Spencer Matthews Reveals How His Drinks Brand Took A Nose Dive

0:00It was a huge failure. We had to take a massive loss. We had to bring the valuation right back down. We raised loads of money from private equity at this massive valuation. All of a sudden there was some pretty serious foxes in the hen house. And the whole thing was pretty hard to manage. The Businessmen, sponsored by BT Business. Welcome back, everybody, to The Businessmen. I'm Joel Domit. And this guy is the insatiable Ben Shepard.

0:32Spencer Matthews:You know me too well. Yes, this is our show, The Businessmen, following the journey that we are starting. And we are charging forward on to develop our own skincare brand. It's been an absolute dream, hasn't it, Joel? It's been a dream with a couple of nightmares in there as well. Nightmares are dreams. Yeah, all under one umbrella. so a lot has happened so far including this so the big thing that you've said to me that rang alarm bells for me is when you said that the data that we have suggests that 80 % of male skin care is bought by women yet you're still fixated on finding out what the men want but they're not going to be the ones buying it the skin care industry is very welcoming the beauty industry is very welcoming to people who respect it and take it seriously If you don't, we get rid of you so quickly.

1:22Yeah, I agree. So the person who has got the least surveys completed and the person who will be receiving the nipple piss is... Joel.

1:42Spencer Matthews:There's some commitment people make to their art and to their futures. committing their nipples though I think is an exceptionally generous thing to have done Thank you How is little Ben the bar? Ben the bar you know it's there I can feel it Do you think of me when you go to bed at night when the water's dripping on it trying to clean it Yeah and I think to myself I hate that guy Ben Shepard When I can't now sleep on my front, which is my preferable sleeping position. That's not good. The great news is the two of us committing to that challenge bizarrely inspired an awful lot of people to complete the skincare survey.

2:31Spencer Matthews:Really did. So thank you to everybody that has. We have well over 5 ,000 skincare surveys now on our way to the magic 10 ,000 mark. Yeah, which would be the biggest male skincare survey that's ever been done. Not just in the UK, but might well be internationally. Yeah, yeah, yeah. And we want to be able to take that to potential investors to explain exactly how we are collating the information and the inspiration for the skincare brand so they absolutely want to invest in us and the brand so we can bring these products to market, which is amazing. And you can catch up with everything that's happened so far.

3:06You can listen to missed episodes wherever you get your podcasts and obviously subscribe if you haven't done so already. There is loads that you have missed.

3:14Spencer Matthews:And I promise you, the YouTube episode, the podcast episode, but the YouTube episode of Joel having his nipple pierced is a moment of pure joy. Yeah, I'm disappointed in the public. I just really wish it was you, so bad. I really, so badly wish it was you. Fortunately, I knew I could rely on my people. Yeah. And they came through.

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4:16what do we got coming up on today's show joel we've got a fantastic episode today uh we have ex-made in chelsea star uh and founder of his very own company clean co uh spencer matthews is coming into the studio to talk to us about uh how he's sort of been a huge this huge brand built it from the ground up from just a tiny idea to getting a massive investment and what difference yeah and um and yeah what happened after that i think we read and see a lot of

4:47Spencer Matthews:spencer doing very courageous crazy adventure challenges his project seven which was seven iron men in seven different continents um and and pushing himself and testing himself we don't hear a lot about this business that he set up clean coke in in comparison and that story is equally as crazy and courageous as well isn't it it's mad and also what we don't find even if we do hear of his company clean co and may have heard of it in the past i don't think you hear about is the failings of that journey and where how he got to where he is today and um and so i was fascinated to hear him be vulnerable yeah um and it's a really really great chat it's brilliant to have spencer matthews with us spencer thank you for joining us on the businessmen thanks for having us it's so great i know you both individually but didn't realize that you were kind of pals and podcasters together and business owners.

5:44Businessmen. I know. Isn't this quite the meeting? It's great. Honestly, there's so much to learn from you, whether it's physicality, whether it's like your positivity that you have in your general life, I find so intoxicating, ironically, because you're now involved in like clean living. It's like, I mean, many, many examples of it. Last time I saw you was when we did the marathon together. London Marathon. London Marathon. The super hot one? It was the super hot one that sort of crept up on us. And Spencer, we probably ran together for a third of it, maybe, something like that. Yeah, yeah. We kind of saw each other a fair amount for, you know, for a while.

