Felix: Today, I'm joined by David Lester and Ben Goodwin from Olipop. Olipop is a deliciously refreshing tonic that's crafted with prebiotics, botanicals and natural plant fiber to support your microbiome and benefit digestive health. And was started in 2017 and based at Oakland, California. Welcome Ben and David.


David: Thanks for this.


Ben: Thanks for having us.


Felix: Yeah. So you two already have... you're veterans in this space already, the beverage industry. Talk to us more about that. What was your experience? What was the opportunity that you saw in the marketplace that led you to starting the company?


Ben: We've got a kind of unusual background. I think a lot of businesses in this space are founded off of more of like an observation of white space or like a trend that is prime for exploitation. For us, well, in particular me, I mean, basically this kind of the whole nexus of this started when I was a kid, I actually grew up eating a standard American diet and we grew up without a lot of cash. And so that pretty materially affected my health. By the time I was a teenager, I was overweight, and had anxiety and I was with other kind of issues. And really just had like the epiphany one day at 14, the young age of 14, that this was not going to create a good life and I needed to overhaul everything.


So I started paying attention to my nutrition, dieting, exercising, especially getting therapy and stuff. It's all super useful, but I lost 60 pounds in less than a year. And really kind of became a little obsessive around nutrition and really curious and fascinated by it. And then what I discovered over time was that what I was putting into my body was having a really profound impact, not just on my physical energy, but also my cognitive clarity, my emotional stability. And I became really fascinated by what that link was and really saw nutrition as an opportunity for personal growth and development and kind of self-actualization. So, that's really where all this started. There's a longer story associated with that, but basically, I ended up dropping out of college when I was 20.


I had a really interesting mentor. Who won a spring court case by himself, no legal representation, which blew my mind and really drove me to drop out of college and then got right into product development and consumer packaged goods and beverages. And then I helped a friend get a kombucha company off the ground, this one, 15 years ago when I was 20. And that's where I learned what the microbiome is. It's all the non-human microorganisms, spectra, et cetera, that live in and on your body but are concentrated in your digestive tract. And the microbiome has this really profound influence on your overall health, from your digestion, to your immune system, to your organ function. There's also this thing called the brain gut access. So basically we produce the majority of our neuro-transmitters and our hormones actually in our digestive microbiome.


And there's all sorts of human and animal studies that show that the health of your microbiome has a pretty profound impact on how your brain works and how your nervous system works and how your endocrine system works and your hormones function and stuff like that. So that was really the light bulb for me, way back in my early twenties I was like, wow, this might be the system that created the outcome for me personally and became just like totally hooked on this is something I come on and lean in to, for the rest of my life. And the more you research it, the more you realize that we have a chronic nutrition issue in the United States and that those issues we have around our nutrition, nutrition health affecting our metabolic health, are affecting our microbiome health, are affecting our digestive function.


And so, basically Dave and I, now working together for the last nine years, really what our focus has been on, is finding the most scientifically credible and impactful ways to benefit people's microbiome and digestive health, but to package it up in a highly accessible format that reaches the most people and that's more or less what the kind of foundation kind of composition of Olipop is and its intent.


Felix: Yeah, I appreciate that. And I think just on the side for a bit is that there's lots of entrepreneurs listening and I think there is this attitude of hustle and kind of just white knuckle your way through it all and just embrace the struggle of it all. And now really focus on some of the fundamentals that you're talking about health. Talk to us more about this, because again, the audience are entrepreneurs, how important before and maybe after you had discovered the importance of nutrition and stuff, how important is that for entrepreneurs?


Ben: I mean, I can't even begin to describe how important it is. Obviously to the point that you were referencing, if you don't have a high level of emotional and oftentimes even physical pain tolerance, entrepreneurialism might not be the right fit for you. So yeah, that's a part of it. Simultaneously, entrepreneurialism especially, if you're lucky enough to start to experience some success, or if you actually also, if you've got to go through kind of like a difficult phase it's kind of a marathon of sprinting. So it's like the worst of both worlds. It's also really rewarding, especially when you have a positive experience. So addressing your physical and emotional, psychological health is non-optional. It's very, very foolish.


It's like to kind of ignore those things. Because you're going to have to be at it for a while. You're going to have to take care of yourself. Psychological health issues especially, are really rampant in the entrepreneurial community. And if you're like me, I kind of had a rough time growing up. A lot of entrepreneurs actually experienced trauma in their lifetimes, which actually can make them more susceptible to some of the disruptions that might naturally come through a higher risk occupation. So I really view it as I need to have access to the deeper parts of myself and how I really get myself to work and function optimally, and quite frankly, take exceptionally good care of myself, because that's actually going to create the most sustainable dynamics for me to really put the pedal to the metal and go for it elsewhere.


Felix: It makes sense. And you mentioned that you two worked together for last nine years, was it all in the beverage industry?


