How I Built This with Guy Raz - Advice Line with Brett Schulman of CAVA (July 2024)

Episode Date: January 2, 2025

CAVA co-founder and CEO Brett Schulman joins Guy on the Advice Line, where they answer questions from three early-stage founders experiencing growing pains as they scale their companies. Today we meet Devin, who’s navigating imposter syndrome as his spiked root beer gets picked up by stores across Texas. Then Sophia, a Los Angeles mom exploring new sales channels for the accessories she designed to support children’s allergy needs. And Sean, who’s weighing whether outside investment is the best way to grow his Michigan-based coffee roastery into a national brand. If you’d like to be featured on a future Advice Line episode, leave us a one minute message that tells us about your business and a specific question you’d like answered. Send a voice memo to [e-mail] or call 1-800-433-1298.And be sure to listen to CAVA’s founding story as told by Brett and his co-founder Ted Xenohristos on the show in 2023. This episode was produced by Carla Esteves with music by Ramtin Arablouei. It was edited by John Isabella. Our audio engineer was James Willetts. You can follow HIBT on X & Instagram, and email us at [e-mail]. And sign up for Guy’s free newsletter at guyraz.com.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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featuring email SMS reviews and more make every moment and count with Clavio. Learn more at K-L-A-V-I-O.com. Hey, everyone, it's Guy here. I hope everyone's been having a great holiday season so far. And as you can imagine, our team is taking a little time off to be with our families and loved ones. So we're bringing you an advice line episode that we really loved. It's the one with Brett Schulman, co-founder of Kaba. And I was so happy to have Brett back on the show to give our callers some advice because he was the perfect person to guide than through the growing pains of trying to scale a business. And in a lot of ways, I think it's also a great episode for the new year, since a lot of us will very likely experience growing pains of our own with like new resolutions and goals.

Speaking of which, I hope you have a very, very happy new year that is filled with lots of growth and learning and joy. And hopefully this episode will give you some inspiration. And without further ado, here it is. Hello and welcome to the advice line on how I built this lab. I'm Guy Raz. This is the place where we help try to solve your business challenges. Each week, I'm joined by a legendary founder, a former guest on the show who will attempt with me to help you. And if you're building something and you need advice, give us a call and you just might be the next guest on the show.

Our number is 1-800-433-1298. send us a one minute message that tells us about your business and the issues or questions that you'd like help with. You can also send us a voice memo at H-I-B-T at ID.Wondry.com and make sure to tell us how to reach you. And also, don't forget to sign up for my newsletter. It's full of insights and ideas from the world's greatest entrepreneurs. You can sign up for free at gairoze.com. And we'll put all this info in the podcast description. All right. Let's get to it.

My guest today is Brett Schulman, the co-founder of Kaba, a chain of fast casual restaurants that serve a Mediterranean menu inspired by his co-founder's Greek upbringing. Brett, welcome to the show. Hey, guy, thanks for having me. It's good to be back. Happy to pay it forward. I had a lot of guidance and advice during my journey and happy to share the trials, tribulations, and the dumb tax I've paid along the way, so hopefully they don't have to pay it as much. It's great to have you back. Last time you were on the show, of course, you told us the story of Kava.

And you were really the fourth founder of that company. You came in when it was just a single sit-down restaurant in suburban Maryland. And you really helped to scale the brand into what it is today, this chain of many restaurants, hundreds. And by the way, if you guys listening haven't heard Brett's story, which he told alongside his co-founder of Ted Chenio Christos, it is a fantastic episode. It is so good. And you can find it by just scrolling back in your feed or searching wherever you listen to this podcast. and we'll also put a link to it in the podcast description. I think your experience, the experience you had,

is really going to help our callers today because it sounds like a lot of the, they all have great business ideas, but a lot of them are at decision points where they need to figure out how to best scale or where to focus their limited resources. Let me start by asking you, Brett, about that. I mean, how do you think about how to focus a business

or more specifically, like with Kava, you decided to focus on, you know, to take this concept that they had the restaurant, it was fresh food, it was healthy, but you were able to kind of transfer that to a fast, casual format. Tell me about how you were able to kind of see that opportunity. Yeah, well, it was interesting because, as I mentioned, the consumer packaged goods, the dips and spreads being sold in grocery stores predated the fast casual. And we had initially thought about growing and scaling that business. but there was clear that this food resonated to a larger audience.

And the idea was really about how do we bring this to more people? And that's where this fast format really lent itself to be able or be a vehicle to be able to do that. And I think oftentimes it's listening to the business or listening to your guests and kind of understanding the need you're filling and leaning into that. And one of the things I've learned along the way and that we've learned is sometimes what you don't do is more important than what you do do. and really prioritizing and focusing on where your strengths are and leaning into that. Yeah. All right, Brett, what do you say? Should we take our first caller?

