S5E2: Scaling & innovating on CPG with Graham Fortgang of MatchaBar

Welcome to The Room Podcast. I'm Claudia Laurie, co-CEO and founder of Pryve.

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On today's episode of The Room Podcast, Claudia and I sit down with Graham Fortgang, co-founder of MatchaBar. MatchaBar was founded in 2014 with the simple mission of bringing matcha to the people. Graham and his brother Max started with a partnership between them and an authentic local matcha producer in Japan. This laid the supply chain foundation to open their first matcha cafe in New York City. In the past 7 years, Matcha Bar has expanded and evolved into one of the largest omnichannel matcha providers in the US. This episode was extra fun for Claudia and me as we're both loyal matcha drinkers. With our fast-paced lives as a founder and a funder, matcha provides a consistent and smooth boost of energy. Something I didn't realize about matcha is that the caffeine is released over a 3 to 5 hour period in what Matcha Bar calls an extended release effect. This offers gentler all-day energy, and when contrasted to coffee, it doesn't have the crash or jitters often associated with the coffee consumption. In today's episode, we explore insights and themes such as the thousand-year-old origins of matcha, the power of hustle and building a business, and tactical tips on being an omnichannel retailer in 2022. Let's open the door.

Let's do it. Thank you, Graham, for joining us in the room today. It's such a treat.

Happy to be here in great company. It's a beautiful day in the world. Things are looking up.

Things definitely are. Before we hop into your story about Matcha Bar and just all the incredible things that you're doing and what's ahead for you and the team, we would love to just start at the beginning. Your story of starting MatchaBar began in 2014 when you and your brother Max developed your own blend of ceremonial-grade matcha and opened up America's first matcha cafe in Brooklyn. Tell us a little bit about what you were doing before you discovered your love for matcha.

Born and raised in New York, as is my brother. I share a deep love for New York City. I consider myself a New York romantic. I, like, obsess over its history, its city. And I was working, I was going to college. I actually dropped out of college to start the business. But my first business, when I started when I was 18, was in the world of music and event production. And so I was living and breathing the nightlife and live music side of the city and became super, super interested in the idea of energy. Obviously, caffeine is what most of us turn to for energy, and it didn't make sense to me that there weren't any other options other than— when I grew up, you went to the bodega, you got a coffee with milk and sugar or a Red Bull. And so I was going to school, I was working, and I was running my own business. I wasn't sleeping, I wasn't taking care of myself. And that kind of landed me on this path of trying to figure out what else was out there. Part of that was taking care of yourself, nutrition, taking care of yourself, sleeping. But the other side of that is what you put in your body. And coffee was like the devil to me. It still is. I get anxiety, my heart would race. I drank it too late, I couldn't sleep. For me, and this is personal, I had the worst acid reflux, like terrible. You can probably hear my raspy voice. It's actually like I ended up having really like severe acid reflux. And I started looking into alternatives, and that, that really led me to discovering matcha. We always joke, we did not invent this. It's not ours. It comes from this amazing rich history dating back from the 1200s in Asia, in China and in Japan. And we started drinking it out of a need to find a better way to feel when we woke up in the morning, which is really what brought me to eventually being like, wow, more people need to try this. And that's That's kind of how the story started.

Like many founders that we've spoken to, there's this common thread of this personal need and personal aha moment, which then turns into a passion, which then turns into something a lot more. Walk us through the moment where, when you and Max decided, hey, we're actually gonna take this seriously. Like we're gonna dive into this world and maybe build a business around this.

