How I Built This with Guy Raz - Advice Line with Scott and Ally Svenson of MOD Pizza

Episode Date: September 5, 2024

MOD Pizza founders Scott and Ally Svenson join Guy on the Advice Line, where they answer questions from three founders about strategic expansion, plus discuss MOD’s recent acquisition.Today we meet Evan, who recently turned his Richmond-based pizza restaurant into a vegan frozen pizza company. Then Zebbie, a restaurateur in Birmingham who's looking to take his hot chicken concept on the road. And Christiane, a Los Angeles area tequila-maker on a mission to improve her industry’s labor conditions. Thanks to the founders of Udderless Plant-based Pizza, Eugene’s Hot Chicken and Valor Bebidas 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 MOD Pizza’s founding story as told by Scott and Ally on the show in 2023.This episode was produced by Katherine Sypher 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.

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For my newsletter, it's full of insights and ideas from the world's greatest entrepreneurs. You can sign up for free at guyraz.com. And we'll put all this info in the podcast description. All right, let's get to it. Joining me this week are Scott and Allie Spencer. They are the co-founders of the fast, casual pizza chain mod pizza. Scott Allie, welcome back to the show. Guy, great to see you.

Great to see you, Guy. Thanks for having us. Great to have you back. So both of you were on the show in the summer of 2020. You told the story of how you created Mod Pizza. And if you haven't heard, Scott and Allie were high school sweethearts. After college, they moved to London. Scott worked in finance, but then he got bored with it, and they decided to start a coffee shop in London,

which turned into a massive business called Seattle Coffee Company, which they sold to Starbucks, and then eventually came back to Seattle where they're from and started Mod Pizza, which today has around 500 stores. It's such an awesome story. I loved having you guys on. We have lots to talk about, of course, especially a bit of news. around Mod. I know that recently was announced that Mod Pizza was acquired by the elite restaurant group. It's an investment group, I guess to help avoid potential bankruptcy. I'm curious,

because Mod is such a great business and was operating as such a great business. What happened? Was it inflation? Was it the cost of goods? Was it too rapid of an expansion that created some of the challenges? Yeah, guys, it's a great question. And I think to summarize, We had, it was a 16-year journey for us, and the first 12 or 13 of those was incredibly exciting, growth-filled expansion across the U.S. We were built as an experience to have on-premise. And we entered the pizza industry, did pizza a different way. And then when the pandemic hit, it really forced us to change how the business operated.

And it also dramatically impacted our. our growth strategy. We had been expanding across the country very rapidly to be a first mover. And then we pivoted very intentionally in about 2018 from first mover into market infill. And so we started to fill in all the markets that we were in, raised a bunch of capital in 2019 to execute that phase of our strategy. And then in 2020, that basically came to a halt while we moved to surviving the pandemic. And as we came out of the pandemic, we made several attempts to get back into growth mode

to fill those markets in and to finish the strategic plan that we had had. And there was just a number of challenges that came out of it, whether or not it was staffing crisis or supply chain issues or inflation. Yeah. It was a combination of those things as we were trying to come out.

And then ultimately, the inflationary spike that led to a lot of price change in the industry over the last few years, started to manifest in terms of consumers eating out less or having less occasions, less restaurant visits. And then we got into a dynamic where we needed to raise capital, which we knew we were going to. It just accelerated it and put us into a position of either needing to raise capital or sell the company and we ended up selling.

And the good news is, Maud Pizza will survive and thrive. You've got all these locations around the country. and so, Scott, you're no longer the CEO, but will you stay as advisors for a short period of time? We're still connected with the company. I think that's a story that's yet to be told in terms of exactly what role we play or how we might be able to help. Things have changed quite substantially, and we'll continue to change. You know, I'm sure Elite has a vision for where they're going to take it. It's a concept that people love.

It's an experience that people love. But the future will no doubt be different than the past. Well, Scott and Ali, the two of you have scaled two chain businesses, one in coffee, one in pizza. We've got callers today who I know have lots of questions about, you know, things like expansion and building brands. So a lot of questions, I'm sure we'll have a lot of hopefully good advice for them. Let's take our first caller. Good. Great.

All right. Hello. Hello, caller. Please introduce yourself. Tell us your name, where you're calling from, and just a little bit about your business briefly. Got Raz, Ali, Scott. I'm so happy to be here. My name's Evan Byrne from Utterless Plant-Based Pizza.

