0103 Kara Goldin - Hint Water’s Alternative Fundraising Strategies, Superbowl Ads, & Most Effective Marketing Channels

Before we start, I want to thank our sponsor, Quiet Light Brokerage. Quiet Light's team of advisors helps entrepreneurs like you buy and sell online businesses for 6, 7, or 8 figures. They helped my friend Ramon sell a few of his businesses. Most recently, Quiet Light helped Ramon find a buyer for his online magazine in less than 3 months. But Ramon thought that he could get more money for his business. So instead of pushing for a sale, Quiet Light gave him the time and resources he needed to reach his goals. 6 months later, they helped Ramon sell his business for nearly $9 million, almost double the initial offer. Want to figure out if your online business is sellable? Get Quiet Light Brokerage's free 25-point checklist at quietlightbrokerage.com/myexit. This free tool will help you determine if your business is sellable and provide actionable steps to make it even more valuable. Get the free guide at quietlifebrokerage.com/myexit. Okay, now on to the show. Okay, folks, welcome back to the 3rd episode of Exit Strategy Podcast. Here with one of my favorite founders. Her name's Kara, and she's the founder and CEO of Hint Water. Kara, thanks so much for doing this. Super excited to chat with you.

Yeah, absolutely. Thanks for having me.

I feel like you and I have met plenty of times in the past, but rarely have we had an opportunity to do like an in-depth one-on-one discussion. So really excited to do this.

Yeah, me too.

So just a quick background on the history of Hint Water. You guys started in 2005. Much like what you're drinking right now, you guys make a flavored water that's generally flavored with fruit. The water is generally non-carbonated, although you have a carbonated version. There's no sugar, stevia, calories, artificial sweeteners in the water. Does all of that sound right? Am I messing up what Hint Water is?

No, that's absolutely right. We have over 20 flavors of our water. And then a few years ago, we came out with a carbonated version and then a caffeinated version of the product too.

And so you started the business back in 2005 when you were making the switch from Diet Coke because you just didn't feel healthy drinking the 8 to 12 cans that you were drinking. Is that right?

Yeah, I never realized this about myself, but I really just wasn't happy with where I was at from a health perspective. And I had gained a few pounds, but I had also developed really bad adult acne, which I had never even had as a kid. And I really felt like my energy levels were low too, and I couldn't really figure out what was going on. And I was at a time when I have 4 kids now, but I had 3 kids at the time. So I was taking a little break from work. I had left AOL where I was running their e-commerce platform. And I just, you know, was interviewing for jobs. We, my husband and I, were redoing a house in San Francisco. And I just took the time to kind of get in shape. And it's funny, I mean, I always tell people when I'm out speaking about sort of my background story, I really thought— I mean, I probably wouldn't have admitted it, but I really thought that my pathway to get healthy was just shopping at Whole Foods. Like, if I went into Whole Foods and I went shopping there, then I was good to go. I was like, I was going to be healthy. And then I was like, okay, well—

Yeah.

I'm not really getting any healthier. Things aren't really changing for me. And I had been an athlete growing up. I was a gymnast and I knew how to train. And so I thought, okay, I'm really gonna start working out and training and continuing to shop and buy better-for-you products. But then nothing was still working. And so I ended up going to a few different doctors who basically said, look, you're probably having too many cupcakes and that's why you're gaining all this weight and that's why you're having this problem with your skin. hormones, or you've had babies too close to one another. And none of it really made sense to me. So—

Your response wasn't like, the cupcakes are from Whole Foods, though?

Yeah.

Okay.

No, I, I said, no, that's not really what's going on. So at that point, I really started to take a closer look. And maybe one of the doctors said, hey, keep a diary of everything that you're eating and everything that you're doing. And I don't even think I really counted my diet soda consumption because I didn't really think of it as food. I really viewed it as just like something else that I'm doing, and there's nothing wrong with it, so why count it? But then one day I was looking at the label on, you know, was Diet Coke was my favorite. The Pepsi people love me because I always talk about Diet Coke and sort of my problem with Diet Coke, not my problem with Diet Pepsi. That's what I'm interested in. And I realized how many ingredients it had, and so many of the ingredients I just didn't really even understand. And so I thought, I don't know, maybe I'll just put it to the side for now and just see what happens, but not really thinking that there would be any dramatic change. And I swapped out my diet sodas for plain water. And at that point, I really realized that things were getting better. My energy levels were coming back, my skin was better, and I was losing weight. And in 2 and a half weeks, it was a pretty dismal 2 and a half weeks. Like, I felt like I had a really bad case of the flu. I just didn't feel right. And I now look back on it as detox. Like, I didn't call it that then, but I was really getting off of— at that time it was Splenda and NutraSweet and some of the other sweeteners that were going into these diet drinks that I was drinking. And I had lost 24 pounds in 2 and a half weeks. My skin had cleared up, my energy levels were back. And that's when I was like, God, I've actually been marketed to, and I've been told that something is better for me because it has the word diet. And that for me was like this epiphany. And again, like, I'd grown up in the publishing industry and the tech industry. I'd never really paid attention to labels on food as being tricky. So at that point, you know, I was kind of living my life and let, you know, another 6 months pass. And, you know, I kept losing weight. I sort of went through a period wondering if I was actually really sick because I was losing weight so much faster. My skin continued to stay great and, you know, my energy levels great. And by the time 6 months rolled around, I had lost 55 pounds, which was kind of my college weight. It was like my goal weight. And it was dramatic. Like, you know, people would see me and they were like, gosh, you know, wow, you look like you lost a lot of weight. And I'm like, yeah, I did. And everyone's like, are you okay? And I'm like, yeah, no, I'm really good. I feel really good. And they're like, well, what diet were you on? And I was like, I wasn't really on a diet. I actually stopped drinking. diet soda. That's when I realized that I was educating so many people about my experience, including the guy who was stocking the shelves at Whole Foods. When I decided I really want— I started, in order to drink water, because then I realized I really wasn't a water drinker after all. I thought, I don't know how long I can do this because I just am so bored by plain water. It's boring. Yeah. Started slicing up fruit and throwing it in water. And then I went looking at my favorite Whole Foods in San Francisco for that product and everything had sweeteners in it that had fruit. And then a lot of times the fruit wasn't even, you know, real fruit that they were using. It was lots of other stuff. So I really saw this like need in the market, but I never really thought, oh, I should like go become a beverage entrepreneur. I mean, I really saw it as like, you know, this is criminal what I've experienced. And so many people really do want health. But I have a really hard time finding it.

And so you have this epiphany and you say, okay, you know what? Like water is boring. It's hard to drink just plain tap water or bottled water week after week. And adding fruit sort of changes that dramatically, right? It's good for you and it's still water, but it's got flavor and it like lets you drink it consistently. So you start this business. How do you make it the first year? Like, do you go to third-party manufacturers and say, hey, I'm interested in making Hint water, or are you making it at home? I'm always curious. Are you cutting up fruit? Is a third-party manufacturer doing that? Like, how do you guys make this stuff?

So initially, I mean, I was making it at home and literally cutting up fruit and throwing it in water. And then what I realized pretty quickly, I don't know if anyone's ever sliced up fruit and thrown it into a pitcher, but, you know, even if you put that in the refrigerator, which you need to do from a bacteria standpoint, you can't leave it out on the counter for too long. But it's sort of, I used to say it would get like smeggy looking, like it would have the water or the fruit would actually get sort of soft. It would just like the pulp would be sort of funky after a while and it just wouldn't taste as good. So I started to try and figure out like, why was that? And then what I realized is that if we actually took the skins and oils of the fruit and created our own extracts and then dropped a few of those into the water, then we could actually still be using fruit, but oftentimes we're using the rind. So people like, we just recently came out with a lime or a lemon flavor, and people were asking us for years, like, why don't you have a lemon flavor? It's really odd. And because a lot of times we're actually using the skins, and most of the time we're using the skins and oils. And so it would almost taste like the lemon naturally has like a, you know, it can taste almost like a turpentine, almost like a furniture polish, like sort of smell to it naturally. Yeah. So again, it was trying to figure out exactly how we could do that in the right way that it wasn't like reminding people of that. I mean, same with cherry. I mean, cherry so often reminds people of bad cherry medicine, cough medicine that they used to take as a kid. And that was the same thing. It was like we just wanted to make sure. And again, we're not using sugars or diet or any type of stevia or diet sweeteners in it too. So there's not a whole lot to hide behind. It's really a matter of the type of lemon, the type of cherry, the process. You know, so oftentimes, you know, people will say to us, well, how do you get that well-rounded taste like year-round? And oftentimes we're using actually grape skins to actually round it out. But again, it's all vegan. And I say that, but a lot of people say like, oh, it's fruit, of course it's vegan. And I'm like, well, actually that's not the case. I mean, that was my epiphany when I was looking at a lot of these so-called diet drinks that were out there. A lot of them that are claiming to be, you know, fruit are actually using things like bone marrow, um, natural. The term natural in general has a pretty wide definition. And so cockroach wings, for example, are considered, you know, natural.

