#246 - BevNET 101 with John Craven

0:09The barriers to finding stuff was pretty hard and obviously now it's the reverse. Like you want to launch a brand with a pretty slick looking package. It's not that hard to figure out who you need to hire to do it. You have options to some extent like democratize the whole thing a bit, made it more accessible. but the barriers to entry are certainly lower than ever, but the standards are way higher. I mean, if you look at like the typical products that were launched 20 years ago, it's like you just roll in with that farmer's market, some crappy graphics vibes to it. That was okay. You just can't do that anymore.

0:46Welcome to the Startup CPG podcast. Today, we are featuring a fixture in the CPG media industry. It's John Craven. John is one of my role models. He is the founder of BevNet and Nosh. And today I get to ask him something that I always wondered, which is how did he start and grow BevNet 30 years ago into what it is today? It's an amazing story. And the perspectives he has on the CPG industry are incredible to hear. Just think when he started, the disruptor brands were Snapple and Arizona iced tea. So he has the long view on trends and characteristics that can set brands and founders apart. I'm so excited for you to hear it.

1:23I also just want to thank John for being a pioneer in new media. He provides a vital platform for emerging brands to stand out and get the attention they need and deserve in the industry. All right, you are going to love this. Let's go.

1:39All right, John, my friend, I'm so excited to finally have you here on the podcast. And I have so many questions for you as one of the people that I really look up to in this industry and has been so helpful to us and Startup CPG as we've grown. First of all, hit us with the good stuff. Could we have a quick intro, please? Sure. My name's John Craven. I'm the founder and CEO of BevNet. BevNet produces all sorts of different media products, our core websites, BevNet, Nosh.com, BrewBound.com. We also have a print magazine still because people in the CPG world still like a magazine in the back of their distributorship or retail outlet and of course have podcasts just like we're on one right now and taste radio and cpg week and brewbound podcast and then have live events for webnet live nosh live brewbound live and our taste radio meetup so hopefully that gives you a sense that we're just all over the place in cpg so probably if you're a brand the order that you might discover all of those things as you're starting and thinking about getting coverage for your brand and your launch and your expansion And my guess is if you're a beverage brand, probably first you're going to hear about BevNet.

2:52If you're a snack brand, maybe hear first about Nosh, the Alk World. I don't know a lot about, but you guys do. And so probably brands first hear about you guys doing coverage of them in those categories. And they're eager to get coverage for their brand. They want to share their stories. They want buyers to hear about it, distributors, people in the industry. And so they're probably coming to you first about that stuff. Is that right? Is that onboarding point, let's say, for a brand into the BevNet universe? To some extent, yes. I think there's a lot of founders out there who consume our content when they're just trying to figure out how to make their idea a reality, too.

3:30And I think as CPG has become more, I don't know, mainstream, if you will, I think there's also people who tune in and probably tune in to your podcast and platform as well that are just, it's like they're the hammer in search of a nail. They want to be in CPG and they haven't figured out the idea yet. They're just looking at what other companies are doing. And I think once they launch, then yes, it moves into looking to get coverage or looking to get the word out there. So it's really, as time has progressed, where all these different mediums exist, it is really interesting to see who kind of goes through what door.

4:08And certainly, I think some of those early stage founders now, they might find us on Instagram or something. You know, they're not doing the old like Google search like you or I might have when we were starting out. So I guess I've been at this so long I went to the library, to be honest. But anyway, Brian knows what that is if under the age of 35, I suppose. So that's so funny to think about. Even for my first job out of college, I worked for a company called Morningstar. They do investment research. And yeah, I mean, you had to go to the library to get there for big annual reports, which were expensive.

4:44but available through the library. And I remember going in there the night before the interview so I could get access to it and reading through it, poring over it, coming up with nice little insights for my interview, which it worked out. It actually was super helpful that I had gone there to the library and done that research. It really came in handy. Yeah, I mean, it's like you had to search for information once. It was hard. It's not hard anymore, right? Yeah, and now we're in this chat GPT world. You gotta help us. I don't understand it, but we're all getting there together. this world of just TikTok and Chad Chippity.

