How does a founder who used to throw up from stress, end up building a multimillion dollar frozen cocktails business?
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Hey there, freedom fighters! My name is Andrew Warner, and I’m the founder of Mixergy, home of the ambitious upstart, and a place where now, almost 800 entrepreneurs have come to tell you the stories behind their businesses.
In this interview I want to find out, how does a founder who used to throw up from stress, how does he end up building a multi-million dollar frozen cocktails business? Craig Cordes, did I pronounce your name right, Craig?
Craig: That’s correct.
Andrew: Did I say Fred by accident?
Craig: No, Craig. You said Craig.
Andrew: Good, Craig. I’m so nervous about getting all these names pronounced right, because I know your drink, but I’ve been in my head pronouncing it one way, and we’re talking, and I’ve got to, of course, pronounce it right. Anyway, Craig Cordes is the CFO and co-founder of Cordina New Orleans cocktails, which makes cocktails that are designed to be enjoyed on the go. I love the product names, including Mar-Go-Rita, Pina- Go-Lada, and Daiq-Go-Ri. In fact, can you hold one up? I think that’s the best way for people to understand what that is.
Andrew: There it is. He’s got the Mar-Go-Rita in his hands. It’s a pouch with a cocktail in it, and this is the business that we’re going to find out about here today. And it’s so cool that you get to actually drink on the job while we’re doing this interview. So.
Craig: It makes the day go by faster.
Andrew: What size sales are we talking about here today, Craig?
Craig: Today we will, projected sales for the rest of the year, we’ll do right over $15 million for this year.
Andrew: Wow. And we are in November, so you’ve got a pretty good handle on where your sales are going to be for the year.
Craig: That’s correct.
Andrew: Back in 2007, your co-founder, Antonio, was relaxing on a beach in Orange Beach, and he had this realization with his mom that led to this business that we’re talking about here today. What happened there?
Craig: Sure. I mean, if you think about it, well, the idea was spawned when Antonio was at the beach, his mom asked him, you know, we were 23 years old, you know, “Hey, can you go upstairs and get some Margaritas for the family?” So like, OK. We had to walk across the street, go up to the condo, get the mixer, the blender, the ice, tequila, the sweet and sour mix, the salt, mix it all up, come back, you know, pour it in a blender, come back down to the beach. By the time we get down there, it’s melted. Oh, by the way, you can’t have glass on the beach. It’s just a hassle, and so he came up with the idea of, “Hey, let’s put frozen cocktails in a Capri Sun-like pouch. And that’s how the idea was spawned at 23 years old.
Andrew: 23 years old, and what was your connection to Antonio?
Craig: Actually, Antonio is a co-founder as well as Sala Martina, who is his brother. Obviously, they were there together, and Antonio, Sal, and I all went to high school together. We all went to different colleges. We parted ways at college age, and then when we went to our professional careers, I lived in New Jersey and they all stayed down here, and I’d come down for Christmas, and that’s how we’d reconnect every year.
Andrew: Wow. So before you connected, what were you doing? You were, you graduated from LSU, you put yourself through college selling stuff on eBay. In fact, before, when we talk about the job that you took on, tell me a little bit about what you did with this eBay business. It feels to me like a lot of entrepreneurs I’ve interview started out by selling stuff on eBay and becoming entrepreneurs there the way, years ago, someone might have, I don’t know, started a lemonade stand almost.
Craig: Sure, it all started, my dad asked me, “Hey, can you sell this pitching machine?” It was a baseball pitching machine. I was like, “Sure, well, I’ll try to sell it on eBay,” when the eBay phenomenon was coming along, and literally I sold it in seven days. I was like, this is pretty sweet. So anything I could find, I went and cleaned out my closet, and found stuff to sell on there. Then I started importing stuff from China, just trinkets, and people were buying them off of eBay. I became a power seller, made great money off of it, and I guess that was the first part of my entrepreneurial spirit was just finding a need, an niche, and making money off of it.
Andrew: I remember when I had my business in high school and college, one of the things that I did was I got to buy drinks for people. I remember being at this party, and someone freaked out because his drinks were drunk by someone else at the party, and I go, “How much did this beer cost? How much does this beer cost? Oh, here’s a ten.” I made them so happy and I made myself feel like a big shot, like I’m going to take care of things because I’ve got all this money. Did you do stuff like that? What did you do with the money you had?
Craig: I actually decided to buy a motorcycle, and then after seven miles I wrecked it and decided I’ll never get on a motorcycle again.
Andrew: Did you hurt yourself?
Craig: It was pretty life-threatening. I decided to pop a wheelie, and it landed up on me, and it was, I’ll never, my what do you call it? My thrill- seeking adventure has kind of been gone. I use business for my thrill- seeking now.
Craig: But, that was one of my biggest things, In college everybody rode a motorcycle to class, and I wanted a motorcycle to ride to class, to get the babes, and that’s what I wanted, so I figured out a way to get it, and I sold stuff on eBay to get it, so that was one of the reasons why I bought the motorcycle.
Andrew: You then went on to work at CIT Group, where you found some fraud. What kind of fraud did you find there?
Craig: Yeah, so I was an internal auditor for CIT Group, and based out of New Jersey. An internal auditor, that’s what we look for. We look for either fraudulent activities, or weaknesses and processes. And so, I actually had the opportunity to fly to China, spent five weeks there, and I was in charge of the expense report audit that we were doing. And we found these people were out there. The MBs are buying cigarettes on company cards, they were buying hair rollers. I mean, it’s a completely different world in China, and some of it was gifts and it just was very completely different, and we spent hours and hours and hours investigating the expense reports that we did in China, and I never got any credit for it, so after sitting there constantly working on different types of engagements, I just didn’t feel satisfied with what I was doing, and I didn’t really see the future going up any further. And so I actually came home for Christmas, and that’s when I was approached with the idea from Antonio to put booze in a pouch, for lack of better terms, and at 23, with no kids and nothing really else to risk, I said,” What the heck? Why not? Let’s do it.” And so we just figured it out from scratch.
Andrew: Why did he invite you to help out with this business? What was the responsibility breakdown that he had in mind?
Craig: So, me and his brother effectively started the company. Antonio is a sales guy. He’s fantastic at sales, but when it comes to reading a law book about alcohol regulations, he doesn’t necessarily like doing that.