The story's awesome. So my brother and I are business partners now of 7 years, which is crazy. I don't know if it's sad or awesome. And we're best friends. We started our journey in life running an epic lemonade stand in the summer. And we joke that I was too young to figure out the proportions of powder to water. And so I joke that we're doing the same thing. Essentially, we're mixing powder and water together. And when we were younger, I was the cute little kid that would be like, lemonade, $0.50. And Max would be behind the stand mixing it up. We're only 2 years apart. And in many ways, that never changed. And so when we started finding matcha, my brother, who is a culinary whiz, started doing all this crazy stuff with cinnamon hemp and matcha watermelon and a matcha lemonade and trying all these combinations that little did we know no one had really thought of before. I told him, I was like, man, like, you got to do something with this. Why don't you hire me to do the branding and marketing? And I was doing a lot of consulting all in the music space. And I was like, this will be my breakout project. I'll get out of the music world. I can do something cool in food and beverage. And within 2 weeks, I was like, let's just go all in on this. I'll leave my business, I'll shut down the event world, and we could do this together. So it really started with his drinks, which is really what the entire business is built on the backs of, which is realizing that matcha can be something that can taste a million different ways and can be really brought into everything from a smoothie ice cream to a sparkling beverage and back. I'm sure you guys have had fun in the kitchen. So that was really the moment. It was trying his drinks and being like, people need to try this. It was a cool thing.

I feel like variations of matcha drinks, whether they're with coconut water or sparkling or in cocktails or in food, are just like such a common thing now. And it's just so cool to know that you were like in the forefront of a lot of that creativity, bringing kind of this historical tradition that was rooted in centuries of consumption now to the consumer space.

If you were to tell Max and I, if you were to come into Chelsea and backstory to the listeners, Claudia used to come into our cafe in Chelsea. Just so they understand, it was on 15th Street. Great little spot. If you were to come in and say Starbucks and Dunkin' Donuts are going to add this to their national menu, the thousands and thousands of doors in a couple of years, I would have laughed at you. I would have been like, no way. So the fact, A, that the matcha space has now, albeit a very low quality, and I caution people who are going to Starbucks or Dunkin' Donuts not to judge matcha by the quality that you would get at these institutions. But if you were to say that it would be served there, I would never believe it. So it's so cool to see how the category grew. And we feel very grateful that people like Drake or Diplo or Billie Eilish, some of our partners and investors on the brand, really helped tell that story because they're a big reason why many different people outside of our own community were able to hear about it.

You touched on your cafe in Chelsea, but if I have this correctly, that was not your first cafe. Tell us about the impetus to open a physical storefront to serve matcha in the early days.

So we no longer run and operate cafes. It was a strategic decision from day one to use the cafes as almost like a huggable billboard. We knew we wanted to end up in grocery, But we said, like, how do you introduce something to a city or to a community? And we really felt like we had to do it ourselves, like really customer, my customer. My brother would joke that I'd lose my voice by the end of the day. We started in Brooklyn, then Chelsea, then in LA, in Silver Lake. But we really believed that this was a cool part of our evolution to show people that a matcha could be very similar to the use occasion of an espresso or an espresso bar. Hence Macho Bar, the name. Our first store, which was a disaster to open, me at 21 years old, maybe 20, and we had never done anything like this before, trying to figure out health codes and ADA compliance and all this insane stuff that even like how air conditioning needs to be installed in a building that was built in 1924. Not to mention, and I can say this because we're now closed, I lived above it. Because I couldn't afford to pay rent and the cafe. So I lived in the second floor of our cafe. So imagine like waking up on a Saturday morning and just like having two dozen people drinking matcha underneath your bedroom. Talk about no division between church and state. It was a nightmare. So yeah, it was a crazy decision. It's part of our story and we loved it. And back then we even opened up at night as a little matcha speakeasy with matcha cocktails and DJs. We'd be open from 9 AM 6:00 PM and then open from 9:00 PM to 3:00 AM. It was crazy. We never slept.

I don't know if anyone called this experiential retail in 2014, but if you walk down SoHo today, you cannot be stopped without looking at a store that is confusingly maybe not a store, but is also somehow a store. You were early on this trend.

