How I Built This with Guy Raz - Advice Line with Peter Rahal of RXBAR

Episode Date: April 10, 2025

RXBAR co-founder Peter Rahal joins Guy on the Advice Line, where they answer questions from three early-stage founders about positioning new products in competitive markets. Plus, Peter’s take on getting back in the game with his newest venture, David Protein. First we meet Kristi from Calgary, who’s considering digital ads as her women’s supplements brand maxes out on organic growth. Then Erik from Los Angeles, who’s wondering if Amazon is a necessary channel for his exercise accessories. And April from New York, who’s hoping to find the right messaging for her line of cocktail mixers.Thank you to the founders of Inner Wellth, SquatWedgiez, and Cheeky Cocktails for being a part of our show.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 RXBAR's founding story as told by Peter in a special live episode of How I Built This from 2018.This episode was produced by Chris Maccini with music by Ramtin Arablouei. It was edited by John Isabella. Our audio engineer was Cena Loffredo.You can follow HIBT on X & Instagram 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.

This podcast is brought to you by Squarespace. I talk to entrepreneurs all the time who are looking for a way to upgrade their digital footprint. Well, whether you're just starting out or you're scaling your business, Squarespace is the easiest way to build a great website that stands out. It's an all-in-one website platform that gives you everything you need to claim your domain, showcase your products, and get paid. Anyone can use Squarespace's cutting-edge design tools to build an online presence that truly reflects what makes your business special.

There are templates, intuitive drag-and-drop editing, and even an AI-enhanced website builder. Then, Squarespace's built-in analytics tools help you make smarter business decisions. Review website traffic, learn where to focus engagement, and track revenue all in one place. Looking to grow your business, Squarespace even offers fast, easy business financing

through Squarespace capital. Go to Squarespace.com slash built for a free trial. And when you're ready to launch, use offer code built to save 10% off your first purchase of a website or domain. Loans issued by Celtic Bank and serviced by Stripe, all loans subject to credit approval. This show is in partnership with Airbnb. This past summer, I took my family to Vienna, and it was incredible. We spent our days wandering the old streets, stopping for coffee and pastries, visiting museums, and just soaking up the history of one of the most beautiful cities in the world. And one of the things that made the trip so special was the home we booked on Airbnb.

It had tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. Your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.com slash host. 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 help me try 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 hibt 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 gairozz.com.

And we'll put all this info in the podcast description. All right, let's get to it. Joining me this week is Peter Ray Hall. He's the co-founder of the energy bar brand RX Bar and a new protein bar called David. Peter, it's great to have you back on the show. Great to be here, Guy. Thanks for having me. So, of course, you were a guest on the show.

back in 2018. We did a live taping in Chicago. It's super fun. And if any of you missed that episode, the story of our X bar, you've got to go back and check it out. It's a great story, and we'll put a link in the episode description. Basically, Peter, you started our X bar back in 2013 with your friend Jared Smith, and the bars had really simple ingredients, such as dates and nuts and like egg whites. And as a story goes, you sold the brand to Kellogg's in 2017 for over $600 million. It's an amazing story. Thank you.

But before, Peter, before we get to some of the callers that, I was hoping to ask you, just a couple of questions about this story. Is that, is it okay? Yeah, of course. So, all right. So in 2015, and we talked about this a little bit on the episode, you completely, like, overhauled the packaging, right? Which was a, I think it was a game changer.

I mean, and a lot of brands kind of have gone on to copy it. And basically you focused on just like four things. It was like four dates, two eggs, six pecans or whatever it was, and no BS. Tell me about the decision to do that and how that actually transformed the product. Yeah. So we had a, we had a marketing problem. We were really successful in our niche, CrossFit gyms. Those were our early adopters.

So they totally understood the product. when we began to expand outside of that market into, say, conventional grocery or convenience store, it didn't sell, it didn't work. And, you know, it's a lesson in simplicity. So when you design the product like ours, you could claim gluten-free, dairy-free, soy-free. And so sometimes you kind of think more is the merrier. And like, you just want to like lay out all your differentiations and communicate it. And actually, it's confusing. Right. Because on the package, you could have been like paleo-friendly, but that doesn't – people who are paleo-friendly knew that.

They would know that it was paleo-friendly. Yeah, exactly. And a couple of insights were, like, in the bar market in general, if you just study and observe the shopper, you'll see they reach out, grab the product, and immediately flip it over. Right. And so that was the real differentiation. It wasn't how much protein we had. It was that we were clean, minimal ingredient product. And so that's what we led with.