Cockroaches?

They're oftentimes used for food coloring, uh, the red color in particular.

Wow.

I always tell people that, you know, even bone marrow, like even if you are okay with eating bone marrow at a French restaurant. A lot of people think that, you know, the fact that they're actually drinking bone marrow in some of their drinks is kind of, you know, gross. And the fact that we're not actually calling that out in all drinks is just not okay.

Yeah, that is criminal.

Right? It's criminal.

Yeah, that's criminal. Yeah, I'd be okay eating chocolate-covered cockroach wings once in my life, but I'd want to know what I was eating. If there were cockroach wings in, you know, a Blow Pop because it was red, I'd want to know that before I put it in my mouth. Like, that type of transparency seems like it should be table stakes these days in the food and beverage industry.

Yeah. And also bone marrow. I mean, certainly, yeah, that's one where, you know, more and more we're seeing people not— that they're vegetarians, right? Or vegan. And it's like, there's some mainstream drinks that are out there that they've thought they've been drinking for years that actually have that. For me, That was really kind of— I probably spent close to a year actually trying to figure out. We looked at a lot of flavor houses because I had run into— I was trying to find a co-packer to actually bottle it, and we kept getting pointed to all these flavor houses. And that's the challenge that we couldn't actually— I mean, this was 15 years ago. We couldn't really figure out what was in all of these flavors, and a lot of the flavors just were not as real as We wanted them to be. So that was when we started creating our own.

And so can you talk to me a little bit about what it looks like today at your co-packer today, or your bottling facility? Do they have like the rinds of lemons and pineapples and grapes and skins and oils? Does that happen in a third-party facility? How does that work? I'm always amazed at businesses like yours, not only because the drink is so spectacular, but just like making it. You know, I'm reading this book about McDonald's, and they're talking about how they perfected the French fry. And for a while they were like, okay, we gotta make sure we get the oil right and the time right. And then it turns out that like, that's not the only thing that matters. 'Cause if you throw cold potatoes into an oil, it's very different than if you throw warm potatoes.

Totally.

And then it matters in terms of like the sugar and starch that's already in the potatoes. They ultimately had to go back all the way to the manufacturer of like the potato in Idaho in order to make a consistent French fry. For a product like yours, you're talking about rinds and oils of like lemons and grapefruits and grapes. Is your co-packer doing that? Are they like getting these rinds and sort of mixing it with water? What does that operational complexity look like?

We have a third party that just works for us that creates that for us. So they do have that.

Wow.

But we have multiple co-packers. We are only distributing in the US today, but we send that into our co-packers.

Gotcha.

Yeah.

Are there any like crazy stats there? I looked at something about Panda Express and they're like, we use 30,000 pounds of chicken every X number of days or something to that effect. Are you like, oh my God, we're one of the largest consumers of grapefruit skins in the country?

I don't think we— I mean, we use such a tiny amount. I mean, in every bottle there's only like 2 to 3 drops of the oil. And so I wouldn't actually say that, you know, we were like a major producer of it. I mean, what's really interesting about it, people always ask us like, do you use organic fruit? And we try to use organic. Whenever we can. But the key thing for us is no pesticides. And what I always tell people about organic fruit, when you go into these co-packers, and our original co-packing plant that we used was, uh, and still use it every once in a while, is that they also do— they're on an apple orchard. So they have, you know, lots of apples and they do other people's products that send fruit in.

Right.

And I'm just amazed at how much fruit that actually gets produced into juices that actually has mold on it.

Yeah.

It's a problem. And so we don't want— that's sort of another reason why we really want to produce our own flavors too, because we have a lot more control over that and being able to see that we're getting what we're getting that doesn't have the mold on it. But just in terms of complexity, I mean, we make it easy to drink our water and it looks pretty simple on the outside. The truth is, is it's not that simple because of temperature And, and everything else about it. You and I have talked as, as founders. I mean, there's all these founder stories that I actually— my book is coming out in October that really dives into a lot of these nightmare stories along the way, you know, of creating not just Hint, but just sort of like other stuff from AOL and sort of my—

Yeah.

I was in the early days of CNN. I mean, just sort of a lifeline a little bit. And what I've learned along the way. But what's interesting, we produced the first non-alcoholic water company that didn't have— with fruit in it— that didn't have preservatives in it. For me, I really just didn't trust the word preservative when I first started. You know, I couldn't—

Sure. It can mean anything. It's like natural.

Right. I kept asking the question. I'd go to these co-packers and I kept asking the question like, Well, why do we need preservatives? And they're like, because in order to have a shelf life to go be on the shelf at Target, you need to have extended shelf life. Otherwise you're not going to be able to grow this company. And so there was a point, probably a year into being in Whole Foods, we were in probably a little over half the country and we almost just shut the company down because we just couldn't figure out how to do it. And, you know, my husband Theo, who's our chief operating officer, I mean, I really give him full credit.

Yeah.

We literally thought we had tried aseptic packaging and, and really just were looking at all different ways to ultimately do this. And then finally, I remember him getting up in the middle of the night and I heard him out in the kitchen really trying to figure this out. And I said, what are you doing? And he was like, you know, I'm just trying to figure out if we can use heat, but it's tricky because of the sugars and you don't want to turn the fruit. And I always tell people just in layman's terms, it's like a cooked carrot versus a raw carrot or a raw strawberry versus a cooked strawberry, very different type of thing. And so you have to be very careful with it. And so it's not a straight shot of heat. There's actually ups and downs along the way in order to make sure that that doesn't change. And so when I talk about like, this is a product that is not easy, I mean, it's probably The biggest reason why companies have had a hard time replicating it over the years, because it takes time and it's an artisan product that is really priced as a mainstream product for anyone to enjoy.

And so the heat, is that like a form of pasteurization that you're doing in order to provide shelf life? Gotcha. Okay.

Exactly.

So that was like one of early on, you're basically like, we cannot put this on the shelf anywhere because the shelf life is several weeks as opposed to a year or 2, which is what you really need to get into like Yeah.

And so, we used to, I mean, this is a segment in my book. I mean, it's funny now. It wasn't funny then. But I mean, we used to go into Whole Foods and we'd stock the shelves in Whole Foods. And we actually had inventory in our warehouse and in our garage, but we would just tell them like, oh, we, this is all we have. We're out of stock. And so, they would yell at us because they're like, you guys don't have enough stock to maintain this relationship.

Yeah.

And the truth was that we were really nervous that we didn't have the stability on the product. And, you know, I always tell entrepreneurs this too. We were— Theo, who's my husband and our chief operating officer, I mean, he was an attorney prior to helping me start Hint. And he had worked on the case. I don't know if you remember Adwala when they had the E. coli, a few kids died. I mean, it was horrible.

Sure.

And they were not like pasteurizing the product and it was awful. And so he learned like a lot about shelf stability, but also the dangers of it. And so every single day, literally in the early days of Hint, I mean, we were taking our product to a lab to make sure that, I mean, it was truly— we believed it was safe and knew that we didn't want to mess around with people's lives at all. But when I see that, I'm sure you've talked to many entrepreneurs and especially in the food space. I mean, It's frightening to me sometimes when I hear like people are like, oh yeah, no, we haven't, we haven't really figured it out because our volumes aren't that big. And I'm thinking like—

For an ingestible, that's nuts.

It's nuts.

How could you possibly think that that's okay?

Right.

There's a startup deodorant brand that launched a couple of years ago, got into Target, had stability issues. All of their deodorant would melt basically 3 months into their shelf life and they got recalled at Target. Target ended up giving Native their shelf space. It was a complete disaster. And like that perspective, it's bad both from a brand perspective, from a customer perspective, because Target doesn't really trust your brand any longer. And from a consumer perspective, because you're selling an inferior product for an ingestible product that could harm a consumer. That's like unforgivable.

It is.

I do want to talk a little bit more about that. You know, in preparation for this podcast, I did a bunch of research on Hint. Today, you guys are a massive company. There was this guy that works at Native who would not drink any water. He would only drink Hint water. I'm pretty sure he brushes his teeth with Hint water.

I love it.

And anytime we'd have to travel, he would have to Instacart Hint water to the hotel before we landed. So we'd go to like Vegas and New Orleans and a different, like Minneapolis, and he was Instacarting water. It was crazy. Huge fan of Hint water. From what I can tell, like, you know, I've seen articles in 2006, 2018, you guys were somewhere in the $90 to $100 million run rate back then. You know, back then, what were the numbers looking like in 2005? And where were you getting sales from? Because, you know, this is 15 years ago. Direct-to-consumer isn't nearly what it is today. Where were those sales from? And what did those sales look like?