Craig: So, my drive and my past entrepreneurial experience, the fact that we were friends, and his brother, who’s a little bit older than us, this would be the mature person in the organization. We decided to team up together and get started.
Andrew: I see. And so, one of the first things that you did, you told Jeremy, was you started to look to see who regulates alcohol.
Craig: Right. I mean, if you think about it, we’re like alcohol, so what are we going to do? We’re going to do like the Red Bull model, we’re going to make this product, we’re going to go pass it out to every college kid, and it’s going to be the coolest thing ever, and then we’re like, “Shit.” You have to get ID’d for alcohol. You can’t buy it everywhere. Well in Louisiana we can buy alcohol at the grocery store, convenience store, but in California you’re not necessarily can buy distilled spirits and so, we were like, well, first off, somebody regulates it. It’s kind of like a bank, or any regulated industry and so we went through the law book and figured out who regulates us, and how it could be classified, and the taxes involved and what licenses we need to hold to operate, because without knowing that, we didn’t have a business.
Andrew: I know the three of you had full-time jobs when this idea came up. Did the three of you keep your jobs at the beginning?
Craig: We all kept our jobs for the 18 months of R & D when we were trying to figure out the entire supply chain, what we were actually going to do. We all kept our jobs, and then for the first six months within the launch, we kept our jobs and then there was a pivot point where we kind of looked at each other and like, “OK, we’ve been doing this for six months, like, are we in, are we out? Are we going to just flush this? Is it going to be a hobby? Is it going to be full-time?” We all said, “Well, let’s give it a shot.” You know, now, we’re 25 at the time, and we all quit. In July 2009, we all quit and said, “Let’s go full force with it.” Since then, we haven’t looked back.
Andrew: All that time were you just researching it and planning, or did you already start some of the process that we will talk about in a moment?
Craig: Eighteen months was research and planning. We literally did not know what we were doing from who regulated us to how we fill this product. How do you make it consumable? Where do we buy pouches from? Are we going to use distilled spirits or are we going to use wine? Are we going to use malt? How do we brand it? What is the name of the company? Everything from that aspect is pretty much what took up that 18 months.
Andrew: I see. How did you come up with the name for the company?
Craig: It’s Cordes, my last name, and La Martina, which is Sal and Antonio’s last name. There is actually a pretty funny story behind that. We were at one of the naive parts of starting your company. We came up with this cool idea that we were going to be called “Spiked” because you can spike a drink. We can go on with volleyball. This was when Crocks [sp] was hot.
Andrew: Love that.
Craig: Yeah, that would be cool. Then we submitted it to the government. We had business cards printed and t-shirts printed. You had to submit your labels to the government. They take 90 days to get back to you. So we are printing all this stuff out. We are going to have to go to trade shows, have somebody write about it, get mock ups done. Then they send us a response back saying “You cannot use the word spiked because it implies intoxicating qualities.”
We had to flush that idea really quick and within 48 hours had to come up with a new name. We said “Cordes and La Martina Cordina sounded cool”. It’s kind of who we are that’s kind of where it came from.
Andrew: I see. Man, it is so tough to be in an industry that is so fricking regulated. I’m used to people who are in the text space who say, “I had this idea. I threw up a website. Then I saw what happened.” Here you have to make sure you are doing everything properly. Even a name can cause you trouble.
Craig: Absolutely. If I had to do it all over again, I wouldn’t suggest this route.
Andrew: Well, it keeps out the competition. The odd thing about the space where I usually do interviews is that you come up with a great website and then a competitor sprouts up very soon afterwards. For every Groupon there are a ton of Living Social and other sites that come up and try to take on the same space. You then went on and you got a loan for $25,000.
Andrew: What did you have in mind for the initial use of the money?
Craig: In my industry we are manufacturing. You have to buy inventory. We had to buy pouches and wine. That $25,000 would suffice. It paid for one month’s rent. We get $25,000, we buy our pouches, we buy the wine, bring it in, and then we start filling them, but we never had any customer to sell them to.
Andrew: You decided before you even had any customers, ‘We are going to buy these pouches and mix it ourselves at home.’
Craig: Correct. If you think about it, if you don’t actually do something and you are not in a position where your back is against the wall, generally you will talk yourself out of doing something and you will never get it done. Being an entrepreneur, sometimes you just have to take a leap of faith. What was $25,000 at twenty-five years old, divided by three? I could eat $10,000 later. Let’s bring it in. Initial force is to sell it, right? That’s what we did.
Andrew: Can you actually mix drinks and sell them on your own? It doesn’t have to be under some kind of supervision?
Craig: The way the alcohol industry works is a three tiered system. There is the supplier, which is us, the manufacturer. There is a distributor. Then there is a licensed retailer. This has been dated back since prohibition. They created this three tier model. It’s called Tight House Rule. If you called me up and said, “Hey Craig, can I buy a case of Cordina?” I can’t legally sell it to you. However, you can go to your local Walgreen’s and find us and buy us. Walgreen’s is serviced by Young’s Market in California. I sell to Young’s Market. So there are three people that are making money off the product at all times. They do that so the cost of alcohol is not cheap. Everybody has to make money off of it. That’s the reason why, since prohibition, they have done that.
Andrew: I see. And also to keep control out of any one person’s hand I guess?
Craig: That is correct.
Andrew: But you are allowed to just mix it up by yourself? You don’t need to have anyone special look over your shoulder?
Craig: No. We get audited. There is a regulating body called the TTB. They will come in and audit to make sure that what you are doing is proper, that your alcohol content is correct, and your fill levels are correct. You get audited by the TTB and the FDA to make sure it’s a consumable product as well.
Andrew: OK. I noticed when I drank it that there wasn’t rum in the drink that I had. It was wine.
Craig: We made it a wine based product. Here in Louisiana you can buy distilled spirits and wine and beer anywhere but generally across the country you can only buy distilled spirits at a liquor store, but you can buy beer and wine at your grocery store. When we were starting the company, were like, hell. We’ve got to compete with Jose Cuervo and Sauza and Bacardi, and all these other big major brands. Then, reading the law books, we were like, whoa. If we make it with wine, we can be sold in grocery stores, which then, we really don’t have to compete with them because they can’t legally be sold there anyway. That’s why we created it with wine, so that it gives us a point of differentiation in the market.