Yeah, let's do it. All right, let's do it. Caller, hello, I think it's Devin. Hello, Devin. Are you in a line? How you doing there? Appreciate it. Thank you.

Devin. Welcome, welcome. It's great to have you on. Tell us your first and last name, where calling from, and just a little bit about your business. I am Devin. Strahan. I'm calling for the great state of Houston, Texas.

Nice. And the name of the business is Devon's spiked root beer. So assuming you, I'm assuming you make spiked root beer, root beer with alcohol. I do. Okay. Yes. Amazing. Which I can't wait to dive into.

What question do you have for us today? My question is as an entrepreneur and as you start to grow, how do you deal with the sinking feeling of imposter syndrome? I love that question. Okay. Let's dive into your business, first of all. Tell me how you got into making spiked rupeer. So to backdated a little bit, I used to be a private chef, and I also owned a healthy muffin company.

So what a pivot. Wow. Yeah. So from 2000 to 2013, I did healthy muffins. And then I broke a quart and a rule. I put all my eggs in one basket with this one particular company. And when they went under, my whole life changed financially. So I had to go back into the workforce.

So I'm working at a liquor store. And about a month later, I was like, well, you got been by the entrepreneur book and just looked around. And I was really impressed with the craft beer market at the time. And how they was like really creative with the different types of flavors. They put in chocolate cake and cinnamon rose and fruity pebbles in there. But I don't drink beer. But I'm a huge fan of root beer. My church are a huge fan of root beer.

But I was like, let me give this a swing. And let's see if we can make this until an adult. beverage. So that's how I got into the Spike Root Beer business. So cool. So you were, you were a private chef before that for many years. So tell me, like, and you worked for, for like at homes, or did you ever work in restaurants? No, I never worked in restaurants. I did not want to go in the restaurant field. Sorry, Brett. I don't play me. I want to have life. And you had a muffin company for a couple years, which didn't work out. I had that for a solid 13 years.

Wow. I mean, what a gift that was, Devin, because imagine how much you learned from that experience. And it's so interesting, you go and work to the liquor store just to make ends meet. And like any great entrepreneur, you're looking at the shelves and you're saying, where is there opportunity? Which is exactly how so many businesses, certainly on High Belt this have started, you're like root beer. There's nothing. There's no one doing this root beer thing. So, and I love, I mean, you're a chef.

So you understood flavors. You understood what you... Tell me how you started to experiment and make it. Did you start to make it in your kitchen at home? I did, exactly. I started to make it in my kitchen at home. Of course, I, you know, YouTube everything and read about it. So, interesting part is the original formulation was actually made with rum.

And champagne yeast for fermentation, I didn't understand any part of that chemistry. And I was getting people really... really buzzed of my first concoction of this product. But I learned my lesson over time. So it was a lot of trialing area. And I think I got it done in about a good month or so. And I end up going with, uh, with a wine based product. With wine? Yes. Because there's less different kinds of regulations that make it easier? Yes, correct, correct. And distribution and taxes and everything else that comes with that. Okay. So I'm looking at your website. You've got at least, what, eight different flavors now?

Correct. Okay, dark cherry to pumpkin vanilla, basically, but it's all, the main flavor profile is root beer, but it might be dark cherry or orange cream or Texas pecan. Yes. And you're now in how many sort of, how many stores, mainly in the Houston area? I'm in the Houston area, Austin, surrounding area. So I'm in about 160 locations. Wow.

But this happened extremely fast. and this is where the problem lies right now because now it's still solely me. I do have a dear friend of mine who handles the finance part of it and all administrative things or whatever. He's on an equity play of the business, but everything is still solely up to me. I got a million thoughts, but I want to turn over to Brett because I think you have a million questions, Brett. So go at it. You answered a lot.

I mean, and first of all, credit to you, Devin. I love the story, love the resiliency. you've already done it. You ran a successful business for 13 years, and now you've come back for a second act. Most people don't even do a first act. So congratulations to you. Thank you. I appreciate it. I'll talk about entrepreneurial spirit. My question, is it an inventory, cash flow funding the growth issue, or is it simply a bandwidth issue of being able to get out and market the product to continue to have it grow and be successful, or both? It's actually both.

Those are really good questions. It's actually both. And so have you thought about raising capital? And do you have the velocities proven in these outlets to kind of support your growth story? So I have, I brought it one gentleman and he came in on a small equity play just last year, which his cash infusion helped a lot. And what I'm finding out is a lot of people really, the people that I've talked to are really interested in a business. but they also see it as a still a young business as well.

So I don't have the track record with these new outlets to show what the true potential of the business can be. I am looking at what you're doing here, and on so many levels, you're doing so many things right. You're branding, your logo, the little red state of Texas on the front, it looks like something. Even though it says established 2015, it looks like it's been around for 100 years. This looks like... Thank you. I designed that too, by the way. Like when I say I was hands on, I was hands on.