We started out, I mean, literally delivering cases. And, you know, I was doing it initially. I just had my 4th child and I joke about this, but I think Theo just really thought I was out of my mind. I mean, I had 4 kids under the age of 6 and I'm a previous vice president at, you know, a tech company. He's like, wait, I get that it got you really healthy, but why do you really want to do this? I mean, you can go get a job somewhere else and go make a lot of money. And I thought, for me, it was really about resetting health for people. And I didn't set off in my business plan to actually go build a billion-dollar company or become the next Red Bull or Vitaminwater or whatever. For me, it was really about helping people change health. And I really believe when I described this company to people, I said, if I can actually just get it in the hands of people, especially the people that are drinking these flavored waters or vitamin waters or diet sodas or even full-fledged sugar sodas and get them to drink our product, maybe they'll eventually get to water. Maybe they'll never get to plain water. Ever. But like, we could actually change health in the world and in our little area or whatever. That did not only mean, you know, helping people to— like, we were hearing early on that this was, you know, and I saw it myself, helping me lose weight. But it was also, you know, type 2 diabetes at that time was probably 2% of the population. I mean, it's upwards of 45% of the population just in the US have type 2 diabetes or prediabetes and heart disease and lots of other things. So I thought that, how do I get it in the hands of people? And so when we initially went into Whole Foods, I mean, that was the first retailer and around the Bay Area, went into some others. I was actually interviewing sort of like not seriously interviewing, but had a few conversations with this guy, Omid Kordasani, who was at Google at the time. And he worked with my husband at Netscape. And so, Ameed was talking to me about a job at Google and, you know, he was really nice and kept upping the salary that he was talking to me about. And after a while, I was just like, you know what, Ameed, it's really nice and I consider you a friend and Theo likes you a lot. But I don't want the job. But for me, it's not about an offer right now. It's about, I don't really want to commute down to Palo Alto and Mountain View. I really want to stay up in the Bay Area, but then I just want to go and do this. And see if I can actually help lots of people. And so, that was a major turning point for Hint because Omid said to me, somewhat joking, but he was like, oh, do you have a sample of this product? And I pulled it out of my bag and he was like, of course you have a sample of the product. And—

Yeah. Okay. So, you're actually selling him during a job interview in order to get Hint Water into Mountain View's office.

Yeah. But I never even thought of it as like Google. But he said to me, he was like, oh, you know, we have this guy, Charlie, who was our chef. We'll talk to Charlie about it and see. And I was like, okay, cool. Yeah, if you guys like want it in your offices, that'd be really fun. And I had no idea what I had stumbled upon. And Charlie ends up calling saying, hey, I really like Amit a lot. Like, can you send me some samples of the drink? Yeah, we'll give it a try and see what happens. We've been doing food and it's going well, but let's give Hint a try as well. And he called back. A couple days later, and he's like, "Do you guys have more supply?" And I'm like, "Yeah, do you have another office?" And he said, "Oh, we're just going through this like crazy." Within like two weeks of that conversation with Omid, Google became our number one retailer.

Wow! I mean, so is it your number two account? Is it go Whole Foods, then Google? Sort of like like you get into Whole Foods.

Yeah, they quickly overtook it. I mean, like I say, retailer in quotes, right?

They weren't really a retailer, but I mean, it was such a selling to their employees. Yeah.

You know, it's interesting because Google was really trying to make sure that they had healthier and better-for-you products, not just drinks, but also food. I mean, they were really aware of it and very early. And so—

And what year is this?

So that was like the beginning of 2006. And so—

Wow. Okay.

And again, like we were still trying to get our shelf life. Our shelf life was maybe 6 months and we were trying to figure out If we could get it higher. I mean, today our shelf life is 2 years with no preservatives.

Do those B2B sales still make up a significant part of your revenue? Like you sell into Google. I know I discovered your product at a startup as well when I was working out of somebody else's office and it was in the refrigerator. Do those B2B sales make up a significant percentage of your revenue today? Or is it sort of like now you're in Whole Foods and Target and Walmart and sell on Amazon? And so it's still nice, but less significant.

Well, it's interesting. I mean, we're obviously taping this during a crazy time in history.

Sure. Yeah, that's a great point.

Right. And so our food service sales, just because nobody is going into offices, is actually cut. What's interesting, we're actually talking to a lot of the executives at some of these companies, and some of them are even sending them home, cases home to their employees, just as a, you know, gifting them just Just to say, hey, continue to stay healthy. But food service has really been, I mean, the sort of corporate food service has been massive for us. Started with the tech companies in Silicon Valley that just really embraced this. And then they would embrace us and then they would go into their local store and say, hey, do you guys have this?

And look for the product. Yeah.

Yeah.

That's great. What a great, like, flywheel effect. Yeah.

No. And I always tell entrepreneurs too, it's like, it wasn't strategic that we, I said, God, if I can just go get Google Or I can go get Facebook. I mean, I remember, you know, Sheryl Sandberg's assistant when she left Google and she went to Facebook and she called me and said, hey, you know, would you guys deliver to this company Facebook? And they were still in Palo Alto at the time. And so I was like, sure, you know, no problem.

That's crazy.

Yeah.

In 2005, you get Whole Foods. 2006, Google comes along, Facebook comes along. The business, at some point, obviously, like you know, something sets into your mind where you're like, I'm not just delivering products anymore. This can be a legitimately large business. At what point did you raise money? Compared to most of the startups that I speak with in San Francisco that have not been around for 15 years, it's pretty recently, like their first check won't be more than 5 or 6 years ago. When did you guys first raise money in the lifecycle of your business?

So I think it was early 2007. We sort of did this a little bit differently. I mean, maybe to some extent, I think I think you very similar where we really thought early on that I still wanted to have like dinner with my friends and not have them asking me like, how, you know, how's the business going? Right.

Sure.

And so we had made a little bit of money and with Netscape and with AOL. And so we thought, you know, we have to be careful, but let's just try and see how long we could go with self-funding. I always tell entrepreneurs too. I mean, we had an amazing house in San Francisco that we had gutted and remodeled, and we had a baby at the time, but the 3 kids were in the private preschools and private schools in San Francisco. And, you know, I remember looking at Theo one night saying like, this is not really that sustainable. If we're going to be sitting here like trying to pay for school, like how can we actually conserve money and actually put it into, you know, our company? And so, So that's when we decided, let's go find good public schools around the Bay Area. And that's what we did. And we moved out to Marin County. And, you know, again, like, Marin is gorgeous and nice. It wasn't like we were sacrificing in any way.

Yeah, sure.

Yeah.

So today, can you talk a little bit about how much you've raised over the last 15 years?

Yeah, I mean, we've raised— this part is all public. I think it's a little over $60 million, but we've raised in sort of a different way. We haven't done venture or You know, no private equity. We have a family office out of Brussels, which was, you know, they've got a little more money into the company or into their family office than they originally did, but it really stemmed off of the Stella Beer family.

Why did you like the family office versus a VC? It's apparent to me, to be clear, I just want to make sure listeners understand, like, why is a family office different or better for you than a VC?

Yeah, I mean, I didn't know back then when we necessarily took money, but these guys had actually been investors in Vitaminwater, and Vitaminwater had sold to Coca-Cola. And so they came to us and sort of part of their thinking was we really want to invest in healthy lifestyle and better-for-you products outside of Europe. And so they were looking at Hint and approached us and said, like, why wouldn't you take money? We had an advisory role with Vitaminwater and we were big investors. And so So that was really like our thinking back then. But I laugh and I don't know if you ever talked to sort of Silicon Valley investors. I mean, we are stocked in most of the Silicon Valley offices and, you know, we definitely, when we were going out and raising money, I mean, we would pitch some of these people. And what's interesting is that so many of these people, they love drinking HINT. It would always start off like, oh, we drink HINT all the time. We love your product.

Sure.

People always invest in what they know and what they think they can add value to. I think that they viewed us as a company that if we actually were doing it right, then Coca-Cola would come in and they would just knock us off. And the truth is, I mean, this sort of, I'm skipping to the endgame on this, but the truth is, is like Coca-Cola has knocked us off like 6 times. I mean, and every time it's just not what their core competency is.

People ask me the same question, why didn't P&G build their own version of Native? And I'm like, it's the same reason that when you look at a bird, you're not like, oh, now I know how to fly. Just because you've seen something grow doesn't mean that it's in your DNA. And the people who work at Coca-Cola didn't start Coca-Cola. They're stewards of multi-billion dollar brands like Sprite and Diet Coke and, and Powerade. Their skill set is to steward those brands and grow them as fast as possible, but in a very different way than going from Like the difference between going from $0 to $50 million is very different than going from $1 billion to $1 billion and $500 million, right? Or even $1 billion, $50 million. Like it's a very different skillset.