Hi, Evan. We're located in Richmond, Virginia, and we're making the world's best bake-at-home vegan pizza. I love it. Okay, cool. So tell us a little bit about how you got into the vegan pizza business. Well, we've had a restaurant up until recently, so I can certainly identify with a lot of the challenges that Scott and Alley have faced. This was a pizza restaurant? Pizza restaurant.

Okay. In Richmond? In Richmond. had it for about six years. We actually just closed on the sale last week. Congrats. Thank you. So this is a pivot.

We noticed that we had a huge vegan clientele. We actually geared it in the beginning. We wanted to have something to be inclusive and have something for everybody. Richmond has a huge vegan community. So we started offering vegan options and we brought on someone who was making a local vegan cheese and they were on our menu and then every time they were not the most reliable vendor and every time we would be out of the vegan cheese we would notice a dip in our sales. So it's really just really just self-preservation. I started kind of reverse engineering it and sort of came

up with my own version of it and it was a lot of tinkering around in the kitchen. We came up with something we were happy with and it just kind of took off and we've just found that it's a much easier business and seems like it's got much more legs than the restaurant. Cool. And are you in grocery stores right now, at least local stores? We're in about 15 stores locally. So there's some mid-sized health food stores. Richmond has a big market community, so we're in tons of different markets around here. And then we just recently got some regional distribution in the southeast. Nice. Congratulations. Thank you. And they're frozen. They come frozen.

They come frozen. That's right. So it's a cashew-based cheese. All the, we make the dough by hand. It's naturally leavened, fermented for 24 hours. We use fresh produce. And then we parbake the dough, freeze it, put the sauce on it, shred the cheese on it, top it, and then freeze it again and repackage it. I love the name, Utterless. Yeah.

Evan, what's your question for us today? So I think my question is, you know, we're Richmond famous. People love our pizza around here. but how do we expand our footprint beyond our local market with limited resources, you know, I mean, aka money, essentially. How do we get our pizza in the hands of people outside of our local market? Because generally, once they try it, they love it. All right. Scott, Allie, maybe answers to Evan's questions or maybe some questions for Evan

before we tackle this question. We're big fans of a grassroots, scrappy approach to things. Yeah. So this is, you're doing it the right way, I think. Yeah, and congrats on, you know, building a restaurant and then pivoting into this. I love that entrepreneurial, you know, ability to see the opportunity and to pivot. I'm curious with the way you've been distributing the product to date, it sounds like you just got some a slightly bigger distribution opportunity. Maybe you could share a little bit more about that. Yeah, it's in the southeast.

So it's a smaller regional distribution company called P-10, who we love. and you know this is distribution from what I've learned is kind of chicken of the egg right you can't get distribution without these key accounts but you can't get key accounts without distribution so we feel really fortunate that you know they actually approached us they heard of us and they added us to their you know sort of repertoire and then also it's for it's hard to find frozen distribution you know many times I've cranked down the AC in my car and driven as fast as I can to deliver some deliver some pros of pizzas.

Entrepreneurial journey. Right, yeah. It's tough in the summertime. Whatever it takes. But anyway, you know, they've been great so far. You know, we are part of a catalog

of other products that they offer, right? So how do we stand out, you know, among those, you know, is it going in person to do events to get the, you know, the pizza in the hands of people? You know, how do we transfer the sort of buzz

that we've generated in Richmond to these other places and get them to, you know, sort of dive in. It's, you know, it's hard to get your name out. So, yeah. Do you do direct-to-consumer? No, we don't. Do you do any mail order or online or subscription or otherwise? I think the turnoff for us with that has just been that it's a frozen product. So the shipping cost is, you know, astronomical.

Yeah. I notice that you promote the fact that your vegan meat topping beehive, a product that I hadn't heard of, but boy, when I started to go down that rabbit hole, they are a real thing. And they have lots and lots of like 22.5,000 followers on their Instagram, I think. And they promote a lot of pizza and a lot of product using cheese like yours. Have you discussed with them, having them help promote and bring you into their venues where they are? Yeah, absolutely. I think that that's definitely in the cards. We've been kind of going through a lot of change. the past couple weeks with the restaurant sale and everything.