For us, community was a big part. And like the one thing I will say about all these little experiential stores that was a little different is we actually started with the community in the cafe. And for anyone who has an idea to make something, if you start with experiential, you're actually able to learn a lot from that community. But it also feels like a real community because it is. It's not just literally a marketing ad in real time of something that already exists online, if that makes sense. I can't imagine having gone from online to experiential, albeit financially, I think it would make a lot more sense. But that was also part of our story because this was like our baby.

Talking about community, there has been micro-communities surrounding the history of matcha for some time. For my list— like, listeners' context, as Claudia has maybe said before, I love matcha. I do matcha reviews on my Instagram as my alter ego as Matcha Mads, and this is something that I a huge kind of personal connoisseur of. And when I went to Japan 2 years ago, I got the chance to go to a matcha tea ceremony in Kyoto, and that was so beautiful to see all of the ways in which there is ceremony and community built around this ritual. Talk to us a little bit more about your early days learning about the history of matcha itself and ultimately the supply chain that that brought you into to create really pure and authentic matcha for your community on the other side of the world?

It depends how nerdy you want to go. We can probably powwow after this for hours. There's such a crazy history to matcha, and it actually started in China. A lot of people thought it started in Japan, actually started in China. And there is one specific monk. His name is the Monk Asai that brought matcha, the first seeds to grow matcha, which is green tea plant inherently, from China to Japan. And he wrote a book about it in 1204. The translation of the header is like the magical healing properties of matcha. And it talks about longevity of life and focus and increase in digestion and all the things that we love matcha for. And it's so crazy that literally almost 2000 years later we're doing the same thing, or 1000 years later, were really saying and preaching the same exact thing. Once it came to Japan, it really got indoctrinated by the whole wabi-sabi concept of life. It's more of a way of life rather than design, which is what it's been distilled to now, which is all about simplicity. And so, many of the tea masters and in particular, this one tea master, like the godfather of tea masters, his name is Senrikyu. R-I-K-Y-U. There's movies about him and he's a very famous guy. And his whole approach was that matcha was for everybody instead of these lavish tea rooms and ceremonies that you'd find in China with golden bowls and porcelain scoops and beautiful rooms. He really believed that you just needed to get some bamboo, thatched a roof over your head, use a bamboo scoop, which is where that bamboo scoop first came from, and that it should be available to everyone. And that's where our mission of bringing matcha to the people actually comes from. We actually adapted his words into what our mission is. We bow our head into that history, but then also realize, hey, like, our job is to make this accessible. We have a USB rechargeable electric matcha whisk. We have drinks that have sparkling water and peach juice in them. So in many ways, we learn from the past and drove all the way in the other direction, trying to understand the intrinsic value I always joke to my business partners, if we had made our drink $4.99 like a kombucha, we would be doing double the revenue that we're doing now. Our drink is $2.99, but we really thought that our drink should be accessible to people that aren't just rich hipsters in New York, San Fran, and LA.

I didn't realize the democratization of matcha was so core to the history of its distribution itself and how you've been able to bring bring that into the 21st century. Who were your early suppliers of this authentic matcha that ultimately became a part of the drinks that you provide to your customers?

We've been working with one partner now for almost 7 years. And when I first reached out to them and traveled to Japan, my best friend Lenny, who grew up in New York City, happened to be Japanese. And I said, hey, can you speak enough Japanese to negotiate a deal? He was like, let's go. And he's covered in tattoos, leather jacket, DJ, like the opposite of what you'd find in rural farmland of Japan. And we went out there together meeting all these different farmers, learning about all the different production techniques, how it is steamed and then how long it's air-dried in the butterfly net and how all these different little small aspects of how it's produced actually has a major impact on the functionality, the efficacy of the product. And so we've been working with One Family Farm now for 6 years, and they thought we were crazy. They were like, listen, nobody in America is going to like the serum. Why are you buying the good stuff? You should buy the cheap stuff. And we were like, no, we're opening in Brooklyn. We swear it's going to work. Years later, matcha in Japan is one of the only areas that is actually booming. Because there's more inbound requests for matcha than you could imagine. There's matcha you can get in Berlin, in Paris, in Mexico City, everywhere. You can find matcha all over the world now. So it's been really cool to actually see. And then for our farmers to see Drake drinking a matcha and they're like, what the hell? This is crazy. It's an epic story of transcontinental partnership on the deepest degree.