When the first time that they came in and knocked us off, I mean, I always talk about it as on a timeline that like, that was a really bad day. I'm sure you guys had this, you know, same day by one of these big guys. And what it, yeah, what I realized is that it actually has helped us to get more space. Because they eventually have given up because, you know, there's probably internal fights, especially, you know, when you look at kind of the mothership of these soda companies, it's sugar, which is totally counter to what we're doing. We're just getting people to drink water that tastes better.

Sure.

And that's it. And so, every single time they've come out with a drink that is a competitor, we've noticed it's hard for them. And we end up getting more space.

More shelf. Yeah.

Just going back to your VC question, I mean, we would talk to these VCs. First of all, a lot of these VCs, I mean, the core consumer for Diet Coke is female, and it's no surprise there's a lot of VCs that are not female, and especially 12, 13 years ago when I was pitching. So I'd be in there talking about my Diet Coke addiction, and they would look at me like, like, well, that wasn't really addiction, was it? And I was like, oh no, it was. It was real. Like, sure, it was right up there with like cigarette addiction, or like it was on like the same timeline. And they're like, really? Like, people actually have that? And again, it was just not what they knew. And so they would still keep ordering cases and cases of Hint to consume. In fact, some VCs have told me that they won't invest in tech companies unless they have Hint in the office because they really, really believe that they understand what their employees need to stay healthy. I mean, crazy stories like that along the way.

That's nuts.

But yeah, I mean, they just wouldn't end up investing. And so, we ended up going a different route and just raising from a lot of individuals. So, we have over 100 investors in the company and people who are really passionate.

Yeah. So, John Legend is on your cap table. I think my brother actually, in all transparency, is also on your cap table. I want to fast forward a little bit to today. You know, I've heard you talk a lot about 40% of your business is online now versus brick and mortar, which is crazy because I think it's like— I want to talk to you a little bit about shipping costs later on in this conversation and how you sort of manage those because, you know, shipping water is not an easy thing to do. But let's talk a little like, you know, 40% of it is online, 60% is in brick and mortar stores. Can you talk a little bit about the brick and mortar stores that you're in right now?

Yeah, I, we've started in, in sort of the specialty store market, which is like the, you know, Whole Foods and Sprouts and some of the local ones, and then went into conventional grocery. I think where we really had the toughest challenge in conventional grocery was with, you know, we just didn't have the bandwidth and the people that the big soda companies have. And so we would just get knocked off the shelf and We wouldn't have the slotting fees and lots of stuff was going on. I think that's where we really started to realize not only from a revenue standpoint, but also from a, you know, it just wasn't as challenging to compete inside of these tech firms. And then lots of other, it wasn't just Silicon Valley, but lots of offices in New York were cropping up that were extensions of Silicon Valley or LA or whatever. And so we started getting into more and more and then companies that wanted to be like Facebook and Google and recruit people, like they would end up putting us in. So, you know, we became pretty giant in those companies. And then we finally got into Target a few years ago in a pretty decent-sized way. We started out with a few feet of space. I mean, again, like I'm sure you and I could swap stories on this. It's just, we had gotten to a point where we sort of understood Like if we didn't have enough shelf space, then we just wouldn't be seen.

Nobody sees your product.

Yeah. And so we would like look little. I remember reading a case study on Toms, you know, the Toms. I mean, they're toothpaste and lots of Toms of Maine and lots of things. This was before they were acquired, but I remember hearing sort of their sales plans and they talked about like they got to a point where they would tell buyers like, like, if you don't give us this kind of space, their sales team would just say, you're just not ready for us. Like, we'll come back. Like, it's all good. And so we really started saying that to these large retailers because we knew that we would fail unless we actually had a certain presence. And so we ended up going into Target and then really got smarter about the data too and started realizing— I'll give you a crazy statistic. I mean, in Target, We do more dollars per square foot than some of the large brands like a Vitaminwater, for example.

Yeah.

And so that is like when you can actually take that kind of data and you can't do that when you're first starting a company, right? And you're not even going to register on this data. But when you start being able to articulate that to these buyers, I mean, you're just getting smarter about the data and sort of what you're doing. I think just sort of how that relates for us into the e-commerce side of the business too. I mean, that is sort of its own story. I mean, we started, we had gotten into Starbucks, another big food service company. We were in 11,000 Starbucks and, you know, which was a great day when we rolled out in Starbucks.

Yeah.

We were only one flavor. It was the blackberry. And, but we were rolling along and doing 2 to 3 times what their goals were for us. And one day, We got a call from a buyer at Starbucks that said, hey, we're, you know, we're going to bounce you out of here because Howard Schultz said that, you know, we're only going to have beverage brands in here that are distributed by Pepsi because Pepsi is actually doing the distribution for us for our ready-to-drink Starbucks drink. And my big lesson learned from that day was don't have too many eggs in one basket.

Sure. Yeah.

That was a bad day. And, you know, I don't cry very often, but I went home and I cried and I thought, how am I going to tell my investors and board about this? And then I remember a couple of weeks later, you know, I resurfaced and I'm like, look, I'm not going to lie. It was really bad that we got bounced out of there. But at the end of the day, we just need to find these consumers because we were doing well and Starbucks actually paid us for product. And they exposed us to places like Chicago and lots of places, Texas, and places where we didn't even have distribution. And so a couple of weeks after that happened, we got another email from, you know, another big brand. They weren't even that big back. Well, they were pretty big, but they didn't have a grocery business. I guess it was 6, 7 years ago at Amazon and they were starting a grocery business. And I I took the email and I said, tell me about this grocery business. And I had dealt with Jeff Bezos in the early days when he was just a book retailer when I was running AOL's business.

Yeah.

And I really believed that— I didn't know if I really believed— I wasn't sure whether or not this was a serious business because I thought Amazon gets into little businesses and sometimes you hear about them and sometimes you don't. And I wasn't sure whether or not they could be serious in the grocery business because of weight and And all kinds of issues. I thought, I don't know, maybe they have it figured out because they're doing books and those are pretty heavy. But I had a lot of Blackberry Hint in the warehouse that was supposed to be going to Starbucks. And so, I said—

And you sold it to Amazon instead.

I sold it to Amazon. And so, that was the only flavor that we had on Amazon. And then, very quickly, they told us like, you guys are one of the number one products in grocery. In addition to that, what we're seeing is that, you know, this goes back to the data side of the story. They said, we're seeing that your consumer is also buying things like type 2 diabetes monitors and better-for-you products. And I thought, wow, that's really interesting. And I asked Amazon for the emails of these consumers because I was like, I'd really like to reach out to them. And they said, no way, you're not getting me. Yeah, you're not getting this.

I'd love to ask you a little bit more about the data side of things, which you were talking about. Like, you know, at Native, we were entirely direct-to-consumer through our own website. So we understood things like AOV really well, repeat purchase rate, when customers would purchase. And if they didn't in, you know, X number of days, what we should be doing in order to retain them. And once we launched into Target and Walmart and CVS and Walgreens, like that data became a lot more gray to us. It was hard to understand repeat purchase rate because did you buy on our site and then you bought in Target? Did you buy in Target and then you bought on our website? We don't know if it's your first purchase or your second. Did you guys experience the same type of like fuzziness with your data once you launched? Like, you know, going from selling everything yourself in 2005 to now having a robust online store, a robust Amazon store, a big Target business, Do you guys experience that data fuzziness or like, is there something that you're doing to sort of help you through that morass?

You know, we obviously have sales numbers that go in by store and I say obvious, like, you know, again, you get to a certain level in these stores and they'll start to give you some of this data. So somebody like a Target, we definitely have that. And then we can match that with how we're doing on our own website, and which is what we did after Amazon. It's still very difficult for us to see that Lisa Smith is purchasing on drinkhint.com and then they're also going and purchasing at Target. Yeah.

The holy grail. That's the holy grail of attribution.

Yeah. And I think it's really tough. I mean, the only way, you know, I think electronics have been able to do it because they get you to like get a warranty plan or—

yeah, yeah, yeah.

Right. But for consumer products, Yeah. Like ours. But I think what online has allowed us to do is when we see, for example, we can go back into, you know, I'll pick on Target or Costco. We are going in nationwide into Costco in the next few weeks. So, you know, it's interesting because we're able to say to them like, here's our top 10 markets or cities inside of, you know, ourdrinkhint.com. And we can also match that to a target. We don't necessarily have to say, oh, this is Target's data, but we can say this is a major retailer and we can show this. And again, you get in front of a buyer that really understands the data and yeah, it's obvious that they're missing, right?

Sure.

And then also, I think from a standpoint of the one other thing that I'll just say really quickly that it allows us to do is that, you know, I always say to entrepreneurs that But if, for example, a major retailer that's in Florida was to just come and turn you off as a consumer, you know, just decide we're going to kick you out of here and you're no longer going to be in here. You know, what I've realized is that without having our own online site, we're actually able to go in and market. So you're, you're really hedging your bets.

Sure.