5:14That's where we are today and who knows what comes tomorrow. But speaking of this evolution, John, one of the things that I would love to ask you is take us back to the beginning, the origin story of BevNet. What made you want to do it? What was the industry like at that point that gave you the inspiration to start it? And just what did the industry feel like at that point? Man, the world that I started in, this was in In 1996, I was a college student, not legal to drink alcohol or anything at that point. I guess I had a driver's license then, but I grew up on Long Island in New York. And the cool brands at the time, if you could believe this, were Snapple, who had this crazy campaign of the Snapple lady and these little cap facts thing, like real cutting edge marketing, right?

6:05To anyone who's doing modern stuff. And also like Arizona iced tea, you know, these were like these cult, certainly not better for you brands, but they were better brands than what was out there. And, you know, I went to school up in Boston where I am now at Boston College. And I was someone who had a little bit of an entrepreneurial spirit from having a news day paper route for many years. And I was studying marketing and computer science at BC. And one of our tasks was make a web page, which, again, think library and books and all this complicated, dumb stuff. Like ChatGPT could do that in like two seconds, right?

6:44But, man, you know, it'd be cool to get some free stuff. And just started putting up pictures, which this was like with an early digital camera. I don't even know how you got pictures on the Internet back then. But I was just putting up pictures of random beverages that I found in my sort of path. And I realized I could go to the library. There was a beverage world magazine. And it was literally just the pitch was like, hey, I'll put your product on the Internet. I didn't know what I was doing. I didn't know that this was like a thing. My father was like a person who spent his entire career in like the media world, mostly or originally like women's magazines.

7:25these sort of old school things that I'm not even sure exist anymore. And then in B2B publishing, and he was like, oh, you know, that's a publishing company. And just sort of went from one thing to the next where people were like starting to see it. And at that point, like when you launch a beverage company, it was like you pitched Beverage World or one of the other magazines. In six months, you might be in an issue, which is for any early stage entrepreneur out there, that's just way, way too slow. So that was really the efficiency we were solving. And at some point decided, hey, we should sell a banner ad and Mr.

8:02That. Mind you, this isn't like the era of the internet where there's still have this around somewhere. Like I had a magazine. It was called something cheesy like Internet World. I have Jeff Bezos on the cover, like starting his bookstore. And I don't know, there's all these other things I probably could have started. But I started BevNet or originally the BevNet, kind of like the Facebook. of. It's funny because all these things that you take for granted now and can do in minutes, like accepting credit cards or registering a domain, like we're talking using the U.S. Postal Service and fax machines and all that.

8:36But I could go on about all the differences for like an hour, but I'm probably already boring some people. So to your other question of what was the industry like, it's funny. I mean, it just, again, it was so different. There were all these like legacy multi-generational families that had these not really better for you or even better products that I don't know there was kind of a point where like if you look at sort of the steps of CPG at that point which I think beverage did play a pretty big role in innovating this like emerging CPG space there were brands like Red Bull coming to the U.S. or Monster launching and we were in this really kind of strange spot for a while that CPG, again, it was not like place people like aspire to be in.

9:24Famous founder of a beverage company that I won't name, my favorite quote of the time was basically that you ended up in beverage either because you were born in it, like your last name's like Bush, or you effed up somewhere. So that's very different than now where like we're in the backyard of Carver Business School. And, you know, every once in a while there's like an HBS student that wants to come talk about the CPG brand they're going to launch, you know, like it's totally different. I think the catalyst for me, and to be honest, I don't know if I'd still be in this industry was the mid 2000s, which is really when like Expo West became legit.

9:57The whole idea of natural, better for you, do good became an important part of the DNA of a lot of CPG companies. And I think that's where we're at today, the continuation of that. And the idea is that we're like the fringe back then, have a chance at the mainstream. You know, 15 years ago, they really didn't. Natural brands were like stuck in some, like a natural store. There was no mainstream retailer saying, hey, I want organic stuff or whatever. Okay. Let's say today, I love this industry. CPG is so much fun. We go, we just were at Expo recently and there is a thriving ecosystem of people, investors, retailers, distributors, they're supporting merging brands.