I love that you went straight to the source, literally, to create the most authentic and ultimately clean source of matcha for your consumers, which started in your cafes, but then ultimately did dovetail into your vision of creating a ready-to-drink or RTD beverage for consumers. Walk us through that transition of serving handcrafted cocktails and matcha lattes for your community to being a CPG brand.

It was definitely confusing for us. We made sure every drink was made perfectly And then we made sure that we were able to explain to them why they were going to feel the way they were. So we used to always tell people, pay attention to how you feel. And as soon as you give someone the idea that they should pay attention to how they feel, they're more aware and they start thinking, am I energized? Am I focused? We always joke that matcha is 90% function and 10% magic. It's like you're leaving open the idea that you could feel better. For me, that's my approach to life. Most of it's grounded in reality, and then there's 10% of unreality that you have to mix in there. To make a fulfilling life. And so when we started making these products, our big focus was how do we scale up and make a product that consistently tastes the same? I remember once we had an apple ginger flavor and the ginger that season was extra spicy and we produced like 20,000 apples that were just too spicy. Like you drank them and you were like, woo. I was like, oh my God, we can't sell them. What are we going to do? And we went through a lot of growing pains. But ultimately we decided, okay, if we are going to make a mass-produced product, how do you bring that product to life in the IRL space? And that kind of started a ton of different experiential marketing we did where we would show up at festivals, at educational conferences, at fashion events, music events, and really try to put as many cold cans in a hand as we could where where we're able to have that personal experience. And that's also where design comes in, because you have to have the right amount of education. For us, that was our tagline of the good things come to those who hustle. It was definitely a transition. And then believe it or not, in the pandemic, the coolest thing was our powder business exploded because people were stuck at home. So why spend $2.99 on a can when you can make your own matcha latte for 50 cents? Or if you get the bigger tin for 30 cents? And so that was a crazy thing because now our business is more powder than it is drink. My joke is people were learning to make more than just sourdough at home. They also learned, oh wow, why spend $6 at my cafe if I can make a matcha for $0.30?

I still fall prey to the $6 latte. Somehow it just doesn't taste as good as me using my own whisk. But I love that had a positive impact on you and Matchabar. When you ultimately decided to make this transition to putting more hands in hands, who was the first retail partner that saw the vision of what Matcha could be?

Whole Foods was number one. But back in the day, if you were a local product, if you were made within 20 miles or 30 miles of a Whole Foods, you could walk in to the store, ask for the beverage buyer, and they could bring in the product. So I just walked into Union Square Whole Foods and said, hey, I make this literally 20 minutes near JFK. I live in Brooklyn. I've lived here my whole life. I got this great new product. You should bring it in. And they said, great, bring it in. And that was how I got my first couple of accounts. We would just go door to door. I had a big backpack. I'd put in 30 cans with ice. I'd be like dripping down the street. And we had a whole scheme going where my brother would go in 2 days before and say, hey, any chance you have any matcha products? He'd be like, oh, what's matcha? And he'd be like, oh. And then I would show up 2, 3 days later, hey, I got this new matcha thing, you got to try it. They'd be like, oh, people are asking about it. That's part of the New York hustle. You got to be down to really grind and sometimes create your own demand. And as we went bodega to bodega, Whole Foods to Whole Foods, but eventually we got a meeting with actual Whole Foods, and they were our first larger supplier. And rolled this out across the country within like maybe a year of us launching the product, which is really cool.

That might be my favorite fake it till you make it story, artificially creating demand with your business partner.

To this day, if I go into any grocery store or bodega, I always have a picture on my phone and I'm like, oh, any chance you guys have this? Oh no. Oh man, it's my favorite drink. I just moved in down the block. Like, you got to start carrying it. Just on the chance that someone comes in, asks them, or they look at a catalog. You miss all the shots you don't take.