Right. But we fundamentally knew that like we had a communication problem and we need to really do something more bold to stand out in the competitive market. Yeah. And it was risky, right? It's not like you and your co-founder sat there and you have all these, this data and we know this is going to work. Like it really was risky. It could have failed. Yeah. I mean, people thought we were a different, a new company. When you put them out, wow. Yeah. Yeah. They're like, wait, what happened? Yeah. It's an amazing story. And really just people who are interested in branding, marketing and past. packaging design. This is like a great case study. Peter, your non-compete eventually ended with Kellogg's and then you became free to reenter the protein bar space and you're doing it. I've

tried them. They're called David Protein Bars. You launched it, I think, last year. And these are bars high in protein. I think 28 grams of protein, a bunch of different flavors. Tell me about the decision to reenter the market. Why? I mean, obviously, you've got expertise, but tell me about, you know, starting a brand new bar brand, especially in such a super saturated category. Yeah. So I basically saw a pretty big gap in the market to make sort of the optimal protein bar, which is, which is, if you're going to design a protein bar from first principles, you want as

much protein as possible with as little everything else. And I guess the problem, or maybe the opportunity in protein is a lot of protein bars are just stacked with sugar or carbs. Yeah, exactly. And, you know, like, protein's pretty. It's like unequivocal, the most important macronutrient. It's not just for bodybuilders anymore. It's for humans.

And so you just, it's a delivery system of protein that tastes delicious. One of the things that, I mean, obviously, this is a different playbook now because you've been through RX bar and you're better resource now to start David Barr. One of the things that's interesting about it, I think it's only directing. consumer, right? You're not selling in stores mainly. We're just starting to, but yeah, most predominantly we're a direct to consumer in Amazon. Yeah. We wanted to start direct to consumer because you can service people directly.

You don't have to plan your innovation around a retailer. Yeah, super interesting. A lot to talk about, and I think probably a lot that will be useful for some of the callers. Why don't we bring in our first caller? Great, perfect. Hello and welcome to the advice line. You were on with me and Peter Rahal.

Please tell us your name, where you're calling from, and a little bit about. your business. Hi, Guy. Hi, Peter. My name is Christy Stewart, and I'm from Calgary, Alberta, Canada, and I'm the founder of Inner Wealth Supplements. We are the first supplement line that's dedicated to both alleviating PMS and perimenopause symptoms and increasing lean muscle mass in women. Well, thank you for calling in and welcome to the show. So, Christy, tell me a little bit about are these pills, are they, what's a form of the supplement? Yeah, so they're powdered supplements. You just put it in your water, shake it up, and drink it. And tell me a bit about what they are, like what do they offer?

Absolutely. So one is a morning, one is an evening. And the morning one has to do with energy and vitality. So it helps provide sustained energy, adrenal support, helps reduce hot flashes and brain fog, increases libido, and helps with bone health. And then the evening formula, it's called sleep cycle. So it contains ingredients that help with your sleep. and help bring the ratio of estrogen to progesterone back in context to reduce the symptoms that women typically get in PMS and perimenobos.

Yep. And so these are basically, you're using different formulations of vitamins, minerals, other sort of other ingredients that I'm assuming is a proprietary blend that you came up with? Absolutely. My background is in molecular biology and biochemistry, and so I came up with the formula. I submitted it to Health Canada. Canada and the U.S. have very different supplement regulations. It's very, very stringent and strict in Canada. So submitted it to Health Canada, got the approval for the claims I wanted to make,

found a manufacturer, and launched in June 2023. Awesome. How is the business doing so far? Phenomenal. So in our first full year of sales, we hit $500,000 in sales and just came off an incredible month in January. And tell me, how are you getting, I mean, where are you selling? It's all direct to consumer. It's all direct to consumer. So I, I've got my Shopify site like everybody else. And I post on my Instagram. I don't have very many followers, but we've grown through just organic social media and word of mouth. And I haven't invested into advertising at all yet. Wow. This is a huge and

exciting and growing category. I did a, I actually led a panel at, at, at, at CES, a Consumer Electronics Show in Las Vegas for AARP, the American Association of Retired Persons, on this very issue and this very topic and all this cool technology that's being developed around paramedopause because it is a massive, exploding business opportunity that has basically been ignored. Well, if you think about it, every single woman on the world, if she lives to a certain age, is going to go through it. And we, as women, you know, all the research is done in men, everything is done in men. And finally, women have just, I don't know what has happened in the zeitgeist, but it's finally come to fruition through some really great knowledgeable voices on social media. And the reason I got into it was I started, I kind of hit that age. I'm 44.