And it allows you to be able to grow the business. I mean, what I've realized now is that But retailers need to do what they need to do. And I need to do what I need to do for Hint as well. And so, the more you can have options out there, and certainly during, you know, this whole corona incident, I mean, it's— we're considered essential. So, we're still in stores and going in. I'm doing my part to help the sales team once a day to go in and check on supply and et cetera.

Yeah.

But I think being able to, you know, have a direct-to-consumer business that is higher now than 40% of our overall business has allowed us to really, like, grow our business when these restocking issues are someone else's problem. And unfortunately, products get hit by it.

Yeah. And then do you, like, you know, you were talking about getting into Costco in the next few weeks, which is amazing. Congratulations first when it comes to that. Are there pricing issues among the retailers that you have and Amazon? Like for Native, it was hard to hold the price everywhere consistently. Like, you know, today Walmart will sell at $11.97 and Target will sell at $11.99, but that's basically the same price. You know, one of our concerns was that we would all of a sudden have somebody drop the price to $9 or $8 and then have to deal with something like that. Do you guys have any of those issues or are you guys sort of like good when it comes to pricing on the product?

So we never try to, you know, we give a suggested retail price and people have different margins that they're working on. But yeah, look, Walmart and Target have amazing algorithms that will change on a dime depending. And so we have consumers who write to us and ask us, should we buy on your site or should we go to Target and buy the product? They're like, we just want to know where's the best—

What's best for the small business. For you.

So we always say to people like, wherever you want, you're the consumer, you're in charge. Any place that we deal with, is like, we're excited that they're growing the business, but there's always going to be people that are going to come to Native's site or Hint's site and buy. And I think there's this perception that it's like fresher if you, you know, get the product on our site. And that's not true. I mean, as soon as we make our product and it's a longer conversation, but that's sort of another thing. And we pretty much are making our product on demand. We spend very little money in warehousing because we're making it and it is going out the door. And so, and it's constantly running, but we've got sort of the supply chain thing where I think pretty advanced about that. So even through this whole corona situation, you know, I saw early on, probably a week before people were even talking about sort of these hoarding issues and out-of-stock issues, I said to our sales team, like, this whole auto-replenishment thing is not working at many, many stores that I've been into. And, you know, the response I got back from our team was like, well, they keep telling us that they're on auto-replenishment. We also have a product where depending on how much space we have in stores, if people come in and buy 10 bottles of Hint, which is common, they'll wipe out the shelf.

The shelf. Yeah.

And it's gone. And so it's supposed to match with register data to say like, oh, you've got to automatically reorder it. But they Stores had never seen anything like this, not just for Hint, but for like other products. And so, they just couldn't keep up with it. So, we went around to all of the buyers of all of our companies that we work with. And we said, look, there's definitely an auto-replenishment product somewhere in here, but we're not going to try and figure this out. And we don't expect you to go figure this out. If you want to like order from us directly, we've got trucks that will truck our product right into you. And I'd say over 50% of the people that we deal with just said, yeah, let's do that. Even if it's just for a couple of truckloads to catch us up, that's fine. But again, like the number of shelves that I look at now and that are just empty, I think we just watch it really carefully and people are like, how did you know that? And I said, I just, I don't know. I've watched it. And that's what great founders and CEOs need to do. You need to really understand, like, why is this happening? And I'm sure once everybody gets back to work and goes back into an office, and, you know, I'm sure the number one thing that a lot of these grocery retailers are going to do is figure out this auto-replenishment thing, because it's a mess. You know, it's broken.

Absolutely.

And I don't know who owns those companies and those softwares, but they're not perfect.

Sure. Would love to shift the conversation really quickly to marketing. I have a couple questions here. One, have you guys had a booth at Expo West in the past? And I'm pretty certain you have, or you've been to Expo West.

Oh yeah.

Do you find those types of events helpful to your business to like network with buyers? Like, I'm sure there are a lot of people who are listening who are going to be starting food service businesses or who are in the food or beverage industry who may not want to spend the money it takes to get into Expo West. Did you find that to be helpful when you were growing Hint?

Yeah, for sure. I mean, our first show was at Fancy Food in New York.

Yeah.

And a few weeks after we actually put the first bottle on the shelf at Whole Foods, I mean, I literally got the worst space possible in New York and I had no idea, you know, I had been to some tech booths, but I just thought, I mean, it happened so last minute. I literally like brought my own table in and set it up and it was just, I mean, it was It was super bare bones and we had every buyer from Whole Foods lining up. So, I always tell entrepreneurs too, it's like sometimes when you actually look pretty scrappy but you have a great product, they're going to come buy you and they'll recognize that you're authentic and real. And I laugh now because I had no idea what UNFI was and some of these distributors.

Yeah.

I had sort of seen Sysco trucks around, but I had never really figured that whole world out. So that was our first. And then I would say a couple years later, uh, Expo West, which is in Anaheim every year. I mean, that's a great show. And I think the one on the East Coast has been an okay show as well. But the real big one, yeah, we've been doing it for 14 years. And unlike some brands, I mean, some brands like actually write orders there at the shows. That's never really been— Our purpose and our goal. I mean, we use these trade shows not only to get with buyers, but also to really understand what else is going on in the marketplace from a marketing standpoint and just talk to other people there. And, and now it's gotten to a point where, you know, it's just a time— like, we have over 200 people in the company now. And so for us, we actually try and staff our booth with people that don't get to work the trade show booths. Like, we don't hire the booth babes or whatever you wanna call it to come in. Sure.

Sure. You know, yeah, you have to. Yeah.

Right. We get our team in there, you know, who just like love being there and they're passionate about the product.

Yeah. Yeah. You know, I've always heard things like when you're sampling at Costco, for instance, you can either get the Costco employees to hand out samples, in which case you'll barely move any product. But if you put your own team member there who's really excited about a product like Hint Water, they will go through samples really quickly and go through sales much faster. Because they have somebody who's authentic and believes in the brand and passionate, as opposed to someone who's like, you know, one of those people who is just handing out a tiny sample and it's like, go on your way. They actually know the brand. And when a consumer asks about it, they can respond to a ton of questions. I've also noticed that you, like this year, you guys had a Super Bowl commercial.

Yeah, it was, it was crazy.

Can you talk a little bit about that? Like, you know, yeah, that is insane. I would love to like understand how that sort of came about. I certainly seen the commercial where, you know, somebody is talking about how they really enjoy BlackBerry and they've got blackberry on their face and somebody else licks it off their face and they're like, the Hint water flavor, the blackberry flavored Hint water tastes more like blackberries than real blackberry. Can you tell me about how that came about? Can you tell me a little bit about costs and stuff as well? I think everybody's always curious about Super Bowl commercials and like whether they're extravagant or not. Would love to hear the background about that.

Yeah. So, I mean, it was a pretty crazy story. We had started to do some TV and just running remnants you know, ads. So we shot 3 commercials actually in the fall, and 2 of them we had running. And we were running just for about 8 weeks on just various, like, some news channels. So some people had seen it, and then some sort of overnight stuff. We were just sort of testing it. And then we were also not only testing the brand commercial, but we were also— there's a tweaked version that direct-to-consumer. So you could actually, you know, you get an offer and doing all of that. So we had this one ad that was sitting there and I don't know, it's a crazy story one Sunday. So I was at CNN for a couple of years, way, way back. And I had just run into a woman that worked with me at CNN who's now, you know, pretty high level at NBC and just happened to see her at a conference. And her name's Laura, and I was chatting with her. And I don't know, one Sunday I just was like, I should just text her and just ask her. You know, I knew it was on Fox, and I should just ask her who's like— if she knows anybody at Fox and if there's any inventory. And I had sort of heard that they were sold out, but I never really trust what I hear.

Yeah.

And so, she's like, oh, yeah, you should just text this guy. He, like, runs Fox Sports, and he's a good friend of mine. And just tell him that Laura sent you. you. And he laughed. He said, oh no, we're totally sold out. But he said, you know, it's funny that you mentioned this, that I just spoke to somebody who was doing regional stuff. And I was like, what do you mean? I mean, obviously I know what a region is. But he said, so in the major areas like San Francisco and New York and Chicago, they have to leave a little bit of inventory in those markets. And I said, so You're saying that there's like multiple people. And this is literally 2 and a half weeks before Super Bowl was running. Wow. And so he said, do you have an ad? And I, I sort of lied. I wasn't sure if that was going to be the ad, but I was like, oh yeah, we have an ad.

You bluffed.

He said, yeah, you should talk to this guy. You can talk to this one guy and he can get them for all the markets. I still didn't really think that it was going to happen, but I was just, I don't know, I was bored and amused by it. And I had never really, I had sort of joked like, we've got to, when we were making these commercials, I said, they have to be like something we could run on the Super Bowl one day. But it was kind of something that I just was energizing the team about more than actually thinking seriously about it. And so, the guy reached out to me and I was like, okay, so the Super Bowl is in less than 2 weeks and you have inventory in all of these markets?