I designed the look, the color profiles, everything. It's so great. I'm going to start with your original question, which is about imposter syndrome. And I think that the answer to this question really is mostly a pep talk. Because, I mean, people who have or feel like they have imposter syndrome, are not impostors. And that's what I've found in my entire life. Most of us have an experience,

a version of this at times in our lives. Some people are just better at hiding it. And so what I see in you when I'm looking at this business is somebody who comes to this with incredible standing. I mean, you have over a decade more than a decade as a personal chef. So you're a trained chef. You understand flavor profiles. You started a business that you ran for 13 years.

It didn't work out, but you managed to build it into something really big. Now you're in spiked rupee. Like, to me, there is nothing about you that is an imposter. Like, everything that you've done up until this point gives you so much standing in this space, like, as an expert. So I think the imposter syndrome is a very healthy feeling. And you just need it. You need that pep talk. And sometimes, you know, if me and Brett aren't here to give it to you, and you can't find somebody, you've got to give it to yourself.

Yes. Because you're coming to this with all of those experiences behind you. And so you are exactly the right person to be doing this. Okay. I'm going to stop there and turn it over to Brett because you might have more thoughts about this and about. I couldn't agree with you more, guy. I mean, that's what I was saying earlier. It's, you know, I think we all have a little bit of imposter syndrome, which isn't the worst thing in the worst thing in the world.

world because it doesn't allow you to get overconfident and think that you're invincible, which is really important being an entrepreneur. But I think you've proven yourself to be far from an imposter with everything you've accomplished to date and what you've been able to persevere. Do you have a question for you, Devon, do you have any advisors or mentors around you around the table? I doubt, to be honest. I don't.

I bounce things off my business partner when we work out in the morning. And it's just a systems check, you know, to see, you know, what's the next stages? What are we trying to do next? The answer is no, to be honest. Don't be shy about cold reaching out to business leaders that you maybe admire or respect. I think, you know, when I found throughout the journey, if I had moments of doubt or that the business might have seemed overwhelming at the moment or a problem, how is I going to overcome this?

Having folks around you as sounding boards that you can lean on and bounce that stuff on can help validate your thinking or maybe help you think about it from a different angle, I found invaluable. And I found, you know, could help get through some of those moments where you may have a little bit more doubt than other times. Yeah. And I think also the problem set in as of recently because of what I just gone through with the business where my first co-packer, they sowed their business. The new owners didn't communicate with me about no longer being my co-packer, found another co-packer, and then he wasn't fully transparent about his finances, and that was a dozy. And all this happened within two months of each other, and the last one just happened a

month ago. And now I'm working to find my third co-packer. I think that's what they kicked in at. I was like, I felt like I don't know what I'm doing. Yeah. And you know what? What you just said, every business goes through and know that you've got a lot of company and that I still wake up every day and I'm faced with challenges in our business. That is business, right? Because if it was that easy, everyone would be running a business. Everybody would do it. Everybody would do it, right?

And it's those who are able to persevere, have that emotional resilience and continue to keep finding a way, have that determination to try and figure out how to deal with all the adversity that's thrown your way. You know, when we bought a company Zoe's Kitchen back in 2018, right? I remember. Man, 2019 was the hardest year of my career. And there were moments, and I used the metaphor that I felt like I was digging through the tunnel, and I thought I was about to break through and a bunch more dirt would fall in front of me.

And I could never get to the light. But, you know, just kept digging. And I was fortunate to have some great co-founders, some partners. And we helped get each other through it and kept working to figure out. There's always a way to solve the problem. And when you focus on solving the problem, eventually it got us to that light. So, man, I feel you. I've been there.

We're often there through the journey of a business. But that's why businesses become successful because they're able to deal with that adversity and get through it. Yeah, I appreciate that. The brand is Devin Spiked Root Beer. Founder is Devin, thanks so much. Good luck. Can't wait to see what happens. Hey, thank you much.

I appreciate it, guy. All right. I've never had spiked root beer I'm gonna try it I have not either I need to try it yeah and wine based so it's a really interesting idea

which I think is an opportunity because it's differentiated it's something novel right that you haven't seen you it's not like another version of something you've seen seltzer or one of these

like you know white claw things right it's a completely it's just a different it's yeah it's a different thing so curious to see what happens by the way imposter syndrome

is a big theme in this episode that we have with Tara Bosch, the founder of Smart Suites, which is a massive brand, low sugar candy brand. And, you know, she started this when she was like 21 as a, you know, drop out of college and really had no money, no, nothing. I mean, she was just doing it on her own and applied for every competition and business grant that she could get and eventually built it into a, to the brand that is today. And she talked about how, you know, when she was like 22, 23, she'd go into meetings with distributors or buyers for just small local chains in Vancouver and just the knots in her stomach and the fear and the terror. But she would just breathe through it, you know, and she didn't say it was easy, but she just kind of breathed through it and figured it out.