When I hit 40, kind of everything went off the rails. And I used to own a bunch of fitness studios. And so I worked with a lot of clients on nutrition and fitness. and everybody started saying the same thing that was, you know, I'm eating how I've always eaten. I'm doing all the workouts I've always done and I'm starting to gain weight and realizing that had to do with our hormones. So I dug into the research. I became a certified menopause support practitioner and just realized that by taking in certain

vitamins, minerals, micronutrients can have a positive impact on the way your body metabolizes, detoxifies, and excretes your hormones. And if you optimize those functions, all your symptoms go away. And increasingly, we're hearing that experts around paramedopause, menopause are saying women need to increase their protein intake. So Peter, we'll get to you on that and say, before we bring Peter and Christy, tell us what your question is for us. Absolutely. So I think I've reached my ceiling of organic growth. And I'm ready to scale.

And for this time period, I believe that online advertising is the best route for me to scale. But if I'm going to scale online, you know, what are the benchmarks? What's an appropriate span? What is an expectation for ROI? What do you ask agencies? Like just all kind of the general, you know, I know, Peter, you're advertising online now with your new company. So what is your blueprint?

Yeah, I'll answer your question very directly, how I recommend you think about it. So one, you want to prioritize like high intent channels. So meta, Google, and Amazon. Those have been the most effective. You can scale in them. And then I would start with those, like a very low budget, maybe like $200 a day, $250 a day. And as you get some data and figure it out,

you can scale, but start super small. You want to keep your acquisition costs below the gross margin per order. So you want to be first order profitable. So make sure your union economics work. That's what I would recommend. And in general, with anything, I would just stay really close to it. And so you learn. Chrissy, are you in the U.S. market yet or just in Canada? I have literally a handful of clients in the U.S. I just figured out how to do really cost-effective shipping to the U.S. So I'd love, yeah, I'm very ready to enter the market there.

It's a, I mean, it's a growing, right, there's a lot of, you know, smart entrepreneurs getting into this space. Absolutely. I mean, I think one of the advantages you have is that the Canadian rules are more and more stringent. And, you know, that means something, especially to the kind of consumer that would be interested in this product. Well, it's interesting that you say that guy, because absolutely. So before we can sell in Canada, we have to get rigorous third party testing. Even the claims that we have to say have to be approved by Health Canada, and we have to show science to show that. So I think people can have a really good confidence that when you're buying a supplement from Canada, that if it's making a claim that it's going to do something, it actually will.

Otherwise, we're not able to sell in Canada. Yeah, Peter, you, I mean, you really leaned into a tribe with RXBarr, Crossfitters, but now there's a new kind of tribe, a much bigger tribe, the protein tribe. And it's a growing tribe of people, right? And again, I mean, especially talking about women, you know, in their mid 40s and over, both women and men, but particularly talking about women now, we know that there's increasing evidence that they need to be consuming a lot more protein. How would you sort of suggest, Chrissy, how should she be thinking about getting this out there? I would say, one, you need to get to the U.S. market at some point. It's just so massive. And then I think if your product's really good, I would just get it into the hands of the right people and I would start small. So whether that's like mom bloggers, like find niche groups and get your brand and yourself in front of them and get into these communities.

And if you have a good product, people will repeat and then they will not only will repeat, they will share about it. So you want like viral word of mouth. That's the best use of time and resources. And then I think like on your product, like the protein thing. So I look at, you know, AG1. So what they did was like an all in one. So if you have an opportunity to do like an all in one with protein and some of these other benefits, I think that would be a great way.

