Tim Moxey didn’t like how sugary sports drinks were, so he created a drink that was better suited to athletes like him.
Nuun, the company he founded, makes a simple, self-dissolving, sugar-free electrolyte tab for athletes on the go.
If you’re a long-distance runner, for example, you might carry one of this tabs in your pocket. Then after a few miles of running, you’d dissolve it in water and drink.
Tim has since grown Nuun to over $10 million in revenue in 2013. Here’s how he did it.
Tim Moxey, Nuun
Tim Moxey is the founder of Nuun, which m?akes a simple, self-dissolving, sugar-free electrolyte tab for athletes on the go.
Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart and the place where entrepreneurs come to tell you their stories so you can learn how they built their businesses. This interview and all others are sponsored by Walker Corporate Law. You’ll see me hold up the mug but you’ll hear me talk more about them later.
For now, I want to tell you about this story of a triathlete who took his frustration and turned it into a business. Tim Moxey didn’t like how sugary sports drinks were. I don’t either, but he created his own drink which was better suited to athletes like him. Nuun, the company he founded, makes a simple self-dissolving sugar-free electrolyte tab for athletes on the go. Let me explain what that means.
Say you’re an athlete or runner, a runner, for example, and you might hate the drink of Gatorade, like I do but you obviously can’t carry around lots of different drinks with you, what you might do it grab one of these tabs, put it in your pants pocket and when you find a drink, maybe a few miles into your run, pop that tab into water, drink it and get something that isn’t sugary and still helps you keep going. We’ll find out how he built that company and we’ll also catch up on what he’s doing today as the CEO of Blueseventy, which makes wet suits. Tim, welcome.
Andrew: Before you started this business you were at a company that you said to April, our pre-interviewer, you were deferred from. What does it mean to be deferred?
Tim: I think it was an interesting time for everyone. I’d just got out of business school and I went to Tuck and we had a place in the bank, consulting for them down in Australia. There were about 15 of us that went there from Tuck for the summer. A number of us got offers after business school. We were heading, not just for a new job, which everyone does after business school but to a new country and one that I’m not from. I’m British.
On our way down to Australia we had these great visions of everything that we’d be in life and then when we got there it was very early September 2001. Obviously a lot changed in September 2001. They said the economy’s in the tank. It’s not going to work. You can’t start. For most people that sounds, now it sounds like a dream come true. They were going to pay us and send us wherever we wanted to go and then after a year we could come back but at the time I just had this knowledge in my head and if I didn’t understand cost accounting that well today I wasn’t going to do it in a year’s time.
I wanted to start working. It felt like the rug was pulled out from underneath us, to be honest but then about two weeks later, over a week later, 9/11 happened. That put a lot of things in perspective. We were complaining about our jobs and other things were going on.
Andrew: This is a point where a lot of entrepreneurial interviews or writers might say, “That’s the evil of working for someone else. If you work for yourself you take life in your own hands and life is really easy.” Is life really easy if you’re an entrepreneur where you don’t have this kind of danger of being the first?
Tim: I think I’ve finally, after maybe ten years, come to terms with the fact that I am an entrepreneur but my classic definition of kind of a success story would be to be the articulate and organized consultant. As much as I try to shoe horn myself into that box that wasn’t the box for me. The joy of being an entrepreneur is that you get to create something but the process of creation is a little hairy at times and a little draining too.
Andrew: You used that word before we started and I wrote it down to make sure to come back and ask you what’s draining about it. Before we even get into it, let’s just understand a little bit more about you. Were you an athlete growing up too?
Tim: Not really. I was an athlete from about the university years and just [??] sport and cycling which wasn’t a very popular sport back then. It is now but back in the day I used to cycle a lot and so I was pretty comfortable with getting out there and doing stuff and being out, the genesis of Nuun was being out in the middle of nowhere and missing my drink so I was very used to that as a real problem.
Andrew: I see. What about entrepreneurship? Were you an entrepreneur growing up?
Tim: No. Not at all.
Andrew: That makes sense then that you would end up going to work for Bain.
Tim: I was at an investment bank before I went to business school and most of the people coming out of Tuck, which is a fairly traditional business school, they go to banking. A lot go into consulting. There are a ton of industries that people go into. Certainly at the time entrepreneurship wasn’t what you did at Tuck. It was a very straight line school.
Andrew: I looked at your LinkedIn profile and I saw that there was a bit of an overlap. You were working at Bain and you were also working at Blueseventy via the wet suit maker at the same time. How did that work out?