Yeah.

Yeah, in every market I have inventory left. I was like, so what do we have to do? And he said, well, your ad has to be like traffic through not only the NFL and not only Fox, but also the NFL. And so, you know, a couple of days here, a couple of days there. And so the response back from my team was like, this thing, there's no way. I mean, you're just dreaming. This is going to be like $5 million. Like, I'm like, we already have the ad. Like, it'll be fine, you know?

Yeah.

The founder just saying like, that's gonna be great, everything's gonna be fine.

Yeah, sure.

But it was still, I was getting shot down by everybody in the company. They were like, there's just no way that this is happening. And so then 10 days before, I guess 11 days before the Super Bowl, I resurfaced it and I said, we should really go back and do this. And I said to my CMO, I was like, go back and just say to the guy, like, give him a lowball offer. And he's like, they're sold out for national. There's no way that they're going to go for it. And I was like, no, like, he's running out of time. Right. So one week before, Friday before, and I said, this whole thing has to be trafficked by the NFL or else they're going to be giving these spots away to their own advertisers. By Tuesday morning, it has to. So at 5 o'clock, Friday, turn in our bid on this and let's see what happens. I mean, I have to tell you, I mean, we ended up getting— the overall plan was less than 50%. I mean, we got 80% of the country for less than $1 million.

80% of the country in terms of this saw the ad for less than $1 million on a Super Bowl commercial. It was a 30-second spot or a 15-second spot?

It was a 30. What was crazy is that what they said to us is it will run sometime during the Super Bowl. It can be anywhere. I can't remember exactly. I think it was 30 to 45 minutes before the halftime show or after. We literally were right before the halftime show. So everybody who was coming in to see the halftime show was showing up now and getting ready and saw the spot. Saw the spot. It did amazing. And it, and we were so excited about it, but not only from a consumer perspective, and definitely it was When you've got people licking each other's faces, which probably we wouldn't run that ad in today's climate by any stretch, but it got people to remember it and they were talking about it. And it was, you know, like some, a very small percentage of the population thought it was offensive that 2 guys were licking each other's faces. Like Gen Xs and Gen Zs thought it was hilarious and they remembered it.

A small percentage of the population will— everything is offensive. Like, no matter what you run, they'll think it's offensive. If you want to walk on eggshells and please everybody, you're not going to do anything.

Yeah.

And so did you have a bunch of friends texting you being like, hey, I just saw your, like, company on the Super Bowl ad?

I have never said this about my cell phone. Like, my cell phone, I think I had over 400 texts.

Wow.

Like, from all over the country, just like, oh my God, oh my God. And I think that that was the thing too, that But what I was going to say is it wasn't just consumers, but it was also people in the industry noticing. It was investors. It was lots of people. Oh, and most important was our employees, like the excitement that they were getting all these texts saying, oh my gosh, there's this big soda, you know, Pepsi's doing it and Coca-Cola is doing it and everybody's doing it. But then all of a sudden—

Sure.

The little underdog shows up. You know, with the ad.

That's an amazing story.

People were so excited. But again, I think it's just, you know, never lose your scrappiness no matter how big you get. And, you know, I think my curiosity and also just my previous life of sort of understanding like what is trafficking an ad and it just like stuff like that, it just takes time. And we knew it was going to clear, but we just like we were playing against the clock and the guy that we were dealing with, like, knew it. And I just said, like, is your manager just freaking out right now that you have these open at this open house? And he's like, kind of like, can we get this done? And I was like, we'll get it done.

You had to take advantage of the leverage that you had. That's fantastic.

So it was fun.

So we've talked about like some of your incredible marketing successes. It sounds like the Super Bowl ad was fantastic. You've had a bunch of successes at like the trade shows that you've gone to in terms of getting in front of buyers. Can you talk about any like tough marketing failures that you've had, you know, at Native We had a bunch of marketing failures where we tried to buy really large podcasts or we tried to buy our way into places and it just failed spectacularly where we'd spend tens of thousands of dollars and it just didn't work out. We also had that when we tried, like, you know, I remember the first like couple months that I launched the business, we lost thousands of dollars trying to buy Google Ads because we thought that that's what you were supposed to do. You know, I'm sure there's going to be a lot of people who are listening to this podcast who aren't nearly at the level of scale that you're at. But want to realize that you're also a human being and want to realize that, you know, there's failures along the way. Were there any like failures from a marketing perspective that you had in the last 15 years that you can talk about?

Yeah. I mean, I would say a couple of things to that. First, I was in advertising before, so I sort of always had this theory that unless we could really get the frequency, that it wasn't worth it. So we never really like went out and bought one billboard because I just thought like one billboard It's not going to do anything. Right. It's just wasting money if we're just doing one thing. And so I think that we've always believed, like, buy a chunk in an area and do it right, or just don't do it at all. And that's sort of been our theory too, that, you know, just not only from marketing brand standpoint, but also from a distribution standpoint, we've also just believed, like, Like, if we can't actually do well in a store or in a market, like, we shouldn't be there. And I think it's the same sort of philosophy for, like, don't be afraid to take your time, which is sort of not what everybody would say. I mean, we've had so many brands that have said, no, you got to get across the US, you got to get into Kroger, you got to get into Publix, like Costco, fast, fast, fast. And so many of those companies aren't here anymore because they just spent too fast. Right. So if you don't have the money to go into those markets and really do it right, I mean, my best advice would be just do the markets that you can be really good at. Well, period.

Yeah.

Right. And like slow that growth. But I would say even I'm just thinking about Facebook. I mean, Facebook is sort of the conversation for all D2C. brands, right? And figuring that out, I think it's really, you know, again, don't put all your eggs in one basket, right?

Yeah.

And I think you have to figure out constantly how do you continue to grow and go back to your list and get the existing buyers to keep buying until you find the right time to ultimately get Facebook to be at a point where your cost of customer acquisition isn't crazy. So I think that that's the key thing. A lot of people say to us, like, why are you on Amazon? But you're also, you know, on your direct-to-consumer site. There's a value to us of being able to have a name that we can go back and market to and have a subscription service and all of those things. So it's not one—

Yeah, launch surveys to understand what AOV looks like and Purchase rate looks like. That's crazy that people would ask you that. There's clearly value in you sort of having your own direct channel with consumers.

Yeah, totally. I think about and I talk about in my book the whole Starbucks situation. I mean, it was clearly distribution. I mean, they were selling millions of dollars to multi millions of dollars of product every year. But for us, it really was a marketing play where they were getting us into all kinds of. You know, there's a Starbucks on every corner, right? And they're every couple of blocks. And so, we were visible in so many places. And then, when they turned us off, I really viewed that as a failure for a lot of different reasons, including I blamed myself for not like having too much into that relationship. I mean, they were clearly buying. We weren't writing them large, you know, slotting fee checks or anything like that.

Yeah.

But I still had a lot of inventory and there was a lot of risk with that. You know, what I've learned to do though too is not be so hard on yourself and create all this anxiety around the fact that, you know, in some ways you failed, in some ways you tried. I think instead figure out like what was the good. I'm a huge believer that in fact, when we went into Amazon, the guy who was the buyer reached out and said, oh, I get your product all the time at Starbucks. And so if we were not in Starbucks, you wouldn't be in Amazon. We wouldn't be in Amazon. We wouldn't have started our own direct business.

What a great story. Yeah.

Yeah. Right. So sometimes it just takes a minute to actually, I'm sure the Google story for you and sort of feeling like, oh, like I made a mistake there or whatever. If you sit back for a minute and you actually just say, like, what did I learn? You know, I got that much smarter about how I do my buys for this next one where I save money. And again, like sometimes you have to connect a bunch of different dots to actually, and sometimes it takes time to figure that stuff out. But I just don't really view life in general as failing as much as it's teaching me that I can do better on the next run. And maybe that also is. telling an audience that here's what I learned along the way. I mean, and these are the lessons. Maybe it's, you know, I'm giving back to other people to learn from my mistake, my failure, whatever.

Yeah.

I'm a huge believer that that's such an important piece of this as well. And, you know, you make the best decision based on the best information that you have. And I think that that is is so key. And sometimes that's challenging too, because I'm sure you have things in your head that you maybe did wrong or were not exactly how you wanted them to turn out. And now then people come to you and start talking to you about, you know, Google AdWords or whatever, and you're like, ah, and you're gun-shy. And so, you know exactly what you need to get over or what the price is. And so, it's a lesson.

Yeah. Yeah. Initially, when we were talking about marketing, you were talking about billboards and how you didn't want to buy one billboard. And there was like a frequency that you thought was really important in order to get consumers to sort of resonate with the brand or think about it. When you're setting your marketing budget or campaigns, do you think, okay, we're going to allocate this much to digital, this much to out-of-home, this much to B2B, or are you sort of like, look, this is a living organism and we'll call the play when we sort of walk up to the line?