But that was kind of the thought process when we got into business with them. It was like, we'll do some co-branding. It'll be beneficial for both of us. They're a really well-known company and their vegan proteins are great. And if they endorse your product, I mean, that's gold. And it looks like Beehive is based, I think, in Nashville. Right. You know, again, depending on how deep you can build out that partnership,

there's a logic to possibly, you know, create some presence there with them. And some of these publications, when you just do a random search on the best vegan frozen pizza in the country, you know, these publications, veg out, veg news, they are intensely focused on exactly this. And they list a lot of pizza brands that aren't yours. And I would use that as an opportunity. I would contact those reporters and say, I see that you listed these 12 brands as the best vegan pizza. I'm sending to your office this week one to try because you need to add a new one. to your list. I mean, those are reporters that are already studying this stuff. Yes. Yeah, that's great. We did have an article in Bej News just by chance. So, yeah, that's definitely somebody we should

reach out to. One of the things we found in our experience with Maud is that the vegan community was strong and outspoken. And while maybe small as a percentage of our overall customer base, they were very influential. And, you know, a lot of people, when they're talking about building a young emerging brand like yours. They talk about connecting with that core customer, that community that you can build. Man, that, that vegan community is a, is a prime one for you to tap into. And it does come down to all the things you've talked about, the quality of the product, how differentiated it is.

And for your, you know, getting out in as you explore moving into new markets. And my strong advice is you've got, it sounds like, a very strong following in your home market of Richmond. I would take advantage of that and make sure that you're kind of leveraging it and moving almost in concentric circles. What's that next market where you can take advantage of the strong following and then move into that next market? Growth is seductive and it's exciting. But man, it's better to do it the right way, be slow and deliberate about it as opposed to be measured. Quality growth over growth is a really important differentiator, particularly for someone like you.

It sounds like this is your business. you own it. You have to fund the growth. You have to manage it. And therefore, just being really thoughtful about how you step through those next few chapters. I wonder if you're in Richmond, right? And let's be frank, Richmond is a small market, right? But you're three hours from one of the biggest metro areas and one of the most influential metro areas in the U.S., right? Washington, D.C., home of Kava, sweet green. I mean, so many brands have really started and scaled out of that city. And it's really been a test market for a lot of these small startups to grow and to become national brands. And I wonder whether there's a world where you go there and you go to farmers markets there and you have a mobile pizza truck and you're making these there.

You know, the DuPont Circle Farmers Market. It's influential. You just get more attention than you would in Richmond. Sampling, sampling, sampling. Yeah, I think that's a great piece of advice. I mean, we haven't really explored the Washington, D.C. market yet. it's a little daunting, but that's definitely something to consider. I agree with Guy.

Thinking about what's the bridge from Richmond to the greater D.C. Metro area, and how do you kind of build up to that? And who are those key influencers? Who are those key retailers? And it feels like, you know, that idea that Ali mentioned of what's the way to get the product in people's hands and into their mouth? Investing in a mobile, you know, a food truck that you can actually take the product would be super cool.

Sure. I think, I haven't really explored D.C. and then mom's organic market is around that area. So that's something that I could see having some legs where I can maybe get somebody's ear there. So that seems like a really great piece of advice. And Evan, in the retailers that you're currently in, do you do tasting events? Do you get into the store? We do.

Yeah. Because I would really focus on making sure that the, retailers that are currently supporting you are being really successful with your product and that you're nurturing those relationships. Taking that data then on the sell through in those stores to the next retailer, because that's when you eventually have that meeting with Whole Foods. If you have all that data and that experience about how, once you get the product on the shelf and in consumers' hands and in their mouth, how they respond to it, that's what, that's the data I think that they're going to respond to and that that might be the breakthrough that gives you the opportunity to

get into that one store and then eventually more. But making sure that those retailers that you're in, it's so easy, again, this gets back to the conundum of growth. Once you focus on growth, then your time and effort and energy ends up being focused there as opposed to in your core business. And man, making sure that that's always a struggle. That's attention. In a small business like yours where it's really you getting pulled, making sure that you're not neglecting those current retailers and making sure that they love you and that they're big advocates, because that's what's going to feed the reputation and the demand then for the product going forward. The most powerful marketing you have is getting your product into people's mouths.

Gorilla pizza drops. Yes, exactly. That's right. Awesome. The brand is called Utterless. Evan Byrne, congrats on launching this. Good luck, man. Thanks so much, y'all.

I appreciate it. Nice to meet you. Nice to meet you. Good luck, Evan. Thanks. Fun. I'm not eating pizzas very often now because I'm on this annoying. annoying diet, but I do love it.

As you guys do, you love pizzas, but we can't eat it every day. It's going, you're right, you just, although maybe I shouldn't say that, because we want pizza, people to eat mad pizza every day. Sure. Yeah, no, I mean, and he's right on it. I mean, health, lifestyle, diet,

those are such powerful trends, and if he can develop a really craveable product that caters to that very strong and vocal community, man, that's a, that's an exciting place to be. How did you guys do with vegan pizzas? because presumably did you have a vegan cheese option or was it just like cheeseless? Yeah, you did.

