Justin reveals how to validate your product idea quickly and inexpensively, how to make sure you’re partnering with the right distributor to get your product in front of your “Target Customer” and also how to build an authentic brand.
Ken: Welcome to the Physical Product Movement, a podcast by Fiddle, we share stories of the world’s most ambitious and exciting physical product brands to help you capitalize on the monumental change in how, why and where consumers buy. I’m your host, Ken Otsuka.
in this episode, I talk with Justin CEO and Co-Founder of Beatbox beverages. We talked about how to validate your product idea quickly and inexpensively, how to make sure you partner with the right distributor to get your product in front of your target customer and how to build a brand that is authentic and aligned with your own passion.
Justin was a great guest with some amazing nuggets of wisdom about how to position your brand and grow it successfully. I think you’ll learn lots from this interview. All right. Hey Justin, thanks for joining me today. Uh, I’m excited to hear a little bit more about you and your business. How’s it go.
Justin: It’s going great. It’s Friday can never complain about that beautiful day here in Texas and looking forward to the weekend. It’s great to be here. Thanks for having me.
Ken: Hey, um, why don’t we start off with, uh, with a quote. Uh, do you have a quote that’s been impactful to you that you’d like to share with the audience?
Justin: Yeah. You know, I’m going to sneak in two quotes, but they’re definitely related. Um, and it’s something we’ve used for, uh, you know, since, since we went on shark tank in 2014 and with our product beatbox fabric, Mark Cuban, who ended up investing in us, set on the show, he said, you guys don’t sell wine, you sell fun.
And, um, you know, another quote that he gave to us when we were just meeting actually at a liquor store after he had signed and signed hundreds and hundreds of boxes of our products. And we were asking him, you know, how, how do you, how do you do this? Like all these people come and see all the time. And he’s like, look, if it’s not fun, I don’t do it.
So it’s all related to fun. Um, and I think in, for me, both in business and in personal life, um, I try to always remember that like, Hey. We’re selling fun. We got to have fun while we’re doing it. Of course, it’s a business and we have to keep growing and hit numbers and all of that, but we gotta be having fun.
And then the dream in life to me is if you’re having fun, you know, both in your work life and your personal life, if you’re not in fondant, then that’s the, that’s the dream to me is finding something that you’re passionate about, that you love to do, that you’re talented at. And then you can, you know, make a nice living from.
If you can combine all of those things, you really, uh, to me, that’s what success would be. So those are the two quotes and all related around having fun, both personally and professionally.
Ken: Talk a little bit more about, uh, your experience with shark tank and Mark Cuban. Um, a little bit more, but, uh, why don’t we, uh, kick it off by just having you tell us a little bit about yourself and where you’re from, uh, your background, any hobbies?
Justin: Sure. So I, um, my name’s Justin Fenichel, I grew up actually in Southern California. Um, I lived there my whole life through, through undergrad where I went to Pomona college, um, small, small college in Southern California. I was an economics major. And then I actually went my, the first part of my career. I worked in finance, so I was a, uh, equity analyst for a wealth management firm in century city, lived in the Santa Monica area for a few years and.
You know, I was very inspired. My, my, my dad, um, started his company almost 26 years ago now out of our garage, uh, in van Nuys, California, and has grown into an amazing business. So I was always inspired by that and always wanting to get into entrepreneurship, but kind of found myself in this finance path.
But when I was 27, I just woke up one day and I was like, you know what? I really, it was a good living. It was a cool job, but I was like, you know, I don’t, I don’t really want to do this the rest of my life. And so at that point, I, um, moved to Austin, Texas to go to the business school at the university of Texas, um, to kind of get involved in entrepreneurship and while transitioning the idea of what is now, the box beverages was kind of formed, but, um, that’s my, that’s my background.
Ken: Okay. So are you guys in Austin then? Is that where you’re located?
Justin: The company in Austin? Um, pretty much took it on almost as like a class project at the business school, at the university of Texas. And for me, my, my, you know, my passion, my hobbies, I love music. I’ve loved going to music festivals. Um, I went to my first kind of major music festival in 2009.
I went to Bonnaroo. Um, and then from there went to electric, Daisy, carnival, and Coachella, and Austin city limits. And we’ve been able, you know, I talked, talked about finding something that you’re passionate about and how to make living from the beatbox was built out of music festivals and bringing people together and having a good time.
So I’ve been to dozens of music festivals. In the last few years. So I love that. Um, you know, I play guitar and love music and sports as well. So just kind of very, very fortunate to be able to have started a company that is centered around something that I’m super passionate about.
Ken: Okay. Very cool. So for people who don’t know about beatbox, what is it and what makes it unique in the market?
Justin: Sure. So the box is a 11.1%. Wine-based party punch. We call it the world’s tastiest horrible party punch. Um, it comes in boxes. So we started with a five liter, you know, if you’ve ever had like a box of Franzia, um, one of those bag and box products, it started as that a five liter, 11%, um, party punch in a bag and a box.
We also now make. Single serves their 500 ML Tetra Paks, which didn’t either have like a coconut water or a muscle milk that kind of cardboard eco-friendly portable packaging. Um, and so it’s just, you know, centered around music and bringing people together. And what, what gave us the idea for it was really three major trends back in 2011, 2012, which was one box wine was showing up everywhere.
Um, you know, it was at college parties, it was at kickball games. It was at tailgates that beach trips and river trips box wine was always there because it was affordable. It was convenient. You could serve everybody. Um, at the same time, there was this explosion in what is now called the, the FMB flavored malt beverage segment.