Ben: Yeah, that's right. I spent about four years doing the R&D for the last beverage business that the two of us had and three out of those four years, I was, feverishly looking for the right business partner fit, went through a couple cycles of that and then finally, I have the fortunate to meet David. After meeting, two weeks later, we shook hands and honestly, haven't looked back since. We have a... we're very different people and we also cover different areas of expertise. But we have pretty materially overlapping principles and values and really have gained a deep level of understanding for each other over time. But we've always worked together on launching our own businesses and yeah, we've worked together in the beverage space.


Felix: Awesome. So it sounded like this particular problem that you wanted to solve was obviously very important to both of you as was a very valuable pursuit for both of you. Was there an opportunity that you saw in the marketplace that was assigned to other people might be interested in solving for this problem as well?


Ben: Yeah, I know, so this one, I'll kick some over to David just to make sure I'm not hogging the proverbial mic. But I think, in our particular case, when you look at the raw data, according to the CDC, two thirds of Americans have chronic digestive distress. Data coming out of UCSF indicates that up to 88% of Americans have some sort of metabolic dysfunction or metabolic disease. So look, we obviously get way too much sugar in this country and then some of the insights that we had that drove Olipop's functional formulas that we also don't get enough fiber, we don't get enough prebiotics and we don't get adequate nutritional diversity. So it's kind of a recipe for disaster from the kind of metabolic microbiome, digestive front, high sugar, low fiber, low nutritional diversity.


And a lot of that's driven by products like traditional soda, which there's no lack of clarity on the data's front around what that product does to your body. And before the pandemic, we were saying there was reductions in the size of the soda market year-on-year as consumers were migrating away from that, quite transparently, pretty addictive drink, but also really pleasurable and enjoyable drink. But trying to migrate over to healthier options with a simultaneous increase in awareness around microbiome importance and science and a real significant increase in awareness around digestive health.


So those are some of the broad meta trends, but in terms of the exact strategy that we chose to approach it, that was really driven by the science and the last five to eight years of microbiome research around dietary intervention versus probiotics, as kind of being the better choice for a lot of people to create sustainable microbiome, digestive health shifts. So there's some awareness, certainly the market and market trends, but that has to be combined with what's being indicated as being effective in science in order to create a real solution for people.


David: Just to build on Ben's point there Felix, I think is interesting three years ago when we were initially fundraising for this business, the idea of a healthy soda was kind of an odd concept, certainly wasn't a trend. People are suggesting we do this as like a sparkling water or more of like a kombucha, prebiotics definitely were not a trend. Again, we had a lot of questions around why we were doing prebiotics when probiotics were much more prevalent in the market at that point. And so I think there's a lot of interesting innovation learnings in here. I actually did innovation as quite a large part of my corporate career and had the opportunity to launch and see fail a lot of products too, but one of the fascinating things about working with Ben is his focus on solving a real human problem and then finding the best way to do that.


So we actually went and pitched to investors with a lot of confidence, because we weren't following a trend, as Ben said, we were following the science. That being said, you're also looking for things like where is the consumer dissatisfaction? And the soda industry to us look like a space that was right for disruption because there's aspects of soda that people love. It's delicious, it's nostalgic, it has deep culture and emotional resonance, but there is one fundamental problem that is, it's not good for you and it has way too much sugar. And ideally people would like to be consuming products that has some nutritional benefits. So, you combine those things and essentially, what we've executed with the concept is the idea of break one rule and break it hard.


And the rule that we broke is the ingredients panel, this is fundamentally different than a can of Coke. But everything else is quite familiar to people. It is delicious from the flavor profiles. It looks like a soda, our marketing is kind of fun and vibrant and I think that gives you kind of a really rich combination for successful innovation.


Felix: Yeah. I think this is an important point that I want to spend more time on, around this idea of following the trend versus following the science with efficacy of the solution that you're bringing to the table. And I think there's one piece that you add on, that I think is important, which is that you also looked at where the customer was dissatisfied, because you could come up with a solution that you're just so sure is going to solve problems, but just people are not aware. They don't care about the problem as much. Talk to us more about that. What is the combination of trend versus science and customer dissatisfaction? Were these things that you guys knew at the outset, or were they things that you learned along the way and modified that the product along the way? Talk us more about that.


Ben: I mean, one of the things that was helpful for us, probably I should address as well, is that our prior venture did use a lot of the same... It was almost like a testing ground for us to investigate this opportunity. So, we had... and our prior beverage was also a healthy drink and we did have some flavors that were pretty distinctively kind of soda based, and we saw them really take off. So, we basically... it was almost like we did a large scale clinical trial or marketing study on our own, in our prior venture, which did give us a lot of really material insights. But I think from a broad brush stroke perspective, I think the best kind of innovation, the point David made around solving human problems.


There has to be an insight. A lot of times people overly they be like, "Oh, we know we need data. We know we need data. We need market data. We need data on our customers," blah, blah, blah. Well, that's certainly not untrue. But the data is only so useful as your ability to synthesize it and come up with an insight. I think a lot of times people just become paralyzed in the data without realizing that the magic is the conversion of the data into an insight and that's kind of more of a right brain process to be honest, like mechanically and it's more of a deep brain process as well, because you've got to bring together a lot of divergent data points and come back with some insights, and then you've got to be able to go out and test them.