And I think we've all been there. We've all had those moments and still do. Absolutely. I think people aren't being real if they're not saying they haven't had those moments of self-doubt, especially trying to build a business. Yeah. And I agree with you. I think overconfidence is deadly. I think that's really dangerous. Yes, it will steer you into decisions and places that you do not want to be. Yeah. All right, Brett, we're going to go ahead and take a quick break. But when we come back, a mom who turned her child's allergies into a business idea. Stay with us. I'm Guy Raz and you're listening to The Advice Line right here on how I built this lab.

Welcome back to the advice line on how I built this lab. And taking calls with me today is Kava, co-founder and CEO Brett Schulman. Brett, let's bring in our next caller. I think we have Sophia on the line. Hi there. Hello, Sophia. Welcome to the show. Thank you so much. Tell us your first and last name, where you're calling from and a little bit about your business. Yeah. I'm Sophia. Sophia Bowden, and I'm the founder of Little Me Allergy, and I'm from Los Angeles, California. And we make really bright and colorful allergy accessories like placemats, lunchbox magnets, patches, and wristbands to help advocate for kids who have serious food allergies. Okay.

Sophia, what's your question for us today that you brought for us? Yeah, so my question is as a niche mission-based business, I wanted to know how I should expand my marketing reach and sales channels. Got it. Okay. We'll get your question in a moment. Let me just ask you a couple of questions about the business. So these are, just to clarify, these are, if a kid goes, like, has a metal lunchbox, you can put a bunch of these metal magnets. Magnets on the box that say peanut allergy, dairy allergy, or egg allergy on the box on the on the lunchbox. Yeah, just to make sure everyone stays aware. And also patches that they could put on their clothing? Yeah, and their backpacks or lunchbox. Okay. Yeah, or lunch bags. Cool. I love it. That's a cool idea. Tell me, I have to assume that there's a personal connection here. Yes, definitely. Okay. How did this, tell me how this started? Yeah, so when my daughter was a year old, she was diagnosed with a severe food allergy to Sesame. And I was terrified. I was a first-time parent. And I, um, I,

Honestly, I didn't want her to leave the house after that. But I knew at some point I had to send her to preschool. So with her being so little and honestly still learning how to speak, I knew that I needed to find allergy accessories that would essentially advocate for her in my absence. So I searched everywhere for the right allergy accessories, but I honestly couldn't find anything that didn't feel cold or clinical. so I channeled my creativity and I decided to design her own allergy accessories that would essentially make me feel confident in knowing that at every touch point throughout the day, whether it be snack time or lunchtime, her allergy would be kept top of mind for teachers, family friends, essentially anyone that came into contact with her to keep her safe.

Cool. And so I'm looking at the website. So you've got stickers, waterproof stickers that you could put on. on, you know, I guess clothing, you had patches, even those, those, like, bracelets. I call them Livestrong bracelets, but they shouldn't really call it. There's rubber bracelets and with allergy, whatever allergies on it.

Exactly. And so you would know, like if there's a five-year-old and they're going to summer, you know, like a day camp on their backpack, you'll just see it'll say, you know, sesame allergy, peanut allergy, shellfish allergy, and you're like good. Because even though, by the way, a lot of kids grow up with allergies are used to telling people these things. all the time, but as a parent, it probably gives you peace of mind to know that it's out there. Yeah, and, you know, I think allergies among the really young population, like newborns even, and six-month-year-old, who are really still learning to speak, to advocate for themselves.

And so this kind of provides a kit for parents and families to at least feel confident in knowing that as they're sending them to camp or grandparents' house or school. that their accessories are going to do the work for them to keep them safe. Yeah. And you launched this in July of 2023, so about a year ago. Yes. Yeah. And how you're new?

And so I'm assuming that it's not easy, that easy to get the word out because your website. And do you have any, you probably put all your own money into this so far? Yes. Yeah. Yeah. I do have a daytime job, which affords me to do this in the evenings. So it's my evening.

job after the kids go down. Do you mind telling us what your other job is? Yeah, so I work for a tech company, and I lead creative for 3D design. Nice. So this is your side hustle right now. It is. And who knows, who knows, right? I mean, this is how a lot of great brands start as side hustle.

Sam Adams Beer start as a side hustle. Yeah. So, and presumably, I mean, because you're in design, you design all these things, all these patches and do all the artwork? I do. Yes. I did all the artwork for all the top nine allergens, and then we do like a design your own section for those with multiple allergies as well. Cool.

And how have sales been in year one? Have you hit 25,000 or still below that? I would say still below that. You know, we have been getting really great feedback as soon as people find out about us. And we've also been partnering with more established brands. We just did a partnership with Planet Box. and Abes' allergy-friendly muffins, which turned out to be really, really wonderful. So my goal is to continue kind of on that path to really get our name out there.