We had a gluten-free and a cauliflower crust option and then we had vegan cheese. So we had a lot of strong customer following from people that had dietary restrictions or preferences. And by the way, that all happened very organically. We did not market that. We did not push that. So it was wonderfully surprising for us, right? And once they discovered it and made modest solution for their vegan needs, they were big promoters of it to their community. And that's why I think in talking with Evan and really getting, you know, making sure that he is very close to and building that relationship with that community is just key.

Okay, next up after the break, another caller with another business challenge. I'm Guy Raz, and we're answering your questions right here on the advice line 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 are Scott and Ali Svensson, founder. of Mod Pizza. Scott Allie, let's say we take another caller. Hello, caller. Welcome to the show. Hello, how are you doing today? Hello, hello. Please introduce yourself. Tell us where you're calling from and just a little bit about your business. I'm Zebby Carney. I'm the owner of Eugene's

Hot Chicken. I'm calling from Birmingham, Alabama. Hey, Zebby. We are a hot chicken restaurant, catering company, and food truck. We started in 2015. We got a two restaurants and three food trucks, and we got two sauces in a couple local stores here in Birmingham, Alabama, and we're looking to expand. So, let me, tell us how you got into the restaurant business and how you came up with this idea. Yeah, so I'm originally from Nashville, the home of hot chicken. I've been in restaurants since I was 16. 27 years I've been in restaurants. I kind of worked my way up through restaurants. I went back to school to get my bachelor's in business. Yeah, it was no hot chicken in Birmingham. It's such an incredible food town.

And I was, you know, kind of tired of corporate America. And I was just looking to do something else. I always wanted my own little restaurant. And I was just trying to add value to the great food scene here in Birmingham. And, you know, I was like, hot chicken was perfect. So I started doing pop-ups. They became successful. And then I purchased a food truck.

And we just kind of grew from there. And it's all been organic growth. You know, we kind of outgrew our commissary kitchen we was working in. So then we opened up a restaurant. And the restaurant just kind of took off from there. Wow. Nice. Cool.

Zebby, tell me about the name, Eugenes. Who's Eugene? Oh, so Eugene's my father's middle name. You know, he passed when I was 17 years old and just a way to honor him. I named the whole company after him. Bless Eugene's had that old school southern name to it that I wouldn't get out with Zebby. Are these his recipes by any chance? No, they're all my recipes.

I created them in our apartment. Wow. Amazing. I'm looking at your menu. It looks delicious. I can't wait to dive into a little bit about your process. Tell me about your question. What question do you have for us today? Yeah, so, you know, all of our growth has kind of been organic growth.

But, you know, we're looking to grow more. As more brands come about, how do you handle fast growth and how do you scale? Right. Just a few thoughts on that. Got it. Okay. We'll get your question in a moment, but before that. Scott, Ellie, any questions for Presby? Yeah, and congrats. It sounds like you've had a lot of success. And, man, you are in a really good space. if you were to look across the restaurant industry over the last five years, and I'm sure you know this, being in chicken and chicken sandwiches, there's no better place to be. Massif.

You just can't get enough of it. You've seen all of what's happened with, you know, the different brands who brought in chicken sandwiches, and it just seems like that, you know, as long as we don't run out of chicken, we're going to be, you'll be in good shape. We just added a vegan chicken sandwich to the menu as well. Wow. There you go.

So I take it that you've financed all of this, and this is all coming. company owned today? Yeah, I have. And, you know, that's one issue with growing, you know. Yeah, for sure. I don't want to stretch us out too thin. Yeah, well, congrats.

I mean, that's commendable that you've done it all off the back of, you know, your own hard work and incrementally grown it. And right now you are just in Birmingham. That's right. The three, the two stores and the three foot trucks. That's correct. Yeah. And so I take it that there is a desire to want to take this great menu, this great brand you

have and grow it. Yeah, so we bought a new food truck this year, which we called a travel truck, and we've just been traveling in different markets. We just got back from Nashville for four days on Sunday, because if you're going to do hot chicken, you've got to do it in Nashville. Plus, it's a bigger market, and I feel like we can scale quicker if we get to Nashville. So we've been taking our food truck there. Great way to test it, too. Yeah, and it's been great. So, Zebby, it's funny.