So you had companies like four Loko, but like Lime-A-Rita Maritas, you’re not Feis. Mike’s hard lemonade. I mean, I feel like everybody probably has some sort of story in four Loco in 2011. Um, But that was really coming on scene. And the third trend was these music festivals that I talked about and falling in love with the idea of hundreds of thousands of people coming together for two, three, four days, you know, with not a care in the world, you know, it doesn’t matter race, religion, sexual identity, none of it mattered other than just having an amazing time being together and, and not having a care in the world for, for that period of time.
And how do you create that? You know, how do you capture that in a brand? And so all of those kinds of trends. We merged into an, in flushed out into B box, which you came a wine-based, you know, box packaging, party punch, um, you know, high ALC, great flavors, classic flavors like blue raspberry, pink lemonade, fruit punch, tropical punch peach punch, um, really nostalgic flavors that you would recognize from, you know, drinking Gatorade as a kid centered around music and bringing people together and just good vibes all around.
Ken: Yeah. And, and I think that that’s one of the things that you guys have done the best. Uh it’s just your branding. Um, it’s I think it’s just amazing. I absolutely love it. Um, how did you guys come up with, with it? How do you think about it
Justin: first? You know, when we did the five liter box. We won. We wanted to develop it on as lean of a budget as possible.
I mean, there was five original co-founders and we all self-funded it for a total of $55,000, which sounds like a lot of money, but in the alcohol space to get a product to market, to actually build like how to manufacturing little, little 800 square foot facility in Austin, um, to get a product fully vetted out.
You know, the marketing research, the legal permits, the manufacturing, buying all the boxes and the bags and getting it to market for $55,000 is almost nothing in the alcohol space. So we did it pretty lean. Um, and we did that by using the lean startup model. So when we first had the idea, the first thing was like, well, before we start investing any serious money behind this, do people actually want, and how can we figure that out for as cheaply as possible?
And so for us, it was. Um, emptying out Franzia bags, we went on designcrowd.com and, um, got a bunch of different submissions for box designs. You know, you put on there, like, Hey, we’re looking, we’re trying to make like for local meats, Franzia kind of thing. Right. And, and so we got submissions and we wanted it to look like a speaker, like a boom box, just to be, to be the centerpiece of the party, you know, and, and tie it into this music theme.
] Um, and so we put stickers on cardboard boxes. We filled up these for empty Franzia bags, with vodka, crystal light and food coloring. And we took different flavors and different alcohol percentages and different box concepts and just brought them around at different parties. And that was kind of the aha moment was when we’d be at like a pool party.
And everybody at the pool would be coming around trying to buy these makeshift boxes off of us or asking where they can buy it in Austin. And every time we did that, you know, went to the kickball league things where I played, I loved playing adult kickball first for many years would bring them out there.
And again, everybody coming by, it was, it was the centerpiece. It was, it was what people wanted to see. And they were, they were used to just boring box wine. And this was something that was really cool. And so that gave us a lot of confidence that, okay, if we can make this thing, people will want it. And from there, we were just determined to figure out all the legal permits and everything we had to do.
I mean, the alcohol is very, very highly regulated, you know, 90% of the things that we wanted to do from the design and from the flavors we couldn’t do. Just because of the way the regulations are, but we figured it out. We actually had the little warehouse, we made it ourselves. We drove it around.
Self-distributing in an Austin and got enough traction to where, okay. Someone might want to invest in this because it’s not just an idea. It’s actually a physical product that is in retail that is selling. Um, and then ultimately we got a big distributor to pick it up and we had outsourced manufacturing in 2014.
And so we just kept checking those boxes and that gave us a really kind of viable business that someone might want to invest in to scale beyond what we could fund ourselves.
Ken: So when, when you guys think about your target customer, um, who is that? And it sounds like you were actually the target customer.
So it was somebody that looked, that looked a lot like you, right. Um, how do you guys think about this as a company?
Justin: Totally. And I think that’s why the brand has stayed and worked so well. I think there’s a lot of brands that come out because someone. You know, sees dollar signs and sees a hot growing category and tries to create something for that.
But isn’t, you know, it isn’t truly authentic. And for us, you know, I was 27 when we started it. Um, you know, Amy was 23. Um, and so we, we really, um, We’re the we’re the customers. We were the ones hosting. The pre-games going to the festivals, looking for, you know, millennials and gen Z consumers were switching away from beer.
They were looking for more flavors. They wanted alternatives. And these were all trends that we were a part of because we were living it to me. I like to say that our, our target customer is anyone that would love to go to a music festival. Um, it doesn’t matter the type of music it’s like, if you, if you get excited about.
A few days of just letting loose and enjoy good times with your close friends, you should be able to get excited about our brand. Um, you know, we’ve done well, you know, in the university areas, um, you know, the millennial consumer, um, those that, you know, like a sweeter drink that don’t like beer. So there’s all sorts of demographics that are getting excited about it.
But to me, it’s all tied into the messaging of the brand, which is, Hey, kick back, relax, and enjoy some music with, with your closest friends. I think that’s stayed true since we started it. And that’s why people get so excited about it.
Ken: Nice, nice. And, and obviously you guys have put a lot of focus into the brand, you know, just even, um, you know, the story around the packaging and why you made those decisions. Um, how do you think that, that these decisions have effected, um, your business and your sales?
Justin: You know, I think they’ve, I think it’s all paid big dividends now that we finally have distribution, I think. Us as the founding team, we were such brand marketers. Like we were the consumers, right? So all of our design, all of our, um, you know, efforts were put in on the consumer side.