Planet Box is a – it's like a bento box sort of, right? Yeah, it's a metal bento box for lunch. Oh, and perfect, because you can use the magnets on the bento box. Exactly. Nice. Okay. Brett, any questions for Sophia before we dive into her question? Yeah, Sophia, when the allergy issues first came up in your home, when you said you went out and you started to look, what were instinctively the first places you started to look for products like this?

You know, honestly, it was just Google and it would bring me not a ton of companies that provided allergy accessories. And if there were, it was very piecemeal. There's lots of also like Etsy makers that do kind of one-off things. it could be a sticker or a patch, but not a full kit or collection. And my goal was to really create something where a parent can come to the website and say, okay, I need all of these things for school rather than kind of figuring it out on their own, which I had to do. But again, you know, in my search, everything that I found was just really cold and clinical

and just felt almost like a, I don't know, like a badge of shame in a way. and it's hard enough, obviously, for kids to deal with having food allergies. I didn't want their accessories or their labels to make them feel othered in a way. I think your question is about marketing, reach, and sales channels, right? And you have essentially a – basically allergies are mainstream. It's a mainstream issue, right? This is something that affects a significant percentage of the population, one or more allergies, right? I don't know the number, you might, but a lot of people.

So this is not a niche thing. It's not like a lot of kids at peanut allergies, very common. I feel like there's a world. And, Brett, I'd be curious if Sophia was looking to expand maybe, is there a world where like going to a gift, like a gift trade show, you know, one of these trade shows that's for gift shops? Because I think about going into a gift shop or even a card store and seeing cool. things like this there. It's the kind of place that I would imagine buying something like this. Like my, you know, my nephew's got, you know, peanut allergies. And I see that and I say, oh, this is, oh, he's now a grown man. So I don't think he needs it on his lunchbox.

But, you know, I, I can imagine going to a gift shop and seeing these little patches or stickers or magnets and thinking, oh, that's cool. Is there, Brett, do you think there's something to that to go into a, like a trade show? Yeah, that was going back to kind of my original question about instinctively, were there any kind of bricks and mortar places that you thought about going? Because certainly what we've seen post-pandemic, the cost of acquisition or just awareness on the internet or being a DTC brand has gotten really expensive. And people have gotten back out in the world. And even with the changes in third-party data, privacy laws, it's restricted the ability to drive awareness online solely.

So where are there potential bricks and mortar outlets that you can be in front of where your consumer, your parent that has a child with allergen issues or maybe have them themselves are trafficking and where is that need state happening, whether it's Target, whether it's a gift shop? I think often in any of these industries, going to a trade show is such a great idea. And just understanding the landscape, the lay of the land, what the marketplace is, what the potential avenues of distribution are, how it all works. I remember when I was working with my wife on a snack food company, we would do that.

We'd go to the trade shows, and it helped us really understand the industry and how it all worked and where our product or offering could fit within that. Yeah. I would love to be at a target at, like, even if there was an N-CAP that was for back-to-school, allergy-friendly N-CAP that partnered with other. allergy-friendly, you know, foods, I think that would be really awesome. And even though, you know, allergies are everywhere and it's become some, you know, mainstream in a way, there's still kind of, you know, it'd be nice at a whole foods to have an allergy-friendly section. I think I still have

yet to see things like that, but would love to be a part of that. And these retailers will do small tests and small market or regional tests. So at Target, they will do a 30, 50, 100 store test. If you can cold email, contact the right person and pitch the idea because I do think it's a viable idea, especially for a lot of times they'll do like an in and out for back to school season as a test. Right. Yeah. Definitely. Guy, I had a question for you. because I know you have podcasts that's geared towards kids. Do you find yourself marketing differently or doing things differently for kids versus your, you know, more podcasts that are geared towards adults? 100%. Yeah.

I mean, with kids, there's all kinds of rules on how you, you know, you can market to them and on well in the world. Unlike on this show on how I built this, I don't read ads. We do have ads on the show, but my voice is not as an ad reader because kids don't differentiate between. I'm a character on the show, and they wouldn't differentiate between my voice on well in the world and me reading an ad. And so we're really careful about that, but we do have ads and we do, obviously, these ads are designed to appeal to the parents because we have kid parent co-listening on that show. And so that's really what you're going for. You're marketing to the parents, not to the kids. And that's who's going to be interested in this.

But, you know, that's a great channel to think about, too. You know, but there are millions of podcasts out there. And I think that you start with, you know, take a page out of Tim Ferriss's world. You start with a thousand people, a tribe. You build a tribe of a thousand people that you can gather around your brand and those become your force multipliers. And so maybe it's like, I think about my sister who's, you know, who had a kid with really deathly peanut allergy is now a grown man. She was constantly vigilant. I mean, before they went to a restaurant, she was. I mean, before they went to a restaurant, she was. would call up to make, well, when airplanes, you'd call up to make sure they insert peanuts in the plane. So this is the kind of thing that somebody like my sister when she, when her kids were younger, would have said to other moms, you got to get this thing. You put on the backpack and on the lunchbox and that's really where you're going to find the momentum. Yeah. I was going to say, I love partnering with the allergen-friendly food brands.