You're smart because my first piece of advice was if you're going to test new markets, you've got to, food truck, it's mobile, it's a low-cost way of getting the product in people's hands and seeing how they respond. And it sounds like you've done that. So you've done it in Nashville. Have you done it anywhere else? We've been to Atlanta. We've been in Nashville a couple times. We've got a hot chicken, not a hot chicken, a fried chicken festival coming up in New Orleans in October. So I'm pretty excited about that one. And the response from customers in Nashville and Atlanta was positive? It was real positive. You know, people tell them it's great, but it's a little bit different. So that's awesome just to hear it because we're not like anybody else you know that shells background and yeah that's

it's just background you know and growing up with hot chicken i want it i don't want it just hot i want to add more flavor to it you know and it's been it's been great what's the population in birmingham roughly you know if you're adding in the suburbs uh it's 33 municipalities i say around a million people so the first thing that i would ask you to consider is you know in our industry there's a there's a formula that is the more penetrated you are in a market, the more well-known your brand, and generally the brands that are more well-known perform better. So making sure that you really feel like you've, before you move into a new market, that you feel like you've really taken advantage of your home market. Yeah. And I don't know, I would tell you, in a market with a million people,

I would be surprised, Zebby, if you couldn't have 10 or 12 or maybe even 15 points of distribution, whether or not there are food trucks or stores. In Birmingham. And I'll tell you it's exciting and it's seductive to go to that new market. But, man, it does bring a whole series of challenges and complexities that at the right time are worth taking on. But man, before you've really maximized the opportunities in your home market, I would just strongly encourage you to do that first. And then with a really strong foundation, then think about, okay, how do we want to extend into a new market. And then there's all types of questions. Zebby around how much risk do you want to

take, meaning do you want to do it all company-owned, meaning you're going to continue to finance it all? Or do you want to bring in partners? Do you want to franchise? And this is another challenge with growth. As soon as you start focusing on growth, particularly if it's in a new market, you've got to travel, you got to hire people, you got to bring. Now you're not focused on your core business. You're focused on the growth because there's only so many hours in the day. And that's when, people get into trouble because now as opposed to focusing on how do I elevate and improve the quality of what I'm doing? How do I manage my costs so that I can keep my prices where they need to be? How can I take care of my team so they're delivering a great experience? You start focusing on the

fact that, well, I had a general manager in Nashville and they left and I got to leave. I got to go to Nashville for two weeks and I got to stay in a hotel and that's going to cost me. And you just, you end up changing your priorities and your focus. And so, man, I think the, more you can really own that, own your home is a mantra that a lot of people in the, in the industry talk about. Own your home, build a fortress, because if you can become the loved local brand in Birmingham, and if you end up having six, seven, eight, ten locations, there's a loyalty that develops, you know, with those iconic local, we have many, we have several of them here in Seattle, which have been around for 50, 60, 70 years. And the value of the brand is almost

more now than the value of the business. Then you can decide to do anything. You can go franchise it. You could grow into a new market. You're doing it from a really solid foundation. Or you can just build it up, have a really easy business to run, and then eventually sell it as this iconic local Birmingham institution. Zebby, quick question on the, you mentioned that you have sauces that are distributed

in groceries. That's a huge deal. How did that come about? Yeah, during COVID, you know, we were just looking for another way to pivot. And we, you know, we're a scratch restaurant. We want a few fast cows or scratch restaurants And, you know, people,

they love that comeback sauce And they loved our white sauce And I was just figuring out What else could we do with it? And, you know, we end up bottling it And putting in grocery stores How do they sell? They're doing well.

We're in a few local, Piglo Wigglies, but that's another thing Trying to figure that out. You know, I really, I'm trying to get somebody else to kind of take care of that part of the business where I still focus

on growth of the restaurants. Yeah. And, but, you know, how do we handle that growth and that skilling? You know, what key performance indicators, do you look for the measure success? Yes, I mean, it's a great question. I mean, I'll give you a few, which are pretty typical in our industry.

The first is average unit volumes. Everyone wants to know what are your AUVs. Secondly, is your store level contribution. How profitable is the store? And that's going to be, obviously, a byproduct of where your cost to get sold, where's your labor and your occupancy costs and other operating expenses. and people want to see that a couple of things, that your revenue is at least two times your cost to build and open a store, your capital cost, and ideally closer to three, but at least two

times. So if it costs you half a million dollars to open a store, they want to see it at least a million to a million and a half in revenue. And then a 20% store level contribution, store ebidah, store profit, is a really important marker. Sometimes, people are in the high teens, best in class brands, Chipotle and Kava and others are in the mid-20s. So being at that 20% level or higher is really important. And then frankly, the other key metrics that you've got to keep track of are how your customer is feeling about you, all of those, you know, the customer feedback. How's your team feeling about you?