Absolutely. And that's very emblematic of our namesake from Hamilton. We love when people decide to take their shots. You didn't take this shot alone. It took a lot of capital to ultimately get this vision into market. Talk us through the decision to capitalize Matchabar.

We had a couple people that believed in us early on. Me and my brother and my father all went in on it equal for starting capital, which allowed us to open our first door in the cafe side of the business. But then when we wanted to expand, we needed to fundraise, and it was a lot of nos. So many nos. It was like a sea of nos. It was like a tidal wave of nos. I was like, wow, like, this is like really terrible. And I kept thinking to myself, I wish I had a friend with a lot of money that would just give me the money. That would be great. And so eventually we ended up finding the right people and the right angels that believed in what we were doing. And there are these camps of people who believe in, in entrepreneurs and businesses. Our first investor is an agency called Bullish. They're based in New York and they invest and then provide consulting. And they were the first people ever to believe in us. That was a big change for us, but very cool and very helpful to bring in people that could really materially change the business and help strategically. Ultimately, my advice to any young founders or anyone interested in starting a business is just be super careful about who you bring in because they're your family. And also be super careful that you're protecting your voting rights and your stake in deciding the decisions of the business.

Yeah, that's super wise advice. And Claudia can speak to that process herself. It's a challenging business to select who you're going to bring on that journey with you.

Yeah, it's a real journey. It's a long haul.

You guys have some fun names, though, on your cap table, if I may. I think Billie Eilish is an investor. Diplo, did you mention Diplo?

Yeah. Drake.

What has been the value besides the obvious of having these fun household names on your cap table?

We were very fortunate. We met Billie when she was like 14 or 15 years old. And we've been very fortunate to pick partners that we've been able to grow with. Someone like Diplo does 300 or more DJ sets a year and is always traveling and loved Matcha. And it was a real fit because it was something that he turns to. He's not just an investor, but a friend of ours. And they've all been helpful at different moments. Like I remember Billie when we, when she headlined Coachella, for the first time, she Instagrammed out, follow Matcha Bar for a chance to win a signed vinyl package of my new album. My phone broke. It was crazy. I think we got 15,000 followers in an hour. It was really scary, honestly.

Out of personal curiosity, what is your favorite matcha beverage? How do you best like it prepared? If not a Matcha Bar can?

I'm an old faithful. I just do an iced matcha with a splash of oat milk. I'm a big Oatly fan. We love their business. We love their story. These guys have been hustling for over 20 years. So it's— for me, I love that because they are a huge powerhouse that have totally disrupted dairy.

And that's so true for so many founders. They think it's so easy as someone who might be excited to start a business or kind of go into entrepreneurship to think, hey, like everyone raised like $50 million in a weekend. Yeah, it's so easy for everyone and became a $2 billion business like overnight. And that's certainly not the case. Oftentimes, and it's really cool to be able to open the door to the stories of how those businesses actually were built and the blood, sweat, and tears that kind of happens along the way in building an empire like the well-known brand Oatly today.

Yeah, I mean, we call them TBTs, team building tears. A lot of TBTs have gone in the last 7 years.

We chatted a little bit about kind of the origin story. We chatted about how you went from cafes to Whole Foods to D2C, and in 2019, I think you celebrated celebrated a million bottles sold. But since COVID and the push towards D2C, for that number has grown tremendously. Tell us a little bit more about why direct-to-consumer has been successful for Matcha Bar and how you've started incorporating kind of technology and the, like, e-commerce space into your business.