But when you break down the alcohol industry, there really are two major customers that we have to win over before. Uh, an end consumer would even see the product and that is the distributor, the distributors and the retailers. So an alcohol it’s called the three tier system. So all the products you see on the shelves, whether it’s at a liquor store or a grocery store, they’re put on those shelves by a distributor.
And we ha so we, we had all this excitement on the consumer level, but, you know, for an example of shark tank, like we were, it aired to over 10 million people in the U S but we were only in a hundred accounts in Texas. And so you had all this kind of pent up demand, but you didn’t have the retail presence to support it.
But, and we would sponsor all these music festivals, but we didn’t think about, well, do we have any stores in the area? So, you know, you could have such great awareness, but consumers are getting bombarded by brands constantly. And they’ll forget you. Um, you gotta be right away. Like as soon as you see it at a festival, That next week you go into your local circle.
K and Oh, wait. That’s the product that I had. And that is the perfect moment. So we kind of spent the first few years, especially under shark tank, so focused on consumer marketing and didn’t think about the distribution and retail piece. Then we flipped it and we focused all of our efforts on, we need to scale distribution.
We need to scale the number of retail accounts. And when we did that, all of the consumer marketing we had done for the last several years, You know, became very, very impactful because there were a lot of people that had been exposed to it that were saying, Oh my God, thank God. It’s finally in my area. So we had to really flip that though, because you gotta be on retail shelves or it doesn’t matter how many people know about you.
Ken: Right? Yeah. Particularly with, with an alcoholic beverage, you know, you’d mentioned that there, you know, there, there are some additional considerations that you have to to think about. Um, you know, when, when, uh, Selling this, this type of product. What, what are some of those, you know, for somebody, you know, out there who might be thinking about, uh, launching an alcoholic beverage, you know, what, what are some of the things that they need to think about?
Justin: Well, you’ve got to think about how you’re going to get to retail. You know, especially in alcohol, you have to have a distributor. So who’s your distributor going to be? Is your product. A wine product, a beer product, a seltzer, um, all a, a tequila, all of those types of products. You need to know which retail channel you want to go after and which distributor caters to that retail channel the best.
So in our example, we started off with a big wine and spirits distributor, but the wine and spirits distributors are selling very expensive wine tequila, whiskey, gin, et cetera. They’re not selling that much out of the convenience store channel. They’ll sell some wine and in certain States, maybe a little spirits, but those are all sold mostly through liquor stores and high end restaurants and things of that nature.
Whereas if you’re a beer distributor, you’re selling tons of beer through the convenience store channel. So for us, we were with the wine and spirits contributors and with the single serve products, we could not get distribution in the convenience store channel. So we had to switch all of our distribution to the beer distributors.
And that was a huge endeavor in 2000 late 2017 and through 2018 to switch out into the beer networks to get the C store. So you really got to think about your positioning, where you want to be at retail, you know, who your customers are and which distributor you will go with to get you with the best chance to get there.
Ken: Understood. So, you know, I’m trying to think of how you guys could have known that. Right. Um, uh, it sounds like that was the learning that, that occurred during that time, but how did you know that you were with the wrong distributor and, you know, w w what type of work goes into, you know, getting aligned with, with a different district?
Justin: Yeah, I mean, totally. Um, had to learn it there’s really no way we could have known it. Other than, you know, we eventually had some investors and advisors that kind of guided us on the right path. But we, we, we knew we needed to switch distribution in early 2017. When we kicked off with the single serve product and launched it in, you know, the main market we launched it in was Austin.
And it was selling really well, but you’d go to the stores and they wouldn’t have any more. And you had talked to the store buyers any, any, and say, or she’d say I haven’t seen, um, My rep and you know, a guy that I knew that ran the independent accounts in Austin, independent being an individual convenience store that is, you know, owned by an individual.
Not, it’s not a chain, not a circle K or seven 11. Um, they were, you know, one, one, one rep covered covered 300 of the thousand. Independent accounts in Austin. There is no way that one rep can cover 300 accounts. Now, if you go to the beer distributors, they’re calling on every single independent store account at least once a week, if not twice a week.
And so we, it was that moment that we were like, we’re never going to be able to scale the single serve product through the wine and spirits networks, because it has to be in the convenience stores. Um, and so we knew we needed to switch. In fact, we had one of our investors and you know, how you, how you do it.
Just a lot of kind of networking, bringing in, you know, advisors or new hires, does that have relationships that can get you to those get access to those distributors? But one of our investors, uh, his name was John Potts. He was the VP of sales and deep Eddy vodka. And he came from our distributor and the wine and spirits side before was a very famous.
Successful alcohol company at Austin that sold for a lot of money a few years ago. And he said, you know, I’ve talked to all the folks that have the distributor and they love you guys, but they’re just not going to give you the service levels you need. And I’m only going to invest if you make the effort to switch to the beer distributors.
And we started to look into it and we said, you know what? He’s right. Um, and then we hired a VP of sales and income from Miller cores. Um, and Sweetwater beer out of Georgia, um, to kind of start that process. And then we doubled down on that. We actually hired as president of the company for an 18 month stint, um, guy Mark King, who, um, started Austin Eastsiders and had been in the beer space for over 35 years and knew every single distributor in Texas on the beer side.
And when he came in, he was able to line up all of our distribution in Texas. We can never have done that on our own. So I think we learned, you know, after, after shark tank, we, we launched in so many new States and there was just at that point, the three founders and an intern and, um, We very quickly realized that we needed to have a team you’ve got to hire you.