So I think it's important to, first of all, you have to do it in order to be able to communicate the vision that you have over to people that don't already understand it, i.e. investors or retailers or whatever. So you do need to be able to come up with some material data points that are supportive, the kind of the fact that... let's say for a perfect example, typically in the healthy beverage space focused on digestive health, especially in the natural channel, you've got kombucha and touts look good for your digestion. There actually are no clinical trials supporting that, but I'll just leave that for another day. That's how the customer perceives it. But the reality is that kombucha is a billion dollar industry. And then you go look at soda and you look at the fact that they're shedding off tens or hundreds of millions of dollars worth of business every year.


But it's still nearly $40 billion industry with over 95% household penetration. So this predict logical data there. The soda market is obviously much more ubiquitous, it has a really long history with consumers. Get to the point of David made, there are clear indicators, both on the research that's coming out and what your doctor is telling you, and also on some of the shifts that consumers are making that there are points of dissatisfaction, and there's a pretty material market that's available from that shifting. But that there's also this interest around digestive health. But then you have to then say, "All right, here's all these data points, I have an awareness of the landscape, but then what do I believe and what is my inset insight for believing that and what underlying problem am I looking to address and what level of elegance sophistication is involved in my solve for that problem?" And that's how you can do something that's quite unique and quite disruptive, but not just out on some island somewhere where you have no awareness of the landscape around you.


Felix: Yeah. And this goes back to the point that you made earlier, which was about how collecting data, doing these surveys, qualitative or quantitative data is not sufficient. You have to synthesize and actually figure out what can we do with this information. Talk to us more about that. What is your process for, once you've collected the data, or maybe it has important on how you collect the data, what kind of questions you're asking and how do you actually use them in a way that is going to lead to the right decisions for your company?


David: I think, one thing I would say that is been an interesting insight for me and working with Ben is, Ben is very good at what I call leverage entrepreneurial thinking. So it's quite audacious in reframing problems. So, the idea of doing a healthy soda was ridiculous to people until we actually made it work. Because the logical thing to do is you're like, okay, this problem has to mature. You take out the sugar, you end up with sparkling water. One of my observations in Ben's process, which kind of fascinating is putting a lot of these different data points together to get to this leverage solution that actually reframes, very malleable and approach to what is possible.


And it's interesting that the challenge here is, as you look at all the different data points, one is, it's really difficult to get people to change behavior. And we've been quite unsuccessful as the natural products industry in really creating a more ubiquitous market and getting people to switch their Coke for kale juice or whatever. And when you understand the reasons why, you start to approach the problem in different way and so, again, I'm paraphrasing Ben here, but it's interesting the... Ben described it before, as like you sort of switch out the poison for the solution, essentially. People love soda, it's a great vehicle, so why not use it to deliver nutrients to people.


Felix: And David, I think one thing you mentioned earlier was about breaking one rule and breaking it hard. And I think this is very related to what you just said, say more about this. I think this is something that I think entrepreneurs kind of dip their toe in the water when they want to make some changes, but you're saying like breaking hard. Tell us more about that experience of breaking a rule hard.
David: Yeah, I think, I love what I would call elegant innovation solutions, which are just very simple. And I think sometimes people can tinker around with too many things, but not sort of materially change anything, just kind of becomes a bit messy or you're lacking in innovation in one space, say the liquid and so you end up doing really wacky packaging to compensate because you need some 'magic' in there, but you sort of looking for it in the wrong place. And so I think the rule about the kind of principle of break one rule and break it hard is say, look, again, if you're getting people to change consumer behavior, if you present somebody with something that they don't have a framing for and the consumer is asking, "What is this?" Your challenge is pretty significantly greater, because I don't even know what this is to start with.


So, in this case, I think we also looked at brands like Beyond Meat, Halo Top, Seedlip a non-alcoholic spirits. Fascinating brands because Halo Top broke one rule, broke it hard in terms of the kind of nutritional panel, but they understood that ice cream is fundamentally about indulgence and if you're not indulgent, it doesn't matter if you've got two grams of sugar or 50 grams of sugar, there's no point to it, is the whole point of ice cream. Beyond Meat, everything they do in their marketing is designed to give you the same exact experience you would get from regular burger. It's just that this one happens to be made from plants and is better for the environment.


And that's really our approach for our marketing too, and that's a trigger for purchasing soda. You have to understand the category you're operating in. For us, the vehicle we've chosen is soda, that's the category where we're operating in. That's the occasion base we're marketing to, that's the consumer motivation that we're targeting as well. So, that category is about refreshment. It's about fun. So yeah, if you're not doing those things, then people are not going to want to buy what is fundamentally your soda, if you are able to do all of those things and solve for the dissatisfaction they have, that is where you've got a very interesting idea because you got an almost kind of perfect concept. You're doing all the things that they love about soda and solving for the one thing that they hate, which is consuming 40 grams of sugar.


Felix: And what about from education aspect, was it hard to reach the people and explain to them the difference between your product and another soda off the shelf, or even like sparkling water? Was it a challenge?