Totally. If you were to interview anyone right now in the D2C space, who talked positively about the current state of it, they would be lying. Right now, all of D2C is under crazy siege because, as you probably read in the news, all the privacy updates Apple has just rolled out where it allows users to opt out. Now, the big change that this created was if you were to go to my website or my Instagram page, I used to have 30 days to remarket to you. I could serve you an ad on day 3, 7, 11, 15, 21, 29. That window, that attribution window, has now shrunk to 7. So you have about 25% of the time you used to acquire a customer who is very likely to find you. So it's really crazy. All— it's like this elephant in the room right now. All direct-to-consumer brands right now are dealing with something that they could have never seen coming, which is this huge privacy movement that is really affecting their ability to acquire new customers at the top of the funnel. We're very lucky that we're omnichannel, so we're also on Amazon. So we've been lucky that we're not 100% committed to the direct-to-consumer route, and it's still there, but it is in many ways changing dramatically for the first time ever. That being said, during COVID D2C was a lifeline that many brands needed because it allowed users who are stuck at home and not going to the grocery store to order their products. We built a D2C channel from $100,000 to several million in 24 months, more than any, any other reason, because we had no other choice. People weren't going to the gym, they weren't going to work. And so that process was so fun to learn. We were lucky that we were developing a D2C platform before COVID but it's all about creating an experience digitally. So that's through SMS, That's through email, it's through a blog, it's through recipes, it's through original content on your social platforms, influencers, affiliate. I almost felt like I had to become like a D2C nerd over the last 2 years. Nothing I ever— I never wanted to talk about ROIs and KPIs, I mean, or attribution, and these are all words that I want nothing to do with, but it's fascinating to learn about. It's really important to any modern brand to diversify where they're getting their revenue from, because if there's anything we learned from COVID is that everything and all the systems in our world are extremely fragile. I really believe that we're entering the age of omnichannel because you, you really don't know how things are going to be shaken up. In one day, when we went into lockdown across the country, our grocery business cut 33%. Just one day, you have no idea what's going to happen. So I think that's really the name of the game in the modern world, and certainly being digitally friendly is super important.

Being flexible is key to defensibility as just the market and the environments change so much. Madison touched on this a little bit earlier in the podcast where physical stores have such a strong kind of brand and experience behind opening the door, going in and experiencing the product. And I think in many ways there's a very similar analogy to digital experiences where your D2C site is no longer just a web page where you just sell product. It's so much more than that and really is a canvas for you to express your brand identity.

I always tell people that your customer is so sensitive in today's world. They're so— they're like overly— they're like that person that they're like the friend that you have that gets so easily agitated that they're usually in a bad mood. We learned that If we tell people it's a natural energy drink or a plant-based energy drink, they won't touch it. They won't even look at the ad. But if you say it's natural energy or plant-based energy, they love it. And it's just because the word energy next to the word drink is traumatizing. They think of Red Bull, they think of Monster. Little small thing where you thought, oh, we can make a healthy energy drink. Nope, you can make healthy energy, not a healthy energy drink. It's these small little things that you slowly learned over time. Goes to show how much consumers really have emotional attachments to little cues or little things that are said.

You're underlining how important a delightful consumer experience is and how sensitive consumers are in how they shop. And that's very much the case for how you shop online. Could you tell us what your D2C tech stack is?

We love our tech stack. We work with— our backbone, of course, is Shopify. So we have a custom website that we build on with Shopify. We're Shopify Plus. I'd actually say it's worth the investment. They have some awesome integrations. We work with Klaviyo on email. We work with Postscript on SMS. Okendo does our reviews. They do these awesome questions where they talk about attributes of the drink or use occasions of the drink that I think blow all the other review services out of the water. So we love working with Okendo. Maybe like 8 or 10 other smaller ones. We upsell with Rebuy. We have a post-purchase flow. We have all sorts of different things, a churn with Blockbuster, which reminds people whose credit cards have gone out of whack.

We—

there's— it's a never-ending, never-ending rope in terms of integrations, but I think the biggest one for us has really been email and SMS, actually.

Hmm.