And especially when you think about social collaborations and giveaways for the back-to-school season to help amplify what you're doing. and be a trusted partner because that is your target customer. They are already an allergen purchaser, an allergen-free friendly purchaser. And it's almost, again, like a validation and a friendly referral that you can partner with them. And whether it's through influencers, creators, or the brands themselves, I think those are powerful channels to help amplify with an audience that already has that built-in passion for what you're doing. Yeah, absolutely. Yeah.

Awesome. The brand is called Little Me Allergy, Sophia Bowden. Thank you so much for calling in. Good luck. Thank you so much. So grateful for this opportunity. All right, Brett, we're going to go ahead and take another quick break. But when we come back, the founder of a Midwestern coffee brand,

who's found a really interesting way to stand out in the crowd. Stay with us. I'm Guy Raz, and you're listening to the device line right here on how I built this lab. Welcome back to the device line on how I built this lab. lab. My guest today is Brett Shulman, co-founder and CEO of the fast casual Mediterranean restaurant chain, Kava. All right, let's bring in one more caller, Brett. I think it's Sean is on the line. Sean, are you there? I am here. Hey, Brett. Hey, guy. Hello, Sean. Welcome to the show. Tell us your name, where you're calling from, and just a tiny bit about your business. Yeah, my name is Sean

Murray. I am the founder of Rootless Coffee Company, and we are in Flint, Michigan. So, We're a roasting company and we make craft coffee, not boring. Ultimately, we bridge the gap for consumers that are looking for better coffee than they can find at a chain or in a grocery store, but are a bit intimidated, maybe put off by the sometimes pretentious and dull nature of third wave coffee. And are you at the coffee roastery right now? Because it sounds like in a loud place. I am. Oh, yeah, nice.

Not an airplane hanger. That is a coffee roastery. behind you. It is, yes. It was between this and my home, which is right on a main road, which can be even louder than this. So it's very appropriate. Tell us what question you have for us today. Yeah. So Guy and Brett, basically my question is, how can I be certain it's the right time to seek growth funding for rootless? And what is the best method for doing so? All right. Lots of questions. As you know, Sean, we've done a couple of coffee brands in the show, of course, Starbucks, and we've done La Cologne and Dutch Bros Coffee, too, which is a big, big chain.

So how did you get into it? How did you get into this business? Yeah. So it actually started with the craft beer business in the early 2000s. I was a bartender and brewed beer at home, and I really wanted to start a brew pub. That was like my dream, my goal. But I ended up removing alcohol for my life for various reasons. But, you know, and I was, I still had the dream.

I've been kind of that entrepreneur shovel, you know, people's driveways in the winter. I had a couple of businesses when I was in college and stuff. So I had that drive in me and I was like, all right, what can I do? And I was just like, let's do coffee. I love coffee. I'm going to roast coffee and I just started pursuing that. So you pivoted to or you sort of kind of moved towards coffee and decided to start a coffee brand. And tell me about the brand.

I mean, it's a, obviously, you're roasting it in Flint, but are you sourcing it in a special way? Are you, is there something about the way you're presenting the coffee that's different or that is kind of influenced by your time and craft beer? Yeah, absolutely. That was a strategy coming in. So we work with artists, primarily comic book artists, you know, locally but also across the country. and they design our packaging, and it's really like what I saw in Craft Beer was people were like, hey, that looks kind of cool, I'm going to try it. And then all of a sudden, they come back to it and they come back to it.

And I've seen the same thing happen with Rootless where, you know, people will see this cool artwork, and they'll be like, all right, a damn fine cup of coffee, that looks cool. They try it and they fall in love with it. Yeah, it's cool. I'm looking at it now. It's like the artwork is super cool. That one, you mentioned that bag, a damn fine cup of coffee, is like, an owl's head on a person wearing a business suit at a cafe drinking a cup of coffee with

a slice of cherry pie, a really, really cool artwork. And so the entry point to you for people, like it was, you knew that you were making good coffee, but it's hard to kind of distinguish good coffee because some people don't really know, you know, and they don't really know what to look for. But your entry point was just creating these eye-catching beautiful pieces of artwork on the bags. Absolutely. So my thing was let's just give people that quality, give people that craft still. I mean, we're small batch. We, you know, we source our coffee beans. It's all ethically sourced, specialty grade coffee. And you can still deliver people the highest quality product, but just in a different way. How many, do you have a coffee store, like can you, or do you just

distribute the roasted and sell it elsewhere? Yeah, we have a bunch of channels, actually. So we are, of course online, we started with e-commerce. It was like smack dab middle of the pandemic. So nothing was open. And then we moved into wholesale. So we do B-to-B stuff with coffee shops, businesses, all sorts of places. And then our third channel is grocery stores. So we picked up our first like four grocery stores two months after we opened. It was insane. And we are now in a regional chain here with like 30 plus stores and then we also have a coffee trailer where we do events. And how many employees do you have now? Including myself, there are 10 of us.

