This Billion-Dollar Soda Brand Founder Explains Why Fortune 500s Can’t Win Gen Z

20:56Hey, I have an idea I want to run by you. And can I just get 15 minutes of your time? Okay, well, where's your deck? Have you done the work? Do you have a financial model? Like if you want to be an entrepreneur, you have to professionalize the business. So as an investor, we're looking for that. And as an entrepreneur, you should be able to put that together and professionalize a real business and take yourself serious and not a side hustle.

21:18Allie Garfinkle:You captured a cultural moment in a kind of counterintuitive way. And one thing I've wondered sometimes, I'm like, is Poppy a soda company or is Poppy a health company in a soda can? I would say poppy is a lifestyle brand. So neither. Because we move at the speed of culture. We see ourselves inserted into like cultural moments, like the Coachellas, the love islands of the world. And you're following the cultural calendar of meeting the consumer where they are in love with something. And by the way, we're meeting, soda is all about occasions. If you think of the word soda, most people have a memory.

21:54They think, well, for me, I'm, I'm millennial. I'm like malls, movies. I'm also millennial. That's what I think too. But every generation, it's like this emotional connection. You have it. Someone might think so. And they might think McDonald's or burgers or like, you know, like all this stuff. And so you're usually emotionally connected to it. And so we found a way to emotionally connect with people on such a different lifestyle, cultural relevance that people are matching their outfits with poppy. They're dressing up as poppy cans for Halloween. They're doing their makeup and get ready. Like that is not normal.

22:27It's so cool to see that come to life.

22:29Allie Garfinkle:People are doing get ready with me is with Poppy. I didn't know that. They're matching their makeups. The nail art of Poppy, we've seen there's thousands of people have done their nails with Poppy and like all of our little fruit icons. Like that is cultural. That's lifestyle. That's not just like, hey, we're a soda and we're better for you. And our consumer journey was really intentional. So we wanted someone to pick up the can and be like, oh my God, this is so cute. And we went for them to drink it. Be like, this tastes so good. and then be like, wait, this is good for me. And that journey was really intentional.

22:59And I think people in marketing get really caught up on what you call your RTBs, like five grams of sugar, prebiotics, ingredients you can love. Whereas people buy with their heart. So it's like, how do you move that buying power from the head to the heart on emotional level? And that's how you get big versus drink this because you get X. It's very transactional. How did Poppy move from the head to the heart? I think going back to the cultural calendar and the hiring young of they know what the next generation of soda drinkers are. And so for us, it was my mom drank like, I think, like six Diet Dr.

23:39Peppers a day.

23:40Allie Garfinkle:That's a lot of Diet Dr. Peppers. It's a lot of Diet Dr. Peppers. But she loved them. But she loved it. It was part of her life and it was her generation. And it got to the point where like Gen Z just isn't consuming soda like that, right? The alcohol consumption with Gen Z is down. they're back in the grocery store walking around they won they have time because they don't have kids they want that human connection and so with us we marketed to the young and the older buys that's like marketing one-on-one you have your creative um cohort who you're going after and then you have who's actually buying so for us it was a word we made up was gen zennial heavy gen z millennial you know the moms in the households want something better for their husbands and their kids and their wives and then you have um gen z who just like isn't super loyal to brands so then And like, how do you solve for that?

24:24Well, we do all these cultural things. So we were just really smart with meeting them where they were. And we were just like cool, effortlessly trying versus we weren't very try hard, which I think some of the other brands were.

24:36Allie Garfinkle:Well, and you're kind of getting at something that I've wondered about many times. Here at Fortune, we cover a lot of very large companies. In many cases, we've spent billions trying to figure out what Gen Z wants. What do you think most large companies are getting wrong about Gen Z? Everything. Absolutely. Absolutely everything. 100 % of everything that they do because they're so stuck in data. So this is the biggest problem. You want to do something? Let's run a test. Let's A-B test it. Let's throw it through the system. Can we, can we like, you know, get a cohort and do, do a study on it? And you're just like, okay, well that was a trend two weeks ago.