I think a lot about SMS. I actually helped to build the first SMS platform for Gap brands and that kind of communication strategy for the brands to consumer. And I love hearing that you're using Postscript. I've heard really good things about that recently. And on the venture side, we're looking towards what is the next tool or platform that is gonna help brands potentially amidst this privacy question really reach their customers in a new way. And how is that gonna unlock more sales and, and better loyalty for customers and brands?

The flip side of the privacy, which is essentially imagine across the industry, CPAs going up like almost double in a matter of a couple months. Crazy. On the flip side of that, what it's going to do is it's going to force brands to have an actual real community and interaction with their customers where their only customer is not Facebook and Google. Because many brands, they said, all right, Facebook and Google, we're going to give you $1 million and I need $2 million back. And they're essentially just paying Facebook for their customers. When it becomes harder and harder to directly market to people, you have to start doing really complex strategies. You have to have brand ambassadors and influencers and micro-influencers and affiliate partners and discount partners and all sorts of things that ultimately allow you to actually have a very complicated web of how you get to your customers. I believe IRL is going to come back in a real way. I think branded partnerships with existing retailers is going to come back in a big way, something that we're focusing on right now. But I do think a lot of the brands that were just relying on paying for their sales will die, essentially, like crumble. And it's starting to happen. And we've talked to some of our investors who are like watching half of their portfolio go under in a matter of months. Pretty crazy.

It's important to navigate just the future of commerce and how shifting a lot of these like grounds are. It's important to have maybe a physical presence and kind of a, a physical storefront even.

Mm-hmm.

A direct-to-consumer channel where you can control kind of your own digital experience. And then definitely important also to leverage marketplaces where you might be able to find new customers.

The conversation that we've been having with the CPG founders we've been fortunate to bring on the room, someone from last season was Cara Golden of Hint, is this hilarious moment of realizing how bad diet soda was for her. And you shared a similar story at the beginning of traditional energy drinks that were not cutting it for you. They're not cutting it for the artists that you have had invest in you and generally the modern consumer who genuinely cares about transparency of what is going into the beverages that they're drinking every day. We talk about that a lot in 2021, but in 2014 it was just a less common trope. Where do you think this movement of transparency in sustainability for consumers is going next?

It's a tough one to say because it was moving very quickly in the plant-based, low-sugar, low-calorie, better for you. I have to say, though, I'm a very, I'm a very blunt, honest person. I love— I have to— I like, I just have to say it as it is. In the wake of the pandemic, there has been a big return to basics and what works. Coca-Cola quietly pulled out of a ton of their innovation deals that they were in, and there's a really interesting article where they dropped the majority of their innovation lines and doubled down on the basics, which is soda for the most part. And you're seeing it across the board. I actually think that people are returning to what worked, which just means big brands are doubling down on their top line. So they're trying to figure out what could they can profit off the most and pushing that. And you're seeing across the board, big food and big beverage slowly get a little less excited about the better-for-you space. But it's an unavoidable tidal wave that it will eventually hit. You see it across every category. It's like dairy got disrupted first by soy. I had soy milk when I was a kid, and then it was coconut, and then it was almond milk, and then it was hemp, and then it was oat. And now, bam, they've lost 30% of their market. I grew up with a Clif Bar, then there was a Kind Bar, and then RX Bar sold to Kellogg's for $600 million. So it's all happening. Certain industries are quicker than others to turn over. The biggest complaint we get about our beverages is that they're not sweet enough. And ours, in my opinion, are very sweet. I have a very different palate and our core customer either drinks the unsweetened or loves the sweetness level, but there's still a consumer that wants what either 20 grams of sugar, 15 grams of sugar, or what tastes like it.

So we talked a little bit about kind of health trends in CPG and in food and beverage. What are some other trends that we should be keeping our eyes out for in the CPG category?