Because I think with your consumer, they're like facing a problem. you have the solution. And if you can make it really, really simple, that's like a very valuable thing. Because if I have to take a protein shake and then I have to take your supplement or other things, that's a lot of work. So streamlining into one thing can be a real value unlock. That could be value. Yeah. So when you said get it into the mommy bloggers, the influential women, would you recommend that we see people first get that buzz going and then do the advertising because I've just, you hear stories that people are pumping money into ads with not a great return because I don't have any brand awareness. So it's like a chicken or the

egg, right? Do you get the brand awareness first through the ads or the influencers? Yeah, it's a good question. Like my bias is use the product and do it more in an organic way and then relying on an ad because like one, you're starting a relationship off in a very generous way. You're introducing yourself. They want to see, you know, you have some influence. You know what you're doing. You have credibility. And that's what we did at our accident. That's at David, we're doing it as well. We sample like crazy. It's like trial is so important. So that's where I would go versus going straight to advertising yet. And that's the one question I had. You said, we've reached our ceiling and I want to go advertising. And like my first thought was like,

are you actually, how do you know you're at your ceiling? Like if you're at your ceiling, what what would ads do to change that ceiling? I guess I meant I'm at my ceiling for, I think, my organic reach on social media. But then, as I just said, we had an incredible month in January, like 30% higher than we've ever had. And so that almost defeats that I'm at my ceiling, right? So yeah. Yeah. Yeah. And I would follow that cohort. Because if you have product market fit, you know, that they should be sharing it. You should see organic growth come from that. But at a high level, I think, like product over ads. Yeah, that makes sense. Christy Stewart, the brand is called Inner Wealth. Thanks so much. Good luck.

Thank you guys very much. Thanks for having me. And thanks, Peter, thanks, Guy. Guy, I love, I love, I love, I love how I built this. I've listened to every single episode. I've learned so much. And thank you for everything you do for entrepreneurs. Thanks so much. Thank you both. Bye. Thank you. Yeah, this is such an exciting category. When I did this panel at the Consumer Electronics Show, I mean, they were like all these entrepreneurs working on technology and products for women going through paramedopause. And it's such a fascinating area because there's so much opportunity.

Yeah. It doesn't seem like the market's being addressed. It's not. No, not at all. I mean, it's just really starting to explode. It's like where energy bars were in like 2008. Yeah, she's in good place. Yeah.

All right, we're going to take a quick break, but we'll be right back with another caller and another round of advice. 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. I'm Guy Raz. And my guest today is RX Bar co-founder and David Barr founder, Peter Ray Hall. Peter. Let's bring in our next caller. Welcome to the advice line. You're on with me and Peter Rayhall.

Hello. Welcome. Tell us your name, where you're calling from. and a little bit about your product. Hey, Guy, and Peter. My name's Eric Rikiske calling in from Los Angeles, California. I'm the founder of squat wedgies. We build exercise products that enhance your lower body workout

with our squat wedges and slamp boards being our bestsellers. Nice. Welcome to the show, Eric. So the wedge is a wedge that you put under your feet for, I'm assuming for squats, right? Yeah, so the most common thing you'll use with a squat wedge or a slam board is to elevate the heel or elevate the whole foot to improve your squat mechanics, make it easier to squat deeper, opens up those hips and the ankles. But you can also use it to train your calf muscles from a toes elevated position so your toes go up the ramp instead.

There's a lot more uses than just the squats. And that's what we're trying to show people that they're not just for squatting because our biggest competition is weight plates right now because people just elevate the heels. Oh, they're on weight plates. I got you. On a weight plate. Yeah. So we're trying to show people that one, it's way more efficient to use a wedge.

or a slamp board. And you can also do way more other exercises than just squats on them. How did you tell me about the story? Because this is a, you know, there are competitors here and we're going to get in the sec. But how did you come up with this business idea? So I've been training for 13 years now. I became a personal trainer at 19 years old. Got my degree in exercise science from East Carolina University, did the Strengthening

and conditioning coach thing. So I've been well versed in fitness. And if you've been in fitness for a while, you've known that. there are squat wedges in the market. But no one was ever really making them affordable. A lot of the products were too expensive, too heavy to move around. So in 2021, we launched a Kickstarter to create the first ever wedgey. And, you know, I figured it was a good time to jump into the market.

And not just build a product, but build a brand around it and hopefully motivate people to exercise in general. Awesome. All right. And how did you finance this? Oh, you had the Kickstarter, I should say, right, you mentioned. So the Kickstarter, we raised about 12,000, 12, 14,000 on the Kickstarter, but I just been self-financing it myself, using a little bit of debt for growth, not the best strategy. So just using your money as a personal trainer to help finance it? Yeah, I'm still working. I still train.

So I was able to make good amount of money and save up from there. And I pretty much just put all that into the business to keep our advertising efforts up. and finance all those purchase orders and stuff. All right. So you've got this product. And tell me a little bit about how the business is doing right now. We've been growing a ton over the last three years. So it's been great to see that.

