scale to where we are today. To that point, it was a joint decision to bring in Chris. We talked to the board, we talked to Rohan. It wasn't something that was like forced on us that I think is on a lot of other founders. and I think that's a lot of advice that we give to other founders is like it's almost like detrimental if you hold on too long what that is is that's your ego at the end of the day and it's really really hard because I wouldn't even say it was it was hard yeah it was really hard it was a hard transition but to have a seat at the table and be part of that transition is really nice versus being pushed out not knowing what's going on because that would be really really I don't know, just really hard.

14:15Yeah, for sure. And I think you said it best. It's like there's been plenty of examples where a CEO is brought in for a turnaround situation, where the company is hemorrhaging cash, you know, velocities aren't what they thought it was going to be. Sales are based on new distribution as opposed to actual velocity gains, you know, and that just, it wasn't the case of Poppy. Things were trending in the right direction, path towards profitability, velocities are increasing, you know, so I think it was it was a really good time. It's not to discount for, you know, like I said, for all of the other founders out there that it's not to say that it was an easy transition, but it was the right transition and it was the right decision ultimately for the business and ultimately for me and Allison and our family long term.

15:01We've done a lot of studies now to date to dig into who our consumer is and why they're drinking poppy. And consistently in every study across the board, the number one reason people drink poppy is because it tastes good. And that's intentional through everything that we do. Yes, we are better for you. We're great for gut health. We have all of these other amazing attributes, but it goes back to we're going after big soda. And to truly be a soda, you have to taste good. And I think the consumer, they're finicky, especially Gen Z, right? They They aren't as loyal as say like millennials and baby boomers.

15:38And it's one of those things that if you taste good, that's why they're going to drink you. And we do that through our marketing, through our packaging, right? With the beautiful colored cans and in store with the merchandising of it. But we're getting data back and 86 % of people that try Poppy moved to conversion, right? And then we have... Wait a second. Let's back up for a second. You say 86 % of people who try it buy it. And then we have a crazy repeat rate of over 66 % after that. So basically, if you hear about it, you're going to move 86 % of those people are going to move to conversion to trial.

16:17And then after that, they're going to stick around at a really high rate. You know, and we see that online with our monthly subscribers to in-store. And I think it goes back to we taste good. They feel authentically connected to the brand. and the brand at the end of the day, it's cute, right? It's the branding. It's part of fashion. It's part of culture. It's modern soda for the next generation. And it's now that it's time for disruption and we're seeing it in culture. I think sometimes the simple is the most brilliant. It's not difficult to understand what you're selling. You use words that everyone understands.

16:58Soda, fun, and flavors that everyone knows. grape is your latest flavor. But it surprises me sometimes when entrepreneurs make things too complex, make things a little too sophisticated for the mainstream consumer with flavors that they may not understand, mainstream consumers, that is, with functional benefits that they may not understand, with sort of a staid and unfun kind of approach to branding and marketing. And if you want to go broad, if you want to go big, you can't do any of that. It's been proven over and over again, simple, easily understood, and great tasting sales. Think about poppy as a simple proposition or trying to make it as easy for a consumer to understand.

17:39You think that's as much of the genius behind the brand as anything? I do. And I think we had the benefit of old brand new brand. Yeah. Right. And those transitions were very intentional. We had a pretty heated conversation when we were going from glass bottles, white label to super colorful labels, design and cans, right? That heated conversation included whom? Oh, just a few small personalities. Yeah. We were split against like half were for the white and half were for the color. Because if you think of like the white, you think of like healthy halo, it's better for you. Apple cider vinegar.

18:19Founder story. I started this because of my health problems, right? And then you have the color, which screams taste, fun, flavor, you know, all those things that you guys were speaking to. And I'm glad that the flavor and fun worked out. And I'm, you know, I say now I was wrong. Yeah. Yeah, it was very intentional that we took apple cider vinegar off the front of pack and we moved it to the back. And it goes back to meeting the consumer where they are. We want consumers to look at the packaging and pick it up because it looks amazing. We want them to then crack the can open and drink it. And they're like, oh my gosh, this tastes incredible.

