Why Selling Her Company Was The Right - If Unpopular - Decision

0:10Hello friends, I'm Ray Latif and you're listening to the number one podcast for the food and beverage industry Taste Radio. This episode features an interview with Alix Peabody, the founder of pioneering canned wine brand Bev, which last year was acquired by global wine and spirits company E &J Gallo. When an entrepreneur sells their company, it's usually a cause for celebration. But when Alix Peabody sold Bev to E &J Gallo, not everyone was cheering. Launched in 2017, Bev is a brand of canned wine and spritzers known for its chic package design, better-for-you positioning, and promotion of, quote, empowerment and inclusivity in beverage and beyond.

0:52Ian J. Gallo obtained exclusive U.S. distribution rights for Bev in February of 2021 and acquired the company last June. At the time, Alix hailed, quote, Gallo's values and commitment to women and diversity in the industry as exemplary of the exact change we aim to create. It seemed like an ideal partnership, but Alix quickly found herself isolated from many of her closest friends, co-workers, and advisors who were unhappy with her decision to sell Bev. In the following interview, Alix chronicles the three years leading up to Bev's acquisition, how she analyzed the timing and opportunity to sell the company, and the surprising fallout with confidants.

1:32She also reflected on how taking a brief respite to focus on her mental health impacted perception of her as a leader and Bev's ability to land investment, and later talks about a potential return to entrepreneurship. Hey, folks, it's Ray with Taste Radio. Right now, I'm honored to be sitting down with Alix Peabody, the founder of Bev. Alix, great to see you again. Thank you, Ray. Yes, nice to see you too. Thanks so much for having me back on. This is four years since you've last been on the show. We last featured Alix on Taste Radio in December of 2019. Not much has really happened since then, not in your life or just in general, in those last four years?

2:16Not at all. Not at all. The world hasn't changed a bit. It's not like you've sold your company or anything. No, no. I mean, what a crazy story that would be. What a crazy story that would be. But yeah, no, it's been a while, but there's a lot that's gone on. So I'm excited. You recently took some time off when we spoke last year. You were in Europe. How was that? Yes, I was. Oh, it was wonderful. I actually, not a lot of people know this. I actually grew up part of the time in Europe in high school. So I lived in France and in Italy. My mom's French, which is why my name is kind of funky, Alix.

2:51And so went back, visited some family and was there for a little bit. It was a really nice time. Nice to ground. For sure. For sure. You're fluent in French? I am. Yeah. And Italian, weirdly enough. Yeah. No one sees that one coming. But I was definitely a little rusty when I got there, but it was kind of meditative to have to be like, okay, I'm focused because I have to speak a language that I'm not used to speaking these days. It's interesting because in Europe, I think most people speak English, but I think in France in particular, they ask you or they want you to speak French. If you go to Scandinavia, everyone speaks English and it's like, no one's going to give you a hard time for not speaking the country's official language.

3:33But it's interesting. I think in France, they're like, speak French. Yeah, they much prefer it, but they also don't love it if you're not perfect at it. It's kind of a funny mix. Funny you mentioned Scandinavia. I was actually there last week, so I've been popping around. Whereabouts? I went to the Swedish Laplands to see the Northern Lights. Wow. Bucket list item. So that was pretty awesome. It's pretty cool. This year in particular is one of the 10-year cycle things where they're bigger than they will be in a long time. So if anyone gets a chance, highly recommend it. Amazing. Amazing. Well, I'd say you deserve the time off.

4:12Thank you. Post acquisition. And I was so happy to see when the news broke about Bev being acquired by Ian J. Gallo in June. What did it feel like when you first signed those papers and said, okay, I'm handing over the keys. Yeah. Wow. Or to my car. I mean, what didn't it feel like is probably a better question, right? It is every single emotion under the sun. It's exciting. It's terrifying. It's, you know, all of the things. There is a sense of accomplishment there. There's also a huge sense of loss there. I imagine, I don't know, I'm not a mom, but I imagine it's not too dissimilar from like sending a kid to college or something like that, right?