Tim: The first thing was I, after the deferment with Bain, went over to New Zealand and that’s when I started working for Blueseventy so it was just Blueseventy for that period of time. [??] Wet suits, as it was previously called. Then I had to end this sort of period at Blueseventy, go back to Bain for contractual reasons. I just found it very hard to end one and carry the other one on, so there was a period where, to be honest, there wasn’t a lot of sleep going on. There was an awful lot of stress, and it was a shake out before I decided what to do next.
Andrew: What were you doing at Blueseventy?
Tim: At the time?
Tim: Well, we had a distributor in the U. S. We’re a New Zealand-based company, and we had a distributor in the U. S., and he was doing things that shouldn’t have been done. So I was trying to remove the distribution in the U. S. and set up a new in-house system of distribution, which was ridiculous given that I was [?] to do both things.
Andrew: So how did you end up doing that then of all things?
Andrew: Yeah, and being the person to replace the distributor.
Tim: Yeah, you know, it was funny. We went New Zealand after 9/11, because we didn’t know where else to really go, and the world was a very dangerous place at the time. I certainly felt it was dangerous. I went back to New Zealand and I happened to know someone who built a website for the company. And I just walked in as this sort of young, arrogant, MBA, and said I could do everything better than they could, and they sort of listened and they gave me a chance to do it, which was incredible. I got this chance to play in a company that was moving. You know, I was not an [??]. I was a business school student and a fairly risk-averse one.
So I wouldn’t start a company, but I got into someone’s very small company . . . he had four employees . . . and to play with it. And it was pretty cool. I liked the fact that I could do something and not only did it move, you owned the answers, as well. You couldn’t hide from it. It was too small.
Andrew: What do you mean? What specific answer did you own back then when you came in there as the hot shot MBA who was going to show them how to run things?
Tim: You know I was focusing on skewed reductions that they had, because suddenly we were looking at new opportunities. Just focus on your core products and get back to that, and to drive the brand. My concern with them was that they had the distributor in the U. S. They had a distributor in Europe. They didn’t control their brand. What you found was the people that were driving the company were the distributors, and they weren’t the company, which was the problem. I like brands. If you don’t control your brand, I’m not sure where you’re going.
Andrew: I see, so you have this idea. You’re able to actually able to go and implement it and see that the distributor gets changed. That the skews are reduced, etc.
Tim: That’s right.
Andrew: I see. Alright, and did you actually feel like you were showing them how to run things the way that you planned to?
Tim: I, yeah, I did, pretty soon. It was exciting to just get in and they allowed me to do what I wanted to do pretty quickly, which was great.
Andrew: So I said at the top of the interview that there was something about the drinks that made you uncomfortable. What was it? What frustrated you?
Tim: You know, there were actually a number of things. I used to go on these long bike rides in Vermont and New Hampshire, and it was very hot and it was very humid. I wasn’t used to the humidity like that. Brutal. I used to run out of my drink, and it was curious to me that in the middle of nowhere in New Hampshire that you could walk into the oldest general store, and there’s lots of those, and you would walk into one of them and you could buy all this food.
The food was this incredible array of products, and the drinks that you had was just Gatorade, and it was only Gatorade, and I didn’t even like Gatorade. I would have to kind of water it down. So I find myself out of frustration needing a better drink than Gatorade, and really I wanted to take it with me, so I could just add water to this thing and have the drink that I wanted. And this whole thing as a cyclist or long-distance sort of athlete, you start the ride with what you want.
You fill your bottles with it, and then you go for your ride and then half way through when you run out, you put any old stuff in your bottle just to get home. I thought that’s ridiculous. Why can I not just bring what I want with me? The focus on the portability was a driver. The sugar for me was a huge driver, only because on a really hot day you sweat more, and you don’t need more calories. You are still doing the same sort of bike ride, but you’d sweat more, so you need . . .
Andrew: And what happens if you were just to drink water, as opposed to one of your tabs or . . .
Tim: You know, water’s great, it’s just you lose a lot of salt when you’re cycling.
Andrew: And what happens when you don’t have salt?
Tim: A myriad of things. Your body functions on electrical signals, so a lower sodium could knock you into a real imbalance, but a lot of it is just that the water processes the system when you bring sodium in. You can get cramping, if you don’t have sodium. So, it’s one of the most important minerals that you need to take.
Andrew: I’ll tell you what happens to me. I do long distance runs . . .
Tim: Oh, yeah.
Andrew: . . . and I can’t carry drinks with me, and I hate Gatorade, because Gatorade really now is candied water. It really had a good reputation in the past and now it’s living off of it and selling candy based on that reputation.