Andrew: I see. Did people tell you that you are crazy for going up against these big guys?
Craig: Yeah. They all said we were pretty stupid. Honestly, we thought we were stupid too. [laughs] Again, being an entrepreneur, being young, nothing to lose, it’s been the best MBA I’ve ever had.
Andrew: All kidding aside, you did maybe think you were stupid, but didn’t you at the same time think, “We found a brilliant idea here. This is going to be the hot thing that everyone’s going to want to drink, because it’s different from beer and wine, but it’s as accessible. It can be carried around. It tastes fun. It’s appealing to people who don’t really, frankly like the taste of rum. But they do want something that’s a little more flavorful.” Didn’t you think this is brilliant?
Craig: No. It was absolutely. We thought it was brilliant. However, we can’t outspend the big guys. We had to outsmart them. In a space where you have to compete for retail shelf space, that’s a game that you just don’t want to play against the big guys. No doubt it was tough. Of course, we had the vision that we would change the way people consumed frozen cocktails. We would make it easy. Yes. Everybody loves to play bartender. However, people in today’s society, with iPhones, and everything is now. I want things now. I don’t want . . .
Andrew: I’m not going to sit and blend. Give it to me now.
Craig: Yeah. I don’t want to wait for an answer. I want it now. So, you call people, then you text them and say, “Hey. I just called you.” “Yeah. No shit dude. I know you called me. I will get back to you in a second.” That’s just kind of the mentality of that in the society we live in today. Everyone wants it now. It was perfect for us for an RTV cocktail that tastes awesome, because we are from New Orleans, where we make awesome cocktails and bring them to the rest of the world. We also had the vision, the fact that if you ever come to New Orleans, you can literally go through a daiquiri shop like McDonald’s. Ask for a strawberry daiquiri, medium size, and they will give you the cup without the straw. If you puncture the hole it’s considered open container. They give you the cup, then the straw on the side. Then, you can do what you want with it. It’s literally like ordering cheeseburgers to get that.
Andrew: I’ve heard that. I haven’t been. I’ve heard that. That blows my mind that you can just drive up and get one of those daiquiris.
Craig: Right. That’s what we thought. We would bring these little things to convenience stores and retail outlets, where you can walk in, grab a drink, and go home, put it in your freezer. Sometimes they are served frozen in the grocery aisle. You will find us in the frozen section in the summertime. You can bring your frozen cocktails to your favorite place.
Andrew: You are mixing this stuff up at home. You got it ready to go. Where do you take it to sell it?
Craig: Like I said, before we had to sell it to a licensed distributor. We start calling distributors. We tell them we’ve got this great product. They should carry it. They all laugh at us. These are distributors that carry your major brands, your Crown Royals, your Bacardis, your Grey Gooses of the world. They don’t care to talk to you. I’m just some young entrepreneur that has a drink that we are not going to support. It’s not probably capitalized. They are going to bring it in. They are going to sit on the inventory. It’s not going to move. We got told “No. No. No. No.” Finally, we get this one small wine distributor in New Orleans that says, “We will take you on.” We are like, “Great”. We sold the first account, Rouses Market, which is a local company here in New Orleans”. We hand sold it on Friday, Saturday, and Sundays behind for 3 to 4 hours doing sampling events. That’s kind of how it got started. Then, six months later, republic calls us like, “Hey. Our reps keep seeing your stuff everywhere. I think we might want to take a look at carrying you guys.” So, we go in, talk to them then. They started carrying us. They get us the reach that we needed to get. We won a beverage packaging award in Beverage World for functionality, which goes out to all the distributors. They started calling us. Then, they started to build momentum from that. It all started with just that one little small distributor. Now, we have 108 distributors nationwide.
Andrew: How many ‘no’s’ do you think you got before that one small distributor said, “Yeah. We will take a shot on you guys?”
Craig: Probably a good 30 no’s.
Andrew: 30 no’s. At any point there, did you think we just went in the wrong direction, let’s get out of this business?
Craig: Oh, yeah. Even in 2010, after ’09, we were like geez, are we going to make it? Are we not going to make it? This stinks. I can go back to my corporate job where I was getting paid every other Friday. I’m tired of living at home with my parents. But, we kept . . .
Andrew: Why? Why did you keep at it, Craig?
Craig: Because we had a vision. We believed in our vision, that we could change the way people consumed frozen cocktails. We were self-funded for the first 2 years, and we knew that if we got a little bit of backing, that we could make this a success. We actually joined the Idea Village which is a business incubator here in New Orleans. They helped us with the marketing, building a financial model, It stuff, lawyers, everything that you could possibly need, and it was all free. It all culminated with a business plan presentation with five companies. If you won then you got a chance to fly to San Francisco and meet with a bunch of venture capitalist firms. When we won that competition we got some funding from the west coast, and some local money and that just grew our company from there. From 2011 on, we haven’t looked back since we raised that round of capital.
Andrew: Wow. In the early days, you packaged it yourself at first, as you said. You mixed it up and you poured it. Then you went to Mexico, where someone was going to put it together for you. How did you find this company in Mexico that was going to do it all for you?
Craig: We had a friend on the west coast who knew a distillery who knew someone. It was a who knows, who knows who. We made the phone call and said, “Hey, we’re coming down” and we started talking to them. We fly down and meet them. We start getting our margaritas mixed there and bringing them in, in totes. It was just by luck and chance. We fly down there, we meet with them, and that’s about it.
Andrew: And you’re not a trusting person, especially not a stranger in Mexico. What did you do to make sure you got what you paid for?
Craig: That’s actually funny you bring that up. I was nervous as hell that we send our mix down there, we mix everything up, we bottle it into these massive drums and then they are going to come back up. I heard these horror stories about Mexico. I told Sal, “Send the truck. I’ll wait here with the owner of the distillery when the truck arrives. I’ll load it for them. As soon as I get everything loaded and sealed on the truck, we would wire the money.” Everything gets loaded up, then calling and saying, “All right, you can wire the money.” Four hours later they get the money.
Then we were nervous about what happens if the truck gets hijacked on the border. You see all this stuff on the news. What better way to hijack a truck than with 15,000 gallons of alcohol in the back of it. We had insurance on the truck. It was funny. Then we got used to it and cycled through since then.