Nice. So last year, we just had our best year to date. We did $700,000 in revenue. Years before that, we did around $345. And then the year before that, we did about $37,000. What's your margin on $700,000? So blended, it ends up probably being around like 33%. That's my part of my question is today is the, you know, 400,000 that was from Amazon

where our margins around like 21%, 18 to 22%, and then the rest of that was on Shopify, which is after advertising efforts, that goes down to around like 35 to 45% just, you know, based on returns and website costs and affiliates and all that stuff. All right. So not bad. Pretty good, actually. Tell me what you're, before we bring Peter in, what's your question for us? So my question here is we've grown substantially through Amazon.

But I don't love Amazon because I feel like it's limiting me in a way when it comes to talking to my customer and being able to potentially upsell them to our other good products and get them on my YouTube channel to see our free workout programs. But I love Amazon for the ability to drive a ton of revenue, drive growth through the company, and obviously cheaper advertising costs compared to Instagram and Facebook. So my question is, at a certain point as a growing company, can you step away from Amazon and just focus on your own website so you don't have to compete with others on Amazon with their lower cost options? Awesome.

Okay. Let me bring Peter Ray Hall in. Peter, something right up your alley. I know you like to go to the gym. So he's got, you know, he's got Amazon. He's got Shopify. He's trying to figure out, right, Amazon obviously great channel because it's Amazon, but the margins are lower. What are your thoughts, Peter?

Yeah. So this is a common issue. We have it at David of how do these channels coexist? How do we optimize them? And Amazon's like a force of nature you can't avoid. So it should never be a question, are we on Amazon or not, I think. It should be how do we optimize it. And I think you're right.

You do want to have a direct. website with relationships with your customers and offer different things. So one way to think about it is, all right, Amazon is like for volume. Like, right, it's like your hero skews there. It's got to be priced right. But like how do you differentiate and how do you create value on your own website to bring customers there? So that could be through bundling.

It could be through promotion. It could be through education. But I would look at it as like a product strategy across the different channels. But I just don't, Amazon's everything, it's such a powerful, powerful e-commerce platform. You want to lean into it and you don't want to run away from it. Yeah, I guess my question for you, Eric, is why is it one or the other? I mean, Amazon, yeah, I get it. You know, they're squeezing you.

And, you know, listen, it's a business, but it's also a great channel. On the other hand, I mean, I'm looking at your website here. You've got YouTube channel. You've got all these free exercise routines that you're offering. You know, you've got other products here that you're selling. So I guess my question is, can't you do both? Yeah, and we've been doing both for the last three years. Part of it's come down to being able to keep up with the inventory.

Like, you know, on Prime Day, we kind of just ran out of inventory. And one of the things has just been like trying to keep up inventory from a financing perspective because I'm paying for everything up front before it we do build in China before it leaves China. And as of right now, we can only order around like a thousand. into 2,000 units at a time. And the lead time on that is about three to four months from, like, building it to getting it here. And the issue at Amazon is, if you don't have enough inventory, you get charged fees.

If you have too much inventory, you get charged fees. And then the return issue as well. And I just, I don't, as of right now, I don't have enough, I think, inventory to potentially do both. Got it. Yeah. If you have inventory constraints, then you'd want to keep it on the more profitable channel. And yeah, and just you'd accept that people are going to be searching for your product on Amazon.

It's just going to buy, you're not going to capture those sales. But it sounds like it's more of a cash flow working capital issue. I would focus on the profitable channel and building your platform. I would spend more of my resources and energy in building Eric as an influential person in fitness. And yeah, then you can create all the demand. Eric, this is a little bit, I mean, going back to this idea of what you are giving your customers or your fans, your potential customers for free. And I know that you're doing these videos. I want to see more of that coming from you because I think that's when people see you as somebody who's a trusted voice, they're going to want to support your products.

I just say this is a focus group one here, but I do spend money on some of these influencers who I feel are giving me really great free advice. And I have gone and purchased their courses or their products and they've been really helpful. I agree with Guy. Okay. I really appreciate that. And also, Peter, I just want to listen to the episode again and hearing about the dyslexia stuff and some of the speech issues myself. I went to speech therapy for about six to seven years as a kid. So it's pretty cool to see, you know, someone struggle with that as a kid to be so successful as you are now.

