KeVita Case Study: The kombucha beverage company launched in a recession (that PepsiCo bought for $230,000,000)

Joining me today is an entrepreneur who created a beverage company and sold it to PepsiCo.

I want to find out how he sold his company but I also want to tear into this story, especially considering what’s going on in the world today.

His name is Bill Moses. The company I’d like to spend a lot of time talking about is called KeVita. If you don’t recognize the name, you’d probably recognize the bottle.

I want to find out how he launched it, how he grew it and why he’s coming back and doing an alcoholic beverage now.

Bill Moses

Bill Moses

Flying Embers

Bill Moses is the co-founder of Flying Embers, Organic Hard Kombucha with live probiotics and botanical adaptogens.


Full Interview Transcript

Andrew Warner 0:04
Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of mixergy, where I interview entrepreneurs about how they built their businesses. And I’ve been waiting for me to use the word literally right here, literally months to do this interview because the guest who’s joining me today, created a beverage company, sold it to Pepsi started another company, the new company now is flying embers. It does organic, hard kombucha, nobody can see it because people are listening to the audio version of this, but I’m holding it up here. And the reason I’ve been dying to do this interview is his team generously sent me a box full of it. And I felt I can’t drink it before the interview that feels wrong. It’s here for the interview. And then if you guys heard my interview with Thomas from Effie International, I said, Thomas, you’re here in person. I’m really not going to drink with you and we’re going to drink scotch Of course, but I’ve had this thing would you mind doing a taste test with me? And if it’s awkward that we hate it, we’ll have to talk about it because we’re in here in person. If we love it, then great we’re gonna have a good time. And I never had hard kombucha. I always hated kombucha, to be honest with you, it adds this weirdo sour taste that my wife loves. She fills our refrigerator with it. I couldn’t get into we we freakin love this thing. And so I basically said, Can we get the guest on here so I can do this interview? Yes, I want to find out how he sold his company to Pepsi. But also, I’d like to finally get to tear into this especially now considering what’s going on in the world. All right, let me introduce him properly. His name is Bill Moses. The company that I’d like to spend a lot of time talking about is called Kavita. If you don’t recognize the name, you probably recognize the bottle. It’s been at all our bar grocery stores here in San Francisco. I feel like at least the ones that my family shops in and so it’s the it’s known for kombucha it makes a line of health beverages that Pepsi acquired. I want to find out how he launched it, how he grew it and then why he’s coming back and doing a hard drink hard meaning alcohol and we’re gonna find out how, how we did it all. Thanks to two phenomenal sponsors. The first will host your website right? It’s called hostgator. The second will help you hire phenomenal developers. It’s called top towel. We’ll talk about those later and why you should go check them out. But first, Phil, thanks for being here. Great to hear the numbers public, but I like big numbers. Would you feel comfortable telling us how much you sold to Pepsi for

Bill Moses 2:18
beer? Yeah, we sold for 230 million dollars.

Andrew Warner 2:22
How much of that? Do you get at the end? Is that too weird to ask? How you doing? Question?

Bill Moses 2:27
Well, I got a I got, you know, well, in the double digits. That way.

Andrew Warner 2:32
I always ask my guests How did you do remember the day you made the deal? Some do remember, some don’t have a feeling you’re gonna remember because what happened? You were driving on vinter. From what I heard, as you’re like talking to who

Bill Moses 2:44
I was actually talking to the counterpart at PepsiCo, when they were actually delivering the confirmation of the price and the date of closing, and I was, I was on the one on one and sure enough, I got distracted. And I ran my car into the back of a Tesla and ended up getting towed off the road. And that was that.

Andrew Warner 3:08
And did that work out that call actually,

Bill Moses 3:11
did they actually crash and i and i was unavailable after that for about 30 minutes and yeah, they did work out.

Andrew Warner 3:21
Why are you doing this? What was going through your head at the time? Was it the sense of I have to do this or is it just the way you were driving? Were you anxious?

Bill Moses 3:30
I think I was distracted. I was really I was I was definitely definitely very anxious and and, you know, so it was a it was distracting so I yeah, definitely it was it was it definitely took my eyes off the road. My I was looking at the road but I was thinking of different things.

Andrew Warner 3:48
How do you changeyour life to have done this deal?

Bill Moses 3:51
Really interesting. Well, you know, it, it really, it really from a you know from a professional perspective, you know, there’s, you know, it’s really a, the grand prize is to build a brand and to sell to a major CPG company. So it really changed my life and so far is giving me a lot of currency with a lot of new brands, other brands, entrepreneurial brands, many of which have gone on the board, and I’m advising, so it really gave me currency in the space that enabled me to take the expertise and the experience in beginning and operating and selling to other younger companies. And that was and that’s really a love I have is, is building a brand and positioning a brand and working with young entrepreneurs so that they could take the experience I have and hopefully be a benefit to them.

Andrew Warner 4:48
I heard you were one of these kids growing up who was just constantly hustling. Did you ever lemon Did you ever have a lemonade stand?

Bill Moses 4:57
Yeah, I actually did have a lemonade stand. I had it. Actually, at the time it was, I think it was it was a Kool Aid stand actually, it wasn’t even eliminated. It was back in the day where I took Kool Aid mixes and mixed them up on a hot day and, and put some ice in it and sold it. So not lemonade, but something a little easier to make, because of what?

Andrew Warner 5:17
Because you would just

Bill Moses 5:18
Yeah, why I think there’s a couple things I really I really love connecting with people, and, you know, and getting them, transacting with them and engaging with them interacting with them. So the ultimate form of interaction, I think, I mean, you could either go the hard way and have a love interaction or you can go the secular way and business interaction and so, as it relates to, as it relates to that I really love interacting with people. That was one way to interact with them.