Andrew: S0, if I drink just water on my runs, I start to get sluggish and I don’t feel as well. So, a few months ago I went on a twenty-six mile run here on my own and, at that point, I can’t carry water. I can’t carry anything, so I go in the stores and I get water. I won’t get Gatorade, and I started to really get slow and not feeling so well, so I did what I’ve done in the past. Usually I will get go get a little bit of salt packet, you know, and just pop it in mouth and go.
Well, I couldn’t find a salt packet on the run, so I went into the Plant Cafe on the Embarcadero. They didn’t have packets but they did have a salt shaker and a spoon. So I put salt on a spoon, I put it in my mouth, and immediately I started to feel sick. I threw up right on the Embarcadero here, and I was just out of it for a few minutes, but thankfully after that I was able to go and continue and finish my 26 miles. After that I started carrying powders, but powder is a pain in the neck. You take it out of the packet. You put it into a little plastic Zip-Loc bag and it just doesn’t feel right on a run.
And in preparation for this interview I found out about your tabs and started to notice them everywhere.
Tim: You love them?
Andrew: I haven’t tried them yet.
Tim: We need to sell that out.
Andrew: I can’t believe that in preparation for this interview… You know what? When we were scheduled to do this interview about a year ago and back then this wasn’t an issue for me. And then I sat down to do this interview this week and I realized, “That was in the sports basement. That’s what those tabs are.
Tim: Yeah. We’ll send some down to you.
Tim: We’ll send some down to you to make sure you try them.
Andrew: I’ve got to try them. And now that I think of them now I see them. They are these round packets that… So you can take a couple of tabs with you and…
Tim: The overall thing is it doesn’t matter how good you… Forget the sports training [??]. It’s sugary. It has a mere protein in it. Forget the way they market themselves. Isn’t how good the drink is that you choose. If you can’t take it with you, it’s not any good when it runs out and Nuun is a way to take the drink with you. It turns water…and water is the biggest component of any drink. So to turn your water into something better and flavor is a big driver of consumption and the sodium and the replacements is also a big contributor.
Andrew: Alright. So you have this idea but you’re already working for a company that sells to the kinds of retailers that you’re going to have to sell Nuun tabs to. Is there a conflict of interest there?
Tim: No, not at all. Well, I removed that and got the company owners of Blueseventy to invest in Nuun. So I said, “Here’s what I’m going to do, and they were good with me doing it.
Andrew: Why were they good with it? Why didn’t they say, “We’re selling to the same audience? We see the problem you’re talking about. We’ll create the same thing. Sorry, buddy, you work for us.
Tim: You know what? They raised that question. If they had I would have had to deal with it.
Andrew: Why do you think they didn’t raise that question? You’re now the CEO of the company. You understand how they think. Why wasn’t it an issue for them?
Tim: You know, quite honestly I think who ran…my opportunity with Blueseventy was that I cared passionately about the product. I was attracted at the time. And these people that started the company it wasn’t what woke them up each morning which is why they had distributors in far flung countries that drove the ground for them. And I ended up replace the distributors and running the company.
So as long as the company was going well and in the right direction then they were good with it. Like I said, I offered them part of Nuun and they came in on that. So they sort of saw success in the right path.
Andrew: Alright. How much money did they invest?
Tim: The very first round we did, there were four of us, and we each put in, I think it was $6,000 but [??] put in double what we put in because they weren’t putting in any effort into that. They were running another business.
Andrew: And what’s the first thing that you did? Was it starting to create the tabs?
Tim: Yeah, it was. We spent time developing the tabs. It was a drink so trying to get it just so quickly to taste good was critical. And to work was the last thing. So we spent time on the brand. The project started when I was in business school. It was my entrepreneurship class.
Tim: It was back in the days when everything was dotcom. I think one of the prerequisites of the class was it had to be a billion dollar idea. I remember thinking, “This is stupid. How do you make a product that does a billion?” So I had this idea for these tabs, and I did the logo, the old logo for Nuun the last before. It didn’t matter, it’s just a class project. And we ended up keeping this logo, and it was distinctive, I can tell you that. So we had this brand. I just poured it over. It was only going to be a project that we were going to move forward with it. This was never going to be a real company. It was just an idea. I wanted to have some fun with it and see what happens.
Tim: So we took the brand. We had a contract manufacturer, and they made the project, and that was enough. We just got the [??]
Andrew: This was back in college that the contract manufacturer did it?
Tim: It was in business school. So this was after [??]. They came out after two years [??] and then launched in about 2004, I would think.
Andrew: And there are companies out there that will take your idea and just create a tab for you?
Tim: Well, there are [??] tablets. At the time Airborne was a pretty popular company. One of the guys at business school knew the owners of Airborne. So I recall calling them and say, “Hey, I want to make a similar but different product. How do you make yours?” And they told me which is a pretty nice thing.