25:13It's not a trend anymore. I don't know what to tell you, but like we've moved on and like three days is the cycle. I feel like within a media cycle or a social cycle or a trending cycle. It's three days. If you can't hit within that three days or be the first to move at the speed of culture, like what are you doing? And big corporations cannot move that quick and they need every reason to get in their own way. And so it's so funny. Everyone's like, what is someone? I'm just like, that's why big corporations like PepsiCo bought Poppy to learn from us to understand how to do these things and to allow Poppy to stay Poppy because we did move within that three-day cycle.

25:48It's so fun. And we'll have like, say Met Gala, we'll know that there's going to be something culturally that comes out of that, right? Whether someone's outfit or a meme culture or something. So we have people standing by watching it in our chats, talking like what is going to be the thing so that we're the first person posting that meme the next day. That's how in tune with culture that we are versus, oh my God, did you see what's trending? Like we should jump on this trend. No, we set the trend.

26:12Allie Garfinkle:Well, one thing that's really interesting about this is it sounds almost like journalism in a way where you have people watching an event in real time saying, what's the headline? And it sounds like that's actually what you had teams doing at massive cultural events. Is there any big anecdote where you're like, this is a moment where we got it completely right? So many. No, like that's the problem is we we were like the blueprint, like we still are of like how you do it. And so I think is what would the biggest key was senior leadership allowed for it to happen, which I think is another piece that could have gotten in the way where it's like, okay, this is trending.

26:49Like, I remember someone once said to me, like, oh, my God, that's such a good grout fit. And I was like, I don't know what that means. They're like, it was like a cultural moment. It's going viral. Do you know what that means? What is a grout fit? They're like a gray outfit. And it was like, we're in gray on gray. And I was like, okay, you guys just do you. You know this stuff. I'm like, I trust you. So it got to the point where I was just like, you know what? They know. And then we were very hyper aware of like also not how to get canceled because within it, you can make really risky moves at trying to get that on top of it and studying the trends of knowing how not to get canceled is really important too.

27:21And having those conversations of like, maybe this isn't a topic. It's a little risky. We shouldn't talk about it. So I think like having those conversations, allowing the team, empower the team to know that like you trust them, which is really hard for big corporations to do.

27:36Allie Garfinkle:You know, you caught something and managed to literally, in some sense, catch lightning in a bottle in a way that Fortune 500 giants completely missed. Why do you think you were able to see it? It goes to the storytelling of the personal problem versus a corporation launching a brand because they see a white space in a category. The data tells them. It's a good idea. The data tells them what to do versus I had zero data when I started Mother Beverage. I did it because I had a personal problem and there was true passion there. and that story is what the consumer connects with. They don't connect with a big corporation launching another brand trying to compete with the small guy.

28:12It's out of touch and it just doesn't work anymore and people see right through it.

28:16Allie Garfinkle:Well, and I think there's a sort of broad cultural conversation around people being really interested in authenticity and it sounds like if you create something because the data says so, that authenticity isn't going to be there. You can use the data on later on, but use it to guide you. Don't use it to just do what it says. It's really important. and dad is like not that great, but it can be great if you use it the right way. Why did you choose the name Poppy when you rebranded? It's so simple. It's just a playoff of soda pop. It's Poppy and it pops off the shelf. How did you come up with it?

28:45Was it you? Was it Steven? When we were Mother Beverage, you can't trademark the word mother. And we named it off of the mother of vinegar. And it was one of those things where like, should it be mom and pop? Like, because it was like me and Steven and we were trying to keep mother in it. And it was just like so convoluted. And I think we were in a meeting once and this, someone that helped, it's Rohan's partner and works really closely with him. And she was like, what about Poppy? And we're like, wait, that's the name. It was just like really simple after like months of trying to figure it out.

29:13And sometimes, you know, that's just how it happens.

29:15Allie Garfinkle:Sometimes it just needs, it just needs to come to you. It just needs to be simple. Don't overthink it. Well, and I'd be curious about a time where you feel like you guys got it wrong a little bit. Was there a moment where you were like, oh, actually, maybe we shouldn't have done that. We probably had a really big learning moment where we, what we call is vending gate at Poppy. And we sent vending machines to influencers for a Super Bowl watch party. And these vending machines were always meant to be part of our arsenal of like, we're a soda company having soda vending machines. Like to me, that concept isn't wild, but people thought it was like a little over the top and egregious.

