#229 - The Rise of Ketone IQ: Creating a New Energy Category with Michael Brandt

23:37Michael Jordan's sweating out electrolyte B. That was me growing up. Probably guess your age, but you probably saw this stuff in the 90s. And Gatorade, which is through pure brand, I think other people could put electrolytes in a bottle, but through pure brand, they were just like the cool kid on the block. Yes. It kind of seems like a ludicrous product in retrospect, but it was very compelling. It's like as much sugar as a merry-go. Yeah, sweat out neon blue sugar drops. Or you don't even call it by the flavor name. You're just like the blue one, the orange one. Like, yeah, you know what that's from.

24:07Okay. So there's a lot to think through about how to shepherd in a new category. But yeah, you're asking the right questions. You think about it a lot. Like, how do you develop a category while also maintaining what you've been able to secure with your first mover advantage? How do you make sure that that's enduring? Well, you got to run fast, which you know how to do. So tell me a little bit more about what your go-to-market has been like, because I know you're very heavy D2C. And then also have moved into retail as well and had success there. Can you take me back? Just talk me through what that whole rollout has been like, continues to be like, what your goals are?

24:43Yeah. And that's such a good question. I know we were riffing about this before hopping on and when we were at Founderland a few weeks ago. And I feel like that's so key. And if I were to run it again, I would run the same playbook. And that hopefully it's valuable to other people, especially people that are following this similar pattern of brand of really inventing something new. that we started out DTC. We were very happy. We made our first eight-figure top-line business before we even started looking at retail or broadening out into brick and mortar. And the reason I think that's such a good idea is because the internet gives you more context.

25:20People come to your website because they hear about you on a podcast. They can read your website. They can look at pictures. They can look at graphs. They can read blog posts. They can read reviews of your product. There's so much rich context. And especially when you're creating something new, you need to do that. People want to see that around something so inventive and new. At scale, when we think about how to become a billion-dollar business, at scale, I expect 90 % of our volume is going to be in retail and brick and mortar. And we're nearing, we're getting close to a crossover point. Our retail business has been growing really rapidly.

25:53We're in Sprouts, Vitamin Shop. We just launched in Target. We have a bunch of other exciting launches coming up. But I think our secret weapon for all these retail launches is that we have this nuclear furnace of our DTC business. And we have a loyal fan base, loyal subscribers. We have people that just know about the product. As we scale, I think about our DTC business as a marketing engine that is itself cash accretive, but which allows us to spend eight figures plus over time that then provides this wonderful halo for our retail business. And it's really interesting when you look at our category at Target, we're sitting next to, it's like the DTC shelf.

26:34Everything there is LMNT, it's Armour Colostrum, it's Seek Protein. It's all these other brands that have gotten to some scale on DTC. And then now they're in retail. Groons is there. You see this pattern. And I think that you almost have to do it. I wouldn't want to be sitting on a shelf at Target without having that keel of a business behind of generating the awareness through DTC. I think if you just plop down on a shelf at Target, you either need a massive DTC engine behind you where millions of people are already aware of you or like a celebrity founder or something. I just think gone are the days where you can set a really nice packaging on shelf and that that's that.

27:13I would love to be wrong on this, like kind of strong opinion loosely held. When I look at our shelf at Target, it is all e-commerce growers that then transpose that momentum into retail. I like it. It's almost like an as seen on Instagram set, the way they used to have as seen on TV. But it's like, you have been marketed this online and now it's here. It's a thing. Check it out. It's really interesting, especially also because I wouldn't know as a consumer exactly where to find your product in the store, probably. Is it going to be in the energy set? Or I don't know. you, then you have like those Celsius packets, the stick packs that you'll see in a different part of the store.

27:47It might be in supplements or like vitamin set, something like that. So if you're not in the as seen on IG set, where typically is it going to be merchandise? Does it usually make sense to you? Yeah, we're in the set that's, we're next to the electrolytes and the protein powder. I think about it as the active nutrition, sports nutrition set. That's where we typically have home base. What's really cool about our product and the shop format is that it can go a lot of other places as well. Oftentimes we're also at check stand. We're often also in the fridge next to the five wellness shots, like the everyday dose, like that set.