Andrew Warner 5:50
Yeah, it feels like the commercial way of interacting is we underestimate the fact that it is an interaction it is almost there’s a line in the movie barbarians at the gate where The head of Nabisco said, when people buy you, they they buy what you’re selling. It’s like, or when they buy what you’re selling, they buy you the sense that they are they’re showing you the way that they show a comic that they like them as they applaud. The way they show you as a as a hustler is that they’re buying your stuff. Am I right? Like, the lemonade, the baseball cards, the other stuff that you were selling growing up? I feel like it’s all connected that way.

Bill Moses 6:26
No, no, I mean, you know, there’s something there’s something deeply rewarding about, you know, making something, crafting something

that others enjoy, and they benefit from.

You know, for me, that’s the ultimate and my ability to express myself. Others express themselves with music or with different forms of the creative arts, or engineering or programming or, you know, gamifying and for me, it’s making a product and building a brand and having To be something more than just what it is having to be something that represents something that someone could emotionally connect with. That’s really something

Andrew Warner 7:09
before this, you, you started recovery television network. I looked it up What was it?

Bill Moses 7:16
Yeah, so a gene

99 2000 we started a nonfiction programming service. And back in the day when cable was proliferating, there’s going to be 500 channels and, you know, and you know, as the and so we created a channel that was nonfiction that really dealt with people’s behavioral health issues. And we had a helpline that, that that helped people when they were in a time of need, and it was telecast into the privacy of one’s own home and it dealt with behavioral health issues. If someone had a substance abuse issue or if they had depression or if they were, you know, mentally unstable and potentially suicidal. We’re Part of domestic abuse you know, sexual abuse, all these behavioral issues that people really didn’t want to speak about, we gave them an opportunity to connect with us and give them information so that they could do something about it. That was was really great. It was really it was really rewarding programming service that we did the thought of

Andrew Warner 8:20
it as, as a place for addicts to see programming geared towards them. I’m looking at an old Los Angeles Times article from 1993 that called it a wellness channel. Did you start off with with dealing with addiction and then expand or was it? We started we

Bill Moses 8:39
started with with addiction. Yeah. And then we brought it for many reasons. Because when you look at addiction, there’s oftentimes an underlying cause, whether it be sexual abuse or domestic abuse, or you know, a host of things. So we wanted to cast a wider net, to really be more inclusive, all in some sort of relationship with one another.

Andrew Warner 9:01
By the way, those those beeps go off the whole day as you work. It doesn’t distract you. I’m gonna ask you to turn it off. But I don’t even know that you know how to turn it off. It’s outlook, isn’t it?

berries that thing so deep in their settings.

You don’t get distracted by that.

Bill Moses 9:17
I do and I’m not usually so tied to my computer where it’s where it’s an issue. So

let’s keep talking and one

Andrew Warner 9:26
night, if you find it, find it, but I don’t want it to distract you from this conversation. I’m trying to understand why you I’m looking at your background. I don’t see why you would get into television. You’re a guy who worked on the back office of Bear Stearns, you then helped create the the computerized reservation system for the People’s Republic of China so that people can book airplane flights and hotels right in my room. How do you end up with a television network? That’s more of a Ted Turner type of thing.

Bill Moses 9:55
Yeah, right. That’s great, sir. Well, it turns out that one of my one of my good friends was actually in the cable industry. And I was working on Wall Street and he brought me this business. And you know, my mother, my mother was a was a was, you know, in recovery and I had a lot of experience related to, to family issues and dynamics and I realized that that, you know, you could do well and by doing good and somehow or another I got really pulled into it and felt compelled to, to get behind it. So I think there was a personal connection. Do you feel comfortable

Andrew Warner 10:30
telling us what happened in your background in your with your mom?

Bill Moses 10:34
Yeah, well, my mother was, you know, she she grew up really. She was an immigrant and broken Pittsburgh. And she had, you know, she had some challenges. She was an alcoholic and she it culminated into a nervous breakdown that she had when I was 14 years old. She came out of it she got into recovery and got healthy and You know, so a lot of her issues I live with. And I realized that it was not I didn’t have anywhere to go or talk to anybody about it and what did you live with? I live with I lived with a mother that wasn’t always there.

Andrew Warner 11:20
And so how did that affect you personally?

Bill Moses 11:23
It It made me

angry, you know really made me angry. It made me

not really understand.

I didn’t understand why why this was happening. I, I couldn’t. I wanted to blame her but I realized it was something else. And so for me it was it was it was it was deeply troubling and upsetting and and I think, you know, my teen years my early teen years, especially I was angry and I and I took a lot of that energy into sports and athleticism that enabled me to really find a catharsis for it? And yeah, sort of,

Andrew Warner 12:05
do you ever break yourself out of it? Or did it help you when you were working at Bear Stearns when you were

Bill Moses 12:09
when you were working? I think, listen, I think there’s a little bit of, you know, there is the cycle of addiction and it comes in many forms and fashions and in some cases, it makes what people might be considered as great. And other cases, it’s, it’s not so great, but for me, I, I kind of have a work. I love the work. So whether you want to call it a work addiction, I have I have a deep desire to be to work to be worthy and to provide others was something of value and whether or not those that came by nature or by nurture, I don’t know, but I think it’s related in some way to my childhood with my with my mother,

Andrew Warner 12:52
and then network that you started to help people who are in your situation in your mom’s situation was in joint venture with Liberty Media, am I right? Yeah, this was the huge unknown, like, most people don’t know, Liberty Media, but they owned a bunch of channels. They’ve been the, it was owned by john Malone. I think it still is right?

Bill Moses 13:12
Whatever, they invest in programming services and whatnot works, but programming services from bt, Discovery Channel, Annie, etc, etc. So having them as a partner was was valid for sure. What was interesting was that during that time, you know, there wasn’t a lot of sponsorship dollars interested and being associated with things of this age. I didn’t think of that. Right.