You got to delegate and, and bring in people that know the space can, can do what you need to do. But you know, at the time we just didn’t know, you don’t know what you don’t know, and you have to learn as you go and try and keep the business alive as long as you can, while you’re figuring it all out.
Ken: Okay. Awesome. Awesome. Well, Justin, let’s switch gears a little bit. Um, we’ve talked a little bit, we’ve talked around a shark tank. Uh, why don’t we, uh, why don’t you just give us some, some details how that came about and, and what kind of effect it had on your
Justin: sure. You know, it’s, it was certainly a surreal experience. And back in 2000, 13 was when we, so we had the idea in 2011, we, you know, use it as the business school project throughout 2011 and 2012. And through 2013, our first batch should be box. We made right before South by Southwest, in March, 2013. And from there, we were able to self distribute from, from March, 2013 through January of 2014.
And in January of 2014 was when we had exhausted all of our own resources, our friends and family resources. And at that point, we had had our big distributor, we had outsourced manufacturing and we were ready to, we got HEB was going to bring it in for a Memorial day program. And we said, okay, we haven’t done everything.
We can, we’ve got all the money. We can get it from, from our group. We need to go raise money. And we would be doing tastings around town and shark tank back then. I mean, season six, season seven of shark tank, where like, it was the big, big show, number one front, you know, slot Friday nights, like. Prime time and everyone was talking about shark tank.
And so we would be doing tastings and people would come up to us and say, Oh my gosh, this is so cool. You should go on shark tank as if you just drove down to Sony pictures, studios and waited in line and got on the show.
Ken: It’s not that simple.
Justin: It’s not that simple, but we looked into it. We just hit it from every angle.
We thought, man, what a cool experience this would be. And it would be game changing. So we, we reached out to all the sharks, you know, and the producers that we saw on LinkedIn, we would hit them up, you know, on all social media. We had our friends reach out to them. Um, we got to one producer who said, look, I think it’s cool.
I can’t guarantee anything. I can only tell you that we won’t throw your application away. That’s all I could tell, because they were getting a hundred thousand applications for 108 spots to air. So, but, but that was, you know, to hustle like that and get a producer to say that as a big deal. And then they were looking at the same time, they actually were going to different cities to look for companies and they happened to be coming to Austin during, during, uh, looking for university of Texas businesses.
In February, um, right before South by Southwest, and this was in 2014. And so we went, waited in line for a couple hours and auditioned and you know, it said, Oh yeah, we, you know, we knew this producer who we talked to and they loved our 32nd pitch. And, you know, lo and behold, two weeks later we got a call that said you made it to the next round.
And all that means is they cut it from about a hundred thousand companies to about a couple thousand. So, you know, you still got a ways to go, but big step, you get assigned to a production to two producers and you have conversations with them each week, updating them on the business, you know, going over your shark tank pitch.
If you were to do it and each week they tell you. Know, you know, we, we love what you’re doing and we’re going to chat next week. But if they don’t, they’ll tell you if we, if you don’t hear from us, we’ve we made the decision to not move forward. So you’re like, okay, great, nervous every week. Are we going to get another call?
Are we going to have an update? And meanwhile, like we’re still needing to raise money because we have to produce inventory for HEB and we have to run our business. So the whole time, you don’t know if you’re gonna actually make it, but you have to go under the assumption that you are because you have to prepare as such and you can’t like screw up a shark tank deal by raising money before that.
So we just had to keep stretching it out, stretching out. Um, and we were reading all the books from the sharks and we had a good feeling. We were just like the way the producers were talking to us, we just kind of felt like our product was super unique. It was very millennial driven, which is the, the type of viewer they wanted to attract.
And they couldn’t have liquor on the show, but they can have wine. And so we like a wine, fun products. Um, and so we just felt kind of good about it. And then I think it was in, in may about about a month before the filming, where they said, you know, we’re gonna fly you out to LA. So that was like, okay, that’s, that’s a great sign.
They actually fly out about 150 to 200 companies. Because even after you film or do your, your dress rehearsal, um, and nothing’s recorded, like nothing nothing’s recorded scripted, but they just have, you kind of do your pitch in front of all the producers and they’re cutting people then that they think might not be good for TV.
So, but we got out there and we, we ended up, you know, they put you in a hotel and. It’s very, you can’t, you know, there’s all these, they filmed the entire season in two weeks, one in June, in September. And so we were just kind of, uh, you know, going through it, it feels like a dream and on Monday, so we did our little first pitch on Friday to all the producers on Sunday, they call us and say, congratulations, you’re going to actually film for the sharks.
So that was exciting. And then on Monday we came out to the trailer and we were in there for a few hours, just kind of waiting. And then of course, like after you’ve been waiting for a few hours, they rush you to the. So the set, um, and we were in there for probably an hour, maybe an hour and a half. And we don’t know, I mean, who knows?
And they, they, they edit it down to the 10 minute pitch you see on, on TV. But no, we were very over prepared. We had it, we prepared like crazy. I mean, even filming ourselves, answering questions to see not only how we answer them, but how we looked while we answered them. We had our friends, Thrillist, the sharks are professors from the business school, gorillas, the sharks.
Some of them are advisors. So we were very prepared and we knew our business knew our numbers knew how we were going to scale it. And they actually all ended up making offers, uh, which was amazing. Barbara kicked it off. And then, uh, Mr. Wonderful, made an offer. And then Mark made an offer. And we kind of, we assign different values to all the sharks the night before.