6:25And then I fainted into it and woke up in an ambulance. I actually couldn't believe that. So I messaged you at the end. Because obviously we were having a great time together. Yep. Running together, basically, you know, give or take, you know, a few meters. and yeah, I messaged you and I was like, how do you go? And you were like, I'm in an ambulance. And I was like, oh. Because I think he loves a bit of drama. I love a bit of drama.

6:48Spencer Matthews:I was like, I'm not getting enough attention. Well, I love Spencer because we've got straight into things that we're really interested in, which is fitness and health. But of course, the thing that we actually want to talk about as well is your business life. Because we see you talking about and running these marathons And as Joel was saying, you've got this infectious energy about how you attack your physical challenges. When it comes to business, do you attack that with a similar sort of zeal and energy and enthusiasm? Or are you a little bit more circumspect? I'm more circumspect now than I used to be.

7:24I founded Clean Co, which is an alcohol-free alternative to spirits. So we make alcohol-free whiskey, rum, tequila, gin, vodka. and we've got some RTDs coming out ready to drink, cans of cocktails, all alcohol-free, low-calorie, hardly any sugar type thing. I think, and by the way, I'm no business expert. Thanks for the big build-up in business. But I have learned a lot. You know, Clean Co was a real, it completely took over my life in a really positive way. I was a big alcoholic before and, you know, I don't use the word lightly. It's a bit of a dirty word, obviously, and most people associate it with being, you know, passed out on a park bench, which wasn't necessarily true of me, but I had a really bad relationship with alcohol.

8:06Spencer Matthews:You're a functioning alcoholic, would you say? Yeah, functioning until the end of it, where I wasn't really and I'd kind of lost a bit of control. For me, it's about control. If you feel that you have control of your alcohol consumption, then you're probably okay. And I was drinking on a daily basis, sometimes to excess, quite often to excess. And I knew I'd lose my wife if I carried on. uh she wasn't my wife at the time she was pregnant with Theodore and so she had stopped drinking which really created this big um gap between us because you know when we were first together we would we'd be pretty social we were out quite a lot partying with each other um she fell pregnant and I carried on with that life and and and she didn't um but Klinko was was this incredible lightning bolt moment for me like I cared enormously about the idea of it and it was a It was a kind of felt like I had to do it.

8:58I was at a party and I'd been sober for three and a half months. Someone gave me a non-alcoholic gin and tonic. They said, do you want a non-alcoholic gin and tonic? I said, what's that? Never heard of that before. As a concept, I'd never heard of that before. And I had it and it was kind of interesting and it tasted a little, you know, different to just a tonic water. It was like an elevated cocktail-y experience. It was seed lip. and um of course and i looked at the bottle and and uh and it was made with kind of hay and peas and all kinds of stuff but and bark and you know trees and i was just like oh you know how strange that it would be a gin with no juniper and like why wouldn't they play more in the gin space um and it turns out they weren't they're not trying to be a gin people are just calling it a gin because it's the it feels like it might be a gin yeah yeah and i thought wow wouldn't it be cool to create the world's first like alcohol-free gin and call it you know alcohol-free gin you know I didn't know I didn't know any of the rules or regulations around gin you know you need 36 and a half percent alcohol to be a gin has to have the predominance of juniper I knew nothing right

10:00Spencer Matthews:yeah so you can't actually call it an alcoholic you can't call it no alcohol gin can you no we did yeah and and it was kind of uh we got slapped on the wrist all the time I think the naivety of never having run a business or never having started a business but having this um you know deep desire to be competitive and to win and to prove a point you know I just come from this like really dirty boozy uh you know decade of of excessive drinking and I always felt like a bit of an outsider even in my own family so you know my brother would kind of raise his eyes at any idea that I would have and you know I felt like my dad didn't fully trust me with you know certain family bits and bobs and because well just because I was a loud you know loud party boy who liked being the center of attention and I would kind of live off their success you know not live off it in a monetary sense necessarily but I would I would kind of their wins would be my wins right and it was all a bit um bit of a shame really you know I valued all the wrong things the business but really was my first ever opportunity to go out and prove myself in a sober setting creating something that I thought could make a real really big difference to people and um I did the whole thing on my own for a while.

11:11I traveled around distilleries trying to find somebody to help me make this non-alcoholic gin and people really like, you know, didn't really understand the point of it. And there was so much pushback as to like why it would be a necessity or a need. And it was all off gut feel, just kind of, you know, I feel like this will be something. And that's all I had. I didn't have any market data, any market research. So when I started having conversations with family officers and funds, it was just pure enthusiasm and blissful ignorance. Yeah, like this is what I think. And they love that. You know, someone in your team very kindly just asked me a couple of questions about fundraising.