28:22So you can go a few different places. As you know, as probably a lot of people listening know, it's really good to be cross merchandise. A lot of places you want to interrupt customers in multiple different spots in the store. And then you typically have a home base. You have like your main category buyer who's really rooting for you. And they're the ones that's like helping you work to get placed at the checkout or they're helping to work to place you on a shipper, seasonal shipper in the summer next to at the front of the store. We'll be right back. Are you going to crush it on Amazon this year?

28:54It's such an important channel, but it's so hard to do alone. And most agencies are a total ripoff. We can't afford$5 ,000 a month and a commission on our sales. They just don't get it. That's why I love our partners at Daybreak. They are full service, meaning they do the creative work, the listings, the logistics, and of course, all the ads, all with the most reasonable retainer out there. I work with them personally. I'm so grateful we have such a good partner to recommend out to you, our community. They do evaluate your product first to see if it might be a fit. So if you want them to have a look, email them, startupcpg at daybreak.agency and they'll do a free audit for you.

29:27Good luck, everyone.

29:32Okay, so as you have been scaling into retail, I'm wondering, is there anything that you feel like you've done really well to support the business and all these retail launches, Sprouts, Target, any particular investments that you've made that you feel like just really nailed it and helped you guys get all of the new trial, awareness, interest, repurchase that you were looking for in the retail setting? Yeah, that's a great question. There's a couple. The one obvious one is the D2C business, the existence of partnerships, the fact that when we launch in Sprouts on day one, there's already millions of people that have heard about the brand and know about it, that we can point to it.

30:09So that's been super helpful in retail is never having a cold start. And then we have our partners point people to the new launch. So a lot of our media right now is telling people that they can buy it on our website or they can go to Target because we just launched in Target. So using our e-commerce engine, definitely a big secret weapon. And then a couple of other things that are kind of fun is that we have a QR code on every shot that lets you get your first one for free. You can get your first shot free. I just baked it. It's not a campaign limited time or anything. It's just forever. And we put that all on the product itself, as well as on a lot of the marketing around it, because my thinking is, okay, I can explain what a ketone is and someone can listen or not listen.

30:48There's some friction there potentially, but if I can just say, Hey, it's free, try it. And if you like it good. And if you don't like it, you know, no skin off anyone's back because it was free. And so rolling that out at scale, and then we provide all of the support on it. You scan it. all that you have to do then is take a photo of your receipt. And then once you scan the QR code, it's like two steps. You get reimbursed immediately on Venmo or PayPal. And so we handle all that. And so retailers love that because the retailer's getting the full ring and customers love it because they get to try it.

31:16Anyone can try. You can tell your friend to try it. Anyone gets a first shot free for any phone number. And then we love it because it's trial at scale. We don't have to have someone sitting at the store doing demos on a Sunday as people are walking by. We think about it as like always on demo that like anywhere our product sits in any store that we're essentially doing a demo and driving trial. And that's been helpful for retail for sure. That's so interesting to me. That's really clever. And I assume you probably have pretty good margins at this point to be able to do that because obviously it is expensive to give people a free product at the retail price, not just your cost, right?

31:51But at the retail price. So that's pretty interesting. So Michael, I guess just one question I have for you also, because there's so many founders and brands in our community who their dream is to get to where you are. I think they would all look at you as being incredibly successful and hoping to grow their brands in that way. How does that feel to you to be in the position that you're in now where you're in mid-eight figures, your company valuation is$110 million and going up as we speak? What does it feel like to you now to be in that position versus rewind it a year, two years? I saw you at Beverage Forum two years ago doing your pitch in the costume, like doing what you should be doing, just hustling as a founder.

32:32How do you feel? Like, how do you internalize all of this year after year as you grow? I'm a big runner. And so I think of a running analogy here, which is that as you get better at running, it doesn't ever actually get easier. You just get faster. I was at the track this morning doing 800s and 200s. And it was terrible. It was a world of pain, chewing on glass the whole time. And it was really hard to do 800s and 200s three, four, five years ago when I was getting into the sport. I'm just a lot faster at it now. And so when I think about the business now, I'm as ambitious as ever and is working as hard as ever.