Andrew Warner 13:40
Right. And so then what happened to the channel,

Bill Moses 13:43
so the channel ended up going under, but we sold the, what we did was we have two businesses, we took the cable network, or excuse me, the internet network and the programming we developed a partnership with at the time was a mirror AOL digital cities. And at the time it was way AOL which was a way of communicating via the internet. This is this is 20 years ago. And they had local programming. So we tied in local programming and all of our services to AOL. And we ended up spinning that often selling up back to Liberty Media, and took the programming network that was the television piece and took that under. So it was it was a mixed bag of success for the joint venture. But not great success or any success for the for the investors in the broadcast.

Andrew Warner 14:38
The You did well. Financially, it seems like Well, okay, well enough. You could take on a hobby as you told our producer, you said I got into winemaking, which is I don’t know if it was a throwaway line but he said wine meaning like winemaking, the folly of the rich. What got you excited about winemaking all of a sudden

Bill Moses 14:56
I don’t know why I went to school in

When I was at college I took a semester overseas to, to the south of France. I was struggling with my with my language requirement at the University of Virginia. So one way of getting through that was do an exchange program student and I went to the American University done an excellent job on site. I lived with a country garage winemaker and I learned to buy French wine while I was going to school there. Wow, fast forward, I get out of there. I go to Wall Street, I work on Wall Street and become an entrepreneur and dah dah dah dah dah. You’re a fast forward and I’m like, I love to grow. I love wine and I started growing grapes. And I started a winery and and then I got really into the fermentation. That’s the piece that really turned me on was the alchemy of the fermentation process and all of that.

Andrew Warner 15:53
And I remember talking to I think, I forget which one of my guests I thought it was. Hotel you But you know what I forgot who it was about how you recognize that one of the challenges of being in the wine business is you have to sit on a bottle for 18 to 24 months that it’s not a fast turnaround that it’s a really slow process. And so what did how did that shape your thinking about the business?

Bill Moses 16:19
I, when I was when I realized that we could make a fermented drink that didn’t require a boring for, you know, 1224 months or 36 months? I said, Well, that’s the business I want to be in. So fermentation. So yeah, I think it gave me a it gave me a reference point on if I’m going to get involved with beverages or fermented beverages. We’ve got to find a way to do it that could that could have a faster turn. And so as we were, as I was innovating, Kavita with good manufacturing practices, We employed a lot of IP to get the fermentation to not occur in one year or one month. But to do it in one week in order to have better economics.

Andrew Warner 17:13
You’ve got Am I pronouncing this right? My wife? Oh, my wife. Like I said, loves kombucha. We have so much in the house. Especially now because we’re stocking up. We don’t know when we could leave the house. Am I pronouncing that right? kombucha? kombucha? Okay, good. I guess sometimes I say kombucha and she. She laughs So from what I understand you started reading up on this, you saw that people were interested in kombucha. You saw it in stores. You want to talk a little bit about the research that you did? Did they told you this is worth going into.

Bill Moses 17:42
So I mean, I started to sample them, explore them. Independent. We have my own due diligence as a winemaker looking at fermentation and fermented products. A friend of my wife was making a watercolor For, which is a different kind of a format in her kitchen. And so we partnered up and ended up creating a company. And we launched and made a water key for fermat that she had perfected in her kitchen. And then I had innovated a kombucha. And then we I went forward and found new and innovative ways of, of making the menu. This is, you know, and CPG manufacturers, everything. So we had to figure out how to manufacturer a way that that would have good economics, and that’s what we did for six years. CPG consumer packaged goods, as we’re talking about, right.

Andrew Warner 18:42
You also told our producer, you said the winery had capital expenditure that I had to unload, what does that mean?

Bill Moses 18:50
Well, you know, there was there was a lot of money that goes into the wind and winery and I didn’t necessarily have to loaded, I think, you know, I just, I just my interest shifted. So not really that really a load it just, you know, I went from making it a primary business to make it more of a hobby, because they’re just the economics were I mean, the winery?

Andrew Warner 19:19
I don’t think she meant that you were saying that you wanted to unload the winery, but it seems like you were saying, I was losing money at the winery for a while, right? Because this is not a business that you get into and you make money tomorrow. And so if I started another business that made a profit, it seems like tax wise, it would cover up the losses. Ryan Am I am I thinking about this way?

Bill Moses 19:39
Certainly. Well, certainly if you’ve got, you know, if you if you make one business, you’re losing money. And so it helps. It helps offset the you know, the economics as they’re two separate entities and businesses.

Andrew Warner 19:53
All right. One of the ways that you sold it in the beginning was consumer intercepts. I’ll get that into that in a moment. As you tell people this interview is sponsored by Hostgator if you’re building a website, if you’ve got a website already built, if you’re just looking to play, go with the company that’s going to save you money, especially now in these tough economic times, save yourself some money by going with Hostgator, they will host you right, they will even migrate you to them if you’re already with somebody else. And save some money allow you to grow business. If you’ve never started a company, you’ve got some time right now while you’re watching Netflix, just go sign up with slash mixergy. Start a site, play with it while you’re watching something goof around, don’t turn it into a business. Let yourself play and explore and learn. And as you do that, you’re going to find a passion that will allow you when you’re ready to start that business. So again, if you’ve got a business hosting with a company, move over to hostgator. If it’s right for you, it’ll save you a ton of money and do you good for your business. If you don’t, if you’re just looking to experiment, it’s an inexpensive way to learn by doing go to slash mixergy. When you use that slash mixergy. At the end of the URL, you’ll be saving yourself a bunch of money by getting the lowest price that they have and you’ll be Tom that you heard him on mixergy slash mixergy the consumer intercepts. How did how did that work? How did you personally sell in those early days

Bill Moses 21:11
was really interesting I had, I think validate the product and I, I have, I have a home that we would have yoga retreats and actually or different kinds of cars, it was sort of like a b&b. And we had the buyer from Whole Foods and we I made up the product and took it to took it to her and all her friends that were all part of this weekend activity. And to see if she liked it, she really liked it. So it was my first consumer intercept was and then ultimately she helped me get it into Whole Foods. But beyond that, you know, really, really getting having face to face interaction with your target audience around the product. is really vital, you get more learnings from that interaction than you do from any kind of survey you do on Susie or, or any other sort of, you know, service, Survey Monkey, etc. So yeah, so consumer intercepts were gave me direction on flavor, carbonation, design,

everything. And that was

Andrew Warner 22:28
you going to the store seeing somebody reach out to a similar product saying, Hey, would you please try my product?