10:40There's a big community of us out there. So if we contrast this today, let's say peak CPG, emerging brand better for you with where you started, what was the evolution like though? Were there marked periods where you're like, yeah, that made a big difference. Now we're seeing a lot more entrepreneurship in CPG or a lot more support or a lot more attention around this. And maybe it was you that did it for everybody. Maybe you guys, probably you had a big impact there also but are there any times that you could point to like yeah really it was like this then and then it changed a lot after this or periods where it accelerated a lot yeah i mean look we were definitely an enabler of this and i think to some extent we were one of the first media outlets to ever really champion the founders and the brands of these emerging players because otherwise they were like i don't know a little bit of like we put on our bevnet live conference which is all about emerging and that we love to showcase the success stories, the poppy being an extreme, of course.

11:41But I think a lot of this stuff, even if you had a pretty good little business going, it was like you still were just pissing in the wind compared to Coke or Pepsi. That's kind of how they were treated. And I think really it is just the classic ball of the money type of thing where these big deals that happened in that time period, that was like uncharted territory, really. Things like a Snapple being acquired, things like vitamin water being acquired. You know, there were these sort of big kind of monumental deals along the way that I think what people probably don't think about is that with each one of these cycles and some big sort of, again, mega exit that fuels the next generation.

12:23someone who saw Vitamil Water and it exits Coat for billions probably was sitting there. And I remember people sitting there going, man, you know, that stuff's just colored, flavored water. I can do better than that. You know, I've got the next$10 billion idea or whatever. And there was a point where that mid 2000s were like the scale kind of tipped in the direction of people realizing that there's a lot of legacy brands out there that they're just hanging on. When I was a kid, I remember people being like, oh, what breakfast cereal do you eat? Or are you a Coke or Pepsi drinker? And like people's allegiance to CPG brands and just brands in general was so different.

13:01But there also was way less choice. What breakfast cereal do I eat? I don't know. It's probably like a General Mills product, right? Like how much choice is there, you know? And it's interesting because I feel like at the time there've been so many times where people have called like peak beverage or peak CPG. But I think we're just still so far from that in that those same legacy brands that people have been chipping away at for like 25 plus years are still there. They're just still hemorrhaging buyers, you know, hemorrhaging dollars. And it's not going nowhere. Like it's not like people need to eat less or drink less, right?

13:35It's just going somewhere else. It's pretty interesting to think about that and reflect on like being a kid and there's Coke or Pepsi or whoa, maybe the wild ones were out there with tab or RC Cola or something like that, but there definitely weren't startups. So I guess you kind of have to ask yourself, what are those big enablers that made it possible? I think just halo of an interest in entrepreneurship generally that started with, I think probably a lot of very successful companies, not just in CPG, obviously, but Facebook and Google and people just getting more interested in it. And I can reflect when I was coming out of business school, I mean, even going to Google then, this was 2009 that I graduated, the people who went to Google, you're like, whoa, buddy, you're risky, huh?

14:18And now it's one of the best jobs that you can get. And then almost nobody went into startups at that point. It was just a wild thing to do with your career. And now, like you said, so many kids of that pedigree really interested in starting companies. And I think it's barriers to entry are low, I think. And I don't know what they were like in that era. If you could just walk around and find a co-man, probably now it's a lot easier to get access to them with the resources that are out there, startup CPG resources, databases on our website, if you find them. But so many lists and email addresses, and even though co-mans are not that great at answering their email.

14:54Well, look, I mean, I think even things that we, people complain about now, like LinkedIn, you know, it's like, you just don't realize how easy this stuff is. And one of the first sort of founders that I really got in touch with since he was in my own backyard was Tom first, who now does Culture Pop, but had a brand called Nantucket Nectars back then. And he's been in this industry longer than me and talks about, they were trying to look up, I think it was like a flavor company or a co-packer in like the Yellow Pages, you know, it just, the barriers to finding stuff was pretty hard. And obviously now it's the reverse.

15:33You want to launch a brand with a pretty slick looking package. It's not that hard to figure out who you need to hire to do it. You have options to some extent, like democratize the whole thing a bit, made it more accessible, but the barriers to entry are certainly lower than ever, but the standards are way higher. I mean, if you look at like the typical products that were launched 20 years ago, it's like you could just roll in with that farmer's market some crappy graphics vibes to it that was okay like you just can't do that anymore i would say it's weird it's like gotten easier but i think it's way more cutthroat it ever was before i think back then you also wouldn't have i don't know it would take a while before someone realizes you have a good idea before like all the other competitors start popping up and now it's cycles are so short you have a whiff of a good idea and all of a sudden you'll have competition unless you have a truly bad idea, I guess.