29:50In a time where like, you're like, was that necessary, Poppy? You're already doing a Super Bowl commercial. and we kind of got checked where it was like we forgot where we came from we were went too big for a moment that was already going really big and it was like one of those things where people were just like that was a little bit out of touch instead of saying oh defending ourselves we were like wait our community has been with us since the beginning like let's listen to them and it was a good check to be like okay now that's ever part of the conversation like are we doing too much like how are we be authentic how do we keep our community involved like if we're doing a give away or a mailer with influencers how are we giving away the same to our community like so it honestly made us better when it was like one of those moments of like hmm that was probably not the smartest but also I think worse things could have happened a lot of people would have

30:36Allie Garfinkle:had the instinct immediately to be really defensive was that there at all or was it the kind of thing where you were just like actually let's listen as founder get defensive of like my team and their decisions and like that trust level but I think there is that level of like Like your consumer usually knows what's best. And another thing that happened is like we had our root beer flavor, which it was absolutely a dog flavor. Like it tasted horrible. And our consumer kept telling us, I think one of them said it tastes like cockroaches. It was like disgusting, like all these things. And we were just like, no, we love our baby.

31:11And finally, we're just like, why are we not listening to our consumer? We ended up changing the formula, changing the packaging, relaunching it. And now it's like one of our top sellers. So usually they kind of know, you know, know, you don't want to be willy nilly and just like constantly changing with what your consumer says, but like to not listen to them can be really risky as well.

31:27Allie Garfinkle:Well, it's one of those things too. I think a lot of entrepreneurs struggle with. When do you double down on something that you know is right? And when do you say, actually, let's totally scrap it? Has there ever been a time where you had a question and weren't sure one way or the other? Well, it usually goes back to the doing too much of like this and do 300 things. Versus like just focus and do like two things better or one thing better. And I think we got to the point where we got really big. and I think it's really fun. We did a pop-up from New York Fashion Week two years ago with 50 Cent and we had influencers come and it was such a cultural moment during New York Fashion Week.

32:00We had like Vogue there, like a soda company's fashion week. You're like, wait, what is this fashion brand do? It was like wild and it was such a cultural talked about thing and it was, you know, it was expensive, but you know, not like wildly expensive and then we ended up going and taking it on tour and we did a college tour afterwards and it was like half the cost And we got more EMV from the college tour, more eyes on the brand from just going and giving free food and free poppy and free swag to college kids. And so it's like one of those things where it's like, do you always have to do too much?

32:32Do you have a favorite cultural moment? Ooh, I want to say my favorite cultural moment was our first Super Bowl ad. Because we'd done all this work of listening to our consumer of like, we're revolutionizing soda for the next generation. We give you the freedom to love soda again. and it got to the point where we wanted to bring it alive into a ad, not a Super Bowl ad, just a creative evergreen brand ad. And we created the future of sodas now. And it was this beautiful anthemic piece of telling why we are soda and why we are here. And we said soda 17 times in it, that we are soda, poppy is soda, soda, soda, soda.

33:08And we finished the creative and we all watched it. And I remember just being like, this is a Super Bowl ad. But the problem is all the ads were sold out at the Super Bowl. So we couldn't even buy one. And it was like, we were so sad and we were ready for it. And it was like the brand was ready for it. And we were, our distribution was there because you don't want to do Super Bowl ad if you don't have distribution in almost every store in the nation. And it was just that pinnacle of people were looking at us. We had no offers to buy us or anything yet at that time. And I remember I was at an event with that TikTok collective and I was like, hey, anyone have an ad for sale?

33:43And they're like, actually one of our brands is going to sell one on and let me see what we can do. We got on the phone. We bought it one week before the Super Bowl.