So I appreciate the inspiration and talking about that. Thank you, of course. Awesome. Eric, thanks so much for calling in. Squat Wedgies is the brand. Good luck, man. Great to meet, Eric. Yeah, squats are so healthy.

It's such a great compound exercise. Yeah, especially the full range of motion ones. Um, yeah, I love to squat. Yeah. And super important. Peter, you will start to discover this as you get closer to 50. That mobility is so key, man. It is like, it opens everything up.

If you're stuck, if you're tight, I know. I spent the last like year and a half just focusing on stretching in addition to the other exercises. And it just completely, it just opens all these doors. It's the best. I'm not there yet. Not there yet. You still have some grease in your. your joints and stuff. Okay. We're going to take another quick break, but we'll be right back with

another caller. 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. I'm Guy Raz, and today I'm taking your calls with Peter Ray Hall, the co-founder of RX Bar and founder of David Barr's. Peter, let's get back into it and bring in another caller. Please tell us your name where you're calling from and a little bit about your business. Hello. I'm April Wachtel, and I am calling in from Brooklyn, New York, and I'm the founder of Cheeky Cocktails. It's a line of badass cocktail mixers for the home and bar that make labor-intensive cocktails a breeze. Welcome, welcome the show. Thanks for calling in. Okay, so Cheeky, these are mixers, basically, like, you add this to spirits, and then you've got your drink. Exactly. These are professional grade, so they're shelf-stable versions of what the pros use behind bars.

And they're non-alcoholic, so they can be mixed with spirits, non-alc spirits, seltzer tea, water, etc. And I'm on your website now. I love the branding. Yeah. And so I see espresso syrup, so presumably for like an espresso martini. Exactly. You've got some agave syrup, simple syrup, cranberry, lemon juice.

So basically, I mean, are you covering the whole gamut of sort of like 50 to 70% of what people order at a bar? Yeah. So that's part of the. problem. It's part of the opportunity and it's part of the problem and part of the question that I have for you actually. Okay, we'll get your question in a second. Tell me a little bit about how this started. How did you start this brand? Yeah. So my background, I basically grew up in bars and restaurants, and then I worked my way up over many years, came up through bartending, craft cocktail, and then I became a brand ambassador of Bacardi, consultant for Diageo and a cocktail instructor.

So I've taught over 12,000 students how to make cocktails. Wow. So you could come to this with like deep experience. Yes. And you decided when did you decide to start a business? Yeah. So I started tinkering with the first version in 2014. Ran a business for about four years, which I would consider to be a worse version of what we do now. Okay.

So pulled that apart in 2019, put it back together in 2020, and then launched into March of 2020 into the first wave of COVID. Got it. And now you sell cheeky cocktails entirely direct to consumer online? No. It's about 25% direct to consumer. We're in 1,300 accounts, primarily brick and mortar across the country, but we're in four and five-star hotels as well. Nice. And are you mainly in smaller stores or any larger chains?

About half are small independent boutiques, independent liquor, specialty grocers. And then we're in anthropology, Nordstrom, home goods on the chain side. Got it. All right. So tell us what your question is for us. Yeah. So there's a lot of ways that Cheeky is distinct. from the competitors.

Okay. But I struggle to encapsulate all of those ways because we are speaking to trade. We're speaking to consumers. And different people use us for different things. And I don't know if I just need to nail my messaging better or if this is something that adds complexity and will prevent us from scaling as we try to hit the gas. What's your messaging now? Bad ass cocktail mixers for the home and bar.

Bad ass cocktail mixers for the home and bar. Yeah, I mean, it doesn't tell me anything. Right. So what is it that differentiates it from competitors? I mean, there are other brands out there that are mixer brands. So how do you, and you say it takes so long to explain it, what is it that's different? So there's many things for the professional bartender, there are very specific ratios and recipes that are used when they make ingredients from scratch behind the bar. And commercial options that are shelf stable on, you know, sold in retail, don't ever say that. We make our syrups to those specs. So the professionals know what is in them and how sweet they are. And then the consumer is able to replicate those cocktails with certainty because we make the exact same products as the scratch ingredients. Got it.