16:25So, yeah, a lot of competition out there, which you're up against. But also the buyers now have that mechanism. They are out there looking for new brands. That is just how they operate. So more opportunity and more competition. And yeah, you can launch a brand that looks like a national brand. That's high quality with good ingredients and tastes good. It looks good. So it's definitely an interesting time. And thus was born the Air One Beverage Cooler, full of unicorn, delicious, colorful beverages that are full of the hopes and dreams of each one of those entrepreneurs as well. So you mentioned something before I wanted to come back to.

17:02You talked about monumental moments, game changer, pivotal times for the industry, major acquisitions that really inspired a lot of people. I'm wondering, so fast forward to today, can you see things that are happening now that you feel like will actually have a big ripple effect on the industry? And I know, I mean, let's say two, three years ago, things were a little bleak, in my opinion. I think there were not a lot of acquisitions happening, which is very important. And I only learn more about this over time. But what I understand is those big CPGs out there, because I don't think they grow a ton organically.

17:40Mainly, they would be looking at M &A for growth. They used to ascribe very high multiples to some of these startups because they can plug them into their systems and get their costs down and get lots of growth with them and say they were probably overpaying for them, which when they do that, great. Like the industry flourishes. A lot of people start companies. They'll just pump them full of cash to grow them. And then there's a good exit. When those companies slow down, whoa, it's tough because they stop buying or they stop buying as high multiples. That means later stage investors also tighten their belts in terms of what they can expect from an exit.

18:09So they'll invest less than the smaller investors who think they're going to then get the support from those. So it really trickles down in a way that you can actually visualize. So in the last year or two, I don't know, at least there is a lot more M &A activity, Ciete Foods and a couple others. But do you see anything like that happening in the last couple of years where you're like that? That's going to really impact this industry? Yeah, well, I mean, look, I think first of all, I'd say that having been in this industry for a long time and having seen things ranging from 9-11 to the Great Recession to COVID, what I would say is that this is also an industry that even the things you were talking about with like the big CPG companies, I mean, they kind of have a history of, I have a pretty simple, logical way to explain this here.

18:57they're like gee whiz you know we need to get in on this action because there's all these cool brands right then they buy some maybe they overpay so then they set up their own little innovation whatever division that's going to go out there and find that stuff and get them invested earlier so they don't have to pay a lot for them and then after a while for a public fortune whatever company it can't just say all the cool stuff's in this little tiny division they at some point have to roll it back in. And then the cycle just kind of repeats over time. A lot of these strategics have tried and tried again with having a division that's supposed to be out there tied it.

19:35But in reality, big companies don't do well is clearly innovation and incubation, which obviously they need billion-dollar brands. They need billion-dollar SKUs in some cases. So like if they acquire a brand for like a billion dollars that has a dozen SKUs, it kind of when it goes through that big company process and decision tree of invest in whatever brands, a billion dollars, but not growing or invest in this other company, that's one SKU of the core brand is small, right? Like they just aren't good at that stuff. So I think they just go through this time and time again where it's like, yeah, we're not going to do that again.

20:13But they also can't just sit there idly if a brand like Poppy is kind of eating their lunch, right? That's created meaningful market share was probably just going to keep getting bigger. They're just going to sit there and watch or let somebody else buy it. Probably not. So I guess where I'm getting to, though, is I look at something like the poppy acquisition. And that to me, it's the same thing again. That's fueling other people who see dollar signs. And, you know, what's challenging is a lot of times the newcomers that come into the industry, I don't know, be it Silicon Valley investors or whoever, they don't really pay attention to the whole story.

20:50They pay attention to the hyper growth time and when they got the exit, not the early days where it was mother beverage and they didn't know what they were doing yet. So I think a lot of times, yes, a mega acquisition is always sort of lubricant for the whole financial system here. But I guess making a tsunami reference here of the water receding before the big wave, I think that's kind of what we saw where it's fine. the money's pulling back, just doubling. Investors are doubling down on the companies they're already in, trying to fuel those. And then eventually we get the hits and then this will just kind of repeat.

21:26So I think there were a lot of people who are first time entrepreneurs who were just like, oh, it's a game over for CPG. And it's like, no, that's just not how the environment works here. And to be frank, historically, things like economic fears have actually made CPG seem like a pretty safe bet in that people always need to eat and drink, right? So if you're worried about investing in tech because of AI, well, gee whiz, like CPG looks like a pretty good spot to put your money. That's kind of how it's worked. And I think the cycle we're in now, the question is always how much sort of room do we get here?