Bill Moses 22:33
Exactly, exactly. I would go to the shelf that it would sit on. And when they were up through shopping, I say, exactly. I say I have a new product, would you be interested in trying it? And give me your feedback? And then I feel awkward

Andrew Warner 22:43
doing that walking up to stage? No.

Bill Moses 22:46
I mean, they were open to if they were open to it, then I was excited. And most most people were really excited to hear see an entrepreneur that was trying to get some feedback on their product. So they were never very shy on giving opinion. Once once I say dragon,

Andrew Warner 23:02
it’s gonna feel a little bit like going back in time to, to the lemonade stand where you’re just talking to somebody making one sale at a time seeing that they like your product and maybe like you and in association, what what did you learn specifically by talking to people by doing those consumer interest intercepts?

Bill Moses 23:21
Yeah. Well, first off is I learned, you know whether or not the particular flavor worked in a fermented beverage, so I learned about flavors, you know, and what flavor works. I learned about acidification, was it too tart? Was it too bitter? I learned about carbonation, carbonation and a carbonated drink. You know how much carbonation is one of the major flavorings. Oh, you mean that there’s some people who don’t know you did you notice that people like more carbonation that you thought there was there was the degree of carbonation can be altered, like a flavor and when you find that people like why find that in the spring? Particular trick they wanted less carbonation, because it was already sort of a body tart flavor that they didn’t want something to carbonated that would add to that. And then, you know, also, you know, we learned about sweetness. And then we learned about brand. I mean, we would show them labels and get feedback on. You know, our first name of the company was Fira. It was Fira. And we were like people can pronounce it was Kiefer. Ah, and while we thought it was cool, people thought it was just they couldn’t identify. So then out of the consumer intercepts, we began to ideate around new names and ideas and would take it to them and directionally got the name that we ultimately settled on. Kavita,

Unknown Speaker 24:51
what is fear?

Bill Moses 24:53
Well, fear IQ is key is effectively cheap when you look at key. It’s an Many different languages it represents sheer energy. Fear and fear is actually Kiefer. It was Yeah, sorry that time keepers is a dairy product that came that comes from the the Far East where a natural bacteria would get in the sheep’s milk or goat’s milk. They would carry it on their saddle in the caucus mountains, the nomads the and what would happen is through the natural bacteria from the flora, the sack of milk that they would carry would begin to curdle and ferment. And it became a digestive aid and an elixir because it had alcohol in it. And that was traditional keefer that then they have made and commercialized in stores and they’re in the dairy area of source. You could buy Kieffer, which is a, which again, it’s not fermented aside alcohol, but it has a lot of probiotics and it’s rich that way. So that’s Kieffer. So one of our Drinks as a water keefer it’s the same bacteria that takes this old goat and sheep’s milk and turned it into a 2000 year old drink and turn it into this sort of nourishing elixir that got your little buzz. And we we, we found a way to make it in an aqueous format in a water form the same bacteria the same culture, but put it in water and ferment. So that was one of our lines. And so could Fira was the name of the beverage line that related to Kieffer, but it didn’t translate to the consumer. And I learned that through a consumer intercept.

Andrew Warner 26:44
And so did you even stop calling it Kiefer, it looks like is that sparkling probiotic drink?

Bill Moses 26:51
Yeah, so we changed it to Kavita and uh, and, and the sparkling Pro. So we have two lines of sparkling probiotic drink which is a water keefer God is originally from the traditional keefer. That was a milk based product, same bacteria, but we we through our own technology.

And then we came up with a chapter that so that was why

Andrew Warner 27:14
why not come out with kombucha right away? What was it that he was selling

Bill Moses 27:19
requests? Well, we were the we positioned ourselves as the antithesis as the antagonists of kombucha because the waterkeeper was a fermented probiotic beverage that but it wasn’t a computer because it tasted more like a healthy soda drink. And so it was much more consumer friendly. It was softer. It wasn’t it wasn’t vinegary. So we went out and challenged all the retailers to say, why would you carry a kombucha when you can carry a Kavita? It does the same thing. It’s just tastes better. Yeah. And that was our way of getting on shelf. So it did that work.

Andrew Warner 28:04
Did they say we’re gonna take

Bill Moses 28:06
anything? It did, yeah. It worked and, and it worked because we also had we also had help from the 2010 National kombucha pool. They pulled the computer from market because that alcohol and the product so when they pulled that, that out and we were pitching our stuff, we ended up getting on the shelves of Whole Foods and nationwide excuse me, and and that, yeah, so we were successful with that. We grew that line to $30 million and in business, and then I was realizing that kombucha drinkers wanted kombucha and Kavita drinkers sparkling probiotic drink wanted that and I thought why not make a kombucha and service to different consumers so that I came up with a complete shot. We drove that to 50 million in sales in the water, more than the waterkeeper because it was a category already built, and was growing. And so while we were a water key for that never developed as a category, we were our own category. So when we made a kombucha we were part of a growing category, and became one of the leaders in that category.

Andrew Warner 29:30
You got to deal with Whole Foods at the time a Whole Foods encouraged each store to find local entrepreneurs to buy the local food to feature it in their store. And it seems like that’s how you got into Austin. Am I right?

Bill Moses 29:43

Andrew Warner 29:44
Yeah. And then you made an exclusive skew agreement with them. What was that?