4:55Where it's like, okay, I did everything I could do. We built it to where it needs to go. So now the brand really needs to stand on its own two legs and needs to be in the hands of, you know, of people who can take it to places that realistically, especially in this industry, is just extremely difficult, capital intensive, time intensive to do. And when you have somebody like Ian J. Gallo that has the horsepower that they have, the execution power, the production power, at a certain point, you have to look at yourself and say, am I doing the brand a disservice by assuming that I'm still the best one to take it where it needs to go next?

5:30And that's a hard conversation to have with yourself, you know? But that's, I don't know, in a nutshell, that's kind of the mix of emotions that it felt like. Is that the situation you were in? Because Ian J. Gallo became a partner, distribution partner of Bev two years prior. And did they have an option to buy the company based on certain results? Yeah, no. So they did not own anything. They were truly a distribution partner. It was a very clear relationship. We produced the product, we did the branding, we did the marketing, and we worked with Gallo on an annual basis to set up sort of what some of our targets are and stuff like that to get the brand out into the world.

6:18but it was not set up like that. Frankly, I didn't even know that that was a thing that people could do at the time. I mean, when we, gosh, when I started the company, I was 26 years old. So I knew a whole lot of nothing about anything. And then it kind of got to a point where it was an interesting time, right? Because the markets were changing, consumer brands were starting to shift a little bit, some of the VC excitement around consumer brands and investing in consumer brands at early stages started to get more complicated. And I think, you know, we exited at a great time. We've seen a lot of brands that have kind of taken a turn in the past six months, in part, I think, because of remnant supply chain issues or a lot of, there was a lot of messiness that went on when Facebook kind of changed some of its privacy policy stuff that that affected a lot of brands that were heavily DTC.

7:16I would include us in that, right? We were heavily DTC in terms of how we were getting customer acquisition and also just information about where to push the product and stuff like that. So it was the right time and it made sense. There was only really so much legwork we could do as a young company and a small-ish brand, relatively speaking, at that specific inflection point. So Alix, you're still involved with Bev. In what capacity? I work with the Gallo teams on generally marketing plans, strategies, brand buildouts, innovation, sales. So I'm still, I'm doing the fun stuff that I loved to do before.

8:03And as I mentioned before this call, the team over there has been amazing and it's just really helped make it very obvious that this was the right move all along in the moments when I wasn't so sure. So I'm working with them on basically like the heart and soul of the brand and bringing it to market. Earlier, I had said that when people start a business, it seems like most of the time, the end goal is to sell that business, to sell that brand. You had responded in the affirmative. I think that's something that a lot of people don't want to admit, is that we're creating a company and hoping to sell it.

8:40But you sold the company in a relatively quick timeline. The timeline from when you created Bev, when you launched the brand to when you sold it was five years, right? Yeah, if that. I mean, I technically founded the company in 2017. We got funded for the first time in 2019. So the degree that we could actually function as a business. So before that, it was my 401k and that didn't get many of us very far, mostly me. And then, yeah, and then we sold this year in 2023. So it was quick. And, you know, I'm happy to dive into sort of some of the, some of the things that I think were unique about that specific situation.

9:24And when you say a lot of, a lot of founders go in thinking about what the ultimate goal of selling their brand, I think that that is something that both is and isn't true. I definitely didn't think that was my goal. And I actually remember having, you know, a conversation with Stephanie at Gallo as a mentor and a friend. And she's always been just the most amazing to me. And, you know, and she was like, well, Alix, you know, you should at some point really be thinking about what your exit plans are going to look like. And I was like, what do you mean? Like, is that something that people start with?

9:57I didn't even, you know, it didn't even dawn on me that like, I should be thinking about, you know, an exit plan. She's like, well, you know, at some point or another, you're going to want to maybe do something else or, or the brand's going to get to a place where that's what you might want, or you might not. And just kind of helped me think through how, how to even approach that as an entrepreneur. At what stage did Stephanie mention this? Was it your second year in third year in? I mean, was it? Oh, this was, this was when we were just friends, like before we were even in a distribution. Yeah.