Because you know turnover is expensive, both in terms of cost to hire people train them, as well as just the experience they deliver. So I'd say those are probably the most important metrics to track. Yeah. Thank you. Zebby Carney of Eugene's hot chicken in Birmingham. Thanks so much for calling it. Good luck.

Thank you all so much for having me. Yeah, congratulations. Great having you. Yeah. It's exciting. Take good care. Good luck. I just, I love a fried chicken sandwich, I got to say.

He's in the right spot. And he's been doing it for a long time. So he clearly knows what he's doing. He's clearly developed a product that people love. Yeah. And you just see in the last, as you mentioned, the last several years, you know, raising canes and obviously chick-fil-A. I mean, even the chicken sandwiches at Popeyes, I mean, they've just, it's exploded. I mean, you see, and Dave's Hot Chicken, you see these other chains coming up.

I mean, that category is just exploded. Exactly. All right, 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 let's go ahead and take another call. Hello, welcome to the advice line. You are on with me and Ali and Scott. Hello, who's this? Hi, everybody. I'm Christiana. How are you? Hello, Cristiana.

Welcome. Tell us where you're calling from and a little bit about your business. I'm calling from Los Angeles, California, and I'm the founder of Valor Bibidas. Valora is a tequila company that's committed to really creating a brighter future for the tequila industry through fair and sustainable practices, both for the people and the natural resources that bring this beautiful spirit to the world. Cool. How long have you, when did you start the business? We formed the corporation in May of 2022 and launched the product in July of 2023.

And you're making it in the United States or in Mexico? Tequila is just like champagne in order to be called. Tequila. It has to have a designated region and 95% of tequila comes out of the state of Halisco. And then there's a few other municipalities within the country of Mexico. But yes, we produce out of the town of Tequila in Halisco, which is where the name Tequila came from, is actually the town. Cool. Tell me a little bit about your background. Have you been in the spirits business for a long time? No, not at all. My background actually is in corporate responsibility and sustainability. I've worked.

I worked for the Walt Disney company for seven years, leading our environmental and science education portfolio across the enterprise. And then I went to an environmental nonprofit in D.C. And then in 2019, decided to start my own company called Do Goodyrie, where we consult with major corporations like Amazon and Disney to help them be better corporate citizens. And then one of my mentors said, you know, Christina, you spent your entire career helping companies try to do better. maybe it's time for you to start your own company so you can model what it looks like to create a responsible company from the very beginning. And how did you land on tequila, which, by the way, is the only spirit I'm drinking now because it doesn't spike blood sugar, at least for me.

Yes, I'm so excited to hear this. It really does. It's amazing. I just had some last night because all my friends were drinking whiskey and I can't drink it. Tell me how you decide to get into tequila. So I am the daughter of immigrant parents, and so I spent my time as a kid living between California, El Salvador and Mexico. And tequila was my very first drink in fourth grade.

My sisters... Wow, in fourth grade! Yes, and my sisters get so mad at me for telling the story because they're 12 and 13 years older than I am. It was just a little sip of a margarita. Tequila has had a really special place in my heart since I was little, appropriately little. But, you know, I grew up with a family, you know,

that sort of always took care of people and growing up in developing countries like El Salvador, you know, you got to understand the deep disparity in labor. And so tipping and taking care of people was always a really important ethos to our family. And I was in Mexico for a New Year's trip and learned a lot about tequila and the real inequitable practices in the industry. It's a multi-billion dollar industry. It's one of the most labor-intensive industries in the world.

But the money stays up here, the money stays in the UK, and it doesn't go back to the people. So I came back and it's also really exploitative in terms of not the people, but also extractive for the environment. So came home and I said, you know what? Tequila. That is what I'm going to do. And I don't know, one door just kept opening and opening and opening and opening. It was just kind of a natural thing.

Amazing. And tell us, well, which question is? Yeah. So Allie and Scott, I listened. I did a lot of research on you guys and I listened to how I built this episode. I was in tears like 19 times. So I'm like, they put people first. they were able to do this.

And, you know, because there have been so many times where I'm like, am I insane? Like, is this crazy to think that we can do this? And, you know, people are demanding more and more that companies be more responsible, but not quite yet at a higher price point. And so how do we get consumers to demand more of companies like ours and everybody? Because supply chains rarely begin here in the U.S., but we get to benefit from, you know, inequitable labor practices all around the world. Scott, Allie, you can answer the question or ask your own questions.