Bill Moses 29:50
Yeah, we we, at the time, and I think they still do this. They like to be innovators and team with a new entrepreneurial company. We did a deal where we went exclusive with them on a new innovation, the agreement was take us, put us on first, give us a shot. And we will be exclusive to you for six months, or nine months or a year depending upon the, the the deal. And what they will do is they get behind it launch it in there at the time was maybe 300 stores. I think they know they have 450 and it would be the it would be at the proof of concept. You know, getting a retailer behind you to give you enough distribution, so that it could be fully representational of the marketplace versus a few stores in San Francisco or wherever was really important. And they really, they really wholefoods really made a lot of companies. They validate them, they made them and ultimately created the better for you food and beverage space by doing such things, as a lot of gratitude to them. program,

Andrew Warner 31:00
what was the product that you started off giving them it

Bill Moses 31:04
was a sporting probiotic drink and we did a we did the lemon ginger was the first one. And

Unknown Speaker 31:11
it worked out.

Andrew Warner 31:13
What year did you start off?

Bill Moses 31:16
We really got one we incorporated late 2009 we went to market 2010. So it was we 2010 to, you know, effectively fall of 2016 is when we around

Andrew Warner 31:28
2009 was in was a bad year. 2008 was when the world fell apart. And then 2009 the world was suffering from it. It took a while. What was it like to start a company back then?

Bill Moses 31:41
Good question. It’s sort of like starting a company right now. Yeah. So it was hard. You know, listen, everybody was it was really hard to raise capital. You know, we had to raise capital at a really low valuation, even though we got the initial launch in Whole Foods. And, you know, I remember the private equity owner coming in and meet with me. And he looked at me and he said, You know, I don’t know about this, but I believe in you, and I’m gonna invest in you. So, at the end of the day, it was a lot of luck and a lot of luck to get capitalized. At a time when people were not writing checks. What do you think is sign you?

That’s good question.

I think he saw two things. I think he saw someone that was gonna

not give up that I think he really felt a sense of


And the other thing I remember him saying is that he liked the way I put thoughts together. So when he asked me questions, and I was, I think I was, I think I was sort of succinct and like how I How I always build from a question into a, you know, into a reason to believe or a story or a message. And so I think those are the two things. I think he saw the logic he saw. And I think in in launching any business is creative and innovative as it is or whatever it is, end of the day. There’s a certain amount of focus logic and commitment that needs to drive the business.

Andrew Warner 33:32
And your logic wise, this is a new category health, healthy food, people are starting to move towards it. It’s getting bigger, right? What about what about the idea that at the time people were losing their homes, they were upside down in their mortgages, they were in financial trouble, they lost their jobs. Why? Why did you think that people would still buy this new drink that was more expensive?

Bill Moses 33:57
I think at the time it was so clear That the whole better for you healthy movement and food and drinks was was that was rising. And that would lift all ships. Right for that. So I think ultimately, in any new business knowing that you’re part of a rising tide helps offset a lot of other macro influences that could that could toward, you know your your objective,

Andrew Warner 34:28
right if I’m trying to eat healthier even if soda is an old traditional soda is cheaper than the healthy drink. It’s not that much cheaper. I’m going to move to the healthy drink. And that’s what you were seeing in the world. Exactly.

Unknown Speaker 34:43

Andrew Warner 34:45
Let’s talk about then how you got it right into bottles. How you how I know that you had some challenges with getting this, getting the product put together bottling it getting into stores. Can you talk a little bit about that?

Bill Moses 34:58
Sure. Sure. mean, you know, first off was it we’re making, we’re making a drink and that ferments and putting it into putting it into a bottle. And so a couple of things that that we had to innovate around, one was, you know, how do you make it and scale it up others were making it and not trying to find economic ways of scaling it. And so, one of the first things I wanted to do was say, How do I, how do I create a manufacturing process where we could we could cost effectively make more and less time and that was the first challenge and how do we make it and get it into the bottle? cost effectively, co packing we had a lot of challenges in going out to co Packers because quality and cost was really sketchy. So once we once we Work through how to make a lot of it for for less time, normally kombucha takes 30 days give or take. And normally they make it in five gallon jugs. You know, give or take, and some great brands out there are still doing that, give or take, things are changing very much. But some of the great brands out there that, that the one that I respect gt Dave, I know GT and what he did with his computer was amazing. And he’s, you know, the icon of the category. So, he had his way and we wanted to do it a different way to have better economics. So that we could appeal to a larger company strategic company to sell it. So finding a way to make it in a much more cost effective way was important we checked that box. So then, you know, we ultimately build our own bottling facility, we realized that paying, you know, exorbitant rates, having low quality with someone else co packing or co manufacturing it. wasn’t the way to go. So, you know, we raised give or take $10 million dedicated to doing our own line. And I hired a young man out of Pepperdine University who has an MBA and who just had a penchant for operations and supply chain. I mean, he could have went anywhere it could have been, you know, could have worked for Apple or Google or, you know, because he had that kind of intellect and interest and skills 360 and he wanted to go on the manufacturing supply chain. So he came in, after six months he built he conceived up and built this manufacturing line that was state of the art that PepsiCo still uses and replicated it on the east coast to to increase production for them. So we made our own bottling line and that gave us control that brought down costs, which made us ultimately compete at price and have strong gross profit margins. Big strap wants to buy a company, especially in this space. You know, at least with PepsiCo, they didn’t want to just buy some company that had a lot of revenue. And companies do they buy revenue, and they really wanted a company that had profitability. So we built and told our business so that we can not only grow and take share, but also increase product margin and gross profit margin. We do that by owning our own production line.