10:28Before we were even involved with Gallo, just as, just as sort of like as a mentor. And that it was kind of the first time that I was like, oh, Right. That is something that's expected and, you know, not just not expected from Stephanie by any stretch of the imagination, but I mean, you know, from investors, from employees, from just like the life cycle of how these things tend to go. And unless you want to make it, you know, unless you really want to double down and make it your life's work to be associated with one brand and one company, that's kind of where you end up having to go at some point or another.

11:00Right. And so for us, it was interesting because COVID did a bunch of interesting stuff for our brand specifically. And part of the reason that that was a canned wine to begin with was because of a lot of the legislation surrounding how alcohol can and cannot be sold in the United States. And I figured out that wine could be sold direct to consumer online very early when I was figuring out what product to make. And I knew, you know, even back then that as someone new to the industry, that I was going to have to be able to build a relationship directly with the consumer in order to build a brand at all.

11:39Right. And so when COVID hit, we were already set up for what that meant on the D2C side. We were lucky in that way. And we'd made that a very, very well-oiled machine. And we were very lucky that we did because at the same time, it pushed out our ability to get on shelves wholesale, even things that were already planned, right? Because for those of you who might not be super familiar, the wholesale cycles are very long in terms of when a Target or a Walmart or whomever decides that they're going to put something on the shelf to when it actually gets to the shelf and you start to see that pull through, right?

12:14In March of 2020, when we were expected to hit all of these shelves, resets were just halted. Everything was kind of stopped. And so we were really lucky to have that direct-to-consumer arm going on that was really holding up the company throughout that time when it was completely out of our control whether we could actually have the opportunity to be on the shelf to grow during that period. So anyways, long-winded way of saying, I think from the outside, the brand was, you know, was and continues to do very well. But because we had that D2C arm, we didn't necessarily need as much wholesale horsepower to be as loud as we were at the time, if that makes sense.

13:01How much of that D2C success continued through COVID and how much of it played into Gallo's interest in buying the brand? I mean, the D2C portion, I think was, it was many things, right? Like it was a great sales engine, but it was a great marketing engine. And it was a communications tool really with our consumer where we could, you know, engage with them about what they liked, what they didn't like, what they wanted to see more of. you know, we have a low ABV that Gallo just hit the shelves with called Bright that was really a consumer-driven product. And in our space where there is so much legislation, it's hard to do that in an effective way to really have that conversation with the consumers.

13:49So it was almost like a step change moment where the brand needed to go from being, you know, a digitally native brand to really being like a mainstay wholesale brand and Gallo were the people to do that. When you think about that point of, okay, someone's interested in buying our company, you've got to really think about a lot of different things. And you've got to think about things for yourself. You've got to think about things for your investors and for your brand. What really rose to the top for you? Was it the fact that you did have investment partners that you were beholden to? Was it this is what's going to be the best for the brand?

14:25Or was it this is what's going to be best for me personally. I think that those things kind of all become one big mess when you're in the middle of it and you're a founder, right? And for me, I, it was very, very clear that it was what was going to be best for the brand first and foremost, and for the, for the overall sort of like continued legacy of the brand. And obviously, you know, as the founder of the brand, that, that also means a continued, a continued presence for, for me and for what I built, you know, professionally, if we're just, if we're going to be real about that. I think, you know, there were definitely moments where I was like, there there's, you know, there's further, there's further that I want to go with this.

15:05You know, I want, I want to do more and I want, I want to be involved more and see it, you know, sort of to, to the next level. But when I looked at it, and this is another thing founders, I think, realize, but don't realize when you're, when you're at that point where you're like, okay, are we going to take on a series B round of financing or are we going to sell the brand or are we going to, you know, measurably slow our growth so that we can be self-sustaining and you're, you know, and these are all valid and fair decisions. When you're looking at sort of like that series B option and you say, okay, if I bring in this much more capital, that's going to come with the expectation of X, Y, Z additional return, right?

15:49that return is going to take me XYZ number of years to achieve. I learned the lesson very quickly and very early that there are so many external factors like pandemics that you may not see coming, for example. And then on top of that, you say, it's going to take me that long, then I'm going to sell. And then you also have to think about yourself as the founder personally and say, and then, you know, and then I, I, in a great situation, you get to continue to be attached to that brand, but that also blocks off, you know, what you can do in, in the, in the immediate term thereafter. So when you're deciding, do I sell, do I take on a series B, you're not saying I'm going to keep doing this for a year, two years, really you're saying, okay, this is a five to seven year commitment.