Okay. You know, they all would add value to the business, but in different ways, you know, Mr. Wonderful is in the wine business. So he obviously can understand the distribution. But when Mark, when Mark said, you know, you guys don’t sell wine, you sell fun. You know, you can just see that moment of all of us being like, okay, great.
Like he gets it. We wanted him to begin with and he offered 600 vows. We came in asking for 200,000 for 10%. And Barbara offered 400,000 for 20%. Mr. Wonderful said he was worth twice as much as Barbara because he had the wine experience. So he offered 200,000 for 20% cutting her value in half. And Mark was quiet the whole time, but eventually they all turn to Mark and said, what do you think?
And Mark said, look, I love what you’re doing. You don’t sell wine. You sell fun. I’m an offer you 600 K for a third of the business, but you got to tell me what you want to do. And we were so clear like, Oh my gosh, this moment’s happening. And we kind of knew that Mark wanted larger percentages of the business from all the shows we watched.
I mean, he had said before, you know, I don’t get out of bed for 10% of a company. So we knew he was gonna want more equity. We also knew he was the only billionaire up there that if he really wanted something, he’s not going to lose a deal because of a little extra money. And so in that kind of moment finally responded back to him and said, look, we didn’t think we were going to give him a third of the business.
And he said, well, just counter, tell me what you want. And right away just said, would you do a million for a third. Taking his offer up from 600 K and I mean, I’m telling you less than a second, he looked down at the paper and goes, yep. We were like, wow. So that was that. Um, he came upstairs, he shook her hands.
He said, don’t, don’t take those boxes. Those are mine. And he said, go and right away after afterwards, they put you back in the trailer and they actually, ABC sends out a psychologist. It’s not a therapist. Because, you know, for good or for better or worse, a lot of people there, you know, it’s their entire lives and they sometimes get crushed out there and it can be really traumatizing.
So they, they, the therapists came to our trailer and was like, you know, I heard it went well in there, but are you guys okay? And we’re like, Oh yeah,
we’re more than okay. And then we. From there was about two months of due diligence and his Mark’s team looking over all the numbers, because all it is on the show, all they know is your name and they know your company name, and it’s just a handshake agreement.
So a lot of times those deals don’t close because founders get very nervous. They make up numbers. They say their margins are not what they are. And so a lot of those deals don’t end up actually closing. But ours closed with Mark a couple months later. He’s been an amazing partner. I mean, having that, that gave us instant credibility.
Okay. If Mark is going to put a million dollars, which is still to this day, a top five deal on the show by dollars. Um, if Mark’s going to do that, then we should be taking a look at this, whether I’m a distributor on the retailer or a consumer. So it definitely gave us huge credibility as founders and that our product was something that was going to potentially be really successful.
Ken: That’s a very cool story. So if you had to, um, you know, kind of name some of the reasons you think that they eventually chose you and, and aired your, your, um, your recording, what, what do you think? What do you think that was? Why did they choose?
Justin: Yeah, one, it’s a TV show. If you’re trying to get on shark tank, which I think if you had the option to go on shark tank, you should go.
I mean, where a, what a platform to get millions of eyeballs on what you’re doing, but. I think it was, it was the uniqueness, the, the, the, the millennial, the millennial aspect of the younger, the younger demographic, the vibrant colors and the passion and the energy that we brought in. And again, it’s a TV show there, even though it’s as real as it gets in there, they’re still trying to get ratings and make good TV.
So you have to be excited. They’re seeing tens of thousands of companies, you need to be different, exciting, and a lot of fun that is going to make great TV. Um, and so I think that’s what we were able to bring was a very unique product that had never been on the show like that. As I said, they only can do wine.
So there was no like really kind of party puncher, alcohol liquor based products. And, and we just, we’re, we’re super passionate. Um, we rehearsed, we practiced, we were excited and I think all of those factors, and then again, the pre kind of the pre-work the hustle to even get a producer to acknowledge that they were going to look at our application.
[00:31:02] I mean, so all call every step of the way we just hit it from every angle and it worked out for us.
Ken: Yeah. And even the research to know what, what kind of deals Mark was doing and what percentage he wanted to see in a company.
Justin: You know, Brad, brad read Mark’s book. And in the book, you know, Mark talked about how, when he used to throw parties in college, him and his buddies would rip off, um, bottle, fancy champagne labels.
And put them on fresh and bottles. And so that was P people would think they were drinking fancy champagne. And so we, uh, we, you know, Brad made sure to bring that up in the tank. I said, Mark, you remember when you were ripping off bottles of fresh banana, imagine if you had this and Mark was like blown away right at the level of.
Kind of knowledge. And we knew that Laurie’s brother like liked to drink beer on the golf course. Like she had mentioned that in one of her books or website, I don’t know where it was, where we found it. And we brought that up and, you know, it’s those little things that go such a long way. Um, whether, and that goes for anything.
If you’re, if you’re meeting a potential new client or a business partner or an investor doing that extra step of research, and we’ve done that every step of the way of knowing. You know, even little things like where did they go to, where did they go to college? Or what do they, you know, what do they put on there?
You know, LinkedIn of hobbies or things that you can just kind of casually throw into the conversations and get people talking about themselves. It really is a powerful tool that I think people underestimate or think that they’re, they know their business so well that they can just go in there. Um, but those little extra things go so far and I can’t emphasize that enough.