Andrew: The throwing up part happened even before you started this business. What is it about this business that stressed you out so much it made you actually, literally vomit. Right? We are not just talking about physically.
Craig: Yes. With any business, if you talk to anybody that’s in business, you’ll find there are so many facets that you get hit from. Whether it’s employees, overcoming sales challenges, because you will never have enough money, or raising capital, you get stressed out with the success because growing a business is like steroids. You are never happy so you are constantly trying to build it, build it, build it. You don’t want to look like an idiot out there to your friends and family and investors. It is just constant stress that you are put under.
I put myself under a lot of pressure because I am a perfectionist. I constantly want to achieve more than what I set out for myself. That’s kind of what started it.
Andrew: I see. Can you remember something that got you physically sick? Because this happens to me too. I wake up in the middle of the night with worries about the craziest stuff. I can’t relax my mind when that happens. It’s things like, “I can’t believe that I asked him that I call him Fred.” That’s the kind of thing that would keep me up at night. I would think, this is just so stupid that I did. What is it for you that gets you going?
Craig: The first time I was really nervous was in 2009 or 2010. I can’t remember what year it was. I literally had payroll due Friday, and there was not enough money in the bank account for payroll. If you ask any small business or any entrepreneur, they have missed payroll or almost missed payroll once or twice before.
Craig: I’ll never forget it. I thought, “Hell, I don’t have the money. The checks didn’t come in.” I had to go to my bank. I had to get cash out of my personal bank account. It was the last of my savings to make payroll. Get the cash out, go to the business account, submit the cash because once its cash, it automatically goes in so that I can make payroll on Friday. Then come Monday, the checks were all in finally.
Missing payroll is never a fun thing. You have to have your human capital. You really have to come up with some type of crazy excuse to keep your people motivated if you miss payroll.
Andrew: They stop trusting you.
Andrew: Even if they love you, they have got families.
Craig: Absolutely. They have to put food on the table as well.
Andrew: How many people do you think you had at the time?
Craig: At that time we had twelve. It was in the middle of busy season, going into summertime. This is when we were still practically hand filling them. There were a lot of people boxing and filling. Now we have up to one hundred twenty-six people total. That’s with front office, back office and production, and we’ll crank out hundreds of thousands of [??] a day now, but a lot of its automated, as well.
Andrew: I’m looking at the original process here in my notes. There was some kind of foot-cranked pedal system. What was that like?
Craig: Yes, and when we first started, we never had any money, right, and so we actually filled each one by hand [??] spout, put it up to this little filler, and we pressed the button with our foot and it would shoot it in. And so my buddy was over for my birthday, and we’re filling pouches, and he’s like, “Oh, give me a shot at that. Give me a shot at that.” I’m like, “All right,” and we’d be kind of drinking a little bit, and so he steps on it kind of hard, and the freaking foot pedal cracked.
Andrew: Oh, no.
Craig: And anyway, all this product here, we can’t fill anymore because the foot pedal cracked, and we don’t even know where to fix this at. So we just kind of stopped for the day, cleaned up, and then called the manufacturer [??] the foot pedal’s really easy. We got it overnighted to us, and so we were back in business that following week, but it was just one thing after another. You’re finally in business, you bring people over, and a guy steps on it and cracks it, and it’s just typical things that happen.
Andrew: You know what, that kind of thing, somebody just goofing around, drinking and breaking your equipment, you not being able to make payroll, this whole process, stressing out, many people would become hard asses because of it. They would be so nervous that anything could go wrong, because so many things did go wrong, that they would just be the most uptight people out there, “Don’t screw around because anything could break, Laugh on your own time,” you know this kind of attitude. You don’t have that. You’re goofing around with me. You’re cursing a little bit in this interview. You’re drinking. Why didn’t you go that way? Why didn’t you become a hard ass?
Craig: Because those guys never win, honestly. Nobody wants to work for somebody like that, nobody really respects people like that, and it never really builds a team mentality. In any organization, a team mentality is very, very important. It’s not Craig’s way or Antonio’s way or Sal’s way or Matt’s way. We all work together as a team and having a hard ass mentality, you just don’t get any respect. We rely on our people to do a great job, and if you don’t treat them how you want to be treated, then you’ll never get anywhere. It’s [??]
Andrew: What about the opposite side? What about the fact that here you are, three friends, we’re making alcoholic drinks, you guys are the fun guys? You ever have people just not take their job seriously enough because . . .
Craig: Oh, yeah, we have that, too.
Andrew: What do you do?
Craig: Actually, I’m reading a book right now called “The Lean Startup”. It’s a pretty solid book.
Andrew: Eric Ries is a good friend of mine, and he’s been on Mixergy a couple times.
Craig: Excellent. I just started reading it. It’s been suggested to me by a bunch of people, but one of his metrics is, or chapter is, “Build, Measure, and Learn.” I kept sitting there saying, ‘Why do these people keep walking on me, or these certain people keep walking on me?” And I started to realize, well, we never measured them. There was nothing measurable about them, so what were their tasks that they had to do every day? What were they supposed to achieve? Did they achieve it? Was it communicated if they achieved it or did not achieve it? And we started putting these measurement tools in place, and so the employee knows, we know, and everybody kind of around the table can say, “Are you a good employee or not a good employee?” One of the most things that we learned was measure. You have to measure what you expect, and if you don’t, then just nothing will progress, and it was interesting to see that in this book about that.
Andrew: All right. So you had this idea that you were going to hand this stuff out in volleyball games, be the Red Bull-style marketer, but you couldn’t exactly. How did you start marketing it? How did you start letting people know about it?
Craig: Right. So still to this day, we’ve never run any national traditional media, if you will, no radio, no TV. A lot of our stuff is very grass roots, coming onto interviews like this. We’ll speak at schools. We’ll do a lot of sampling events. We’ve done Hangout Fest down here in the Southeast. Traditionally, we just never really did much marketing. However, like I said earlier about drive-in Daiquiri Shops, we wanted to turn convenience stores into walk-in Daiquiri Shops. So Antonio had this great idea to put freezers into these stores that were fully wrapped [??] and people [??] could walk into the 7 Eleven store and go grab a frozen pina colada for $2. And so we deployed 6,000 freezers and spent almost over a million dollars on freezers putting them in the stores. Like I said before, the shelf space is tight in a retail store, so this provided us our shelf space. It provided us a branded cooler, and, oh, by the way, provide the consumer the ultimate way to purchase our product, which is frozen, and it was convenient at a convenience store. So we deployed 6,000 of these little puppies into the marketplace, and they turned extremely well with the product. It’s done a phenomenal job for us.