16:37And that was kind of one of the things that I had to really start thinking about was, okay, this isn't, you know, if we, if we take in the external capital, continue to, to grow, this is, you know, five to seven more years realistically of a lot of, you know, what I'm doing with these expectations and with so much unknown out there that you just have to make a judgment call. We were ultimately, you know, happy with how everything shook out, but it was definitely, I lost a lot of sleep over it for sure. It was, It was a hard decision and it was a difficult time to just sort of sort out what part of this is me, what part of this is my ego, what part of this is what's actually best for my people, my investors, the brand itself, which to me is almost like its own person.

17:31And I think that that's some of what you mentioned is interesting because there is like a big sort of ego element that comes along with it at a certain point where you're like, well, I could grow it to X, Y, Z, you know, bazillion or whatever people think that they can do. And that is true for some people, but it's mostly not, right? And so having a moment where you step back and say, you know, do I feel like I did a really good job here? Do I feel like I did the best that I can do? And do I have the humility to say someone, you know, someone's going to be able to continue this on in a way that that's better than, than I will be able to.

18:12And that, you know, that's, that's, it's tough. That's a tough, that's a tough moment, but it's one of the most important ones you'll make, I think, as, um, as someone I'm sitting in business. As you've mentioned, the whole process seems like it was tough. And a week ago on Instagram, you published three posts in succession that talked a bit about the sale and how difficult it was. I DM'd you about four minutes later and was like, Alex, can we have you on Taste Radio? And you're like, yeah, that'd be great. And you talk about gory details and you talk about things that were really, really tough for you personally.

18:49And I want to talk about something in your first post that you said, you're selling a company is hard. People I thought were ride or dies, part of my everyday life, fell off the face of the earth faster than I could say goodbye. I became isolated in a lightning rate, and all those people who once, quote, loved me, vanished in a nanosecond when I no longer served. I was devastated, heartbroken, feeling very alone and utterly irrational about it. What happened? Oh, man, what didn't? So first and foremost, none of that was related specifically to the Gallo team. They've been awesome. They've been awesome all the way through.

19:28it's more some of, you know, like the early employees that you work with and the people who have been, you know, maybe who saw things going in a certain way or want, you know, wanted, wanted things to shake out a certain way. And I think that it becomes very clear. You know, I had, I mean, I had some very, very close friends that I worked with for a very long making the decision of, you know, what we were going to do with the company. And I also worked with a lot of friends and family and family as well. Right. When we were making that decision, it became very clear very quickly, the, the, the difference in our responsibilities within the business too.

20:17Right. And it became very apparent to me that there were things as the founder, as, you know, um, the head of the board, all of these things that, that responsibilities that I had that weren't necessarily going to translate through even to the like the early stage employee level. I had a I had a tough time when every single day of my life for like six to seven years, I was surrounded by people. You're kind of the core of the organization. And all of a sudden, you realize that you're not necessarily going to be a main character in all of these people you care about life forever, right? For some people, you're a chapter and that's a different outlook, right?

21:00And that's a different thing. And I think a lot of founders find that when you're a founder of something and you're on all these lists and you're getting invited to this, that, and the other thing, and people want to have you around because they want to talk to you about the founder stuff or they want insights or whatever. And all of a sudden that goes away overnight a lot of the time. And it was, it was just very interesting for me and to see who stuck it out when like, I was kind of struggling with like, who am I now? You know, I don't, I don't really know. I'm, that's still something that I'm trying to figure out.

21:35And it wasn't the people I thought it was going to be. And that was the part that was kind of really, really difficult to rationalize to myself. And I think I spent a lot of time like trying to explain it away or get angry or be like, you know where are you so and so like we were we were in this together whatever and realizing that hey they're going through their own story here you know and whatever that story happens to be Bev is part of it I am very tightly associated with Bev I need to be okay with being that person's villain for a while if that's you know if if if things didn't go the way that they wanted to for their own story in the way that you know that that life happens sometimes and that's a very strange kind of thing where you're like, I am the trigger right now for some, for some people.