33:49Allie Garfinkle:You bought it one week before the Super Bowl. What is the thing nobody would expect to be true about running a Super Bowl ad? One thing is it's a cultural moment of it tripled our awareness overnight. Like you truly get the bang for your buck. But some people that Super Bowl ad is worth it financially. It is, but there's more to it. So like you buy a Super Bowl ad, but then you can't just do a Super Bowl ad and not have the money to continue the media afterwards. I think a lot of people forget about the three months afterwards of like, you have to sustain that because sure, people see it once, but you got to hit them like seven times before they really know the brand.

34:21And so some people are like, I'm going to go really big, do the Super Bowl and then have no more money to sustain it. I really think you have to, when you're ready for it, do it all.

34:28Allie Garfinkle:That's really interesting because I've always wondered if the Super Bowl ad is worth it. It sounds like it absolutely is. And if you don't have the follow through, it doesn't have the effect you want it to have. Yeah. You have to have the distribution, the follow through. And then like, if you can really prepare for it, which we did in our first year, we did our second and third year is like the retail aspects. Like you can get off shelf and you can get like really move a lot of product if you prep for it months ahead of time. One thing I've previously read is that you don't necessarily believe in work-life balance.

34:56Allie Garfinkle:No. Not at all. Not at all. Why not? It goes back to, if you want to be an entrepreneur, you have to be willing to work hard. And it drives me insane when I hear all these entrepreneurs within the longevity world of like, you have to take care of yourself and you have to have a five-step meditation in the morning and get up and cold plunge. And I'm just like, I have three kids and I'm running a multi-million dollar business. Like I don't have time for that. What I do know is post-exit, I do have more balance, but I've earned that. And I worked 10 years of my life without taking a vacation, missing a ton of my kids' soccer and baseball games to their bed times.

35:36But you know what? They've seen their mother work hard and they are so darn proud of me. And it goes to show that like, yes, I've exited, I have generational wealth and I'm very blessed, but I'm not retiring at 39. I'm working on my next project. And so you just have to be built different to allow yourself to live within that non-work-life balance. And it can be controversial, but like I like to work and that's okay. And that's my truth. And it doesn't have to be for everyone else.

36:04Allie Garfinkle:One of the things I've always found interesting about the word balance is it implies a temporary state because when you're balancing something inherently, it's a little bit precarious. Like, can we call it juggling? Yeah. I was thinking we call it juggling because it always, it seems like it seems kind of what you're saying is, um, balance is sort of the wrong goal, especially if you want to be an entrepreneur and especially if you want to be a parent? I think juggling is a great example of you have three balls. One is work, one is marriage, and probably one is like your kids. And for me, maybe the kids is like a glass ball that I would never allow to drop.

36:36But maybe I will say there's a while within our marriage because we were working on the same goal that we sacrificed date nights. I didn't care if I got flowers on Valentine's Day or my birthday because we were building something so incredible with Poppy.

36:48Allie Garfinkle:A lot of founders tend to cling to a CEO title. You really didn't. Why not? So it's so funny. And I'm here to tell you entrepreneurs, being CEO is just a glorified HR person. Like the last thing I want to do is deal with a ton of people problems and run a P &L. And in a day, no, CEOs are incredible and they have amazing vision. And I adored ours at Poppy. That's not what I'm saying. But it's like this title that people are so obsessed with. And it's like, find your superpower. My superpower was running the creative and brand because I was the brand. I loved every aspect of it. There wasn't a can that I didn't design with my team, like all of those things.

37:30And so why would I want to do the CEO role? And it was the same with my husband. He was incredibly talented in the innovation and supply chain. And his team, I think other than our sales team was like the largest team. He was like managing like 80 people, right? You can find your superpower and not be CEO. And I'm here to tell you, like you holding onto it for too long can be, it can hurt the business.

37:51Allie Garfinkle:Why? To be a CEO, I think that it comes with experience. And so Poppy, with the crazy growth that we had, me and my husband looked at each other. It was like a year we're going from, I think we were looking at going from 50 million to 200 million. We were looking at buying superblads and we looked at each other like, we've never done this before. Why don't we bring in people that know more than us and be part of the conversation and partner with them instead, instead of it getting forced upon you. Because if you have a board and you have investment and you have growth and you hold on for so long and let your ego get in the way of growth, like it's going to get forced upon you and it's going to go sour real quick versus acknowledging it and learning from it.