Andrew Warner 38:28
If you see me looking down, it’s because I keep taking notes on what you’re saying. And then I’ve got follow up questions to ask you like how do you promote this out? Why doesn’t Pepsi and Coke Why don’t they just create these products by themselves? It looks like they have a habit of buying them how you got together with Pepsi and a few other questions. But first, let me tell you about my second sponsor is a company called top talent fact. Instead of telling you about them, I’ll tell you what happened with my kids school. This week. We got an email from the school which email from the school talking pre K. They’re sending us a zoom link, zoom link. This is the school whip. tons of money I literally paid for months and months while my kid was in the womb to lock in the spot at the school in San Francisco. If we ever wanted to reach them, they don’t answer email, except for once a week, if you want to talk to them, just walk, take your shoes off and go talk to them in person. They’re that old school. There’s so they’re doing zoom, because the kids school is closing, they want the kids to get to know each other and to do their singing circle, and so on. So I get on with zoom with them. They don’t even know how to operate zoom. Every kid is screaming on the mic. And they don’t know that they could just mute the zoom for everybody, but they’re on it. They’re playing with it. The other kids school is sending me this resource to learn math at home using software. I go, Holy moly, these schools that were like pride themselves on being Luddites, and now encouraging software. This is the future software still is here. Software still is growing. And if you’re out there in a software space, and you still believe in this space and want to expand your business, right. I’m going to introduce you to a company that will let you hire phenomenal developers. We’re talking about Silicon Valley developers at least Prices because these people working internationally often from their homes, and it’s a company you’ve heard me talk about with past guests who have raved about working with them. It’s called top towel. And now more than ever, if you’re looking to hire developers just start a conversation with the people at top towel, they will start you off by talking to a matcher. Understanding your needs, then going out and finding within their network, the best of the best developers, then talk to them, interview them, if you’re happy, great. If you’re not, you’ve lost nothing. And if you use my special URL, you’re going to get 80 hours of top towel developer credit when you pay for your first 80 hours. In addition to a no risk trial period, they have worked with me and my audience for years. My audiences love them, which is why they keep coming back and buying up all my ads. And so I recommend you try the thing that has saved so many other companies and help them grow. It’s called top slash mixergy is a URL to get that special offer it’s TLP to slash Mr. ZRGY Top Tao comm slash mixergy. Calm up even if you’re not ready to hire right now get to know what’s possible. For you with top town meeting in that bill, that was a pretty good read. It wasn’t even read. It was just me talking. I was wondering like as a salesperson, what is what’s going through your head as I’m doing a sales pitch for my sponsor? Does it feel like uncomfortably uncomfortable like a stick? Or do you say, Wow, this guy’s good?

Bill Moses 41:18
I think it’s part of what makes it work and you’re good at it. So I was listening to how you took a personal experience and you connected with a sponsor and it was perfect, beautiful.

Andrew Warner 41:33
Thank you to self improvement. I know you had that yoga place I am. Are you still into it?

Bill Moses 41:39
I’m surely I shortly focus on myself. When I when I give myself time.

Andrew Warner 41:45
Like what I told you, I’ve got photos of you from before in preparation for this interview. You’ve got like a real charismatic Look here. People are not going to get it because they’re listening but maybe they’ll learn something that will carry up. You’ve always looked professional now you’ve got something. What are you doing to improve yourself? What’s One weird or different thing that’s uniquely yours that you’ve done to improve?

Bill Moses 42:03
Well, I mean, I’ve, I’ve created my own sort of morning workout program this morning, so, so I did. And you know, it’s a combination of yoga, core training,

breathing exercises, and

meditation. I mean, I’d so I have this, I put together a little bit of everything. And the end of the day I, oh, the other thing I did this morning, which is really interesting, I bought this, this this, I guess it’s a swing or something or it’s a you know, it’s like a, it’s like a yoga swing. And I, I get and I and I get inside of it, and you could flip yourself upside down. And you could hang upside down for a long period of time. And I did that for probably like six, seven minutes. And I think it kind of makes me feel better. So yeah, I mean, I think everybody needs to find their own sort of, you know, I mean the some of the greatest entrepreneurs are not only great thinkers, workers leaders, execution oriented masters, but they’re also ones that really have a deep sense of balance and focus on themselves. Some that come that summit comes naturally they don’t have to really do much to have that deep center and that inner health and they do what they do to keep themselves healthy. Others have to do more and work harder.

Andrew Warner 43:29
Really which isn’t. Do you have

Bill Moses 43:30
someone? Yeah, somewhere in the middle I some of it comes natural but if I’m not if I’m not focused on it and really working it then I could. I could look like I looked at some of the photos which is not as healthy as

Andrew Warner 43:45
I What do you do? You’ve never seen it was not healthy, but maybe in your mind, it’s not as healthy as you could be. What do you what do you do to make sure that you stay on top of it?

Bill Moses 43:55
I schedule it.

Andrew Warner 43:56
In your in your calendar. It happens.

Bill Moses 43:58
It absolutely If I don’t fit in my calendar, because I’m so busy, I wake up and wake up at 330 in the morning, and I can’t wait to get to work. I’m you know, you know, so it’s so so when you get into that, sort of when you get that rush, literally and then physically you want to rush and move, unless you schedule time to like, stop and take care of yourself. It never happens. And it usually if you don’t do it the morning time, even more unlikely, because usually

Andrew Warner 44:30
that’s too for me, I, I need some app. And it’s always a run. I love running. It’s my thing. And still I won’t do it unless there’s an app that tells me here’s how many times you’ve done it this week. And I know I want to hit at least for four days at least five miles. It’s It’s weird how we need these external pushes. By the way, I’ve always had this question, why does PepsiCo not see the same thing that you’re seeing? Do the same math you’re doing and say, all right, people want drinks, probiotic drinks, healthy drinks. We’re going to get into this. We see this guy, Bill somewhere in the middle of the country or somewhere out there, we’re gonna jump into it and beat him. Why do they never do that?

Bill Moses 45:06
What they tried it from time to time they have, you know, brand extensions or line extensions with Gatorade or etc. But it’s really fine.

Andrew Warner 45:14
They didn’t create Oh, yeah they did Powerade. Right is the competitor thing. Okay.