All right. Peter, I want to bring you in here. Messaging is a challenge. I don't know if that's the main challenge here. But what do you think? I mean, again, badass cocktail mixers doesn't tell me anything. It's fun, but it doesn't tell me anything. So, like, your positioning and communication is a reaction

to the competitive landscape, it can never be done in isolation. Yeah, I think badass cocktails is like a fun thing, but it's not a very telegraphic. It doesn't like really communicate. And one of my sort of design principles, it's a bit crude, but I think it's a very good approach to packaging design, is like the consumers are stupid and lazy, stupid in the sense that they don't really care that much.

The brand is supposed to make it easy. for them. And then lazy in the sense, they're not going to look at your package and, like, read the third point and then flip it over and read the story. So question for you, if you're to boil down the value in a one statement, what is it? So this is part of where I'm getting hung up. So the packaging itself is really attractive. It's minimalist and it's premium. Nice. It looks like New York, Art Deco-ish, really cool. Love it. Thank you. So that, I think, for the consumer, that is the first thing that catches their attention. It's relative to a very crowded, cluttered marketplace and competitive set. It pops out because there's a lot of

white space, like it's more relaxing to look at our packaging on shelf or if it's in your home bar or in a professional bar. So that's the first thing. The second thing is the ingredients quality is incredibly high, and we don't use preservatives, we don't use natural or artificial flavorings. So it's really shelf-stable versions of the ingredients that pros use. Where do you have the most success, like on-premise or at home? So our focus this year is the on-premise. So food service, for sure, yeah. Yeah.

And is that because you're providing, you're making the bartender's job so much easier? Is that the value? I think it's a couple of things. One of which is if it's in a cocktail, yes, but if it's in a cocktail on a cocktail menu and it eliminates multiple steps, it improves consistency, you know, all of that fun stuff. Yeah, then it's, of course, easy for them to use. Yeah, I always say like strategy is choosing what not to do. Yeah.

So one of the, it sounds like your product's kind of working everywhere a little bit. Yeah. But it's probably one of those things where like if you really were to just focus on where it's the highest demand is where people are like, oh my God, finally a product like this. Like, where they're not price sensitive, where they forgive you if there's, like, quality issue because it's just, there's like the early adopters are there. No, you, you've identified the issue, which is I have been conflicted because it is working everywhere. And so choosing up until this year has been difficult. You know, I'm looking at, keep thinking about this, this, you know, badass cocktail mixers.

And, and, I mean, I'm looking at your coffee mixer for the espresso martinis. And I notice in the back, I'm looking at the label here on your site, you're using a very specific kind of premium coffee. You know, you're using really high-quality ingredients. I mean, you even name the coffee. It reminds me a lot of the story we did on La Colombe a few years ago. And when they launched back in the day, you know, they were making a very, very premium coffee. And they started by working with really the best restaurants in Philadelphia, New York. Because when people tried it, it was just, it was different.

It tasted better. But I feel like there's a way for you to convey. that. You know, people use words like artisanal, which is overused or, you know, premium. But there's something around that idea that I think can really pop because the fact that you have sourced the coffee that you're using in your syrup mix is really interesting to me. And I think that would be interesting to a certain set of cocktail enthusiasts. Yeah, because that's not communicated. Yeah. So there's two things. The trade gets it immediately. Like we do zero explanation with the trade and immediately they're like, oh my God, I cannot.

Like, this is amazing. With consumers, we used to call it bar quality syrups and juices. Then we said professional grade serps and juices. So that was why we adapted it because the consumer reaction was like, like another premium product. And when we started saying badass, everyone just laughs. And that is more in the spirit of what of the reaction we want to get from people because it opens people up. and then it's more of a fun conversation versus just kind of groaning and saying,

oh, yes, yet another of these. Cheaky is like English humor, right? Yes. So then the badass is like American. Yeah. So I find those two things are at odds. Like, yeah, yeah. Good brands have great tension,

but I don't think those tensions really work. They're more confusing. It's a really, really interesting insight. I think that, you know, mean, again, it's not the answer, but something like, you know, a mixer is for for cocktail nerds, you know, some way to kind of convey that it's like, you cannot get anything better than this, you know, like if you are, if you're into like watches or you're into pens, right, there are people who are, and there are a lot of people like that, they want the absolute best. And the good news is a lot of people who are really into making the absolute best cocktails. Yeah, I mean, it's a lot of food for thought. I think because there's a lot of sort of exclusionary behavior associated with the highest quality craft cocktails, I'm trying to share a more approachable version. And so that's the thing that we've been batting around for a number of years at this point is like, how can you be super approachable and fun and light and also be very serious about what you do? But I think one of the other puzzles that's making this difficult is that you're talking to the bartending, like on premise is a very different communication than to the consumer.