So we currently divide our marketing out into branded marketing as well as direct-to-consumer. And so some companies actually have, especially when you're small, You have one person who's maybe kind of managing or running the ad buys or whatever. There are actually 2 very separate departments in terms of budgets. But what we found is the more money we put into direct-to-consumer, as an example, in terms of ads, like there's a lot of people who will go on Facebook or other places where we may show up and they're going to walk into a Target store.

Yeah.

They're going to go on Instacart or whatever and order. And so that for us, we've just found there's some carryover into the branded or sort of the offline stuff that they're going to do. They may not click the button and actually order online, or if they see TV, they may again go into their local grocery store or whatever they might end up doing that. So I think it's just a matter of There's definitely spillover into that. So it's from the standpoint of budgets, our direct-to-consumer, just because of its measurability and because of the spillover, we put more money into that. But on the flip side of that too, we viewed the Super Bowl ad as there was no— at the end it said drinkhint.com, but there was no 800 number. Nobody was going on in the middle of Super Bowl to go buy. Sure. Yeah. But the next time that they saw a direct-to-consumer ad, did they click it because they remembered the Super Bowl ad?

Yeah.

That's really how we view it.

And if the direct-to-consumer side is sort of larger than the branded side, is Facebook like a native— Facebook was king there, and I think you've told other people as well Facebook is king there for Hint as well. Is that right? Is that where you sort of say, okay, this is our— Yeah. Okay.

I would say So, we buy from, you know, third-party like companies where we're doing it.

Yeah.

We also go out to other lists as well and do different swaps with other companies as well to try and figure out if we can email people and do some sort of partnership too. So, it's funny too, just from a branded standpoint. And again, sort of, I can't say that I was strategically like brilliant or knew exactly what was going to happen. But a few years ago, Verizon reached out to me and they're like, hey, you know, we've got this ad. We're asking entrepreneurs to be a part of this ad. Would you be interested? And I've been a Verizon customer pretty much since day one. I wouldn't get good cell connection through AT&T. Sorry, AT&T, but I'm sure you've gotten a lot better. I've just always been Verizon. And that was from my AOL days and I was traveling around a lot. I still have my 917 number even though I'm living in the Bay Area. And so they asked me to be a part of this and they didn't really give me a sort of clear definition of what it would be. And they told me to show up in this like studio and I really thought it was going to be print. And then after they did the print, they were like, by the way, we think we're going to run this. And they actually didn't run the ad until recently. And so it's running on CNN like a lot right now. By some miracle, they were just talking to me just like you and I were talking. And by some miracle, I had a quote that they picked up on, which is part of the Verizon ad. And it said, we don't have to be together to work together. And so that has become a Verizon-like quote. And it says Kara Golden, founder and CEO of Hint. But the number every time that Verizon ad runs, People go onto our site.

Yeah.

They go on our site. It doesn't say drinkhint.com. It's very subtle. And then the exact same thing happened with a company called NetSuite. I was speaking at their conference and I tell the story that I truly didn't know how to call Oracle. We were like moving out of QuickBooks and I didn't know how to call Oracle. I just thought like, where would I start? And I'd heard about NetSuite and You know, I just thought they're like, maybe eventually we'll get to Oracle, but for now, like, let's start with these guys at NetSuite. And so we've grown with them. We told them all their problems that they had and we continue to grow. And the CMO said to me, you know, I loved watching you on stage, like you're just telling the story and would you do this ad for us? And I was like, sure. So that ad has now been running for a year. Every single time that ad runs, it's like You know, Hint benefits from that.

People go to HintWater.com. Yeah, sure. Yeah.

And so, we have not spent a dime on that advertising. And I would say conservatively between Verizon and NetSuite, which is now an Oracle company, easily $50 million in ads that they've run.

That's crazy.

And our brand.

Yeah. I've certainly seen a lot more like businesses doing that. Like I've seen your ad first on like NetSuite. It's fantastic. I've seen ShipStation doing ads with a beard brand. I've seen like Amazon doing ads with companies like Nut Pods. It's really amazing to see these large businesses sort of lean into that. I feel like it all started with American Express a long time ago. So leaning in and talking.

And I've done some for American Express too. I mean, I think like that's the other thing that I've learned. I've done for some of their direct mail pieces. I haven't done a television commercial for them, but I think like that's the other thing that I say to entrepreneurs. It's like, Like, none of those were intentional partnerships, but they're authentic and they're real. And I think that, you know, when you're out, that's why I always tell entrepreneurs, like, the sooner you can get out and actually tell your story too. And that doesn't mean like necessarily talking to press outlets about it. I mean, maybe it does, but also actually speaking and whether that's whatever, The Hustle or Startup Grind or whatever you go, you go.

Sure.

and speak at some of these conferences and you start telling your story about like, we initially funded the company with our American Express card and thank God we had like good credit.

Yeah.

We needed it and to buy the bottles and the caps and it's all, and then American Express reached out, took them 6 months. So they reached out and they're like, we wanna talk to you about the story and thank you for being a customer. And then suddenly, you know, It was clear that they wanted to get you involved. And so those things are so valuable. Like if you can figure out 2 or 3 partnerships that you have where you just really believe, I mean, again, like I had another phone company reach out to me interestingly after the Verizon one. And I was like, like I wouldn't do another food company.

Sure.

I just thought like, these are companies that I truly believe in. And I think like if you borrow equity from those brands because they're clearly borrowing equity from our brand, right? We're a startup.

Yeah, absolutely.

We're a female-founded startup. Like, there's lots of reasons why.

Better-for-you products. Yeah. Yeah. Very 21st century. Completely agree that they're doing that.

But less obvious marketing. And I'm just saying, like, that is one where I think nobody's really thought we value those relationships. Like, that is so big and it's Doesn't cost you any money. Costs the other company money. Yeah. That's amazing.

I'd love to talk a little bit about the other categories that you've launched into. Early on, we talked about Hint Water, though that was— I'm not sure if you call it flat water or like non-carbonated water.

Still.

Non-carbonated. Still water. Okay.

That's right. Yeah.

So, still water, carbonated, Hint Fizz. We talked about caffeinated. Since then, you've also launched a couple other categories. I know you've launched Hint Sunscreen, which smells absolutely amazing. It's a spray sunscreen. I think you've launched Hint deodorant as well. Are there other categories that are sort of coming up? And how did you think about those categories?

You know, for us, I think it was really, again, looking at how can we help the consumer get healthy, right? And we felt like there were a lot of consumers who were coming to us who were drinking our product, and they would reach out and say, hey, you know, what kind of makeup should I wear? Or what— we were like, wait, what? We're water, you know, that's what we're doing. And so we felt like we could start to touch on these categories that were, in our opinion, not doing what we needed or what our consumer needed. And so I'm allergic to coconut. A lot of the, you know, natural deodorants that are out there have coconut in them.

Sure.

And so for me, like, I was totally on board with the concept of a natural deodorant, but I wanted something that didn't Free of coconut oil. Right. And so that was something that, you know, I just started to play around with it at home. And then I just thought, huh, this is really interesting. And then, you know, for us too, it's primarily sold online. I mean, we're on Amazon as well as andreandkint.com, but for us, it's really helped us to kind of understand this consumer a little bit more and what more they would be interested in as well. I mean, And I think the same is true with the sunscreen. I mean, sunscreen was way harder than I actually thought of when we embarked on it. I mean, you need FDA approval. You're like—

Yeah.

I mean, we're using the same essences that we're using in the water for the sunscreen, which they actually needed to do. The FDA needed to do shelf life testing before we actually got the approval because most Most companies use fragrances. They don't actually, which is a whole other topic that if you're in— Sure.

And you're using natural essences.

Well, yeah. I mean, it, it was crazy. I mean, that we were like, what I saw in the beauty and personal care industry was so much further behind than what the food industry, what people were talking about. But we were one of the first companies, non-mineral-based sunscreen that was really calling out oxybenzone. And so I really believed I had some precancer stuff on my nose that wouldn't go away. And I started really looking deeper at the sunscreen industry. And I had grown up in Arizona, had red hair, way too much sun early on. And I had read about the stuff oxybenzone, and I was like, this stuff is really bad. I mean, there's The Center for Disease Control back in the late '70s had actually told the FDA that oxybenzone may actually enhance precancer cell growth, and they had recommended to the FDA not to approve it. And somehow it got approved. There's many places in the world where oxybenzone is not approved, but in the US it is approved. And so we started calling it out. And I think I think for me, this goes back to sort of like the big company strategy. The number of people after we launched it from large companies who reached out to me and said, hey, you know, we've always known that this oxybenzone stuff is not so great, but it's hard because we have multiple brands that are housed in our house. And for us to actually call out, that means we have to reformulate everything that we do.

Sure.

Like, that's really tough. I was like, okay, well, we'll just keep doing that. We'll keep calling it out. And so, eventually, you'll have time to go and reformulate or not. And we'll just have more runway to just go and build this company.