33:05I don't feel like I've made it. I think that there's so much more room to build. I appreciate that I've come a long way, but I'm not like patting myself on the back. It's that the quanta, there's more zeros in the back of the numbers that I'm processing now, but I'm still as obsessive over them as I was in the early days when we were like shipping our own packaging out of our apartment. department and I was customer support ticket answer guy and that balancing our books every month. And like, when I was doing all those things, like that stuff all really mattered. It did. It's true. When you're like you and your co-founder, maybe a very lean team in the early days, like everything really mattered.

33:44It still feels like everything really matters. It's just that the scale of it is larger. So yes, no rest for the weary. Like we keep working really hard and got to kind of, at a certain point, just enjoy it. It's like asking someone how they feel at mile 18 of the marathon. It's like, job's not finished. Like, we're still going. I like it, job's not finished. So maybe a little bit less of the existential dread of like, is this even going to happen? Am I wasting all my time? At least hopefully now at this point, you can see like, okay, this is paying off. This is working. This is going great. I still have all of these things that I got to work my butt off to really get this to where I want it to be.

34:20That is true. That's actually a very good read. If I'm thinking about the difference between now and the early days. That's actually a really good read, Daniel, because I was working hard in the early days. There was more of a question in the early days of, does this thing have product market fit or am I totally crazy? You're right. Now when I work, it's like, I don't have any doubts there. I know that there's product market fit. I know that we have this playbook. I know how to keep building it. My questions are around, okay, we just launched in Target. How do we make sure that the turn inside Target is really good?

34:46How do we, like, what's the right amount of push to do there? Like, how much do we have merchandisers visiting our stores? How much do we have our partners pushing people? How much should we be really peeling off DTC traffic and pushing it towards target? Because Mars is better on DTC, but you want to make sure that your new account is really successful. It's more of a how. It's less of an if. At this point, I think early days is like, I don't even know if in your very early days, I don't even know if this is going to be a thing. Like maybe, I don't know. Just, I think for a lot of entrepreneurs, you're making your first thousand dollars, first maybe million dollars, somewhere around there.

35:17So you're still like, is this actually a thing? And then at certain points, a thing. and you have product market fit and that box is checked and it's about, okay, how do I execute this? How do I go? Like, how big can this thing be? How quickly can I grow this? But yeah, I'm not like, I think it's a very good read, Daniel. I'm not thinking about doing anything else or wondering if this is a thing. Sort of like moving up the hierarchy of needs. Like, okay, I've got the like shelter and the food safety. Now I can worry about that next tier. Like I still am just going to sit here working on the business and worrying about things, but it's the next tier of things that I can spend my energy on.

35:52So another question that I have for you is, so you are, I'm sure, a total e-com pro after having such success that way. As you were scaling into retail, how do you learn the stuff that you don't know when you're figuring out what are the right retailers to start with, the right strategy, the right distributors to go with, the right way to support the business? Are you relying on sales hires that you've made or brokers or investors to give you the guidance? Or are you really just figuring it all out yourself and piecing it together. How do you learn all the stuff you don't know? Definitely learning a lot from people smarter than me all around.

36:27And one thing I will say is that I think a good DTC team can learn retail because DTC is pretty technical. And I think a high IQ, sharp DTC operator can learn the ins and outs of retail, not overnight. And there's still just a lot of hard work involved. Even if you know the strategy, there's still just a lot of ground game involved in pulling it off. So coming from a good base with a team and just smart people, sharp operators, sharp on the money and underwriting of different spend that we do and trying to attribute things and understand what's working and not. And if it's working, spend 10 times more on it.