And you're trying to do both. Right. And so like one strategy would be like, we're just going to dominate on premise. They get it. We can just align our communication to prioritize them. And then guess what? If you do that really, really well, the word of mouth, they'll see it on premise. Like, oh, my God, that cocktail was great.

What was it? it's cheeky. So I kind of think you're just diluting yourself across those two different channels. And it sounds like your DNA is on premise. You know it. Yeah. And they get it. So it's like Chulula is a good example.

Like Chulula just popped up in every cafe all over America. And then next thing you know, you start to see them in grocery stores. Next thing you know. And so there has been a history of that sort of strategy. So I think this is a strategic question. and then your positioning and messaging should align with that strategy. And then as you scale, it's a growth area. I think this is so interesting how, like, that was not my question,

but you got to the actual question behind the question. April, good luck. The brand is called Cheaky Cocktails. Awesome. Congrats on which you built, and we'll be cheering you on. Thank you. And thank you so much to both of you. This is such an honor, and I'm such a huge fan of the show.

So thanks so much. Cheers. Thank you. See you. Yeah, I mean, the product like this is particularly positioned well because obviously still lots of people drink alcohol, but a lot of people are moving away from it. As you know, Peter, right, in your space, I mean, a lot of people are just not drinking anymore, but they still want to have something. They want to have some kind of cocktail-like drink. Well, and the thing is you're seeing on-premise people prioritize non-al menus because it's a huge revenue grab, basically, because they could like sell a, you know, without the alcohol, it's charged $20, $15.

Yeah, mocktails are super expensive. Or a lot of fancy restaurants are doing non-alcoholic pairings where they're making these concoctions and they're just as is still $120 in some of these super high-end restaurants to get a non-alcoholic pairing. Peter, before I let you go, I want to ask you one question that I've been asking people come on the show, which is, you know, now that you've got a new brand that you're building and you've got a chance to kind of do things in a different way, right, and not make the same mistakes you made in the first go-round. But if you could go back to where you were in the early

days of RX Bar now and say, hey, this is a piece of advice I'm going to give you. What do you think would have been helpful for you to hear? Yeah. I was full of pride when I first started, meaning I was sensitive to criticisms. I was defensive. I was very proud of my baby. This product is my life. You know, like, oh, they don't, you know, my product's not the problem. You're the problem. And so I would tell myself, like, removing yourself of pride is super important. And instead of, like, being defensive on criticism, you should actually seek criticism. Like, it's about finding what's wrong and fixing it. And so you're just being super objective, pragmatic, and not emotional about your product and its position and is really, really prudent to be successful.

It's great advice. That's RX Bar, co-founder and David Barr founder, Peter Rahul. Peter, thanks so much for coming on the show. Thank you, guys. That was amazing. And by the way, if you haven't heard Peter's original how I built this episode, you've got to go back and check it out. We'll put a link to it in the podcast description.

And here's one of my favorite moments from that interview. You got this idea. You have a plan. Did you think, yeah, let's go raise money? So that was actually our initial plan. And I remember Jared and I was talking about, like, who are we going to raise money from? I remember asking my dad, like, do you know, many rich people I can like, you can connect me with, who'd give us some money.

And my dad was like, he's old school. It's like super traditional. And he's like, you need to shut the fuck up and sell a thousand bars. Thanks so much for listening to the show this week. Please make sure to check out my newsletter. You can sign up for it for free at gairoze.com. Each week, it's packed with tons of insights from entrepreneurs and my own observations and experiences interviewing some of the greatest entrepreneurs ever.

And if you're working on a business and you'd like to be on this show, send us a one-minute message that tells us about your business, the issues or questions you'd like help with, and hopefully we can help you with them. And make sure to tell us how to reach you. You can send us a voice memo at hibt at ID.wondery.com or call us at 1-800-4331213. and leave a message there, and we'll put all this in the podcast description as well.

This episode was produced by Chris Messini with music composed by Rumtin Arablui. It was edited by John Isabella, and our audio engineer was Sina LaFredo. Our production team also includes Alex Chung, Casey Herman, Iman, Ma'ani, Elaine Coates, J.C. Howard, Catherine Seifer, Carrie Thompson, Sam Paulson, and Neva Grant. I'm Guy Raz, and you've been listening to the advice line right here on how I built this lab.