Andrew: That is pretty cool.
Tim: Yeah, it was.
Andrew: Alright. So what I heard was one of the first versions that came out didn’t dissolve properly, left some gray scum around the glass. How do you fix that? Or is that not your problem, you just get to try it out and send it back to this company?
Tim: You know, that sample is actually made in New Zealand. That was one that we made through a local manufacturer in New Zealand and I remember we put so much work into it. I remember when it turned up, the ultamism around this thing being great and we dropped it in water and it just sat there and we’re still staring at it. You see a bubble appear on the tablet and we’re all, “It’s okay, it’s going to dissolve.”, fooling ourselves that this is an incredible product. After while we realized that the gray scum on the surface was, just no you can’t do that. [laughing] So it was just finding a new manufacturer, it was then that we found the [Inaudible]
Andrew: [Inaudible] Is he okay?
Tim: I think that the premise of that is you can get lots of people to something done. But if you want it done properly, go to the best there is and build the company that you really want to build. So we went to the contract manufacturer who is the best at what they did and they are by far the best still.
Andrew: So Tim, what does it cost to have them make up the whole thing for you? For them to take your idea and give you what’s called a fully working prototype.
Tim: [Inaudible] we went in to build this company to do this and they went off and developed it all under this predicated [Inaudible] space through them and that was great. It didn’t cost anything to do that at all.
Andrew: And did you have to guarantee any minimum orders?
Tim: I can’t recall what it was but yes we did. I think we guaranteed the orders to them as opposed to the order size because we had no real idea what the market was.
Andrew: The other thing you did early on was you created a spreadsheet of the drinks that were out there. Why?
Tim: Did you know I only knew a little about how sports drink worked? The reality was, it was about taking the drink with you. More than it was the amount of sodium, potassium or calcium that it had in it. So for me there is nothing I could bring to the table on what amount of sodium is the right amount of sodium. Gatorade and Pepsi were there and coke was there with Powerade. And Accelerade and Lucasade and lots of companies called with “ade” at the end. I just thought, you know what you know what, they know what they’re doing. So it’s about getting the other bits right. So I built a big spread sheet, with all the minerals in it. I removed [Inaudible] and averaged it.
Andrew: And that is how you knew what would go into your drink?
Tim: That’s how I knew what it was, yeah. Turns out it’s pretty good. [Laughing]
Andrew: What about this? We all have very specific interests. Like for me, I don’t like taking bars on my run I like taking a pita bread with sliced cheese in it. It feels better to me than having one of these very sugary bars. I’m not so sure that the rest of the world feels the same way about it. How did you know what you had in mind for yourself, would appeal to other athletes and even to people who weren’t professionals or weren’t as avid as you were.
Tim: I’ve never been asked that. What I bring to any business that I get involved in is I make things for me and I seem to be a pretty good proxy for what people would like in a flavor. Componently, not a lot of style behind it but just the timing of the product seems to make sense. All of the flavor development was done with me and a couple friends and we go to a spin class beside the office. We go in with three bottles, three different versions of lemon lime. I heard this belief that there is sort of four phases in spinning and this is not my way to articulate it. Which is your sort of spinning less than gently and not a lot is going on.
Then you’re sort of pushing at that harder and sweating and you need to drink a lot more. The third phase is when you’re just balls to the wall and you just want to throw up you’re going so hard. The next one is just the recovery phase like after the workout. I kind of wanted to have a drink that made sense at every one of those phases. If it would taste good when I was just rambling along and tasted good when I was just killing it, then it probably tasted pretty good. And I could actually test this in a 45 minute sort of section.
I just found that the flavor profile, which was a very light flavor, is like a diluted sports drink. It made sense at all of sort of levels. It’s like chocolate and you’re a runner. I love chocolate, chocolates great but on a really long run if you give me chocolate it’s not what I needed at the time. It’s just too intense, it’s not where I want to be.
Andrew: So you tested it by bring out water bottles, ready to drink already, pre-mixed and you handed it to people in your spin class. But you didn’t test it by testing the pills, by making sure that people were interested in carrying it with them long distances. I see
Tim: I knew that once you get to a certain point in a long distance ride or run you are at whatever you started with. If you can get the person to like the flavor of this product, because there are attributes to the product. You can articulate what those attributes were, but if you liked the flavor of the product you’d take it would you just to avoid having water or whatever it is that you have on a long [??] ride.
Andrew: You also tried to come up with reasons not to launch Nuun. Why?
Tim: You know, again I’m very risk-averse and it’s this question of what is there that I could be doing that isn’t this product or isn’t this idea. And for me trying to think through all the reasons we shouldn’t be doing it was just a process you’d have to go through to prove that you should do it.