David: Yeah. It is a challenge still. As Ben mentioned, the soda category is a $40 billion category and we're a long way off getting a significant share of that. So, there is a lot of people that probably don't fully understand what this is. And so, there is a kind of patience in innovation. It's a long-term thing. You have to have a long-term strategy over years to go through different consumer segments, people with different levels of openness to your concept. Initially for us, we start building in the natural channel, and people there are very sort of familiar with digestive health. You can find us next to kombucha. It's not a major leap for people, if they don't understand prebiotics, so at least they understand fiber. And say that the things sort of to all intents purposes it looks like a soda. So, people kind of get it.


They're like, "Oh, I see you sort of made up better for your soda. And then they try it and fundamentally and CPG, your product tastes good or it's not going to go very far." And Ben's formulation skill is quite incredible in terms of what it can do with these flavors. So, yeah, I think there will be an increasing challenge. Looking at brands like Beyond Meat, it's interesting to see the evolution over five years, how they've slowly penetrate the market. There's a limit to what you can do with your own marketing spend. You're heavily reliant on shifts in the broader macro environment. For us, a key one is, interest in digestive health increased by 3000% through the pandemic. No amount of marketing budget takes that shift, it's the kind of societal trend, a macro trends. So, to a degree, you have to have the macro trends on your side. There's an element of foresight in that, there's and luck and there's an element of being grounded in science and where things will inevitably go.


Felix: Yeah, I think there's this agility that's also required, especially when you're a startup. And one thing that... a lesson that you and your team had learned was around what kind of flavors your customers would like and a incident earlier in the company around cinnamon cola was something that caught you guys off guard, tells us more about that experience.


Ben: Yeah. I mean, it was kind of funny because we obviously kind of... All right, I've worked on the first three flavors, which was strawberry vanilla, at the time cinnamon cola and then ginger lemon. And it was a little bit of like they were... I felt good about the outcome, the flavor outcome and all three flavors. And I also thought they would give us really kind of interesting feedback on... So you've got strawberry vanilla, which I actually based the flavor of this hard candy that I loved as a kid called strawberry cream saver. So it was nostalgic for me, also it's, and for a lot of other people also, it's just like an intrinsically delicious flavor. Cola is obviously just going like right up against soda and then ginger lemon was kind of like, all right, and it might be kind of helpful just to like, have a tester in here because we're starting off from the natural channel and just kind of get another sense of what the gravitation is around.


But for cola, the reality is that cinnamon is a flavor in the flavor mixture of cola already. People obviously don't know what the precise ingredients, it's like, clove, cinnamon, orange peel, lemon lime, there's like a handful of different things that are in that flavor profile. So, I was like, this is kind of interesting. And I bet I could kind of lean in and like accentuate flavor. I also used some caramel notes and some vanilla notes. So it was just kind of... what we've tried to do or what I try to do with all my formulations is kind of take... find out what the nostalgic flavor is kind of deeper in that mix, that's going to hit that part in your brain that says, "Oh, something about this is kind of familiar."


But then figure out the rest of the flavor architecture that clearly communicates the soda aspects of that flavor also. And then reformat it to make it ownable by Olipop. So it's like, this is definitely an Olipop flavor, but it also clearly signals this kind of soda structure, and there's something in this as well, that gets me this kind of deeper nostalgic hit. So that was really kind of... that's my generalized approach to formulation for Olipop. But I was just like, well, isn't it nifty, thirsty I mean, in cola already. And I've kind of brought in some new different types of cinnamon, everybody will get it, it'll be fun. And people had the association, they assumed that it was spicy cinnamon instead of what it actually it was, which is more of like a sweet cinnamon, and so there was a little bit of just consternation around that.


We changed it and the reality is like I barely changed the actual underlying formula from cinnamon cola to vintage cola, but people are still debating online today about which one they like better, which I think is like really funny, because it's pretty much the same formula. But hats off, people feel that passionately about the brand that they want to go online and discuss it. But, I would say this is also kind of just the... I guess, and then... sorry, to finish answering your question on the flavor kind of choices. It's just like the more that we got signals, because in the next flavor I kind of worked on, was a root beer. And that thing is absolutely crushed. I did a cherry vanilla for personal reasons.


I was just like, don't find that, there's a lot of good cherries drinks slash any good cherry sodas out in the market that I've been able to find it's like, I don't know what is going on, where companies are putting out cherry products that tastes like cough syrup. Cherry is my favorite fruit. So it just feels like a bit of an abomination. And I just wanted to contribute to the solution of having good cherry product on the market. And then we've done an orange soda. We've just launched a grape soda. We did an orange cream scope and then we'll also throw like a blackberry vanilla in the mix, which is just like some of these curve balls. And I think that our generalized goal is really just to keep hitting on these kind of clearly nostalgic flavors that oftentimes I, myself, as someone who grew up drinking a bunch of soda, have a certain amount of nostalgic relationship with.