11:48I think like brutal honesty and a bit of ignorance and naivety goes quite a long way at the very start. Obviously, when you've been operating for five, six years, you need, you know, a degree of data. And obviously, you know, you need to be able to show market cases and stuff that's happened and prove the opportunities there. But when it's just an idea, particularly something that doesn't exist, you are it, right? And if you can get somebody to really believe what you're saying and trust that you can deliver at least a version of it, that's what they're going to invest in.

12:21Spencer Matthews:One of the things I think is really interesting about what you've just described there, and for lots more brilliant insights from Spencer, do go to the Patreon because he's done some questions there of how you can help with your pitching. but all of the experts particularly the dragons that we've had on Deborah Medium was really clear about this but they all say it's not just the idea they invest in they invest in the people right up front they want to have a great why and your why is so compelling you know you've had that lived experience you've tasted this drink and you think hold on I think there's something here there's an opportunity here and your enthusiasm and your energy exactly that you know that's infectious whether that's in the world of exercise and challenge and physical stuff right then and there would be, I can imagine, really enthralling for a panel of investors who, nine times out of 10, are getting very clear business reasons for investing in a business, but not necessarily the emotional reason.

13:17It's quite fun because you sort of make your own rules. Yeah. And you turn up and you, you know, my biggest mistake probably as a founder was was rushing things and like wanting to just get things done quickly not focusing on it being as good as it possibly can be right i was in a like a mad rush to be first on shelf here like first in this territory you know and it's the person who gets there and does the better job will always win like if you know if seed lips there and we arrive and we're a better proposition than seed lip and better priced and a better brand with a better we'll wipe them out you know it doesn't really matter who's who's there first really and i i made that mistake plenty but it's also just great fun you know i'd call bottling manufacturers and and say you know we would love you know 50 000 units of of these bottles and they'll be like oh right okay these have a nine month lead time and i'd say why can't you just make them like you know like like i i'd love them in nine days like yeah we don't do that it's like why not and then like you'd call around around around call you know I'm Italian bottler and that you'd make all these, and then you'd find people that can just do it quicker and get the labels quicker.

14:26And it was kind of, not that speed is, as I've just said, it was a mistake to do a lot of this really quickly, but it's just fun, right? Because you don't really understand certain things that are in place. The process, yeah. And you just, you know, everything happens as you want it to happen. It's exciting. I think there's a perfect sort of thing with what you're saying there with business, with the way that you should approach marathons, which now you probably know that too about marathons. That thing, if you go out of the gates too quick, like you just said, you get to 10K and you've done a 41-minute 10K and you're just all out.

15:03And you suddenly realize, I forgot my music or I didn't realize there was no crowd and that's when it's really hot. You hit a wall and then everyone passes you because they've done it slightly slower from the beginning. I guess if I was to repeat doing Clean Co, which by the way has had so many huge falls from grace and like near-death experiences over the time it's easy to look at it if you look at our latest deck you're going to see an awesome business that's really impressive uh but the reality of it getting to that position is you know we've survived all kinds of stuff and i think if i were to start a brand new clean co today i would uh do it very differently well i love the experience right of what we have done but you just take it slower, you'd spend longer on product development, you get the brand to a place that you're very, very, very happy with it.

15:56You know, we were, we were shape shifting in real time, you know, I'm not sure people like this, let's change it. Oh, like, still not quite there, let's change it again. And it's like, you know, it, it took a while for people to even understand like who we were, because we looked different, you know, so, but that's just my experience as an executive.

16:23Spencer Matthews:let's go back if we can because i want to go back to the start of it then because this is so interesting not least the ups and downs because that's going to resonate undoubtedly with with lots of our listeners you launched in 2019 yeah so you've got this blind enthusiasm and you're going out to investors do you remember that first moment that one of the investors said do you know what spencer we're going to give you some money and what that what was that like Yeah, it was an incredible experience. And I'll try and sum it up quickly. It was Nicole Quinn, who was a director at Lightspeed. Lightspeed is a massive fund who invests mainly in tech.

16:58And they don't really do consumer products. And she and I clicked very early on, we just really liked each other. and she'd written an article that was published in something that someone happened to send me saying that Lightspeed were looking for interesting ways to bypass the three-tier distribution system in the States like selling alcohol in the States is really complicated it goes it swaps hands like three or four times before it ends up on shelf there's tons of layers to it tons of complexity it's it's a really difficult process um but obviously we got to we get to bypass there's no booze in our product so I wrote an email to somebody at Lightspeed like blindly I was introduced to somebody that works at Lightspeed, I said, I'd really love to chat to Nicole Quinn.