Andrew: And so did you come up with anything reasonable? Or did you end up saying, ‘Hey you know what? Worst thing is I lose my investment which is not that much money.’
Tim: There are excuses that I gave myself and I just tried to knock them down kind of one by one. I was at that everyone said it wouldn’t work so I said it wouldn’t work and when it started to sell into customers then it was working. Right? But it was always that people would say, ‘Well it’s the repeat orders not the first order. Any client can get a first order. It’s the second order that matters.’ Of course then the stores ordered for a second time it’s like Chad [??].
So there’s always this process of I’m finding reasons to do this and I can’t find reasons not to do it anymore. So Nuun didn’t start as though we’re going to go and kill a whale, get all these [??], and grow the company. Nuun started as I was working at Blueseventy we had some tubes and they started to sell and at some point it became that Nuun was as big as Blueseventy. And it just happened over time.
Tim: Yeah. Yes. It did.
Andrew: Wow. I’m going to ask you later about [??]. I’ve got some research here that I want to check out with you but you said ‘customers’. Who was your first customer?
Tim: You know I was in Seattle. It was a local Seattle store and we’d hired one of their staff and so they sold it back into the shop.
Andrew: You hired one of their people, they sold it back into their shop, I see [??], and then how did you get the next batch of customers?
Tim: Again you’re an athlete, so when you find something that works your excited and you sort of tell other people. And this was you know pre-social media, you just tell people. You wanted to help other people and I think that peer network in some of these endurance sports is a very friendly, and encouraging, and helping one. There’s a knowledge base that you’ll develop and just pass on to others. So it quickly sort of moves through I guess the network there. What was important was that the people who drove opinion were the ones who were telling others very quickly. I know living in the UK when Cliff bar came out and Cliff bar was this amazing product because Power bars when they were cold you couldn’t chew the things. They were just inflexible and nothing was going to do it.
Andrew: And when they were hot they would melt in an awkward way that would make your fingers sticky while you were running.
Tim: Yeah. And then Cliff bar came along and it kind of tasted good and it was stable. You know this is amazing you should see this thing and you know I remember telling people about this product. And I love new products. I love it when it works. I think Nuun just connected with people. Like I said the bags of powder, Nuun was a tablet. You take it on a run, you drop it in, and off you go again.
Andrew: What about the ambassador program? What is that?
Tim: Ambassadors were for me getting product to the people that really drove perception into I guess the wider market. And again they cared about what they were doing. These weren’t people you had to pay or incent to do anything with. You just created I guess a company or an environment that they felt happy to get involved with and at the same time we were all you know kind of young. We were all athletes. We were all out there doing things and to have people going out for a bike ride from the company along with people who just loved going for bike rides. Suddenly it legitimized the company and they started to become voice boxes for us which was great. They were just spreading the word that we were spreading because we liked cycling and running.
Andrew: Can you give me an example of who a typical ambassador is? I think this is a really innovative program that we don’t talk much about online. What would a typical ambassador be? Would it be someone who was a coach? Someone who just happened to run with other people? Or cycle with other people?
Tim: Honestly I describe myself as the person who went and they sold Cliff bars to show other people what a Cliff was. It was a person who was key to share what was going on and yeah that could be a coach. And traditionally it would be coaches but there were lots of other people who just loved the sport. They have a boring job but they love the sport. It’s a person with passion. A person that wants to spread the word of something. They’re hard to find. Right? You only really find them by connecting with them in a legitimate environment. It’s tough to advertise to that person. You meet that person.
Andrew: So an authentic user, someone who actually drinks it, someone who’s around others, has passion for the product, and has the ability maybe to influence them.
Tim: Yeah. That’s right.
Andrew: And then what do you give them in order to allow them to do this?
Tim: They got cheaper product from us. In exceptional cases they got free product but a fundamental point if you devalue your product to giving it away people aren’t really going to think about buying it so you put some price on it. That’s something that Gatorade did about 40 years ago. They never gave product away. They always charged for it so if you didn’t value it and you gave it away.
Andrew: The coach might get a big discount on the product but not free and then the coach would be expected to hand it to people and let them try it?
Tim: You know what, Andrew? They could do what they want to. We were out there to help people run faster and the moment people came along and said, ‘I know your product because of this,’ that’s great. There’s no better feeling than hearing that you helped people do what they want to do.
I’ve been living in England for the last two years, just moved back to Seattle and it’s been interesting for me to move from a country where they don’t really get what Nuun is. Some do. A lot of sports people do but outside of that people don’t know what Nuun is. I describe it. It’s a little tablet. You throw it in water. It tastes like a Gatorade without sugar and [??] thing.