Andrew: If I, by the way, drink it from the freezer, it’s pretty solid as it comes out of the freezer, so I have to leave it out for a little bit before I drink it, right?
Craig: Correct. And so, what you’re supposed to do, it’s freeze, squeeze, so you squeeze it up. I mean, you can let it, if it’s hard, most people, 90% per cent of people who buy our product are taking it somewhere. You’re not necessarily buying it, and you need to open it right then and there and put a straw in it and drink it, and so, by the time you buy it and you get in your car, you go to the beach or you’re going your family barbecue or your friend’s house, it’s going to be, at least, five or ten minutes, and so that gives it enough time to kind of defrost. You give it a little massage on the bag, you get it nice and slushy and voila. You unscrew the top, put the straw in that it comes with, and you’re ready to rock.
Andrew: Gotcha. And then you can start drinking it. So it takes just that long? I get a little impatient, I guess.
Craig: Yeah, yeah. Listen, if you really need it right away, if you’re at home, just run it under hot water and literally, in two minutes, it’s done.
Andrew: Oh, I didn’t even think of that.
Craig: But a lot of people also like it frozen, too. We just got an email yesterday, actually, this lady said, “Oh my god, I love your product. I don’t need ice in my ice chest. I just bring my sandwich and a couple beers and three or four Cordinas, throw it in my ice chest, and it keeps everything cool for my picnic, and then after about an hour, ‘m ready to go with your Cordinas.” Because if you keep this in an ice chest, frozen, it will stay frozen for a good long time. We’ll do golf tournaments, and we’ll load up at eight o’clock in the morning. By four o’clock, they’ll still be frozen in an ice chest as long as the ice chest is closed. So it just depends on how quick you need your Cordina.
Andrew: Let’s see what else I want to find out about. Jeremy asked you about your lowest points, and you said after two years of doing this, you quit your job, not being anything for a long time. You were even living with your parents, and you depleted your entire savings and 401(k), and you continued anyway, because you had this vision. Did you cut grass on the weekend?
Craig: Yeah, so it got to the point where I needed to pay my cell phone bill, because my cell phone was my lifeline to the business, and so I never went on dates with girls, I wouldn’t do anything on weekends because I just didn’t have money to do anything. I actually just moved out of my parents’ house.
Andrew: Just recently?
Craig: About eight months ago.
Craig: But it still feels like it’s recently because I spent so much time there, but you have to do what you have to do. I mean, if it’s flipping burgers, if it’s making snow cones, if it’s cutting grass, you’ve got to make it work, and you have expenses to pay, and you have car insurance, and cell phones to pay, and after the depleted savings and the 401(k), it had to come from somewhere, it’s not just going to fall out of a tree. And you’ve got to start cutting grass on the side, because if you do it on a Saturday, you make great money doing it. It’s not difficult, and that’s what I started to do after we weren’t paying ourselves the first three years.
Andrew: You know what? It’s amazing how many entrepreneurs I interview have that situation where they have to go do something, not necessarily like mowing lawns, but something like that, but they don’t see it as a failure, they continue anyway, they don’t see it as beneath, they continue anyway, they don’t see it as proof that their idea failed, they continue anyway, and they have the success that you had. And you mentioned earlier that one of the reasons why things turned around for you was you applied to Idea Village, right?
Andrew: That was the incubator?
Andrew: Your mom encouraged you, I think, to apply, which now that I understand that you were still living at home makes me think maybe she just wanted him out of the house, I need an adult, already, not a kid still living with me. But you were rejected. Why did they reject you the first time you applied?
Craig: Well, I think there was just a lack of processes on their end. We had to submit our application through this black hole with applications at IdeaVillage.com. Nobody looks at those things, you know that. I mean, it’s like submitting a resume, I mean, to HR at whatever company, so I don’t think we had the credibility, from that perspective, I don’t really think they knew what they were really getting into, either, when they were trying to incubate businesses. And then the following year, finally got some funding from the government and some more backers, and so they put some staff in place to actually review these business applications that were coming in, and we also got referred to them by a good friend who put in a word for us, like, “You guys really got to meet these guys.” I told them that. And so we finally got the interview and you know, we got into the program, which ultimately gave us most of the success that we have.
Andrew: Huge boost, huge boost. You guys raised them $350,000?
Andrew: OK. And that’s what enabled you to do the freezer program which changed everything?
Craig: That is correct. And pay my (?) off.
Andrew: And pay your (?)? Another big challenge that you told Jeremy, our producer, is that you guys came out at the wrong price-point, right? What was the price that you charged and where should you have been?
Craig: We came out, well, there’s multiple (?), so there’s pretty three main ones, we came out at the wrong price point, a lot of entrepreneurs, like, I have this good or service, how do we price it? Ultimately, the consumer’s going to dictate that. We came in at $14.99 a four-pack, which was way too high. Then we dropped it down to $12.99, then $11.99, then $9.99, and then ultimately, where we’re at now is $7.99, and then now we’re getting rid of the four-packs, and going single sales for two bucks. So you’ll find it sometimes in a four-pack for $7.99, sometimes single sales for $1.99, but, you know, at every price level, we start seeing volume go up, volume go up, and so we would do test markets in different regions, and that ultimately drove, kind of, where the consumer was really comfortable with the price at. That was the first mistake, was pricing it wrong, and the second one was coming out with one SKU at first. Only had Margarita for the first two years, and people want more than margaritas. They want daiquiris or they want mango, they want malt, all these different flavors. I mean, go look at Arizona Tea’s shelf. There are 30 different flavors, and we came out with one SKU. That was really tough to do it that way as well, was coming out with one.
Andrew: Is that because, as long as you’re getting shelf space, you can get more shelf space, for three products, and it’s not three times as hard to get that.
Craig: That is correct.