17:42We've got a really interesting line of products that we're producing that are booze without the booze, that look like booze and taste like booze and feel like booze. But, you know, they shouldn't have to play any part in the three-tier distribution system because there's no alcohol tax, there's no alcohol. And Nicole emailed me back after about a week and said she'll be in a five million pound valuation for the idea and the business and what it should be worth to raise the initial funds. I didn't want to sell more than 20 % of the business. So we're looking to raise about a million pounds. And that came off the back of what?

18:21That was just like, we need a million pounds. So long story, but we came to the conclusion, I now had two other people working with me, one of whom had built brands before. And, you know, my idea of having to raise a hundred grand or something to get going was shot dead, you know, on day one by this guy. And he said, we need a million quid. I said, what do we need a million quid for? They said, trust me, like, we're going to need tens of millions, but like, we need a million quid just to get going, to build a team, to get the office space, to get the thing grinding. Like, we can't just buy a few thousand bottles, fill them, sell them, reinvent.

18:55Like, he's like, that's not how this is going to work. We need, we need a base. So I was like, how are we going to raise a million quid when the, when the company is valueless? And he was like, well, the company's not valueless. It's a great idea and it's cool. And it has a great name. And we were called the Clean Liquor Company then. Uh, I started way higher, by the way. Uh, like I, I, I had initially, this is going to sound ridiculous, right? I'd initially valued the thing at 20 million pounds with no sales and hardly, and no product.

19:19Spencer Matthews:Just from your bedroom, you're sitting there going, yeah. Yeah. And I'd flown to Luxembourg to try and raise funds through this family office. they agreed in the meeting to invest at a level of five million pounds as a valuation so they kind of set the valuation so i went in at 20 they literally were just like how are you valuing it and i just said to be honest i don't like i i'm looking to sell about 20 of the business and you know they said well in that case you know we'll do this because they like the idea they like the clean drinking they like the clean cocktails they thought it was a timely thing i think they did 500 ,000 pounds, but they agreed to do it for 10%, you know, at a post money valuation of five.

20:01So I didn't know what pre or post money was at the time, but essentially once we've raised all the money, it had to add up to five, right? So the value of the company plus the money. And I didn't know that. And Nicole in this meeting taught me that. So she was like, what is the valuation of the business? And I was like, oh, it's 5 million. And she was like, is it 5 million pre or post money? I was like, I don't know what that is. And she was like, well is it all added up or is it five million plus the money and i was like oh no i think it's all added up and she was just like okay so it's post money and five million post money and you're

20:31Spencer Matthews:literally doing by the way you're literally doing everything we're told not to do go into these opportunity meetings and not know i mean what did the dragons all say not know your numbers oh yeah but we had no numbers right i had a i had a bottle with some liquid in it and i brought a bottle of seed lip to the meeting and i made two gin and tonics and i said which is better and she was like i prefer yours i said great they're the only show in town so let's go and let's go and hammer them you know like i think i think we can do that and she was like look i love you and blah blah and she ended up she said well light speed will do a million pounds right so she wanted the full million it's nothing to them by the way they write tickets for hundreds of millions like they're huge and for her like a million quid ticket at a five million quid valuation you know were we to become a billion dollar company they they own you know they own 20 of the company and they're off to the races and that's just a a little you know flip of the coin for her at this stage because the thing has nothing right so she's in right at the very start and i said oh no we've already got um uh like a a commitment of 500k so we don't need uh we don't need the million i'll just take 500 and she was like flight speed off you a million you'll take the million and i was like oh okay i still i was like can we go over the the five like this is this is now five and a half and she was like yeah so it's now five and a half and you take the million i was like great i still didn't really get it i went and spoke to my brother and he was like spencer there's absolutely no way that lightspeed are writing a check for a million quid into this company i was like no they are like if she said she said that they are and he and james was like like trust me like there's no i was like nicole quinn is the director of lightspeed just had lunch with her he said they're doing i mean he's like they're gonna want this they're gonna want that they're gonna want pref this they're And he was like, they're going to just hammer you.