18:55And then as they're drinking it, they turn it to the side. Oh my, oh my gosh, it says prebiotics. It says apple cider vinegar. Wait, only five grams of sugar. Like this is insane. Sometimes there's a lot of consumers that if it's marketed and pushed to them as healthy, it's automatically, it's going to taste right. So it's basically tricking them saying like this product tastes amazing. And oh, by the way, these ingredients are actually good for you, not just the absence of bad, but also the presence of good. And I think that for us as entrepreneurs, we've always wanted to make a positive impact on the world.

19:26In order to make the greatest positive impact, people have to buy into it. If you have a product that's so hard to understand or the taste is so off-putting, how many people are ultimately going to try it? How big of an impact can you ultimately drive if it's not meeting the consumer where they are? Let's keep it going with Jake Bullock The co-founder and CEO of cannabis-infused beverage company, Cannes In this clip from our episode published on April 25th Jake discussed how Cannes sits at the intersection of Cannes and Sober Curious Why early-stage fundraising is about, quote, finding the one And how Cannes' commitment to innovative advertising and video-based content has paid off

20:15the idea of someone being canna curious or sober curious i would think are mutually exclusive but are they the same consumer in so many ways they intersect we talk a lot about can sitting at that intersection point between the sober curious and the canna curious in the beginning we thought a lot about you know are we building a mainstream cannabis product is that the idea here right some people will never smoke. We had the vaping crisis. People are afraid of vaping. We don't really know what's going on there. Edibles seem like a natural entry point, but are often way too potent, right? And so could we create a product that was a microdose beverage that keys off of the heuristics of alcohol that really would be the product that brings a mainstream consumer that's walking down the street today thinking about the glass of wine they're going to have later tonight to flip the switch and think about a cannabis product, right?

21:02And we started down that track. As we got down it, We started realizing so much of what the sort of salient emotional touchpoint that our product solved didn't come from cannabis being unapproachable. It actually came from hangovers. It came from that physical pain of a hangover, the emotional regret of the choices that you made and then the consequences the next day. So we really thought about tapping into Cannes as a social beverage company. That was our goal. It was how do we really make these products social? And if you're going to live in the world of social, you have to deal with alcohol.

21:34We try to deal with it in an inclusive way. Our view is that what might be right for one person is not necessarily right for another person. So Luke and I drink quite a bit of alcohol. Now we probably drink half as much. We've been given up entirely. We'll continue to drink it. But that 50 % reduction in alcohol consumption for us is really healthy and really positive. For some people, it will be 10%. And that's also great. For others, they'll give it up entirely. And I think really seeing especially the millennials and the Gen Zers, you can see this in the data now as well, looking at cannabis as an option to help them drink less alcohol.

22:07They definitely are drinking less alcohol. Now, are they mixing up with cannabis and other potential sort of sources of buzz? It appears like they might be. And that may be healthy. I think there's a lot we still have to learn about these younger generations and particularly the Gen Zers that are old enough to consume our product, how they're really growing up into this industry. but we think that our product provides real opportunities there. And what's interesting is it doesn't shut off the opportunities of older generations, right? Because there are people that are still saying, you know, your doctor is telling you, hey, you know, for your health right now, you should really just cut back on the booze.

22:37And we help people do that as well. So I think curious is a parallel to choice in so many ways, right? Choice is the key here. You're not just giving someone an opportunity to try something. You're giving them choices, Right. So they don't have to choose between vodka or nothing or wine or nothing. They have vodka and wine can and nothing. Yeah, exactly. And I think one of the big differences, so there are a lot of products out there that are alcohol alternatives. Most of them do not have a buzz source, right? Or the functional ingredient, there's maybe no functional ingredient, or the functional ingredient is something like caffeine or taurine, some sort of stimulant, right?