Bill Moses 45:18
Well, I mean, look, I mean, it’s really hard even. I mean, it’s funny, because when I initially went to, I think this was actually what was going on I, I went into Pepsi, I got a term sheet. They got cold feet at the 11th hour, because they felt like they could do it internally. So I went to go, downtown Atlanta, met with coke got a term sheet from them, and my banker showed Pepsi, the term sheet from coke. And then Pepsi closed right away because they felt like they wouldn’t want to miss it. So I think ultimately, you know, PepsiCo, and coke, and other big brands, other big CPG companies really do look for innovation outside of their ecosystem because by nature Sure, they can’t think beyond their box when you’re in that big, institutionalized box. So that’s the same reason why the Microsoft’s or the Googles or the Amazons, they ultimately acquire new innovative companies that would take it’s just difficult to innovate out of your given box internally.

So I think that’s what I think that’s what they realize.

Andrew Warner 46:26
And did they make an initial investment before they did the acquisition? They did.

Bill Moses 46:30
They made an initial initial investment, and then they

sat on a board and gave us some good insights on compliance and legal and distribution helps us with distributions a certain extent. And there was a built in option that at a certain time, triggered their ability to buy us and it was interesting then in June of 16, was the first month after option open, it was a 12 month option. And we were growing exponentially. And I was so hopeful that they would. They would wait. And they didn’t, because valuation was predicated on that. Yeah, actually, the I talked to the board and I was saying, well, maybe we should message them that we’re not ready to sell and we don’t want to sell even though they’re contractually obligated because they don’t want to buy, they might end and we decided not to do that, which is probably a good idea. But you know, I mean, look, I mean, had had we held the company for another year, we would have gotten twice as much money because we’re growing that fast.

Andrew Warner 47:33
So and the way they do it is they do this as an investment because they want to learn and they want to make sure that it really is why why did they do this? Because I think Jesse it’s learned from Zico told me he had a similar situation,

Bill Moses 47:45
right? I mean, look, I mean, they, they still do it. They love young entrepreneurial companies, and they like once they qualify the category they invest. They take a board seat or a board observer seat and they want to Watch the company from the inside out, to get to know it, to help it and then they get comfortable with it. And then ultimately, many times not all, they have an option as part of their investment to that triggers upon a certain, you know, when they get to a certain size, but they could buy it. It’s it’s just an auction, it’s not an obligation. So, you know, the company really does. Because if, if PepsiCo or coke or Nestle or if they if they invest and then they walk away the company’s really in trouble because other potential buyers will look at it as a kiss of death. Why didn’t

that was that’s the big concern.

Andrew Warner 48:44
You know, I’ve got one other question about that. And then we’ll come into flying embers, which I’ve got here. And that is how did you promote? I’ve seen this as I said, I’ve seen Candida in my house. I’ve seen it at stores. I i’ve never in my life seen an ad. How does any But even know to go buy it. How do you what do you do to get more sales?

Bill Moses 49:03
That’s really interesting. It’s 70% of this category is shopped at point of sale, not through, you know radio or out of home is what they call. So what we did a lot of demos, I mean, we did millions and millions of dollars a year, I think the 2016 we did two and a half million dollars of demos at point of sale. We were at the all the different festivals. We do, we did two and they do now digital geo targeting digital so that when you’re going into a store, you can be hit and digitized. Also customer specific marketing where retailers have loyalty programs, Albertsons has what’s called just for us so when you look at it, you can get a promotion on something else based on what your basket,

Andrew Warner 49:52
what you’re shopping on and they print out exactly, but there’s also online promotions based on what people buy in the stores if they’re part of these members. program

Bill Moses 50:00
breakfast here. So that’s

that’s also relevant. But yeah, I think as it relates to the better for you space, you know it, you know, it’s not a lot of traditional advertising and it’s really high touch, high touch interaction. It’s a hand sell. And I think ultimately that’s and then it’s word of mouth and then what’s the festival

Chela, you know? festival got it. Okay.

Andrew Warner 50:29
Got it. Also you, I guess the that’s where the label is so important, but even the flavor names like mohito lemon, mint coconut, right? Like, you got to just try and see what that is. If I would have seen that. I would have bought it just to see what it what it is. Alright, then. You sold you were done. Why come back with flying embers, this organic hard kombucha?

Bill Moses 50:52
The question you know, I was noticing that the, you know, just noticing that the better. That the better for you alcohol. space was where the non ALC space was 10 1012 years ago. And so I thought, well, who’s really built a company and a brand around?

Better few call. And so

I went to work and we

saw I saw people that were drinking computer that actually liked it when it went over the legal limit. And I said, Well, you know, why not make a kombucha that actually had alcohol on it? Since the non outcome boots or manufacturers were doing everything to keep it out? Even though people kind of wanted it, wanted it. A lot of people said,

Andrew Warner 51:41
so people want to feel it, even a little bit of alcohol did

Bill Moses 51:44
it feel it and they liked it. And so we find out then, you know,

that was a whole marketplace that wasn’t being tapped into for so.

Andrew Warner 51:54
We know that people want a healthy, healthy alcohol. What I’m seeing is they always seem to want Alcohol that that isn’t painful in the mouth, right? They they want the thing that makes them feel like they’re not drinking alcohol but still get the buzz feels like I can see that salt like the seltzer right? And then before that there was the bartles and jaymes A long time ago and the all these things come out to say, No, you want to drink alcohol, but you don’t like the taste. This is gonna make it easier. I haven’t seen anything that says people want a healthier drink. How are you? What are you seeing?

Bill Moses 52:26
Yeah, I mean, I think the first thing that became a phenomenon was what’s not in it. That makes it healthy. So what’s not in it, though, as you as you look at the seltzer market, from the non out from the non Alka Seltzer, to the ALC. seltzer. It’s about session ability and what’s not it? You know, low carbs, no carbs, low calorie, no sugar. Listen, though. My bet. Is that creating something more crafty. For the craft drinker that actually has the newer one next to you has no no sugar, no carbs, whatever here. Yeah,

Andrew Warner 53:12
yeah, this one has no gluten No, like, it’s a list of all the things it doesn’t have.