Andrew: I see. So as long as you’re making all those cold calls, and getting rejected, and eventually getting into a store, you might as well enter the store with multiple products and give people multiple opportunities to try and like your product.
Craig: That is correct. And also, if you think about it from a consumer perspective, somebody may say, “Oh, I love margaritas,” and her friend may say, “I love daiquiris”, and so now you get two consumers instead of one.
Andrew: I see. And what about the pricing? Is it just like they taught us in school? You know how they show you the supply curve where the lower your price, the more you could supply, or the demand curve, the low, what is it? The lower the price, the more people want it, the higher your price, the more you can supply it. Is it just like that, like in school, where you can actually plot it. Is that what you guys do?
Craig: No. We never really did anything academic-wise. We literally just, it was just feedback from the distributor. I mean, if the state of Alabama’s priced at $9.99, and Louisiana’s priced at $7.99, who is outselling what? We get access to the retail returns, and so I can figure out Alabama retailers are turning in an average of 50 cases per store per year, and Louisiana may turn in 75 cases per store per year. And so, obviously, it has something to do with price-point, and there’s other factors, but a lot of it was driven by price point as well.
Andrew: I see. And, in your business, are you willing to lose money on a sale today to make it up later on because you’re introducing your product to new customers?
Craig: Yes, we have done that.
Andrew: For how long do you do it?
Craig: Usually for the first 60 days, kind of like an intro deal, if you will. And so, it allows us to get it. Our goal is to get it in people’s hands, and so, if that means I have to give it to you for free to try it, then that’s, so be it.
Andrew: Are there places where you can literally give it to people for free today?
Craig: No, there isn’t. I mean, there’s some events, you know, special events, like we just did, at Christmas in the Oaks, here, and they have all the liquor companies out, and you can try all these different products. I mean, at events like that you can, but you can’t just say, “Hey, dude on the street, want a Cordina?” and throw it out the car to him. It doesn’t work like that.
Andrew: Tim at Walgreens, how did you get into Walgreens and who is Tim?
Craig: Tim is the buyer at Walgreens, and we received a phone call, I don’t even remember when in September, we’re going right out of busy season last year, and we ran out. We came into the office on a Saturday, and we get a phone call, and said, “Hey. It’s Tim at Walgreens. I’m looking for some information on your product, if you could, give me a call back at blah blah blah.” And then me and Antonio were like, we looked at each other and we’re like, “Sweet, dude, this is like, a national chain account. This is awesome.” We weren’t out in Walmarts or anything at that time. We were in some local regional grocery stores, and a bunch of independents, but never a national company would like to take us on. So after six months of negotiating the deal for the launch, for the nationwide launch of 2012, 2012. Sorry, I’ve been doing budget for 2013 so everything in my head is 2013. For 2012, we kicked it off March this year and rolled it out nationwide through them and it’s been extremely well. The Duane Reades, which is owned by Walgreens in New York just killed it. I mean, they do extremely well in the city as well as Walgreen’s on the west coast. California does well, and pretty much everywhere does very well, but New York is just killing it through Duane Reade.
Andrew: Wow. I didn’t even know Duane Reade could sell alcohol.
Craig: It’s wine.
Andrew: I see. They can sell beer and wine? I didn’t know they could do that.
Craig: Wine has to be below six%.
Andrew: I see. I didn’t realize that. That must have been new since I left. You don’t like to delegate though, you told Jeremy. I’m revealing too much about my notes. I accidentally read Tim’s name and gave away the fact that I know the answer.
Craig: That’s fine. We can talk.
Andrew: I think maybe it’s because you’re so relaxed that it’s relaxing me. You know how, as an interviewer I should be so relaxed that you spill some stuff? I think it’s happening the other way. I think you’re relaxing so much and then I start revealing everything. That plus, I got new hot lights. I moved to San Francisco and I said, ‘It’s time I got decent lighting in here.’ You should see this. It’s a really professional setup here. It is boiling me. I am sweating from every pore. I can’t believe that I continue to sit like this.
Craig: That’s funny.
Andrew: I should have one of those drinks. That’s why I keep talking about the drinks. I just want a margarita, right now.
Craig: Go to Walgreen’s. They’ve got to have one near you.
Andrew: They actually do. I just discovered that they did. I’m now getting the lay of the land here. So anyway, delegating.
Craig: Delegating is probably one of the most important things in management, and me being a perfectionist and a control freak, and eventually, knowing that we had to grow an organization for me to delegate was really tough. I mean, I remember last year, I never had a control or any account. It’s tough for me because I do handle all the money. You read all these things on Money.com or wherever, and these companies or CFO’s money launder this amount of money, or the controller stole this amount. This is everything I’ve ever worked for. My entire net worth is is this company. I didn’t want anybody else touching my money except for me and my business partners. So delegating in my role was very tough and so finally, I hired a controller this past year. It was someone that I trusted, that I’ve known for the last six years of my life. He’s been fantastic. It’s been great. What I’ve started to realize was that, as I start to delegate, and as the owners started to build their teams from sales and production, it started to all come in synch with each other. It was tough at first, because nobody can do it better than yourself, but you can’t do everything. There isn’t enough time in the day. So you have to learn to delegate and trust the people and the team that you build. Again, it goes back to measuring, measuring your team and make sure they are striving to do what’s best for the company and what you have expected for them.
Andrew: You would do the same thing for yourself and the company. What’s your vision for next year? Now that you’re setting up for the budget for next year’s sales. Where do you think you’ll be at the end of 2013?
Craig: Can you give me one second? Let me grab my charger.
Andrew: Sure. I’ll keep the interview going though. I’ll just sit here in front of the lights. Let me see, actually. For anyone who happens to be watching at home, this is what it’s like with just normal lights, and I’m going to look at it myself. I am hot here. Now I’ll bring up the lights again.
Craig: All right. We’re good.
Andrew: All right, we are back.
Craig: Sorry about that.
Andrew: No, thanks for charging it up. Where do you think you are going to be in 2013?