But also really driving kind of a surprise and delight. We kind of want our customers to not totally know what's coming, but then be really excited by the thing that drops, have a consistent... it's consistent but differentiated experience from flavor to flavors. So it kind of meets a different need for them. It's good for different experience for them. And that keeps it both fresh, but also consistent. And that's really working and now we're lucky enough, because we have such robust D to C platform and we're really fortunate to have a lot of direct relationship, conversational capacities with a lot of our customers. We have a multi-thousand flavor request list at this point. And so we do also get really clear feedback on what flavors customers are still interested in. And if that is certainly something that I draw from, and we all talk about when we're considering where we want to go with our flavor and our brand architecture next.


Felix: Yeah. And this kind of learning early on about what flavors your customers like is obviously much more difficult when you don't have a list of existing customers, anyone reaching out to you. When you learned that it was simply almost a naming thing, a branding thing that caused people to not try out the cinnamon cola, even though the formulation was almost exactly the same when you relaunched it. How did you learn this, if people just weren't even buying it in the first place?


Ben: Well, that's what's nice about doing things like demos. I mean, you can go out to... because the thing, as well as like a lot of people assume that we were a digitally native brand, we actually weren't. We actually started in brick and mortar retail then built out more of a fledgling D to C platform, then COVID hits and David and team did an absolutely exceptional job and adapting to that and building up that platform. And that has taken on such a life of its own that certain people go like, "Young brand, huge D to C platform. They must be digitally native." But we weren't. So there are different ways that you can get feedback from your customers if you're going to brick and mortar retail, really just interacting directly with the customers and having brand ambassadors out there that are pulling information back for you. Talking to the buyers and kind of beverage buyers of different stores that you're at, ask them, how's it going, talking to your distributors.


So, if you get out there and you shake your leg and you have your direct relationships, you should be able to get data back about how things are doing and how things are playing out. But I'll also say on point, this is one of the great aspects of the dynamic between David and myself, because... so the customers come back and say like cinnamon cola is a problem. I might have been able to react to that, but David is much better positioned to take a look at that situation and come up with a solution and execute against it, which I think worked extremely well. I mean, I think oftentimes in teams, especially in founding teams, you need to have an obnoxious, visionary, highly creative, perpetual disruptor, spoiler alert, that's me, who I don't look at... beyond me, I don't look at anybody.


I try to look at what am I actually trying to accomplish? And what's the most interesting way to do that. And then you have somebody with David's profile, who like he had a decade of experience of handling innovation, seeing it work, what didn't work, figuring out how to not blow it up, and so that combination is super useful. I kick off a bunch of stuff. David is like, "This makes sense, it doesn't make sense. Let's work to get this done." Kind of really great at getting those communications together. And that synergy is really useful. If you don't have a partner that can counterbalance to their team, that can counterbalance to their... then you have the task of kind of playing both roles simultaneously. But if you can build your team to address natural spikes and skillsets, so that it's balanced, and then everybody can coordinate well with each other, that's hyper useful.


Felix: Yeah. You had mentioned that David was instrumental in this move to D to C, you mentioned to us off air about how it shifted from 5% e-commerce, 95% retail to now 40% e-commerce 60% retail. Now that you're closer to your customers, you have that direct connection with them, is the product development process any different today? How do you make sure that you're out of those thousands of flavor requests or you're picking the right ones?


Ben: Well, we stack right. We order rank them. So we know which ones are the most requested and we say, "Okay, these handful of most requested flavors, these need to be a part of the launch sequence somewhere on the line." So we say, "Okay, here's our plan for flavor development over the next, this called like three years. And so here's these top three ones and we hear about them a lot. So, I need to make sure that I develop formulas and we can roll them out." That being said, I also... like the next flavor we have coming out, it isn't not requested, but it's nowhere near as high on the list. However, I had a very specific concept around it that I'm feverishly clapping my hands together around because I think it's going to, again, fall a little more on that surprise and delight side of the fence, where consumers are going to be like, "I didn't even know I wanted this, now that I'm drinking it, I see what you did and I'm excited." So we'll see how much that plays out.


Ben: But for example, we just launched... I formulated the mixed launched grape, classic grape. And that was reasonably high requests, had reasonably high request rates. I'd say it was like number four or five in the line in terms of most requested. But the thing that the whole team came away with, and I felt like I really saw, was that when someone did come and request grape, that there was like an exuberance behind the request that even though it wasn't the number one most requested flavor, you could tell that the audience that was requesting that pats of like fervency and some real enthusiasm around it. So that is why I ended up being like that.


I think it's something that I want to work on because I mean, I think, some part of me is just like I do like making our customers happy and we're going to be able to make a lot of people really happy with this product. But yeah, I think that, that just means that there's either an unserved market, that's a part of your overall mix that you can serve better with that flavor and that you're going to make a real impact. Plus I think the flavor profile and the can color kind of helped around out our offerings a little bit.


But this is again, getting back to the fundamental underlies around you've got your data, but then what are the points inside of your data that you're prioritizing as an important ones? How creative are you being in your approach? How are you synergizing that information? And also what is your mission and what are you doing and how does the data relate to choices you should make grant your mission. You should never get so wrapped up in the data that you forget about the entire reason that you're doing the whole thing in the first place.