Please. First of all, congratulations. What you're doing is really exciting, cool, and it's so authentically. I just love that your mission and your purpose is just so fundamental to why you're doing what you're doing. So that's really great to hear. Is any other tequila brand in the world focused this way? No. Great.

Okay. That was my question. Yeah. And I would just say, first of all, congratulations. I love the story, and I just popped onto your website. I think it's important to note, dedicating 10% of sales is not trivial. I mean, that is a serious commitment.

Serious. I would suggest that you are taking the position of building a company in order to promote these, which is spectacular. Our journey with Maud was similar, different, but similar. And, you know, I think a lot of people try to wrap social impact and, you know, being a good corporate student and dedicate teeny little bits of resource and try to get the benefit. And it feels like you're doing exactly the opposite. Yeah. What's your price point? So our Blanco is 79-99 retail and our reposado is 99-99 retail, which, by the way, when we launched,

it was 119 for the Blanco and 135 for the reposado. But we just, we pigeonholed herself by doing that. So we took a big plunge and we're actually getting ready to do enough. other price drop. I'm sort of taking the Uber approach where, you know, we'll probably break even with this next price drop. But for us, like, velocity and just getting this product in front of people is really important because that's our biggest, that's our biggest roadblock is price. Allie and Scott, I'm curious. I mean, and I'm going to play a devil's ad ticket here for a moment because I think that the 10% is incredible. But I wonder whether, again, we talked about

this with Mod, you know, whether consumers ultimately care of. about that to the point where they're going to choose that product, right? Because, I mean, there are, I think about the coffee industry, and I know La Cologne and a lot of other coffee brands do a version of this where they really focus on sourcing and making sure that they're buying it from the farmers. I'm not convinced based on my conversations on the show and around the country that consumers care as much as we hope they will, right? And so I wonder whether that approach is really the way to sell the tequila. Yeah. So I would just offer that, first of all, Christiana, we totally applaud you because I do think, as you said, that consumers are starting to become more aware and are starting to appreciate good corporate citizens who are building businesses the right way. But I agree with Guy.

I think you are in the vanguard. You are a pioneer. And I don't think consumers yet are necessarily voting with their pocketbooks the way they do with their conscience, the way that they might talk about it. Now, that's not to say that you can't be one of the pioneers that prize it open and finds a way. And Guy, you gave a few examples. The one I would offer is Tom's shoes. And so Tom's that one-for-one model. And Allie could speak more articulately about this than I.

but I do believe consumers at the time when they went in to buy that type of shoe, they cared. They cared enough to buy that product. And I do think you have a similar opportunity. It all comes back, though, to the product. People have to love your product. And you're selling a premium product. So you're selling it to people who are maybe not quite as price conscious or as price

sensitive as others. And I do think if you can find a way to communicate with them, educate them, and get into their conscience that this is not a matter of you just having a token. You're giving 10% of sales. I think a key word is education because I had to, gosh, ideally you almost want to find some journalists or a publication. You need people to help do some sort of an expose and help educate us as consumers, our country around this industry and the practices that either are good or bad because as soon as there's more discussion or education around it, then, people will ask the question, well, who is doing it, right? What are my options? And if you can get people

asking those questions, you're going to be the only one standing there saying, I'm doing it. And so education, as much as you can help educate people, I think, would be huge. I might also suggest that you study Starbucks and what they did years and years ago when people started, nobody knew anything about people knew they like drinking Starbucks coffee, but nobody knew anything about ethical sourcing of coffee beans. Nobody was talking about that. And I think Starbucks did a phenomenal job years ago, starting to help us consumers racing in, getting our latte, and they started to seed bits of information and education in their locations that started to discuss this. And I think that can help get people made more aware of what really the issues are. That's,

you've got to get it to the point where people are asking or curious. And boy, you're the person to have the conversation with. It feels like there's an opportunity as well. If, you know, this is a type of product and it's an industry in particular where influencers and people who have, I'm forgetting the name of the brand that was started by the famous movie star that's gone out of my head. George Clooney. Yes. Oh, the Casamigos.

Casamigos. Yeah. But there is a great example of a product. that blew up because of that affiliation, I would be surprised if you couldn't find some very, very influential influencers who would buy into your mission and buy into maybe partner with you to say, we're going to get this story out. We're going to help you promote this brand in a way that's much more efficient than just buying marketing or what have you or media.