23:19Which We've got Red Bull behind bars for decades now. People drink espresso at night for various reasons for energy. So it's not necessarily new, the idea of having an alternative with a sort of caffeine-based type stimulant. And a lot of them also are trying to mimic the flavor experience of alcohol. And so they add a lot of sugar and they add a lot of sort of adaptogenic or sort of bitter type things. It's like, oh, let's make it taste like a cocktail. Or cinnamon to make it, to get that heat. Yes, cinnamon, right. It's not working. Exactly. It's always interesting to us because you try some of these products, you're like, I get what they're trying to do.

23:54They're trying to make this taste like alcohol. The problem is when you remove the alcohol taste, you actually free up an amazing potential set of opportunities. You don't have the sugar from the alcohol. So you have way more caloric space to create something that tastes delicious, but with like less than 10 grams of sugar. Our products are 30, 35 calories. That's important to a lot of our consumers. You drink a bunch of them and still be much, much lower from a caloric standpoint than alcohol. but you also don't have to mask the taste of alcohol. And so some of the stuff that we like associate with, ah, that's what I think of as a cocktail is actually a burn that comes from, from the alcohol.

24:26And so we pushed back a little bit on this idea that it is a real choice if it doesn't deliver the buzz. And if it, all it's really giving you is the same calories and a kind of unpleasant flavor experience, then maybe that's not actually what consumers want. We're a product like ours. And there's other examples, I think of, of ways you can incorporate a functional ingredients effectively into beverages. But really having that buzz is what our consumers care the most about. And that that is the right sort of potency for them. We talk a lot about our product being the same strength as a beer or a glass of wine.

24:56It was intentionally designed that way. So we think about how long does it take the body to metabolize two milligrams of THC is roughly about the same time it takes the body to metabolize one beer or a glass of wine. Without the hangover. Right. I don't even know how you start with an investment plan or strategy for a brand like this, at least early on. Data is possibly, I guess, one way to start, you know, just showing the potential for a brand like this. Was data as important as I think it might be when you're talking to an early stage investor? Yeah, it's interesting. So we think about it a lot as in the beginning when you're pitching an investor, there's a couple of important things.

25:35The first is absolutely how can you use data to show the potential, right? Because they're evaluating how big could this be possibly? Like, if I believe you and you're successful, like, what are we talking about here? And we, you know, investors, especially early stage investors need that number to be really big because they're, you know, they're, they're going to, most of these are going to fail. And so that's important. The other thing is they're assessing you and sort of, are these the right folks to do this? You know, they could believe every single thing we have down on our slides and still say, I don't want to invest because I'm not sure you're the ones that should do this, right?

26:02Like what uniquely makes you capable of executing on the plan that you've created. Now, some of it is that you created and you know it, but a lot of it is sort of the second piece, which is how do you make it more than just a presentation, more than just a set of pages that you share or walk through? And for us, that was easy. I think a lot of beverage companies have this weirdly, it's an advantage because we bring the product to the pitch. It's in the room. You know, we can make, we can build this because it's sitting in front of you. And now maybe we'll change the branding. We didn't have it right in the first, which we didn't, but smart investors get that.

26:30They'll say it like something to the effect in the room is like, well, we know you'll figure out the branding. That's, that's the easy part. You just need the money to do that, right? But having the liquid, having them be able to crack open a can and taste it. Again, this is why we hand seamed like 18 times every single can, which took hours and hours. But that experience helped investors understand that we actually are able to make this product because we did. We made it. And how we did it was, you know, they didn't need to know at that point. But that really helped bringing it away from just a presentation that's on a set of pages and into the room in a real way.

26:59Did you ever encounter an investor who said, I don't think you're the great guys to lead this brand, this company. They never said it in those exact words. I'm sure there were investors that thought that. We got a lot of no's and no's are never really no's. They're kind of like, yeah, let's keep chatting or like, best of luck with things. You should meet this founder or whatever. Everyone wants to be nice and play nice and they want to be helpful because ultimately they don't know either, right? Like a lot of times people would, in the very early days when we were fundraising, we would be sometimes halfway through a pitch and we'd realize, oh, they think we're a CBD company.