Powders. And that's what I was telling you. Our powder business exploded, like grew 6x over the last 2 years. People are making things at home. Businesses no longer want to ship water. Literally ship water around the world. Doesn't make any sense. Our case is 14 pounds. You know how heavy that is? 14 pounds. And our tin is 1 pound. And you can make 30 drinks from our tin and only have 12 drinks from a case. And so functional powders, you have brands like Mud Water, like Hydrant, Vital Proteins with the collagen. You have brands like Liquid IV that just got bought out by Unilever. They are all very simple just add water products. And that makes sense in the modern world because environmentally you're shipping less weight around the world, and then financially they're recession-proof. I'm not like a paranoid guy that thinks we're going to go into a recession at all times, but people are definitely traumatized by what happened and they're not spending like they used to. That's the big trend that I'm like hyper-focused on right now.

We'll keep our eyes on that for sure. We spoke a little bit about the future of the category, but Graham, I would love to, in our last few minutes, ask what you're looking forward to next and what's next for you.

My focus after the pandemic is living a fulfilled and happy life. Within that, I have to run a business, and I enjoy doing that. So we will continue working with our farming partners and growing our business and creating products that make sense for our consumers to buy but aren't just products for the sake of growing top line. So we just launched an awesome culinary blend, which is perfect for smoothies and sweets and all sorts of baking because why waste money with our ceremonial grade on something you're going to eat and effectively not get the energy from? So that we brought into the market. We launched an expensive reserve blend for the matcha snobs that just want to drink like the real good vintage, a 10-year-aged delicious whiskey version of a matcha. I'll send you guys a tin. It's unbelievable. You don't even need to add milk. It's just so creamy and umami. And growing our business and responding to what's happening. Our whole thing coming out of the pandemic is actually focused on providing a good lifestyle for our company, for our employees, and for ourselves above all else. And, and hopefully building a good business within it.

We have our closing Kuro question for the podcast. Who is a woman in your life that has had a profound impact on your career?

So many. My whole family was built on the backbone of strong women. Shout out my mom, shout out my grandma. But on a professional landscape, we're lucky enough that our farming partner, her name is Chico, is a female, and our whole business wouldn't be possible without her believing in us and without her taking a bet on us and growing with us. So I'm gonna have to give it to her because she has been so patient and understanding and encouraging and nurturing and growing a business together. And it's so rare to work with someone for that long on the B2B side. I always think like you have to pay your respects to how what you do is possible. We wouldn't be here without a supplier. And yeah, so yeah, we've been working with her. We're probably coming up on our 7-year anniversary. She, we, she flew out to Japan with me when I was literally 21 years old and never sold a cup of matcha and is still here. So I'm going to send her this podcast and I hope it puts a big smile on her face.

Definitely. Thank you so much, Graham, for sharing your story and all that you're looking forward to ahead. It's been such a pleasure to have you on this podcast today.

You as well, Claudia. I'll talk to you soon.

Such a pleasure to meet you. Thank you for the time and cheers to more matcha. Thanks for listening to this week's episode of The Room Podcast. To get The Room in your inbox every week, subscribe to our newsletter which you can find on theroompodcast.com/newsletter. We'll be back next Tuesday, 10 AM Eastern, 7 AM Pacific, with the third episode of Season 5. Support for The Room comes from Silicon Valley Bank. Silicon Valley Bank understands these questions can keep founders up at night like Claudia. For over 35 years, Silicon Valley Bank has helped high-growth companies through scalable able to offer global financial solutions plus insights and expertise that many other banks just can't, which could be why 50% of US-based venture-backed tech and life science companies bank with SVB. Learn more at svb.com/next. Silicon Valley Bank, built for what's next.

Cooley is a global law firm built around startups and venture capital. Since forming the first institutional venture fund in Silicon Valley, Cooley has formed more venture capital funds than any other law firm in the world. The firm has 60+ years working with VCs, helping form managed funds, make investments, and to handle the myriad of issues that arise through a fund's lifetime. Learn more about the firm at cooley.com and also at cooleygo.com, Cooley's award-winning free legal resource for startups.

All opinions expressed by Claudia Madison McIlwain in podcast of the podcast guests are solely their own opinions and do not reflect the opinion of The Five EC. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.