38:29And I love that we're able to learn from these people had been so seasoned in it before.

38:33Allie Garfinkle:There are so many entrepreneurs I've interviewed. At some point I calculated that I've interviewed more than a thousand entrepreneurs and investors over the last couple years. And for a lot of people, their business is who they are. But you said something really interesting before we started rolling that you sort of separated your entrepreneurial journey and Poppy a little bit. What parts of Poppy are you and what parts of your entrepreneurial journey are Allison? I think the founding story and the why we started was me. but then at some point I think pretty quickly the brand just transcended me and now that we've sold to PepsiCo the brand is completely fine without me and I think how do you feel about that you know the first year was really hard you know people talk about like the post-exit blues like all that stuff's real and they're like oh poor baby you've had this exit but it's like you're working on for something for so long and then you have to let go right but I think that it's smart to separate it but I also think being founder led gives you an ability of leverage and it's good to have your face attached to the brand because at exit or anything like you are now valued as someone that can then go on and do more things right like you're more visible right that's only going to help you in your life and your career and your brand but I do think the brand needs to stand on its own and I can't allow me to take all the success for poppy because there's a lot of hard working people that helped to get to where it was.

40:04It wasn't just me. I just was at the forefront.

40:06Allie Garfinkle:And when you think about the very beginning, when you're sort of selling soda at the farmer's market or selling it out of your car, what do you know today that you wish you knew then? And what are you certain has always been true? I think I have an answer for both, which is change is the only constant in life. So if you're not willing to change from farmer's market, mother beverage, to poppy to changing roles to changing who you are and growing like everyday things are changing and you can embrace it or you can fight against it and I think for me probably for the first two years I fought against it and then when I learned to embrace it is really where the unlock and the emotional connection of just like we versus I really started to grow and I saw so much more value I think a lot of entrepreneurs don't start companies to have people tell them what to do and you started because you're really confident in yourself versus as you grow and you have a team it can't be about you anymore it has to be about we and that was something I think people have to learn most entrepreneurs don't know how to be a leader you learn to lead through example and and trying it and failing at it right and so you have to learn to be a leader you have to learn to work with a team learn it's not all about you so like all of these changes made me a better person, even though some of them were really hard.

41:29Allie Garfinkle:One thing that's interesting is you did sell into a Pepsi that's since come under pressure from activists to sort of simplify its portfolio. You know, Poppy was the largest exit ever for a female founder, right? How do you make sure Poppy is protected in that context? You know, I think that's like the number one question when we were selling it that we had as founders, as board members. So you were asking about this? Yes, this was like absolutely a question. And one thing that we do know is they gave everybody at Poppy a job that wanted a job, which was really important to us as well. And with that, I know I am a broken record.

42:03I go back to the people. It's like as long as our Poppy brand and people are there, I feel really comfortable with that because I also know that their motto was like allow Poppy to be Poppy. Like they kind of didn't want to mess with the secret sauce. We're kind of like a subsidiary. We're still operating as Poppy separately within it to allow us to not kind of like mess things up.

42:23Allie Garfinkle:I know you're not yet talking about what you're doing next, but what can you tell us about sort of the framework you're using? After such a spectacular success, what happens after that? How do you decide? So with money comes freedom, freedom to do what you want, when you want, with whomever you want. But with freedom, purpose isn't there. And so for the first year after exit, I was like kind of missing my purpose a little bit of like my why. And me and my husband looked at each other and we're like, we're good at this. We have so much knowledge. Why would we not do this again? So we're absolutely working on another brand.

42:58We're launching in the fall and we're just like so excited about it. And people are like, why, Allison? I'm like, because purpose is more important than money. Follow purpose and money will come. Allison, thank you so much.

43:09Allie Garfinkle:Yay, thank you. And that was my interview with Allison Ellsworth. My spicy take here is it was really refreshing not to be talking about AI. Don't get me wrong. I'm totally OK with that. But consumer brands have a very particular intimacy that we have, like there's something we see in our grocery stores, in our fridges. And that felt surprisingly novel in this environment. That's it for Termsheet. I'm Ali Garfinkel, and we'll see you soon.

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