Craig: Next year, we will probably double sales from where we were at today. We have a lot of really cool stuff coming out next year. We have these Cordina. We have found out that a lot of our consumers are females and they are looking for something that is more easy on the stomach, if you will, from a caloric content prospective. So we are coming out with Cordina Lights. We’re really excited about that. Each pouch is only 100 calories, per pouch. I’ll repeat, it’s 100 calories per pouch. If you go buy Skinny Girls non-Skinny Margarita, which has 100 calories per four ounces, our pouches are 10 ounces and it’s 100 calories for 10 ounces.
Andrew: That’s like Bud Light. That’s less than Bud Light.
Craig: So looking at four ounces for 100 calories, you’re looking at 250 calories for the same serving that we have, and we only have 100 calories. We’ll be the lightest drink out there.
Andrew: I’m sorry. Where do you think you’ll be next year for sales?
Craig: We expect to double sales.
Andrew: And what did you say your sales were this year?
Craig: We’ll do around 30 million in revenue next year.
Andrew: Thirty million next year.
Craig: Yep, thirty million in revenue.
Andrew: You guys profitable yet?
Craig: We are just profitable this year.
Andrew: Wow, what did you do to celebrate profitability?
Craig: We drank more Cordinas. [laughs]
Craig: Honestly, not that we were never profitable in the past, we did have small losses but they weren’t huge losses that you normally see in small businesses. We run a really lean ship, we don’t overspend on stupid stuff like I was saying. We’ve never done any TV or print, all these people all these media companies come up to you “oh, you’ve got to go spend three hundred thousand dollars on this” no you don’t. You don’t have to spend three hundred thousand dollars on that when you’re starting your company. If your just smart about your spending and you negotiate properly you can get a lot of stuff done for a reasonable price. We were really smart, we didn’t grow our team until February of this year. Before that it was kind of like hourly people, and a few only commission people. We never really had a strong payroll until this year. And this year…
Andrew: This might seem though for marketing for you guys, it seems like it’s all about distribution. If you are in Walgreens and Duane Reade because you have an innovative product that doesn’t look like the bottles that are on the shelf right now people are going to at least sample you, and if they like you they are going to continue. But there isn’t a big marketing budget, there isn’t a big way for you to get people to sample. Is it just that, distribution?
Craig: It’s distribution right now.
Andrew: And the innovative package and Antonio came up with that day that his mom wanted a margarita.
Craig: Correct. Now going into 2013, 2014, 15, were eventually going to have to start investing into to that kind of consumer marketing and we have plans to do it. But for the past five years we haven’t taken that seven million dollar, hey let’s do this national campaign and see if it sticks.
Andrew: What about Walmart? I remember being in a mastermind group with a friend that was working on getting into Walmart. It took him a long time to get. He was selling soccer jerseys into Walmart. Took him for frickin ever. Once you get in there, the payoff is huge, but it takes forever. How did you get into Walmart?
Craig: Well, again it goes back to, we don’t directly sell to Walmart our distributor…
Andrew: Oh I see, you get to the distributor that gets you into Walmart, so that’s the thing, if you get with them your good.
Craig: Correct. So ultimately we still deal with Walmart, we have to deal with the buyer. However we can get an inside track into his office by leveraging our distributor, so it’s a little bit different. Everybody’s like “Oh, Walmart payment terms, oh it’s so long and they beat you up on price and do this and that”. They do a little bit, but again, my industry’s different. I’m in alcohol, I’m highly regulated, very price transparent in the industry. We don’t really have to deal with the normal dealings that you would have to, sell soccer jerseys to Walmart.
Andrew: So there’s an advantage though to going through a distributor. Yes they take a cut, yes it means that there’s another layer between you and the customer, but it seems like the big advantage is that if your with the right distributor they get you in where you’d have to struggle.
Craig: That is correct.
Andrew: Business plans. People ask you all the time, should you do it you say no, why?
Craig: I do a lot of speaking events at college campuses, and one of the main questions that people ask is, “I’m working on my business plan, any advice on my business plan?”. Ultimately, everybody always asks me, did I do a business plan or did we do a business plan. We never did a business plan because your business changes every freakin’ day.
Andrew: So what do you do? How do you know what to do from day to day, what to focus on for a long enough period of time that you can actually get it done?
Craig: See my business plan is, I know where we are today and I know where I want to be, and there’s alot of stuff in the middle that needs to happen. You make a ton of to do lists. To do list A, we’ll call in, me, Sal, and Antonio will come into the office, at least, once if not twice a week, and we’ll get in the conference room and say, “OK, what do we need to get done in the next eight days?” We’ll break it all out as to what needs to get done, “OK, you do this, this, this, this, this” and every time we walk into that conference room we can go, “OK, we need to do this”, and go on. You can kind of see the long-term vision of where you want to be at, but if you get so caught up in writing a fifty page business plan you’ll never execute your idea. You’ll sit there and beat it up so much that it’s a dumb idea, and then you’ll just continue to work for somebody.
Andrew: So the budget that you’re preparing for next year, that’s essentially your long-term business plan?
Craig: Let’s step back a second, that’s when we were in startup mode. Now we’ve become a much more mature company.
Andrew: I see.
Craig: We’ve been in business for five years, and I have [??], and I have people to report to. We have, of the hundred however many people they have there it fluctuates every day, we have people that we need to make sure that we have a payroll, that we can meet payroll, that we have a plan in place, that everybody’s accountable for this. It’s a lot different when you’re five years in and you’re a little bit more mature than when you’re at startup phase. You’re trying to go everywhere. So my business has changed constantly, but it doesn’t change as much as when you’re in startup mode. Does that make sense?
Andrew: Yeah, that does make sense. In startup mode, you just need to do whatever it takes to get it out there.
Craig: Exactly. I don’t know how long it takes in general business, but for us it took us, where we are at today, five years now, and now we have budgets. This is our first budget we ever did. And so we have budgets, and we have plan . . .
Andrew: [??] you could budget that far out is because you have more predictable revenue. You know what Walgreens is set to do. It’s OK.
Craig: That’s [??]