22:25And I need to just be okay, isolating, stepping away and, and really looking inside and deciding like, who, you know, who am I? And, and cause I'm not all of these people. I'm not all of these things. I'm, I'm, you know, I'm, I'm leaks. I'm not Bev. I'm not boss. I'm not whatever. I'm, I'm me, but it's easy to forget that when you're in a day in day out for seven years. I don't know if that answered your question or just danced around it a lot, but. No, it definitely answers part of the question about what happened and how these folks who are so important in your life have been distanced from your life.

23:03And I think one of the counterintuitive things about our industry is that people talk so much about food and beverage as being team focused, culture focused um you know people who work for you are part of a family but at the end of the day the responsibilities typically end up with one person or two people if there's a co-founder in this case that it ended up with you you um at the end of the day were solely responsible for so many things related to the brand and its success and its acquisition and one of the things i keep hearing about consistently with entrepreneurs more than I actually ever had in the time that I've been involved in this industry is the loneliness that comes with being a founder and being an entrepreneur.

23:52I mean, how much did that factor into, you know, the grief that you felt or, you know, if not grief, the, I guess, hurt that you felt during this process? Yeah, I mean, it was huge. You know, it was huge. I'll be real. And I think, It kind of felt like this when I've explained it to people. It felt like, you know, and part of our brand and the nature of the product is social, but, you know, by its very nature, right? And so, and, and so, so much of Bev and the office had its own heartbeat and its own culture. And, you know, and I think that that has been passed on through our, through our consumers, but inside the company, I mean, and so it felt like I, you know, I built this community or I tried to, where nobody ever had to feel left out, right?

24:44Because that was something that really bothered me. And that was kind of part of our ethos was that we're together, we're having fun, we're creating fun environments that are also safe and we can all feel good. And then one day you kind of like look around or you're looking on Instagram as the founder, right? And everything's, dust is starting to settle. And you realize that party's still happening. You're just not invited, right? And in some situations for me, that was quite literal, right? Like there were couples that had met at my wedding who were, you know, getting engaged and not inviting myself and my husband who I worked with or, you know, there were things like that.

25:21And not taking that personally was like, I didn't do it well at the beginning. I took it super personally. Right. I was like, well, what the heck? Like, you know, but but then realizing that the community has kind of, you know, people need need the space from and the distance from that chapter of their lives the same way that you do and being OK with the fact that you are associated with that chapter. Right. So you kind of have to almost look at yourself as like an object outside of yourself and say, OK, if there's a time in my life that's upsetting to me and there's someone that reminds me of that.

26:00And when I say upsetting, you know, I think I don't mean to make it sound like things were like super dark or whatever. I think I think in many ways, like a lot of people were just bummed it was it was over. Right. Like a lot of people just like we're kind of like, well, why couldn't we figure this out? And it wasn't you know, it wasn't like a like an anger necessarily, but there was a grieving that other people had to go through. And there's only so many times I can say, you know, this is this is what's best and whatever. And, you know, and this is what's going to make sense. And there are all of these other factors until you're kind of talking into the void.

26:34When you say, when you say, why couldn't we figure things out or why couldn't we do this differently? Do you mean that they were upset about selling the company or, you know, something that they didn't receive as a result of selling the company? No, not so much. I think, I think it was like such a tight knit group that people just didn't want it to change that much. You know, like it's like, well, why why don't we have the series B and continue on and sort of that sort of option B? And I think there was so much love inside the organization that people really wanted the party to keep going in a way.

27:11Right. And and were, you know, looking to me to figure out how to make that happen. And it's not it from their perspective, obviously, they move on to new jobs and new companies. It is the party's quote unquote over from their perspective because, you know, they're not at that office and they're not with those coworkers and stuff like that. That's not necessarily true for the, you know, for the brand and like the investors and whatever it is. And that's kind of a part of it that people don't have a day to day communication with when, you know, when they're at the employee level. Right. That's just it's just different.