22:01How long does a poppy acquisition or any other bunch of deals, you know, we've had a bunch of good solid exits in the past couple of years, how long does that fuel people's interest? And for sure, we also do need a steady stream of brands that build up to a meaningful size and do get acquired, right? Feminine sort of stops. That's bad. But as I was saying before, I think the risks of that are, to be honest, pretty low. So I think since COVID, the cycles have gotten shorter, I would say, is kind of my only observation. That has had its own shock through CPG. Used to be more like maybe five to seven years and it felt like we were on a weird couple of three-year cycles there but we'll see i mean again i'm pretty bullish on like where we're headed though it's so interesting to just hear this kind of retrospective on the industry and i am wondering there are other brands that grow really fast and then i don't know if they keep growing that way let's talk about something like prime right and okay there are other people in that poppy space who are trying to run that playbook.

23:06We've got Stiller's Soda. And it's the accessibility to the consumer in a lot of ways is easier now because of influencers, partnerships, affiliates, all that kind of stuff where you don't have to rely on being big enough to purchase a national advertisement, right? But my question, I guess, is when you, because you've seen so many brands rise in different ways and tumble, do you feel like when you see a brand grow now, whether it's hyperspeed or a slow build, do you feel like you know what brand really might be a fad? Let's say, I don't know where prime sales are now, but I know it did not live up to the hype that we all saw right when they were out of the gate, just being sold on eBay even, versus some of the ones, let's say, like Poppy, at least so far, that looks like it has a lot more staying power potential to grab and maintain significant share in the industry.

23:58Do you feel like you can see that as they're growing? Yes and no. I mean, I feel like if you take a brand like Prime that had a really, really rapid rise, you know, in retrospect, I think one of the things that has always been really dangerous is going from scarcity to just overwhelming volume, like being everywhere. And, you know, I think that is a lot of times hard to translate where like consumers got in to your product when it was like hard to find and it was exclusive. And then in a really short window, it became the thing that you couldn't escape. Right. And again, like a really, it's one of those things that it's really hard to manufacture that.

24:41It's not really, I would say necessarily like actionable thing for most entrepreneurs, like obviously the Logan Paul KSI thing, like they just had their own platforms to promote. But what I would say otherwise is a lot of times it's just easier to point out the things that aren't going to work than are going to work because frankly like no one really truly knows what the consumer is going to like latch on to hard i think what always interesting to me are the brands that are just kind of out there doing their thing and maybe there's some bigger sort of education hurdle or mainstream awareness needle that needs to move and then it just happens and that brand that's been doing its thing heads down, all of a sudden becomes the 20-year overnight success.

25:28And certainly there's brands, if you look at something like a Celsius, for example, to give another beverage example, that company's been around a long time to try a bunch of stuff. And then finally they figured it out. I think more than anything, the point is just, I think for brands, it's always kind of being realistic about just where consumer adoption and education is, as well as just not being afraid to adapt and pivot without totally throwing away your company's mission, right? I wouldn't go from selling maybe ethnic Mexican products to, hey, everyone else is selling THC drinks. I'm going to go just sell that.

26:02But I think smarter pivots, if you look at like a Siete Foods as an example, as I mentioned, a Mexican style product, they were selling, it was like an almond flour tortilla. That was their original thing with kind of a, I forget what the brand is. They brought it to our, one of our events when they just started out. And then it's like they pivoted and they had all these different products. I'm like, gee whiz, I don't know if people like their chips and stuff, right? But I think the point I was trying to make is really just for any entrepreneur, it is just that constant pivot and evolution rather than just saying, hey, this is what we're making.

26:34We're going to just, consumers are going to like it type of thing. It's just such a hard nuanced business as you pointed out before. Those nuances like really, really matter. And I'm, I think such a tough business in that regard, since you actually have to hit go on your production run at some point and have this whole pile of product you need to sell. It's so interesting to think about. By the way, do you know the date that Celsius first went public? Not off the top of my head. It's been a pretty long time, though. It's 2006, 20 years ago. For me, that was so surprising to learn this. And probably you've seen some of those old bottles that they were sold.