37:04And if it's not working, stop spending anything on it. Taking that ethos into retail has been really helpful. And then yeah, just surrounded by amazing people all around. Some of our investors, like Family Fund, for instance, has been really helpful as an investor. like they're real sharp joshuan the gp there also runs force brands and they've helped us hire some amazing folks and getting talented people like our head of convenience channel was a senior leadership at monster energy and so when we think about okay how do we take over convenience channel i want ketone iq shots to be everywhere where energy shots are sold it's like i don't want to reinvent the wheel there i actually want to hire art who's just the absolute star from monster energy and have him run his playbook and everything that he learned good bad and ugly is already baked in and he knows what he's doing and so there's a lot of like you hire really smart people who know the ins and outs of the channel way better than i ever could so all across the org like people advising or investing thinking about big picture strategy people boots on the ground, figuring out the execution with that within accounts.

38:13Yeah. A lot of just find the smart people be very, I would say, I try to get out of my own way. Like my job is not have all the answers. My job is to hire the people who have the answers and then learn as much as I can. At the end of the day, I got to stitch it together and make sure the whole picture comes together by a lot of trust. That's great. It's really interesting to reflect on. What about what do you wish you had known that you didn't? What'd you get wrong or get to a little bit later than And you wish you had, obviously it's going really well, but I know there are always learnings, always things that you could wish for other people, for them to understand, to shortcut some things.

38:45I wish that I'd gotten into personal founder content creation earlier. I've gotten into it and it's been really rewarding. And it's been a great way to connect with other partners that we work with. It's been a great way just to get my story out there. There's the Ketone IQ story, like the at Ketone handle on Instagram, and there's the at michael d brandt handle and being able to kind of play between the two and like my team runs at ketone i'm involved over there as well but then i'm just like full on my own personal it lets me talk about running let me see me talk about family i'm a i'm a dad i have two kids it lets me just like round out my own story and like for what we do which is creating a new type of energy like and energy is the raw material behind every accomplishment i think it's very helpful for me to tell my own personal story what do i use my energy for what am i getting after in life what are my ambitions going behind the curtain a little bit as an entrepreneur and talking about what yeah what it's like to build a business what it's like to train hard marathoning what it's like to build a family trying to be helpful back to the community helpful to other entrepreneurs helpful to people just getting into marathon running try to kind of give it back and create a community around i wish i'd started it sooner because my early days philosophy was like put everything into the brand Early days, it was let the brand speak for itself.

40:03I don't actually want to be famous or anything. I was just thinking, make the brand famous. People should like the brand. Make the brand really big and really famous and maybe IPO it or sell it to another company and make something really cool in the world, use it to generate wealth. My initial thoughts, it's all about the brand. And it hasn't changed. The brand is still the most important thing. But making room for the founder brand as well. and that at the end of the day, a lot of people don't necessarily even want to hear from like your brand page. Like they actually want to hear from humans and that there's a realness that I feel on my own account that I don't feel on the brand account.

40:40And just like a dialogue and like brands, it's like, what even is a brand? It's like this amorphous logo thing that posts stuff. It's like, it can be harder for people to relate to. I think, especially in this era where people don't love being advertised at, they want authenticity, they want vulnerability. And so getting out there and being real with people as a founder, I think is something I would do again. I would do earlier. It's actually something I think about if people are considering even starting a brand, if they're in school or they're at a full-time job and they haven't yet taken the jump, I actually really encourage people to get started on your personal brand because you can do that now and you don't have to like, there's no MOQ.

41:15There's no minimum order quantity of like bottles that you need to order or cans you need to order. You can get started on it. You can build a follow. You'd rather once it's time to make the jump from your job or from school or whatever. Once it's time to actually launch something, you'd rather have 10 ,000, 20 ,000, 100 ,000. You'd rather have some followers and have a community and a niche and all of that that develops something new. You have an audience and you can get feedback and you can get your first hundred orders, your first thousand orders. And then the ball gets rolling. You can say, hey, why are these people reordering it?

41:47Why aren't these people reordering it? And just having that seed crystal of a community around you as a founder, this can to be pre-idea. You don't even have to know what you're going to go and do, but just like, I'm not the content guru here to say exactly. There's plenty of those out there, but to like take that advice for people and build out their own personal following, I think just gives a really good launch pad to starting any brand later on. And it's something I wish I did more of at the start, you know, no water under the bridge. You learn as you learn. So no major regrets, but it's something I would potentially do differently.