22:14And she was just completely reasonable. I pulled my brother in to the conversation. And she just said, I like your brother. I like the idea. We'll take a punt on it. We don't need anything special, you know, whatever. And my brother was like, I've never in all my life seen you. And I'm sat there thinking like, maybe I'm Elon Musk or something. Like, shit. That was a real turning point for me. So, yeah, I remember it, you know, of course. What a moment, though, as well. It was brilliant. I can remember going home because none of us really got it. Obviously, since then, I've raised£30 million for various companies.

22:49Lots of it gone into Clean Co. I run the fundraisers for the company. We don't hire professionals to do it for us. I'm very used to it now with the term sheets and how we organize it as a business. Sounds like you love it. I love the fundraising element for businesses. I find it really interesting to get people to a place where they understand you and what you're doing. I enjoy that as a process. But I remember telling Vogue and she just didn't. She was like, so she owns the company now. I was like, no, like I own the company, but she owns it with me. And like it was all just we were fish out of water and we built the business.

23:28We ran a bit too hard, a bit too fast. So what does that mean? um the business did like a million four of turnover in its first year uh lots of that was during covid vogue and i were making clean cocktails at home uh and doing pretty significant sales d2c direct to consumer just shipping uh because we were able to continue that side of the business we got like 40 000 followers in three or four days back then because i think everyone was online right everyone was just at home and um i know it was great so we we raised more money and you know we we we raised we ended up raising 2.1 initially then we raised a further seven and a half quite quickly like a year later and then less than a year after that we raised 20 at a pre-money valuation of 80 million pounds christ uh yeah but like we weren't we didn't have the sales to support that but it was just more of like the dream wow um so no we but we we had a tremendous fall from grace like a i can't tell you like it was uh like a nosedive uh because we we We went into 40 states.

24:31We pumped shit loads of product, like 6 million quids worth of product all over the states. Nuked a bunch of money on marketing, rushed it. My fault again. And just burnt the money, like burnt through the 20 million, not many sales, not enough handholding. Like in the States, this is years before anything like this existed. We were the first to market, which I thought was a big thing. Yes. actually a bit shit, right? Because there's no proof of concept. So you've got people saying like, why do I need an alcoholic tequila? You know, and it's just like, fucking hell, we haven't done any of the like educational piece.

25:07And it was a huge failure. We had to take a massive loss. We had to bring the valuation right back down. We raised loads of money from private equity at like this massive valuation. All of a sudden there was, you know, some pretty serious foxes in the hen house. And, you know, the whole thing was pretty, pretty hard to manage. What happens then? We need to right size the business. We need to unfortunately lose a few people. You know, the business can't sustain the level of... Do you know how many people you were employing at that point? We had like 38 people employed at that time. And now we have seven.

25:41So suddenly it has to be trimmed significantly. But it's interesting. It's all part of a learning. like what the team achieves now is is genuinely more than what the team achieved then we've just we have the right people we spend the right amount of money everything's downsized but actually the the business is in growth it's it's just it's just an interesting learning everything is you know i stepped down as ceo at the time the the private equity funds and we get along famously i mean there was a time when it was uh you know pretty sketchy but describe sketchy for us what were those moments just like hard to sleep at night you know because obviously people trust what you say like you know people trust what you put in front of them we're talking tens of millions of pounds and if and the thing essentially uh didn't deliver at all but at the same time you're taking these risks together right none of these decisions were taken without their consent you know they came in with the money and also you know some controlling factors around the board so it's not like we just burnt the money and they suddenly went, where is it?

26:44And they wouldn't have put that money in the first place if they didn't think it was going to work. So they were kind of aware of it. We all saw it nosediving together a bit. So we kind of had to, you know, group up and decide what to do next. You know, if that particular instance didn't kill the business, nothing ever will. So we went through that. We hired Billy Peretti, who was the CMO at Belvedere at the time. And he was beginning to have a bit of a moral dilemma with selling alcohol full stop. Interesting. You know, he helped build Belvedere, the brand and everything. And I caught him at a time where he just felt like he didn't want to be selling, you know, hundreds of thousands of cases of alcohol to people to have fun.

27:24You know, he doesn't drink much at all. And again, loved this idea and loved what we stood for and wanted to come across and work with us. So he left them, worked with us. He literally, one of the first he said to me was this is going to take two and a half to three years to clear up really so he was like please don't expect you know us to make a u-turn and to just like sail off into the sunset he's like that's not going to happen he's like we have to unravel this whole deal we have to create a new distribution deal with with southern glazes that will take months in itself right because we've got all this stock that is essentially being written off so we have to navigate all of this without being sued as well by these people whose stock has rotted when they bought it.