By the time I got to Seattle where we started the company and I would repeat this description to people, and our kids had just gone to a new school [??], “Hey, it’s this tablet.” They’d say, “Like Nuun?” I’d have to say, “Yes. Nuun. It’s Nuun, actually.” Their response is generally this, “I love that product. I used it,” insert time when they used it, “and I got a great time” That’s about the best feeling you can get. Finding people that want to spread the word so they can have their great time, it’s just finding those people.
Andrew: The name, N-U-U-N when I first saw it I wasn’t sure how to pronounce it but it seems like you always include the pronunciation with the name. That’s like a double edge sword. It means that you’re communicating the name but also saying that it’s not, you’re helping people pronounce it but also saying that it needs help to be pronounced. Why’d you come up with it and why do you do that?
Tim: Like I said it was a business school project. Didn’t mean anything.
Andrew: I see.
Tim: One of the guys in the class, they had, like a study group and we were just thinking of a name and I had a real, I did not like names with ‘ade’ on the end, Accelerade, Gatorade, Powerade, there’s loads of them. I was like, “Come on. We’ve got to come up with something that”. I had this big thing about define the category. Coming up with a name that transcended the category. It was at business school. I came up with stuff like this [??]
I just thought, ‘Let’s pick a stupid name. It doesn’t matter.’ It was a class project, right? This guy Scott, he had this idea, this word that is [??] [punk], I think. I was like, let’s call it the name you want to call your punk that his wife [??] We just slapped that on. I think the pronunciation of it, it was one of those sticking points that when people repeated it or people looked at the name and the logo before it was fairly abstract, I would say, when people would look at it they’d really have to stare at it and study it to work out what on earth they said. Then they’d say it and they’d sort of Nuun and they’d, but for whatever reason it really stuck in their heads, right? They spent so long staring at this too, trying to pronounce it. Then they’d correct it [probably], calling it Nuun.
They’re like, so it just stuck with them. It struck me that this stickiness of the name was actually an asset even though it was a barrier when you stared at it. You didn’t immediately get it. You remembered it. I thought it was good.
Andrew: Let me do a quick plug here. I know we only have ten more minutes. I won’t make it long. I’ll just say to the audience, Walker Corporate Law, baby. If you’re an entrepreneur, startup entrepreneur, you need a lawyer, you don’t want someone who’s out of the tech space. You don’t want someone who’s outside of the startup world because they won’t understand the way you need to structure your business for investors. They won’t understand the kinds of conversations you have with investors and the needs you’re going to have down the road right up until the time you sell it.
You want someone who’s a lawyer who works with entrepreneurs, who works with this community and I recommend you talk to Walker Corporate Law, to Scott Edward Walker there specifically. In fact, I’ll give you his email address. Scott@walkercorporatelaw.com. Talk to him.
REI. I don’t know if we have an REI here. I go to Sports Basement but REI’s huge. How did you get into REI?
Tim: REI was, again we were doing this. We were learning how we won’t rule out specialty stores and we used to go to this trade show, an outdoor retailer and we’d stand there and you just sit and hope that the buyer from REI would come by. You know you [??] it. Every time we try and pitch him he wouldn’t answer his phone. He was to the point of rude and I know that buyers do this as a habit, right? They like, at the time you just couldn’t get his ear. I was frustrated at this. We just got in every shop that surrounded REI.
I thought, “Well I’m going to make them regret not having,” this was my, “regret not having Nuun.” We put it in every damn store circling the corporate headquarters of REI. We went to events where we knew REI people were and in the end they just came up to us and at the very end of a show he just walked up and said, ‘You’ve done it. You’re in.’ Wow. [??] directly.
Andrew: I heard their sales, their buyer said, “I’m never going to take your call, never going to read your emails. move on.”
Tim: Yes, yes, he was, yes.
Andrew: Wow, and it was surrounding them that got them interested and it was also going to shows, you said, what’s a show?
Tim: It was a trade show, but the trade show is in, I suppose the Active and Outdoors Space, are pretty cool. There’s lots of hiking stuff on Patagonia and it’s places that you actually want to go and hang out. So, we could get to really cool people and give them products that do the things they did. And a lot of the people that work at REI, get out there and do the stuff that they do. So all I needed to do to make if visible enough in their sport or in their activity base to make it legitimize the product. So if you’re in the core stores, then that will go to REI or that’s the assumption, so we put it in those store. The people who worked there saw it there and then it ended up in their shop.
Andrew: Even though you don’t get very many sales from those stores, would you give them a deeper discount, just to get into those stores?