David: I think, is a danger of overvaluing qualitative data as well at times. I mean, as a society, I think that's maybe an issue in general. I mean, I remember the first innovation project I worked on in my archer days. We did very sophisticated product concept tests, blind taste testing on the liquid, multiple liquid variants, top box, bottom box analysis, went through a whole gate process, that launches thing, and it totally bombed. And I was in a bar with my friends and they said it tastes disgusting and it did. And it's just... it's liquid in particular, products that kind of you taste, drink, eat, very difficult to work through on a qualitative basis. I mean, we heavily rely on Ben's palette.


I think where you've got a skill formulator. I mean, when we did it well at the archer was in whiskey. We didn't test it in the same way. We just had master distillers that knew exactly what their vision... they had a vision for the liquid, and they went and executed on it. And it's the sort of thing of consumers not knowing what they want and you're not going and asking them, John has to kind of dial down this caramel nut a little bit, or put a bit more pizza in there or something, they're just like, "Look, here's an amazing whiskey that I think you're going to get to love." The same thing when Ben is formulating liquids. It's like you look at certain data points and again, you just sort of treat them as one of many data points and you only say it over complicated either.


I mean, cola is a massive category. Root beer is, grape is, asda goji berry is not. So if you're launching an asda goji berry flavor, it's probably going to be pretty niche because it's just not the same size category. When you do come to execute on it, in the case of grape that's when you hand over to the division of the formulator. Ben, had a very clear vision of how he's going to formulate it. He went away to the lab, no distractions, tasted his way through it, tweaked things and came out with a product that people are like, "This is incredible, but I can't quite put my finger on it." And this various things, it's very interesting hearing Ben talk through the layers in the flavor and what hits you on the back end and at the front end. No consumer would ever guide you towards that's a kind of an expert's vision that has taken you there.


Ben: And it has to... When I formulate something, I have to want to drink it and like it, and there's nobody more... I'm so critical of these flavors that by the time I'm happy enough to release it, hopefully it's going to resonate with customers.


Felix: And there's the vision and the formula and the taste. What about when it comes to the presentation, the packaging, how was this design with everything from the brand identity, the logo, the packaging of the can itself, talk to us about that?


David: Yeah. I think it goes back to the elegance of the innovation, when everything works in sync, when it's simple, when the best innovation and consumers just goes that's obvious. Why has no one ever invented this before? And there is a sort of nostalgic thread to the formulation that Ben has developed. Consumer packaged goods are as much about emotion as a function. And I think it's lost a little bit at times in the natural products industry where we can get very focused on the farm that is grown on or a specific ingredient, or the founder's story itself. It's not why people are buying Coconut Oreo. It's because the way those products make them feel. So that sort of, I call it kind of like modern nostalgia in the concept just carried through into the packaging.


Packaging itself is pretty modern minimalist, pastel colors, bright. But, there is wins of fun for the flavor, that wins a fun was almost retired before we started using it. It's very old fun, not very fashionable. You combine those two things together in an elegant way, which the design team did, and you deliver something that carries the thread of modern nostalgia through, from liquid to packaging.


Felix: And is this one of those things that can also be tested, or how can you determine whether you hit the nail on the head when it comes to the imagery of the brand?


David: I mean, you can certainly put it in front of people. Again, I'd sort of caution against overvaluing qualitative date. I think an early stage innovation qualitative is very useful, because I'd say I remember when we were developing Olipop, we didn't have any money. So I just went and ran like 20 consumer groups, myself, seven to 10 people, friendship groups, across different parts of Northern and Southern California, try to hit slightly different variations of the target demo we were going after. And I think we just spoke to about 50 people, you start to see patterns. And if you're doing qualitative you can understand why they're saying what they're saying. I mean, we actually changed our packaging a month or so before launch. Our investors thought we were crazy. We'd already raised a series C convertible note at that point.


So they bought into the packaging, we'd present it to them. But, we could see the pan in the research that clearly this was not working. It wasn't communicating. And from what people were saying, we could understand why. We actually... the initial hypothesis, it sounds kind of stupid now, but this is why innovation is so difficult because it's always easier with hindsight. But the liquid itself, the ingredients in there are quite incredible. You're drinking this soda that has kudzu, slippery on bug, nopal cactus, calendula. I mean, people look at ingredients panel, and their minds are blown particularly when they try the thing. So initially we thought we got to show what's in this, because people... like this is what the value is, people got to understand that.


And unfortunately these ingredients in our various setting pleasing and trying to put them on a pack was complicated. And what we lost was the sense of soda. And we could see that from the research groups we were doing, say, you don't need to do like a ton of them, but getting in front of a few people, you can start to see patterns and it didn't look delicious. It wasn't colorful, it wasn't what people were expecting from a soda. So that's when we got really clear on saying scrap this idea, that by the way, it's good for you. That's where that has to see, as much as we want to shake every consumer and tell them about these amazing ingredients and how they're going to benefit their health, most people are just looking... in that moment I'm looking for soda, they're looking for more refreshing and delicious, not necessarily to transform their digestive health in that particular instance.


And so the research, the qualitative research we did was useful and giving us confidence to make that decision, and also clarity in terms of the path that we took with the brief. And we made that pivot really quickly. We had to shrink wrap our cans because we don't have time to print them once at market and the rest of history from there.