Bill Moses 53:17
So so we check the box on what it doesn’t have. And then we go ahead and put things in there that make it better for you like adaptive jets, you know, and probiotics, by probiotics, so that by by making something that is craftier, it’s got a little bit more flavor profile. You put more in it. The bet is that this is the next gen next generation. better for you alcohol product that goes beyond what’s not in it with the cell search and trying to bring up identifying Another target audience that once more in their drink than what they’re getting.

Andrew Warner 54:06
It says zero grams sugar right here. But when I look at the ingredients, I see sugar,

Bill Moses 54:13
right? We firm that. We make it with sugar, we ferment it dry. So when you ferment it, when you ferment it dry completely dry. You get you have no residual sugar, enter. So yeah, it’s part of the ingredients, because initially we start with it. So yeah, you’re by law

Andrew Warner 54:30
compelled part of the manufacturing process, but it’s not in the end product.

Bill Moses 54:35
That’s correct. It’s fruit. Yeah, you use sugar to form it. And then you ferment it all the way drive.

Andrew Warner 54:40
You know what, I never even noticed that it’s 100 calories. I think because it’s bigger than the standard soda can. I thought that it would have more calories. I’m not a calorie counter that way.

Bill Moses 54:48
But it’s just the 12 ounces or 85 calories in the 16 is Yeah, so

Andrew Warner 54:54
yeah, they took they hooked me up, dude. I gotta tell you, your people. I can see so much In a company based on the people who I deal with, there are people right now who are pitching so aggressively to be on mixergy like this, and I could see that their staff has no clue about what’s going on in the world. No consideration. Your I don’t know, Julia, I don’t know Susan. You know, they work for you, right. These are amazing people that like the level of consideration is not like they just took care of me with this. It’s just, I call I messaged them last night. I said, here’s the situation, San Francisco. What can we do? There’s always like, a sense of heart without feeling like they’re, I don’t know, too much

Bill Moses 55:34
really good people. Thank you. That’s really important.

Andrew Warner 55:37
That’s going with that. But I got I just I get such a good feeling with some companies when I see the people who work with them. Thank you.

And so now how are you going to survive in a recession we’re about to go to pay in economic

Bill Moses 55:50
times. You know, they say alcohol is recession proof, but it’s not whenever they shut down all the bars and restaurants. Right, right. Yeah. So we’re, no actually our sales are up I mean, you know, we’re still relatively small company. We just went national and, you know, we’re so we just got into a lot of different we got into a lot of retailers, Publix, Harris Teeter, Wegmans, Albertsons, Vaughn’s, you know, etc. But all of a sudden, they’re doing their resets their spring resets, where they take out the old, the deleted items they put in the new ones. And we’re not we’re like in the back room. Neither, you know, unable to get on the shelf yet with a lot of it. But nonetheless, we are in, you know, 5000 doors nationwide, and we know that the resets are going to be coming. And our business is up. We had a record week last week. I mean, ultimately, what do people want? I mean, they want their they want to they want to drink at home, even if they’re cooped up,

and they want to drink something that makes them feel good about drinking.

And the usage occasion for this is not just at a park Or something that is, you know, it’s not something that’s crushable it’s something that really invokes a little bit more, you know, just intention that I’m going to drink something that actually could, you know, affect my overall well being, even though it’s got four and a half percent alcoholic. And so I think that properly so that value proposition has never really been put to market and alcohol. And while it’s a small and we’ve done a lot of data, it’s a small slice of the adult beverage market. It’s growing, and those that can deliver an authentic brand that really tastes commercial enough, but actually has something and I think so we’re seeing that be people were buying it people were we’re getting we got with floor stacks in different places around the country, competing against michelob, ultra light etc. And we’re in selective stores where we’re selling More. So

we’ll see

Andrew Warner 58:03
how it tastes great. I’m not a computer drinker. I told you I know everyone everywhere I go in San Francisco if if they got if they want to keep the San Francisco techies working in their office, they have one of those little kombucha handles where you can I’ve never been into that. This I like I think it’s milder than kombucha. It has a flavor that doesn’t feel like I don’t want to drink I don’t I haven’t tried the seltzer drinks yet, but I want to feel something I want to feel something that slows me down a little bit. I’m not trying to get drunk when I drink alcohol. I want to feel quiet and appreciative and have a conversation and it

Bill Moses 58:42
it does. You want to chill you want it you want to relax. I mean alcohol does relax you before it in any breach you and you know, our whole intention is you know, this is about you know, conscious consumption. And so yeah, that’s, that’s what we’re all about.

Andrew Warner 58:57
Alright, and now that I was I would usually drink Hear, but I’ve got a big day of interviews while I’m still at the office and for once I drove in instead of riding my bike, I want to be careful. But now that we’ve done the interview, I got the cans here. I get the drink with my wife, which is exciting thing. She usually drinks wine and I usually drink whiskey. Now we’ve got some we can drink together and I’m looking forward to it. Thanks so much for doing this. I appreciate you being here today. It’s been a tough day around the world. And I like I said, I talked to your team last night and I appreciate that. They said Yes, let’s do it today.

Unknown Speaker 59:31
Thank you, Ricky.

Andrew Warner 59:34
You bet the company is called in the can and the drink is called flying embers. Now you can find it in a lot of stores and you can also ask them for it in case they’re not putting it on display flying embers. The one that I’m going to try next is the ancient Berry. And I know the one that Olivia is going to go for she’s going to go for the one that has tumeric for some reason lately anything with tumeric she’s been drinking. I want to thank you for doing this and thank you to the two sponsors Hostgator and toptal. Everyone, be well

Transcribed by

Who should we feature on Mixergy? Let us know who you think would make a great interviewee.