Wow. Okay. So you start in 2020. You're in more than 30 retail locations in and around Metro Detroit, Flint area. You have 10 employees. And you're trying to figure out what you know, what you need to do to grow. Should you bring an outside investment? Before we get to your question, Brett, do you have any more questions for Sean about the business?

Yeah, I'm curious with those four different channels, is there any one channel that stands out? What's the kind of channel mix of your revenue? Is it equally weighted? It used to be e-commerce was the biggest by far. It was like 60, 70% e-commerce, 30% wholesale. Those two are kind of neck and neck now. And then the event part of it is very low, very, very low. So it really is between e-commerce and the wholesale retail partner.

are pretty neck and neck. And are the profitability of those channels pretty similar, or do you see any differences between them? They actually do work out to be very similar. The wholesale is a little bit more profitable, and it's also a bit easier to fulfill because it's, hey, give me 50 pounds of coffee. All right, here's 10 bags versus here's 50 orders from individuals who want different grinds. And so wholesale is absolutely where I have been doing my best to focus on, particularly this year to grow. Yeah, I think, you know, this is like the age old question of what do you want to be when you grow up, right? Where do you ultimately want to take this business? Because you're going to be the best one to answer how much you want to grow, when you want to grow as far as taking on investment or not.

And so I'd love to hear from you how you're thinking about that. Yeah, so the vision is quite large, actually very inspired by the Dutch Brothers episode of how I built this. I would love to eventually have shops all over the country, whether to that be a franchise model or whether that be kind of the corporate model that we're doing that. But I love marrying quality and efficiency. I think, as you know, Brett, like, fast casual did that where they took something where there was only fast food and it's not like, hey, you can get really good food and you can get it fast. But you're not sacrificing that quality to do so. And that's like my big, big dream. I've really been like, hey, how do we get there? How do we do this in the next like five or so years? It's really a matter of like, we need the revenue to fund things in order for me to be able to kind of put off like, all right, wholesale.

is now managed by this person, et cetera, et cetera. Can you give us a rough sense of what your ballpark revenue is? Are you under three a year? Roughly, where are you? We are actually under a million. Under million. Okay. Yep.

We've seen really great growth, though. In our first year, we did just about a quarter million, and then we did a 65% year-over-year growth. Wow. And then last year, we had 35% year-over-year growth. Wow. Brett, there's some parallels to where you guys were when you joined Kava. I mean, small, you know, business and just still at the beginning of its journey, but with potential. Well, I think there's a lot of interesting parallels here. I love your vertical integration. We have our dips and spreads production facilities to supply our restaurants as well as we sell in Whole Foods markets and other grocery stores across the country. And you've got your roastery and you're leveraging it through a few different. channels. And one of the things we quickly realized early on is that we were going to focus raising

capital to grow the restaurant channel. And we've kept the consumer package goods channel growing slowly, but we focused our efforts on the restaurants because we found it very challenging to grow multiple channels at once. And so we tried to lean into where we thought the greatest opportunity was to bring this food to people across the country. And I think it also presented a clear story for investors. It gave them a clear understanding of what we were going to do with this capital and connect those dots clearly to the return. Because ultimately, when you're raising money from investors, we're ultimately stewards of their capital. We're good stewards of capital. We'll continue to attract capital. But that allows us to do what we love to do, right? And build our brand and bring

this great food to folks across the country. So how are you going to do that? How are you going to focus that? And, you know, I think it goes back to the question I posed to you earlier. What do you want to be when you grow up, right? What pace do you want to grow it? And that's going to determine how much money you raise because I like to say scaling restaurants is not like scaling SaaS software. It takes people. It takes process. It's building physical restaurants. You're building physical roasteries. So that takes capital. And it's hard to scale these things. So being able to afford the capabilities, the talent, the infrastructure before the business necessarily affords it for you through your profits, allows you to scale faster and grow faster and do it sustainably and successfully.

Yeah, absolutely. I mean, my advice to you also would be, and you may have done this already, but to think about finding a consultant on a just a short-term basis. I mean, that's how these guys found Brett, right? And it was serendipitous because it was like Ted's cousin said, hey, this guy, Brett, and he came out as a consultant. So I wouldn't jump in and just hire somebody right away. I'd look for somebody who could maybe do some consulting. I would look out, especially because you're in the Midwest,

I would really look for somebody who has experience in the food and beverage industry in the Midwest, who understands what your values are. where you come from, how you think about what you're trying to do. I mean, maybe there are some retired executives who are on LinkedIn who might be willing to do some consulting for you that you could find. Yeah, that's actually a really great idea. I think that what I found with people who have been in business for a very long time is they love giving back, love working with smaller businesses. Yeah, exactly. And yeah, that's a great idea. I actually, I actually, I actually, I do have a question for Brett, if I could.