That's the type of thing that's going to just elevate the brand, elevate the story, and start to trickle down this message that, hey, this is a brand that's doing things differently. A lot of people love tequila. And I think if you can tap into that Venn diagram of people who are loving tequila and who love the fact that you're doing it differently. And obviously, ultimately, you need to love the product. Right. I'm going to just, I'm going to push back a little bit. I think that all of that advice is really sound.

But there's one thing that I still think is important, which is the product. From what I understand, looking at your website, Christiana, is that there's something somewhat unique about your tequila, right? It's mature agave and water, and that's it. Nothing else. It's really clean. Very clean. I would push that because, you know, the mission side is going to be critical and you're going to be pushing that and you're going to be explaining that. But the flip side is, you know, you want people like me who are on keto diets who want to have a drink or people who are going to CrossFit gym.

or people are going to orange theory who want to have a drink and, you know, nobody should drink in excess. But I'd love to just for you to double down on that clean mature agave plus water. Something that really evokes this idea that this isn't just another tequila. This is the one you should go for. And who are the most high-end bartenders these days that are, you know, introducing people to the best of the best? You want them to, I mean, if the product is so great and it's so clean and it's helping build community and solve real problems, I mean, that's a wicked combination. And if you have bartenders, you know, the ones that people are writing articles about or people are building concepts around, making sure that they are your ambassadors, I think, would also help. So much of it, I think, does come down to education. People just don't know until they know. And that's a big job. You can't do it on your own. I also think there's an opportunity. You probably are already doing a version of this to really push us with women. Yes. Being a women-owned brand is something to trump it as loudly as you can.

You know, I think about the avaline, the wine, you know, with Cameron Diaz's brand. I think people really respond to that and you can have your version of that. I think consumers are open to it and respond very well, but it's a matter of just getting out there for them. Yeah. Oh, gosh, you guys, thank you so much. This is all, you guys are amazing. You know, we are a very tiny brand. We don't, you know, we're actively going to actually raise real capital now because to do all of this, it takes so much money. And unfortunately, bartenders, a lot of them are paid to play now and influencers.

And I get it. They have to make their money, right? We just don't have, like, we're too busy. We say 10% of the bottle, like 900% of the bottles are going to the work that we're doing right now until we get this work off the ground, you know? So it really is like our advocates that have been wonderful and haven't charged us to promote us. And Walt Disney World actually brought us in.

We're the first female added a free brand for Disney ever to. Congratulations. That's huge. Thank you. Thank you. Yeah. It's been an exciting. It's been an exciting ride.

But I'm not joking. When I listened to your episode, I felt very hopeful, very hopeful. Very, very hopeful. Awesome. Christiane Martens, the brand is called Valor Tequila. Congrats. Keep us posted. We're going to be following you.

We'll be watching. Thank you guys. Thank you guys so much. Thanks so much. Bye. Take care. Bye. There seems to be a theme from almost all of the entrepreneurs that we got to talk with today.

They're all at the right time in the right place in terms of a product or offering something that is right now. So, I mean, whether it's, you know, chicken or, you know, just the vegan movement. Tequila, you know, the time is now. It's very exciting. And I think there's a lot of, we can be very hopeful for all of them. For sure. and have a great meal. It's true.

We could, for sure. I would go. Scott and Allie Spencer, co-founders of Mod Pizza, thank you so much for joining me on the advice line. It was great to have you guys back on the show. So fun to be with you again. Yeah, great to see you again and great to be a part of this.

And by the way, if you haven't heard Scott and Allie's original How I Built this episode, you have to go back and check it out. You can find a link to it in the podcast description. And here's one of my favorite moments from that interview. We had never worked in retail. Our qualification was the fact that we had been customers of the thing that we wanted to create. Yeah. It's interesting.

I think one of our strengths at the time was the fact that we didn't know what we didn't know. A friend joined our board early on, and the week before our first store opened, he said, listen, I decided to do this because I really like you too. And I wanted to make the process of failure less painful for you. because this is never going to work. 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 gairozz.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.wondry.com or call us at 1-800-433-1298 and leave a message there.

And we'll put all this in the podcast description as well. This episode was produced by Catherine Seifer with music composed by Rumtina Arablui. It was edited by John Isabella. Our audio engineer was Sina LaFredo. Our production staff also includes Alex Chung, Carla Estevez, Chris Messini, Devin Schwartz, Elaine Coates, J.C. Howard, Carrie Thompson, Neva Grant, and Sam Paulson. I'm Guy Raz, and you've been listening to How I Built This.