Tim: I think supporting your core market and the people that are out there who gave you the, I guess the ability to grow. You always look after them, they’re the ones that drive your brand. And if you think of Patagonia which I just mentioned just now, they constantly, constantly refer back to the core and support them, and the vast majority of sales are internet marketing.
Andrew: And so you’re doing better, and better, and better, and one of your regrets was that you didn’t stop to celebrate. Why is celebrating important? Shouldn’t you just have stayed worried, and work hard, and forget the celebration?
Tim: I think, you know, that’s a good question, well, first of all I think life’s too short to do that, and you can be heads down and forget the life that’s going on around you. But for us we were a company in the outdoor space, and we came out of sight, we came at it running, and long distance stuff, and it was, it would have been better for us to just pause, down talk, and for X weeks, even over a year, get out there in the marketplace and see what’s going on, and it became very much, a kind of a heads down, let’s keep focused on what we’re doing. And that I think was an oversight, and it wasn’t as much fun.
Andrew: And I shouldn’t say that, I shouldn’t make it out to be an easy process for you. You said earlier that it was draining, one of the big challenges was that you were competing against other drink manufacturers, big guys. In fact you had a run in with Coke, what happened there?
Tim: [Laughs] Well, you’ve got to remember we did this pre-interview a year ago. We went down to a show, and outdoor show down in, -I’m sorry, it was a natural heath show, down in California. And we were Vitamin Water had just been bought by Coke for a huge sum of money, a record breaking sum of money. And, we were kind of frustrated at what Vitamin Water was, well first of all they’d done this huge deal, and it was nuts, right, but it just frustrated me.
You had this, mainly water product that was basically sugar, in a plastic bottle, and it, and it knew plastic bottles were not good for the planet. And I was annoyed with this product, where ours was this little tube that was recyclable, and used only the water. It was far better for your pocket, far better for your health, and far better for the planet. And so I remember we had a, [??] a special that we had that had 16 tabs in it. So you got 16 bottles of vitamin water, and emptied all of the Vitamin Water and put it in a big stack, glued it together in a big stack, on the booth.
And then we got the sugar content, furthered by the water and put that in a bowl, a kilo or whatever, for the 16 bottles that we had. And the, only had one tube of ours at the front table saying which would you rather have? And the Coke buyer came by and they were pretty pissed, [laughs].
Andrew: Okay, and what can they do if they are pissed? They can just say take it down? Or they can’t do anything?
Tim: Well we had actually taken the labels off the bottles, we hadn’t said it was Vitamin Water, we just said, look at these products, and they, they recognized the bottle shape, and we said, you can’t prove that, and they walked away.
Andrew: [Laughs]. So this is a brawl, you fight, and you fight, and you come up with this idea, and you grow the business. Where are the revenues now?
Tim: The revenues are north of ten million.
Andrew: North of ten million in 2013?
Tim: Yes, and it has grown consistently over the time, I think the opportunity and the company right now, continues to be growing through specialty and then out through what would be, where, where there’s a specialty core consumer. And then there’s people who go shopping everywhere else and there’s a lot of active people that like to get out there and enjoy the life, and it’s expanding through the channels that we’re turning in.
Andrew: Let me show you just how far, -show the audience just how far you’ve grown. We originally found you about a year and a half ago, we listed for you internally that we estimated sales to be three million dollars. But there was a note that said we can’t confirm it, throughout. Last year, 2012, after we talked to you, closed out the year with what, 7.4 million? That we could confirm.
Andrew: And now this year, it’s north of ten million, this is huge growth.
Tim: It’s a good market.
Andrew: Does it feel like huge growth or do you feel like, “I’m not doing as well as I should have?”
Tim: I think that there are two customers there. The core user group. The people who use your product for all the right reasons. And I think staying relevant for them is critically important and think we still have work to do in that market. And until Nuun is something that you know as a cyclist about to go on a ride if you’re not immediately thinking, ‘have I got my inner-tube, have I got my pump, have I got my Nuun’ then I think we failed.
There’s always going to be work to do in that channel. But it’s only so large a channel. These are core users who are going out every day doing stuff. I think the opportunity is going out to the wider audience. Out to the places that active people will go and purchase that stuff for general daily life you know going to the gym and that market is quite huge. You look at Gatorade sales and there in the many billions and the option there is just to say well look, your drinking all this sugary stuff. It costs a lot of money. It’s a pain in the ass to carry around. Take a tab drop in the water. Better for you, better for the planet. It’s an easy sell.
Andrew: So things are going well it’s growing. Why are you CEO of another company then?