Felix: Yeah. That's amazing that you basically went through with your intuition. I think the big thing we're learning here is that the data points are just a factor, something you should consult, but should not necessarily always lead you blindly into following the data. Now-


Ben: 100% even, sorry, even on the packaging thing, it's like we got some of that feedback and making everybody real nervous, but we're also like, let's not just throw the horse out in the middle of the stream or whatever and then... I remember the particular moment was when we got the actual test run of the cans and David and I looked at them and we actually were at separate locations, but I just called him, I was like "Bro, this is obvious." So even in that storyline, while there was a lot of external data points. Sometimes just sitting there looking at the physical thing, you've got to be ready to just come to grips with reality and trust yourself.


Because I think to the point that was David was making, it had gotten a little overly cerebral around the presentation of some of the ingredients, without having an awareness of the actual emotional driver, because the goal of the product is actually to get past people's defense mechanisms and facilitate healthy behavior change and to do it through this benevolent kind of product offering. And that was the thing that we needed to have designers working on the design that really got that in a personal way. And that's the thing that ended up helping it to translate.


Felix: Makes sense. Now, talk about this success that you've had with SMS, specifically around a campaign that you had launched went ridiculously well in just a very short period of time, talk to more about that, the SMS campaign and the results that you're able to get.


David: Yeah. SMS is a really important channel for us and we were one of the first brands to use it in subscription. Is one way that we use SMS. The approach we took to subscription is that we have to earn the right to be... if people sort of subscribed, like just signing up, committing to something, that's like quite a big commitment. So we don't auto populate subscribe. We look to win you business and have you voluntary opt in. When your order is about to ship, you get a text and it says, "Do you still want this? Or do you want to change it if something else? We're about to send it." And you can opt out right then. I mean, we text people right before we send it.


And I think people really appreciate that. It's an interesting medium because it is the most intimate form of connection. I mean, there's so many people up in your inbox. I mean, I've got a whole email address that's pretty much a spam now. But there's no many people that text you. So, we keep the communication light. We respect the channel and the intimacy of it. And so, how we've used it as well is say to communicate a new flavor launch. And it's an opportunity we've sent out, like just a kind of picture that Ben snapped on his own phone of him formulating and quite personal message and say, "Look, I just finished making this for you guys. It tastes amazing. Here's what I did with it. If you want to order it, click here, it's ready to order."


And I think on the last one we did, we did something like $30,000 in sales in the first 15 minutes. The click through rate on a text is exponentially greater than you get on email, because it's so immediate. But I think, it's having the discipline, not to abuse that channel, to respect the intimacy of the communication and try and offer real value to people via that platform.


Felix: The SMS list that you have, these are existing customers?


David: Yeah. We allow people to opt in. So they can opt in for email, they can opt in for text. So, as our D to C platform has grown, our owned channels have grown, significantly as well. And it's been really important, particularly with iOS changes and that type of thing. I think a lot of people are looking at the data that you hold and that direct relationship you have with consumers. I mean, as a consumer marketer myself of 20 years before this, there was no way of... you had no connection with the consumer, you sell to a distributor, who sells to a retailer, who sells to consumer. You have no idea who's buying your product unless you invest in some fairly expensive research.


Now, we're chatting to them on a day-to-day basis. We have a pretty reasonably sized CX team with the response rate of under 30 minutes. And if you email us in with something, if you're dissatisfied with the product in some way, if you have a question, we get all that information and we pull that data as well. So we can see the trends of where our things are going and what we might need to do to improve.


Felix: Do you have to offer an incentive people to join the SMS list?


David: We offer what is typical like money off discount. I think it's 15%, if memory serves correct, to sign up. I think though that consumers, and especially see this with gen Z actually, they're willing to kind of really opt into brands that they like, that serve a purpose in their lives, and we're seeing that with Olipop. As I say, people love soda, and they're super grateful that as a company we've developed a solution that meets their needs, that is not taking away the fun and refreshment of soda is allowing them to enjoy an experience they love and is formulated very purposefully and scientifically back to support their digestive health in a pretty meaningful way too.


And so when you're in that position, it's people will willingly hand over their information to contact, because they want to know when the next flavor is available and they appreciate the thoughtfulness and the subscription approach. If they forget that they might be going on holiday and want to turn it off, whatever. So, I think our reputation is starting to catch up with us in that respect as well. People trust our CX platform, they trust the way that we'll use that data. Yeah, I think that become increasingly important for brands as well.


Ben: But I think the... Sorry, just a quick one, another new dawn, the text platform that I really like a lot is, because it's a more personal platform, we tend to be a little bit more personal in our messaging. So we'll have times come from me, quotes will come from a member of the team and we'll also give early access. So if you are on our text platform, you might be able to buy a brand new flavor that's dropping 48 hours before anybody else gets access to it, which our normal flavor is kind of fun. But we've done a couple of limited release flavors.