Yeah. Brett, how did you focus Kava when you had all of those channels and, you know, you decided on the restaurants that was going to be the growth? My fear is that I'm like, okay, if I want to do coffee shops, am I going to neglect my wholesale or my e-commerce? Or did you just kind of bring people into manage those things and let them have their natural growth? Like, how did that work? Well, yeah, I mean, if you think about it, the channels operate very differently, right? Dealing with grocery stores or wholesale distributors is a different channel and value chain than a retail shop and different than DTC.

So you would often need different capabilities, which would then be something that you'd have to hire more people for, right? So I think if you're trying to stay nimble and agile at a small stage and be cost effective and capital efficient, hiring folks that can do everything you need in the channel you're trying to grow is how we thought about it and how we looked at it. And even today, you know, we opened our new production facility. So we have capacity now to get more intentional about growing the consumer packaged goods business. But we've talked about if we're going to do that, we need to really hire a focused, dedicated team that's fully integrated with our larger team because it operates very differently than our restaurants do. and that whole distribution channel. So I think it's trying to, you know,

we like to try and do fewer things better. It's hard. It's hard to pick and choose. But having that focus helped us have the energy to really make it what it is today. And other things I see a lot of small companies leverage is there's more and more folks who used to be executives at private or public companies

that have gone on to become now fractional CFOs, or fractional COOs that can bring that experience to you and not have necessarily the commitment on your end. And sometimes those folks go into full-time roles if they find an opportunity that they really hit it off with the founder or entrepreneur with. And it also gives you a chance to leverage their experience and leverage in a bit of an asset light way.

Yeah, that's great. Sean Murray, rootless coffee company and Flint, thanks so much for calling in. Good luck. Thank you so much for having me, Brett and Guy. I really appreciate it. And yeah, I love the show. And Brett, I love what you guys are doing at Kava.

So thanks again. Awesome. Brett, we are coming to the end of our time together again. And hopefully we can see each other and eat some Tutsiki. I mean, you might be sick of the food that you make. I don't know, but maybe not. We can have like some lamb kebabs and Tatsiki and some spiked root beer. Some spiked root beer.

Throw back some coffee. Yeah. Yeah. Before I let you go, tell me, this is a question that I'm asking a lot of founders who come back on the show, which we may have touched on when you were originally on the show. But knowing now what you know about the world you're in. And you talked earlier about the stress of expanding, you know, when you guys acquired Zoe's, what do you, you know, what do you wish you knew when you first got into this business that would have been helpful for you and maybe caused, maybe cost a few fewer stories? sleepless nights? Two things come to mind. One is right people, right roles is a mantra. I say a lot these days. It's understanding what kind of capabilities and what kind of people you need at every stage of growth.

And I think sometimes I wanted to believe certain things to be true that weren't necessarily true and wouldn't really force myself to see it. as soon as I should have. And I think that the other thing was prioritization. You know, what I said earlier about what you don't do is often more important than what you do do. And that really helped us turn the tide in the challenges of Zoe's is when I finally figured that out.

And we simplified and focused and did fewer things a lot better. And that helped us get out of the challenging situation we were in. and then, again, bringing in people with the capabilities that were needed at that stage of the business because you can't do it yourself. And being able to find people and bring in that you can lean on and that can be a force multiplier of you really helped us get to where we are today. Awesome. Brett Schulman, thanks so much for coming back out of the show.

Thanks, Guy. Appreciate it. And by the way, if you haven't heard Brett's episode, the story of Kava and how they turned it into this. incredible chain. Go back and check it out. It's an incredible story. Look for it wherever you listen to podcasts. Just type in Kava and how I built this or just go to the link in the podcast description on your phone. And thank you for listening to the show this week. If you are working on a business and you would like to be on the show, send us a one minute message. Tell us about your business. Tell us about the issues or questions that you'd like help with and hopefully

we can help you. And make sure to tell us how to reach you, please. You can send us a voice memo at hibt at id.wondry.com or give us a call 1-800-433-1298 and leave a message there and we'll put all this information in the podcast description as well and thanks so much for listening to the show this week this episode was produced by carla estavez with music composed by romtina ablui he was edited by johnis bella and our audio engineer was james willets our production staff also includes alex chung elaine coates neva grant j c howard chris messini sam paulson devon Schwartz, Catherine Seifer, and Carrie Thompson. I'm Guy Raz, and you've been listening to how I built this.