Tim: You know I left Nuun maybe three years ago. We brought some investors in and I think one of the things that [??] taught me they said always assume that you’re not right, or never assume that your right. Which is a pretty arrogant statement in itself, but there’s constant need to check and say, ‘Well hang on. Am I doing it the right way? Is this the right way?’ I think there was definitely an opinion on the board that I was too close to where things were. And I accepted you know you put a board in place for a reason and they’re older than you, and they’re wiser than you, and if the board was thinking that I took a decision to step down and have someone else run the company.
Andrew: Why? What’s a disagreement? What do they think that you’re not doing right?
Tim: I think there is certainly a commitment to the core user that I had. My belief in anything that I do is you get the right customer, you nurture them and grow them, and they will help grow your brand. But that happens at their timetable and not yours. Right? So if it was a marketing company you throw more money at the marketing issue to try to hide it. But if you’re looking for an authentic customer it’s very hard to force that through. So my expectations of growth were very much grow at the rate that we need to grow because the brand that we build is a long run sustainable brand. And I think the board their best is they have expectations on where growth should be and where numbers want to be and that’s understandable. That’s why they came in.
Andrew: All right. Let me show something from a past interviewee and then I want to ask you a question that’s kind of selfish but still relevant to this interview.
Andrew: You know most people’s business cards look rectangular. This is Shed Samo’s[SP] business card. Can you see that?
Andrew: His email address in on there. I guess his hero is on there. This is Shed his photo is on there. It looks like a banknote. Everything that Shed Samo does right down to his business card is creative, and it’s different, and it’s interesting, and it’s kind of a keepsake. Usually I toss my business cards in a drawer. His I have right here on my desk for inspiration. The reason I show this is Shed is one of the people who teaches on Mixergy. He’s an entrepreneur whose stuff you probably have seen in Urban Outfitters and other stores, and online, and I said, “I love your creativity. Would come and teach my entrepreneur audience how to do it. How to be creative”.
And he broke down his process in a way that even the most anal person in the audience is going to understand and be able to use because he showed us his process. And I urge you to take that course and all the other courses taught by real entrepreneurs, doers in the world, by just going to Mixergypremium.com. If you’re there and you’re already a member search for Shed, S-H-E-D, and you’ll see him. If you’re not a member join up. By being a member you get to learn from all these great entrepreneurs and frankly you get to help us with all our research, and you get to help us find great guests like Tim, and be prepared for these interviews as you’ve seen in the pre-interview process.
It’s all at Mixergypremium.com. All right here is the final question. So I’ve run for years. Marathons, do my own ultra-marathons not organized. I do bike rides, got up to 170, 180 miles in a day. Exhausting. I now started swimming in the bay and I’ve been renting wet suits and frankly I joined this group and all I see are your wet suits there. Now I recognize the squirrel. Before I buy a wet suit here’s what I’m thinking. There are two problems that I have. One is right here I get chaffing on my neck and I’ve learned from people if you put some spray there it’ll go away. The other problem is my back hurts in a wet suit. I guess I’m floating differently.
Tim: Yeah. You are.
Andrew: How am I supposed to swim differently in a wet suit so that my back doesn’t break? Or maybe I shouldn’t even be wearing a wet suit because it does something funky?
Tim: Well, the goal of a wet suit is to keep you warm so you actually swim faster in a wet suit. So to protect you and to make you faster. And by making you faster it’s elevating your body position in certain places. So the suit that you’ve got is certainly pushing you up and curving your back a little bit more than it should. A good suit has I think the buoyant panels in the right places. So it’s the bit that stretches where it needs to stretch, it’s the bit that pushes you up where it needs to push you up, and the suit that your in I think is pushing up in all the wrong places.
Andrew: So it’s pushing me up in the wrong places. What about my responsibility in this? Am I also maybe looking up a little bit more than I might in a pool? Is that a common problem? You know in a pool I don’t have to look up because the lines are on the bottom. Maybe I’m looking up in a weird way? What have you seen?
Tim: From experience it sounds like all of the above. There’s certainly an art to swimming in open water. I mean it’s not a swimming pool. You do need to navigate and be aware of your surroundings. And looking and learning how to sight is a good technique. If you don’t know it’s definitely one you want to get down.
Andrew: It’s such a process. It’s so much harder than I expected but boy is it fun, Tim, and you’re right. I swim really fast in a wet suit. I float. I barely need to kick. It’s a whole other experience.
Andrew: All right. I could talk to you about that, and running, and cycling all frickin’ day long. My dream is to be able to do an interview just on running and swimming but I’m going to save that until later on. Now I got to focus on important things like business and I’m so glad to have you here to talk about how you build your business. Congratulations on all the success.
Tim: Thank you.
Andrew: All right. Thank you all for being a part of it. Bye, guys.
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