So if we have a limited release flavor and I mean you're on the text, you're definitely going to be able to get your hands on it, before it starts to dwindle versus the typical the rest of the consumer base. So, early flavor access and kind of content that you wouldn't necessarily get elsewhere that has more of a personal touch, I think has also been a very cool part of that platform for us and hopefully something that consumers are responding to.


Felix: And this 30K in 30 minutes, was that example of a launch? Is that, that generate those sales?


David: Yeah, exactly. Yeah, people were really excited to see what's next. They... So as Ben said, text is the channel that we use to inform people first because for us, it's the most valuable form of communication. So we kind of rewarding in the sense who buys that way. So it's like, if you want to hear about something first, get on our text platform. That's where you get the first... and we're consistent with that, that's where you'll get the first piece of information that is available. You'll get it before anyone else and yeah, so we kind of push people down that funnel.


Ben: [crosstalk 00:55:38] And that was actually on an exclusive, that was on a limited release, a product that was on our orange cream that we did that.


Felix: Got it. One thing I've heard from others that have utilize SMS is that the communication frequency has to be weightless and email needs to be shorter and direct to the point. Is that in line with your experience too? Are there other learnings that you developed from SMS that you found to be useful?


David: Absolutely, on frequency, I would say. It's easy to ignore an email in your inbox. It's annoying to trying ignore a text ping into your phone. So, maybe we send two, three emails a week, we send two texts a month, just to give you some idea of kind of ratios.


Felix: Makes sense. Do you remember how large the list was at that point for a launch like that?


David: I can't remember exactly where we're up to with texts at that stage, but yeah, this has all been built in a very short space of time. We-


Ben: I think we're in 12,000.


David: Was about 12,000.


Ben: I think we're in that realm. Yeah, it's grown a lot since then, but, I think that's about where we were.


Felix: Yeah. That makes sense. Do you remember or rather, what tool do you use today to handle these SMS campaigns?
David: There is a range of different tools actually that the guys use. There's a different one for subscription. I think we've actually just changed tools manage our CX. It's interesting kind of as we found, it seems you have to stay up to date with the latest ones out there. It's very useful to have a network of other D to C businesses around you and be comparing notes, because the space is moving so quickly. Even in the last year, it feels like a seismic shift, and the time that we've already been invested in the D to C space. So, it's interesting as well. It's exciting. Last mile delivery, it has really transformed the profitability of a product like us. So, there's lots of different tools that appear to be changing all the time.


Felix: Any of the ones that you just in general for running the business?


Ben: Shopify.


David: I mean, it's kind of the key one really in terms of democratizing what we can do here. I mean, I don't have off the top of my head. I know, if you're listening to this and you're really interested in staying abreast of what we're doing Eli Weiss on our team, his name is spelled W-E-I-S-S, posts a lot on Twitter about this and the tools we're using and there's some really good podcasts that he's done that Steven Vigilante on our team has done as well. But as I say, the kind of... it appears is changing almost every month. We're kind of constantly reviewing what's out there in the market.


Felix: Yeah, it makes sense. So drinkolipop.com, D-R-I-N-K-O-L-I-P-O-P.COM, is the website. And I'll leave you guys with this last question. What do you think will be the largest or biggest challenge that you want to focus on in the near future?
Ben: From my side and we're kind of living the dream over here. It's a high intensity, it's a high intensity drink. But the goal for us is really to create a product and a product platform that can really be ubiquitous and its ability to resonate with customers across channel, across retail channel, across geography, across political belief. Basically, food and beverage really is at the bottom of Maslow's hierarchy of needs and so it's an amazing tool to bring people together. And soda has done a really, really good job of that, because it is so universally appealing in its taste profile and in the reaction, the neurochemical reaction, it facilitates for the consumer.


Ben: So, it's kind of the biggest opportunity, but also the biggest challenge. We'll just be con continuing to push the product and the brand messaging and the business apparatus into a bunch of different places and talking to a bunch of different customers, which really fulfills against the mission, but is no easy task, because you've got to find languaging that is insightful and still authentic, but could still work across a broad spectrum kind of keep leading into the flavors and taking customer feedback. And I think as well, like for us, we put a lot of effort into doing all of this and trying to build a culture that really humanizes three-dimensional and the people who work inside of Olipop, their physical health, their mental health, their emotional health, their motivation, while still pushing them to execute at a really high level.


We're doing clinical research. We finished our clinical work at Purdue and Baylor College of Medicine. We got really great results back from that, but we're going to be doing more, which is really unusual for a consumer packaged goods brand, likely have some sustainability missions as we go. So, performing and really growing out the base of the platform, performing and executing at a really high level while still looking to consistently and innovatively really do the right thing because ultimately our business exists, not just so we can walk off into the sunset with some cash, but our business exists to serve human beings. And that includes the human beings in the company and that includes all the human beings purchasing the product or potentially purchasing the product and being the best stewards of that mission possible on the broader scale is kind of that's the nut of the whole thing, but that's also where this office is going to be a lot of challenges associated with that.


Felix: Awesome. Exciting times ahead. So thank you so much for coming and sharing your story and advice, David and Ben.


Ben: Our pleasure. Thanks for having us.


David: Thanks.