Ken: So, what kind of results did you see from shark tank? You mentioned, um, you know, changed your relationships with distributors or potential distributors, you know, w what, um, yeah. What was the impact?
Justin: The impact was huge and looking back, you know, I wouldn’t change the name because we got to where we are now through all this, but it put us on a very unique growth path.
So as a company, We were not ready for national scale, by any stretch of the imagination. I mean, we were in a hundred stores in Texas, you know, some convenience stores, some winter stores, a hundred total, there were 250,000 wine license accounts just in the off premise. So not even bars and restaurants, just no grocery stores, community stores, liquor stores.
We were in a a hundred. And all of a sudden, a month after the show airs, we’re in Bentonville, Arkansas talking to the buyers of Walmart, about how, how fast can we put this in 2000 Walmarts? And we were like, we don’t even have the permits to sell outside of Texas yet. Um, but in our distributor Republic, national was in 23 States and they were so excited.
They said, we want to put you in all 23 States. And we said, okay, we just went for it. And because we’re like, well, maybe everyone that’s on the show, you know, we’ll just, we’ll, we’ll get into there and they’ll buy it and we’ve made it. I mean, that was absolutely not the case. We didn’t have any clue how to manage national alcohol distribution.
Um, we didn’t have any clue how to manage retail programs with a company, the size of Walmart and how difficult that is. Um, we just had our eyes wide open. And so we, we launched in all these States and shipped products. The load into the distributors was okay, but we had no clue what actually drove a repeated customer repeated sale at the store.
And so we, we, our sales grew, you know, we, I think we did 200,000 in 2014 and just from all the new Loehmann’s and 15, I think we grew to 600,000 or 700,000. And then in 16, we only grew to 700,000. We were flat and we were still losing a lot of money. And so we really were like, Oh my gosh, we have such a great brand.
We have such a great story, but we can’t, we’re not in, we’re not in the business to grow 10% a year. We need to be doubling. And that’s when we spent a lot of time, you know, through 2016, developing the single serve and launching that and hiring, we raised, we raised another $10 million since shark tank. In fact, we’re still raising.
We actually are raising, um, Uh, on, on a crowdfunding for equity platform on we funder, which has been really cool to see, we have over 1100 individual investors on that, but we’ve raised over 10 million since the show to kind of figure out the right model. Um, we had to hire a team. We had to switch distribution.
We launched new products, so all of that, um, but, but I don’t think we would have been able to raise the next round. Without shark tank. You know, there was a lot of people that saw that and wanted to invest because they said, you know, Mark Cuban invested that’s good enough for me. Um, so, so I think without shark tank, we wouldn’t have had the credibility and we wouldn’t have been able to, to keep the business going like we had, but it definitely put us on a path that we would not have done if we didn’t go on national TV.
Ken: Understood. And so you mentioned that, uh, that there were a lot of things you didn’t know about, um, uh, national distribution and that you weren’t ready for. What, what are some of the specifics of that?
Justin: Well, you know, wholesalers are, have know, distributors have thousands of skews and a lot of them are, are by very, very big companies.
You know, the, the constellations of the world, the analyzer bushes, the Diaggio, is that the most, in course, The Mark Anthony brands, which does white claw and Mark, and Mike’s hard lemonade, or even Boston beer company that does truly in Sam Adams and twisted tea, um, huge, huge suppliers. Those are the ones that get focused and share mine as a small company.
You know, you have to fight for every inch of support from your distributor. And so thinking that we were just going to ship it to all these distributors and they were going to automatically. Put it in all these stores. Was just a fool’s thought. Um, so managing them, meaning who are the right contacts at the distributor that managed the chain, who were, who were like, what sort of programs do do they like to see whether it’s incentives or display activity?
Um, which chains do we want to be in, in CA do we, can we even get to them, um, for programs and learning what pricing promotions, and how to. Account, you know how to put those in place so that you could have an entry level, like an intro Christ’s legally across markets. And I mean, there was an endless amount of things that we just had no clue on that you need to know, um, to even people that, that have worked in the distribution to have on your team, to know what levers to pull, to get the product to market.
Because as any individual, maybe you can hit 10 accounts a day and you know, so that might be, you know, four days a week, one day in the office for admin day, maybe 40 accounts in a week. You know, you’re never going to scale distributors have 50, a hundred, 200, 300 sales reps covering a market. You have to figure out how to get them excited and what motivates them too. Be successful in this industry.
Ken: I see. That’s a great story. And I’m sure there’s many other lessons, right? This has been years in the, in the making. Um, let’s, uh, let’s switch gears just a little bit, you know, we’re, we’re um, recording this and, uh, towards the end of January, 2021 and a 2020, obviously COVID has been a big factor. How has that affected your life?
Justin: Yeah, I mean, it certainly affected our business. Doesn’t it? Um, In March of 2020, it was very scary. We, uh, you know, everything was shutting down and we didn’t know what to expect. And as a company we weren’t profitable yet. And so we were definitely reliant on the capital markets and our investors, and there was a lot of fear and we didn’t know if we could raise any money and keep things going.
Um, fortunately as an alcohol company that doesn’t sell at all, really in bars and restaurants, All of that money that was being spent in bars and restaurants was being moved towards convenience stores and grocery stores and liquor stores. It wasn’t that, you know, there was all those stories that people are drinking so much more, um, by the numbers, actually, they weren’t drinking.
It wasn’t a total dollars of alcohol. Was that much more, it was just that all of it was being spent and just a few areas. So it’s like the shelves were getting. You know, annihilated because so many people were buying large PAG volume alcohol out of the grocery stores and liquor stores. But for us, that played right into where we were sold.