Sure.

That's the thing that I also realized that I had done with Hint Water, which was we really focused on ingredients. And the ingredient was sweetener, right, back then. And then you start to look at the rest of the product and, you know, all the great stuff around it. But I, I think it's no different for products too. And more and more, I think people are looking at their products. It's not just about being organic or not organic. It's really about— people are getting smart about ingredients.

Definitely.

And I think I was speaking to, uh, on an interview earlier this morning, and I was talking about the world today and what is the biggest thing that I've noticed. And I think that But for the last few weeks since we've been in shelter-in-place, I mean, the number of conversations that I've had with people, not only friends of mine but also business colleagues around health, like people are realizing that health is like such a key thing and—

Everything.

Right? It's everything.

Yeah.

And I think that people are trying to, you know, make sure that they're getting their exercise every day, but then also eating right and eating well. And I have not heard this conversation like everywhere where I go, like I'm hearing it now. I mean, people are just so focused on it, which is great.

I think that's absolutely true. And I think you're right. And I think like we'll have that conversation a lot more when the COVID crisis sort of dies down, because right now I think it's a struggle in order to make sure your fridge is stocked and in a way that, you know, where you can get food in an easy, healthy, safe way. And I think it'll, once it becomes easy again, it'll be a lot more important to people. Other beverage companies that have sort of crossed this Rubicon and gotten into personal care. I'm trying to think of other beverage companies that have launched personal care products. Do you know of any?

You know, I feel like Vitaminwater way back when did, I mean, chapsticks. We had always had like a great lip balm or chapstick or whatever you wanna call it. I don't really know, I know of any others that really crossed over. I mean, I think like the challenge of course is that the soda companies. Like, I mean, we are today the largest independent non-alcoholic beverage in the country that doesn't have a relationship with Coke, Pepsi, or Dr Pepper, Snapple.

Yeah.

So I think like a lot of companies and a lot of founders that I've talked to, I mean, they could not figure out to do what we've done nationwide without the trucks, the Coke trucks or the Pepsi trucks.

Absolutely. No question about it.

Beyond 10 million, Sunscreens are hard, beverages are harder. I mean, beverages are, when you go into major markets, in addition to the Ciscos and the UNFIs and all the rest of it, you have to have a DSD network that is going into these stores every day that makes sure that your shelves aren't wiped out. And if you don't know that now, if you're starting a beverage, like you learn it really quickly, whether or not you're focused on, you know, the 7-Elevens of the world or whatever. You cannot rely on the stores no matter what category they're in, whether it's club or whatever. You have to have teams of people that are in those stores and actually helping to build out case stacks and merchandise and make sure that your reorders, or you'll fail. And so that's why the teams are bigger. It's just what ends up happening. And so I think when I look at these other categories too, So it's probably tougher to build the sunscreen and we really haven't put a whole lot of marketing into any of those either. I mean, we're really sort of in the infancy stages of it, but I think it doesn't take any more people to do it. I mean, we've got like a small group inside internally that can focus on it because it's not as high touch as beverages need to be.

So. Do you think people haven't done it as much in the past because they're afraid of Like, Coke doesn't want to buy a deodorant business or a chapstick business? Or do you think they're afraid of dilution of brand? Or do you think they just haven't had the right story? They haven't been focused on ingredients? Or do you think it's just because, you know, people haven't thought of it or haven't had the bandwidth? Like, is there a reason that it hasn't done in the past?

You know, I think there's definitely people who have said, you know, you're starting these categories and, you know, the soda companies, like, won't like that when they're looking at you to buy. But I think there's There's 2 things that I would say. Number one, my goal is not to figure out like how to get my company perfect so that a—

Sure.

Pepsi will buy us. We have built a standalone company that is now profitable, that has grown every single year for the last 15 years.

Of course.

I mean, we have built this really solid company. And I think in addition to that, that we have a direct-to-consumer business that is— I don't think there's any other company in our space that is doing what we're doing offline as well as online. And I think soon people are— these large brands are going to figure out that Hint is a brand name that can stretch across multiple categories. I mean, I would love to do a home product, not necessarily to go, you know, super broad on it, but just to actually figure out— I'm all about consumer permission too. And yeah, when I think unless you test it, you just don't really know whether or not. And I see products every single day where I'm like, if it just had that, or like it could just be a little bit better. And for me, it's just really trying to understand when we talk about lifetime value, I mean, that just expands the lifetime value of And if you can do that in a way that doesn't jeopardize the rest of your sales, that doesn't get your team focused on stuff that they shouldn't be focused on, then it makes sense. And I don't think it happens— like, I wouldn't go launch a company today and go into multiple categories. I would definitely say—

Yeah, you've got the consumer permission to do that.

Yeah. And I don't think I would've even had the courage to go do it if I didn't keep hearing from the consumer. Help me, like help me. Just like you, I have a coconut allergy. Just like you, I had read about oxybenzone. You should go do this. You should go do this. So I not only feel like with our products we're helping consumers, but I also feel like we're helping large companies really understand that this consumer like wants health and they're no longer going to be fooled. You know, these words like diet. it, or natural, or oxybenzone, or like feeling like it's a plus. It's like these things are injuring our health. And I think that that is—

It's time we stand up to that.

We stand up to it. And I fundamentally believe it every single day that that's what we're doing. And if there's products that I think we can do better, I don't plan on having this company under my leadership be the next, you know, Honest Company, the Jessica Alba's Honest, not the Honest Tea, that I don't think we need to do thousands and thousands of SKUs. I think what we need to do is do a few SKUs well and really try and understand where the consumer wants us to go.

Yeah. Well, Kara, we're way over time. I really appreciate you spending the time. I'm going to ask you a bunch of just really quick, 4 quick questions. One, what is the best-selling flavor of Hint Water?

It's a close tie between blackberry and watermelon.

Okay. What is your favorite flavor of Hint Water?

We just launched Clementine, which is so good. Clementine.

Okay. That's your favorite right now?

Amazing. Yeah.

Okay. Before you launched Clementine, what was your favorite?

Cherry Fizz is also— I love Cherry Fizz too.

Okay. When you aren't drinking Hint Water, what do you drink?

Coffee.

Okay.

I'm a coffee snob. I love Equator Coffee, another San Francisco female-founded brand. Yeah, I would say coffee.

And finally, if somebody wants to start a beverage brand today, what do you recommend the first thing they do to get into a brick-and-mortar store is? Is it to try and to go into bodegas in New York? Is it to try and get a, you know, a meeting with your local Whole Foods buyer? Is it to try and get a booth at Expo West, what is the first step that they should think of when they're like, I've got a beverage brand or a food brand and I want— or beverage brand, let's focus on beverage brands. I have a beverage brand and I want to get this into brick-and-mortar stores. What's the first step there?

I think it's finding who your audience is because I think that if you're launching an energy drink in a whatever, 22-ounce can, that's probably not the market for Whole Foods. I mean, maybe, maybe not. It depends on the ingredients. But I think you just need to find out who your market is and then go and try and get in there. I mean, when I got into Whole Foods 15 years ago, they had a program where you could actually go into the local store and try and sell it in and they would test it out. I'm not sure since Amazon acquired them whether or not they're doing that or not. But don't focus on the Targets or the Costcos. I mean, start small and just keep doing well.

Yeah.

just keep building and building and building. I would say also social, having social channels has just become absolutely critical. And if you can do that right, I think that that's the most important thing. And whether that's figuring out who influencers are, there's highs and lows and pluses and minuses to that. But I think also just, you know, are you doing something from a messaging standpoint that you think an audience would really relate to? relate to that they would tap into. And I think don't be afraid. And I know many days you actually delivered cases and you were at the trade shows and showing up. I think it's— I still see Hamdi, you know, not necessarily delivering Chobani everywhere, but every once in a while, you know, showing up and definitely at the trade shows. And Daniel from Kind Bar Well, and, and I think it's like, never be afraid to take care of your product and make sure that it's being cared for. Yeah, that's the biggest thing.

Fantastic. Thanks so much, Kara. If people want to hear more from you, where should they follow you? Is it on Instagram? Is it on Twitter? Can you provide your handle?

Yeah, I mean, I'm on all social channels at Kara Goldin, K-A-R-A G-O-L-D-I-N. I'm probably most active on Twitter and have a pretty robust audience there. That's lots of fun. Yeah, that would probably be the biggest place. And then if you are interested in buying Hint at stores, but also on our site at drinkhint.com, as well as Amazon.

Fantastic. Thanks so much for your time, Karen. Really appreciate it. This was fantastic.

Awesome.

Hey guys, that's a wrap for this episode of the Exit Strategy Podcast. We'll be back next Thursday with another new episode. And if you like this podcast, visit thehustle.co to subscribe to The Hustle, a daily email that will give you the business Business news you need to start your day.