Andrew: OK. Let me do a quick plug, and then I’ve got to ask you two questions that I’m probably not supposed to ask you but are important to ask. So first, the plug is for Mixergy Premium. If you’re a Mixergy Premium member, Jeremy, the guy who I keep mentioning, who did the pre-interview here, keeps telling me that I’m not mentioning enough the fact that Mixergy Premium members have access to hundreds of interviews. So as you’re going through your holidays, through your commute, and by holidays I mean your trips out somewhere for the holidays, or maybe your commute day to day, or maybe you’re just walking around or running or going to the gym, download these interviews if you’re a Premium member. Listen to them. Let these stories fill your day, and I am telling you that what these entrepreneurs have done will start to embed itself in your head. If you see an entrepreneur who mows the fricking after he’s starting his business that’s supposed to change his life, and you have a little setback, you can go, “This is part of the process. I don’t remember the name of the guy maybe necessarily who had this happen to him, but he created these great margarita drinks. It happened to him. He’s now in Walmart. He’s now getting interviewed on Mixergy. It’s OK if I have this little setback.” And that’s what I do these interviews for, to let you see how other entrepreneurs deal with life and let you understand that these issues are pretty fricking common, because if you surround yourself by talk radio or television or movies, you’re going to have a whole other world view. You’re going to start to think that success happens instantly, and if it didn’t happen for you instantly, then it means that something’s wrong, that it’s a good indication that you’re on the wrong track. Anyway, I want you to be exposed to these entrepreneurs so that you can go out there, build a successful business, and hopefully come back here and do your own interview. And if you’re a Premium member, you get access to these hundreds of interviews. If you’re not a Premium member, go fricking sign up already at MixergyPremium.com. What dropped over there?
Craig: That’s the girlfriend that just walked in with [??]
Andrew: That’s one of the questions I wasn’t supposed to ask you about, dating. You said earlier you didn’t get to date because you were busy building this business and living at home. You’re dating now?
Craig: Yes, I do have a girlfriend now.
Andrew: OK. Did you ever have a period there where–she’s in the room, so maybe you’re not supposed to talk about it–but did you ever have a period there where you said, “Life is good. We’ll building a successful company around drinks. I get to bring the drinks to the party, and they’re named after me. I’m going to date up a storm.” Did you do that?
Craig: We did have that, where it was year, “Oh, you’re the owner of Cordina,” and this and that, but that all just gets old. You don’t want to date somebody for what you do. You date somebody for who you love, and so eventually that kind of gets out of the way. And so that’s kind of [??]
Andrew: How’d you guys meet?
Craig: Drinking at the fairgrounds. We were at the fairgrounds.
Andrew: Were you drinking a Cordina?
Andrew: All right.
Craig: Well, it was actually a Cordina-sponsored event, and I was there, and it was a Friday night at the fairgrounds.
Andrew: There must be a lot of perks to running this business. All right, here’s the second thing. Anyone listening to us has got to be thinking to himself, “Huh, innovative pouch. Capri Sun came up with this a long time ago. I could do the same thing. I’m going to copy them.” You guys have had copycats. What do you do about them, these people who say the same thing that maybe someone in the audience is thinking right now? How do you deal with them?
Craig: Yeah, in any business, like you were saying earlier, with Micro Gifting or whatever, Groupon and Living Social, you’re always going to have competition. A lot of people say competition is the ultimate form of flattery, which I completely disagree with, but irrelevant to the point. We do have competition, but all of our competition, they were dumb, and actually I probably shouldn’t say this.
Andrew: What do they do that’s dumb?
Craig: They were smart, in parenthesis. They came out with a similar product in a pouch, but it doesn’t have a screw top, and so it’s effectively like booze in a Ziploc bag that offers no functionality. And if you’re going to compete in the ready-to-drink market, you need to be a ready-to-drink product. So if I told you, “Andrew, here’s this drink like this. Go put it in your freezer, then tear off the top, or get scissors, and then dump it into a glass and then drink it like that,” you’d be like, “OK. I get it.” Or you can have Cordina, and you can have a spout on it. That comes with a straw now, by the way. You can unscrew the top and put the straw in. I drink it without a straw because I just like the nipple. You can put a straw in it and drink it. Which one makes more sense? And intuitively you’d say, “OK. I can only drink half of it. I can reseal it. Oh, by the way, if I drink it all. I can put liquor in it so when I’m going to my college football game.” There’s multiple functionalities to it that they’res doesn’t offer. So, I mean, that’s fine. They can keep coming out. They can keep copying us. They can keep copying the flavors, but ultimately, we have the true ready to drink pouch.
Andrew: Did you just give away the secret to your success? Now your competitors are going to add screw tops and win?
Craig: They can do it. We’ve been out long enough. We’ve created a decent brand about us. Listen. They can’t. I mean.
Andrew: Do you worry about that? In all seriousness, do you stay up nights thinking we’re not far enough ahead and these bastards can come into our space or are already in our space. We could get destroyed.
Craig: Of course. If I’m not thinking about that, I’m already destroyed. If you’re not always thinking about what your competition is doing, then you probably are doing the wrong thing because you always have to be one step ahead. I mean because they’re sitting there thinking about being two steps ahead.
Andrew: A little paranoid.
Craig: So you always have to be innovative and constantly changing things and make it work and continue to build a lasting brand.
Andrew: What did you do to stop throwing up from anxiety?
Craig: Just kind of laid back now. I mean, like you said, I think I’m more relaxed then.
Andrew: Because the pressure is off?
Craig: Well not that the pressures off. You can’t really do anything about it. I mean you’ve got to go with the flow. I mean the whole statement. Go with the flow.
Andrew: But it’s so hard to think that way. Mentally, you always know I can’t do anything about it. Why am I worried like this? This is actually making this worse because I am stressing over it. But, you can’t stop. Something has to happen to make you stop. Do you go to therapy? Did you have a conversation? Was it dating?
Craig: You start bringing in millions of dollars and that helps.
Andrew: That’s a good place to leave it.
Craig: Yeah, just leave it right there.
Andrew: Because it does make you feel more accomplished. You’ve got a measurable way of seeing that you’ve succeeded. The drinks, I wish that I could have had one here in this interview. I wish everyone in the audience could have had one to drink together. If not that, at least we all know to go to Walgreens, Walmart, any number of stores and when you’re in that store with whoever it is, point that out and say, “I know the story behind that company. That guy used to mow lawns because he couldn’t get it to work. And now he’s on Mixergy.” And do try those drinks. They are fun. Craig, thank for doing this interview.
Craig: Thank you for having me. I appreciate it.
Andrew: You bet. And thank you all for being a part of it. Bye, guys.