And so in may and June and July, we saw a huge increase in, um, our rate of sale. And it was partially because we launched some new markets, but a lot of it was just that our product was working so perfectly for the only thing you could do, which was. Be at home or go to the park, you know, or be outdoors at the beach.
And our product is a cardboard kind of resealable container is perfect for that. But one area where we had to really pivot was our marketing strategy, which had predominantly been major music, festivals, sponsorships, and we had to pivot all digital very, very quickly. And we D I think we, you know, our marketing team did a phenomenal job.
And the number of impressions and store located, but it’s like we threw our own virtual house party with some of our influencer investors. Um, we did a whole beat, boring campaign, you know, saying, look fun, isn’t canceled. You know, maybe you can’t go to the festival, but fun isn’t canceled. And how, you know, send us your submissions of ways that you’re having fun with beatbox, you know, at home with your, you know, social bubble or your, your, your, your friends.
And that really resonated. And we aligned like rolling loud. There’s one of our biggest music festival partners. They have like a sweet NCAA, March madness bracket of the 64 best moments at rolling loud. And we saw, we were the sponsor of that. So lots of impressions and on social media, I mean, everybody was just on their phones for like two months straight.
Um, and so that was really powerful and, you know, we still done a great job with digital and influencer marketing. And the funny enough, like, even without the music festivals, The number of people that were visiting our store locator throughout the summer into the fall of 2020, we went from about maybe a thousand unique people a week to seven, 8,000 people a week, or we’re looking for our products.
And we were able to really scale distribution through that. So the silver lining and what was an absolutely crazy year was that our business, fortunately, Was able to not only survive, but really thrive. And, um, the numbers will be even better this year as we continue to expand in new markets and get more marketing and more awareness.
And it’s just, it’s just working. So it’s been a lot of fun.
Ken: Nice. Nice. All right. So what’s next for beat box. And do you have any other products in the pipeline? Um, you know, what are you excited about
Justin: for beat box? You know, we have quite a few we’re, we’re launching five new States and Puerto Rico here in the next few months.
We’re launching Pennsylvania, New Jersey, um, Colorado, Montana, and several more markets in Wisconsin and Missouri. Um, we’re also launching, so the product itself has 11%, 11.1% alcohol, um, it’s low sugar, only eight grams of sugar per serving. It’s gluten-free, but where you’re launching a 6% version that is zero sugar and natural flavors, natural ingredients.
So that’s coming out in March or April. Um, and we think that’s going to be really, really cool to kind of broaden the demographic and kind of take a lot of that better for you, um, segment that is looking for more flavor. You’re seeing a lot of the big soda companies, you know, mountain news, just coming out with.
A zero sugar, um, but very full flavor, you know, mountain Dew flavor. So I think that’s where the puck is kind of going. So we’ll be doing that. And then we actually, because of the success of beatbox in 2019, um, we pivoted to, to name our company future-proof brands and launched a couple other products underneath that umbrella.
I mean, beatbox is still, you know, 99% of the revenue, but we did incubate, um, a hard seltzer. And a canned wine, trying to capture some of the trends and leveraging our, our, our distributors that were looking for more alternatives to beer. Um, but of course, trying to launch a brand new brand in 2020 was not just not going to happen.
So, um, we just kept the focus on beatbox and becomes doing so well. It continues to be the focus, but we are positioned, you know, we, we have about 220 distributors across 34 States now. They’re looking for innovative products and future programs as a disruptor in the millennial and gen Z alcohol space, whether it could be partnering with, um, you know, other alcohol brands that need distribution or creating our own, we’re in a really good position for the future.
Ken: Nice. Well, um, let’s, uh, let’s get to the quick fire round. Um, I’ll just ask you a question and you just tell me the first answer that comes to mind. Are you ready? Okay. Uh, name one tool or resource that you rely on to run your business
Justin: slacks. We, we are black. We w as you know, we’ve been working remotely since day one.
Um, and the ability, like how powerful Slack is to be able to keep everyone connected, to share files, and then not emails, it cuts down on game-changing cool for a virtual company.
Ken: Now, what is one book that has helped you the most in your journey?
Justin: Oh, man, there’s so many, but I love shoe dog, Phil Knight’s book.
I mean, you know, you think about a company like Nike, And, and when they, even, when they were doing 40, 50 million in revenue, when they were just getting going, he thought he was going to go out of business. And it’s just like the stories for a company that’s as big as Nike that they went through. Um, it’s really cool stories.
I’d recommend that one. That was pretty inspiring. Especially as an entrepreneur, you have your own business, there’s going, you’re going to have like four to five near-death experiences. It doesn’t matter what your business is, um, where you have to fight through it. And so I think that story is pretty inspiring, so that give you some hope, keep going. If you believe in your vision
Ken: and what is the one piece of advice that you’d give to your 21 year old self?
Justin: I think it’s just, yeah, don’t, don’t quit. You know, if you have a, if you, if you have a product that you believe in that you, that you’ve seen delights, customers just never, never stop pushing board and keeping it going. And it’s advice I would give to any. Anyone starting in businesses once you’ve validated it.
I mean, for me, I guess it’s 21 year old self. We started a company 27. I really don’t have any, that’s such an unfortunate life that I, I, I don’t know, but, um, that would probably be, it is just keep, keep going, even when it’s hard.
Ken: All right. And last, um, who’s one person in the world, uh, that you would love to take the lunch.