42:19Yeah. Especially just on the partnerships track that you talk about. Yeah, if you're going hard in retail or looking for investors or other kinds of partners, the social media aspect of it, I think matters so much because I have learned in this business that people support people much more than brands. And having been the face of brands and all that, just when you meet buyers, they are like, yeah, I've seen you and I've seen the kind of stuff you do. I'm very active on LinkedIn. Probably a lot know that. And it really matters. And you can also do different kinds of content on your personal LinkedIn.

42:52I recently saw one of those LinkedIn ad videos that says that you typically get about 10x views on your personal LinkedIn as from a company page. So we can all wish that we could post things on the company page and that it would make its way out there and we could have huge company page distributions. But it doesn't really work like that. People don't just love to browse LinkedIn for company posts. They like posts from people. And if we're being honest here, like, why do I do this? And all of the stuff that we do to help brands, it's actually way more about the people than it is about the products, even for me, because there's a funny programming in my body that just I get really excited when I can help specific people to do things.

43:31And that's why I like this early stage part of CPG, because I can talk to you, Michael, like you're very involved in the business at this early stage. It's not like when it's a massive scale CPG and the founder's not even there anymore and who knows. And it's just like a lot of different people doing different jobs. So that's the part that's very exciting to me. And I think that is why that kind of content does really well on LinkedIn and people have really different kinds of strategies for their content on LinkedIn. And I think people figure out how to lean into the thing that is really unique about them and what their pillars are and what their energy is and just help people get to know them.

44:05And hopefully that's a good them that people want to get to know and the content is good, but it really helps you, I think, accomplish a lot. And I really also like your point about you can get started doing that. And I've seen a lot of founders celebrate that. Like, yeah, thank you to so-and-so for giving me the push to just get out here and start putting content out there. And I don't think it means put out some just hogwash, some terrible content just to post like, here's what I have for breakfast today, like and share. But it is good to practice that stuff and then find what your messaging is all about, whatever that is.

44:38And you'll figure out a lot of stuff you want to work doesn't work, but then you'll figure out a lot of stuff that does. And hopefully it is something that helps you accomplish your goals while also connecting you with people. What do you think? Good assessment? I think that's an awesome assessment. And I think that that's one of the things that makes your line of work hard and also really special is the read that you have on people that at early stage, it really is a bet on people. And I think people need to hear that again and again, that your idea has to be good enough. Like you can't have a bad idea, but a lot of businesses, they win or lose.

45:09There's that saying that most businesses die of suicide, not homicide, that it's unlikely that your competitor crushes you or whatever, that your business model couldn't work. If you've thought through those things, you have something good. It really comes down to you and your ability to be resilient and your ability to be creative and your ability to be a talent magma and all those things. And it's really helpful for people to hear that from you and the position that you're in as an investor, as just a general tastemaker, trusted person in the space that the character read is at least as important as the business model and all that, especially in the early stage.

45:44And that it does tie into the content side where if I worked at Pepsi and I was thinking about, hey, in a year or two, I want to make a jump. I would start posting interesting things. Whenever a company gets acquired, whenever a company does a fundraising run, give your take on it. What's your take? Like give your rundown on it. What's your analysis of whenever a company does a rebrand? You see these folks out there and like they're no smarter or not smart than you. Like if you're inclined to do something in the space, if you have that kind of itch to be a founder, you probably have a good sense of judgment and good sense of taste.

46:16And like, we all want to hear that. That would be my message to people. Like we want to hear what your take is on the Cracker Barrel rebrand or on the Celsius buying Alani Nu or whatever is going on, whatever's interesting to you. And then what's your take on that? That's interesting. Like people want to hear that and you'll end up attracting the right people around you if it's an actual valuable, interesting, provocative take. And then you've already won half the battle because people at the end of the day are investing in you as a person. If you just have it planted in people's mind that you have smart takes and you're thoughtful and all that stuff.

46:47And okay, when you go and launch whatever it is, you've already won half the battle. Like you already have community. You already have investors who would back you. You already have customers who would try out your product. You have that kind of momentum and it costs, you know, time, right? So yeah, I think you can get just very low production costs. You and your laptop can like go viral on like that and Instagram and everything. Yeah. Yeah. And we say following, but really what we're talking about is value, like adding value to people in whatever form it is, like the content that you have is valuable to people in some way.