Justin: That’s such a tough one. My dad’s definitely my hero and inspiration, but we go to lunch pretty often.
Ken: Hey, that works. Let’s go to lunch with dad.
Justin: Yeah. Why not? I mean, I think it would be cool to go to lunch with like Obama or Warren buffet, you know, um, just for my equity career to, to hear know Warren Buffett’s stories.
I’m super lucky. I’ve been able to have lunch with someone like a Mark Cuban, um, in some of these. Yeah, I’d rather just get what you get with my dad.
Ken: Okay. Awesome. Well, um, as we wrap up here, um, just wanted to ask you if you had any advice that you’d give to somebody that’s, that’s grinding it out in the physical product space.
Justin: Yeah. I mean, it’s definitely read, read books, you know, if these are, these are folks that are taking the time to, um, share a wealth of knowledge that tastes. A long time to acquire, you know, think about all of the things that we had to learn just in this one industry. If you can just get a few tidbits out of a book that stick with you, just read, read more.
Um, I would say definitely that, you know, we, we wouldn’t wait, it went over it, but once your idea is validated and you truly believe in it and you were passionate about it, just keep going. Um, and then. I also think like everyone’s situation is different, you know, it’s, it’s, it’s not like you definitely don’t want to go all in on something until you’ve been able to validate, validate the idea and know that it’s going to be successful, but that’s also very difficult because you’re working a full-time job to, you know, make a living and are trying to work, to create a company which takes all of your efforts.
So it’s kind of a chicken and the egg. But I definitely think as much as you can, if you’re working a job and you’re like, I’m tired of this job, I had this idea, don’t mortgage your house. Don’t take on a ton of debt, you know, until you, until you have enough evidence that this thing’s going to be, um, has a lot of potential.
Um, I think a lot of I’ve heard some really horrible stories of folks that went all in because they, they were so in love with their idea, but never once validated it. And put themselves in really bad spots, as much, as much as you can get your idea validated by people outside of your core circle before you kind of go all in on it.
Ken: Yeah. And I think that you gave us some, some really good tips on how to do that at the top of the show. So, um, and even just that lean startup, uh, book, I think it gives you a lot of techniques on how to validate an idea.
Justin: Yeah, definitely. That’s a great one and there’s all sorts of ones out there. Um, but definitely gotta be passionate too.
I think that’s definitely an important one is like, for me, I love bringing people together, hosting pre-games having a good time going to music festivals that is like, that was marching for us. And it was like, can’t believe I’m working right now. And you have to be passionate because once you’re all in.
You are all in, I mean, the sacrifices that you have to make from a personal level and relationships and the amount of time and energy, and, you know, I don’t have any kids, I’m not married, but for people that do, like, you got to think about those things. You have to be passionate about it because if you’re not, you will get smoked by someone else who is, and don’t just go into something because you think you can make a lot of money from it.
Or, you know, someone told you, you should, you have to love it because it will be your life. And. I think a lot of times people think of like, Oh, entrepreneurship. And so it’s so easier. I mean, it’s the exact opposite. It’s the hardest thing you’ll ever do, but it’s the most freeing thing you’ll ever do. I mean, not having to, to be able to control your own hours and build your own lifestyle. It’s so amazing.
Ken: And, uh, Justin, so is there anything that you would like to, uh, to promote or plug.
Justin: I mean, definitely hop on our website, check out our store locator. If you want to try the products, uh, they’re delicious. They’re fun. You can see it on the website. Um, we should be in some store near you. Uh, if you go on there, uh, as well as if you are, if you love the story and you want to learn more and aren’t crown funding is only going to be open for another month or so we’ve already raised 1.1 million.
Um, we funder.com, but if you, for as little as a hundred dollars, you can invest with us. And be a part of the story. So definitely check that out. There’s actually a link to it on our website. Um, but we’d just love to have you experience what millions of people have, which is having a great time, enjoying some delicious party punch and listen to some good tunes. So.
Ken: All right. Uh, and the website is beat box beatbox and beverages.com. And, um, and, uh, in order to find the, the crowdfunding, you said it’s a wee funder.com, is that
Justin: yeah, it’s wheat, funder.com. And then, um, on our website, there’s a link direct to it, but it’s one hundred.com and then there’s for the it’s a forward slash future for future proof dot brands.
Dot LLC. So we’ve under.com/future.proof.brands.llc. That’s where you can invest. And of course there is the link right on our website. Okay.
Ken: We’ll add a link to the show notes as well. All right. And lastly, if people want to reach out to you, what’s the best way to do it.
Justin: I’d say email always welcome to email me.
It’s just email@example.com. Um, you know, always down to help time permitting, uh, anybody that I can and. Um, there were so many people that were so helpful to, to, to us as we were growing. Definitely want to return the favor. So feel free to email just mentioned that you heard it on the show and we can definitely connect.
I’m also on Twitter, for sure if you want, but I’m not very active, so I don’t know how much you’ll get me there.
Ken: Sure. All right. Well, Justin, I appreciate you taking the time to talk today. It’s a great conversation. I think lots of lessons learned. Um, and, and I think that this is just great advice for, for people in this industry and people thinking about getting into this industry.
Um, anyway, I appreciate it. Best of luck with everything. Take care.
Justin: Yeah. Thank you so much. This is great. Really appreciate it.
Ken: All right, man. See ya. Bye. The Physical Product Movement is brought to you by Fiddle to find out more about Fiddle and how our industry leading inventory ops platform is giving modern brands and manufacturers all visibility into their inventory and operations.
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