47:16And it can be a lot of different ways. It can be because it's informative or it can be entertaining. A lot of different things. And you can do any of those. It can be humorous. I mean, some of the most shared content that I've had has just been a dumb meme that just shows a little bit of our insight about the founder journey. But for whatever that is, it does add value to people's lives. People are human when they show up at work. Still, they're still humans. They're not just their professional self. And there are a lot of different things that can work. So I really like that angle on it. So hopefully that inspires a lot of people to just get out there and not wait to build because build it adding value and then finding that, oh, I actually have a little bit of my own distribution here is incredibly powerful, whatever you decide to do with it, which then will be the next task.

48:02So as a media company, I really do appreciate that part of it. And that is what we do all day is just try to figure out how we can add value. And that's the business that we're in. So, Michael, I really want to thank you. These insights have been so great. And I'm just really excited that I got to catch up with you and learn about this incredible ride that you're on here defining this new category, bringing it to everybody's attention. So I guess last question for you. What is your hope? So fast forward five years. How will people be talking about ketones? Is it going to be just part of the lexicon and the general awareness and psyche at that point, the zeitgeist?

48:44or do you feel like people will still be learning about it in the way that they still are in some ingredients? What's your prediction and what's your hope? My prediction is that it will be very far along and just be part of mainstream vocabulary. The same way that people go to the gym and afterwards, or I need some protein. People are going to be speaking that way before a big meeting or before a workout or before they're doing something where they want to be completely dialed in, they're going to say, I need some ketones. And there's a lot of people who their work really matters. And the caliber of energy that they're putting into their body, it's analogous to when you're filling up your car, like there's the premium gas, there's the less premium gas.

49:26And I think for a lot of people, it's a no brainer that they should fuel with the best possible fuel. And I think we'll have done our job in five years if that's just mainstream. If you see it in TV shows and movies and just like part of the culture that that's something you do as you take some ketones the way that you see, you know, people talk about creatine, people talk about electrolytes, that if we're in the pantheon of discussion in that way, I'll consider it a success. I think that it's a gradient over time. It's not a black and white thing where like we're much bigger than we used to be and there's much more room out ahead of us.

49:58So I think we're going to be in like every single American's kitchen in five years. I think that'd be aggressive. Like that'd be very ambitious, but I think we'll be well on our way. Yeah. All right. I love it. And if any of you out there feel like you need some ketones, then you can head to ketone.com and pick up a pack and try it out. So definitely do that. Maybe check them out at Target or Sprouts. Maybe follow Michael on LinkedIn or Instagram as he dropped the handle a little bit before. Any closing words, Michael, or any other ways for people to support you and Ketone IQ? I would encourage people to interact back.

50:31If you have questions from anything on the episode, I'm around. Let me know. Shoot me a message. And yeah, let's chat. I hope I can be helpful to people. and yeah, appreciate you gave all the great shout outs. You can find me, I'm at Michael D. Brandt on Instagram and our brand is at Ketone. And yeah, I love to hear from people. All right, amazing. Nothing like owning that ketone.com domain to show people that, hey, I was here first. That's one of those good examples of when you're first tracks in the snow doing something, then like try to land grab what you can. I'll just say that. Yeah, all right.

51:03Thank you so much, Michael. I hope everybody enjoyed this as much as I do and we will see you all soon. All right. Bye-bye. All right, everybody. Thank you so much for listening to our podcast. If you loved it, I would so appreciate it if you could leave us a review. You could do it right now. If you're an Apple podcast, you can scroll to the bottom of our Startup CPG podcast page and click on write a review. Leave your company name in there. I will try to read it out. If you're in Spotify, you can click on about and then the star rating icon. If you are a service provider that would like to appear on the Startup CPG podcast, you can email us at partnerships at startupcpg.com.

51:42Lastly, if you found yourself grooving along to the music, it is my band. You can visit our website and listen to more. It is superfantastics.com. Thank you, everybody. See you next time.

52:02you