How I Built This with Guy Raz - Spindrift: Bill Creelman

Episode Date: January 13, 2020

Bill Creelman graduated from college in 1996 with a business plan — to sell smoked fish from Nantucket. But over time, that idea morphed unpredictably into a brand that sold cocktail seasonings and supplies. After selling that company to liquor giant Diageo, Bill wanted to stay in the beverage industry. As a way of kicking his Diet Coke habit, he started making sparkling water with a fresh squeeze of lemon or grapefruit. That deceptively simple idea grew into Spindrift, a beverage that came with huge production challenges. Today, the company has an annual revenue topping $100 million. PLUS in our post-script "How You Built That," Gaurav Chawla loved home-made chai but hated how long it took to make. So he quit his engineering job and started the five-year process to create Chime — an automatic chai brewer that uses tea and spices from India. 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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Airbnb.ca slash host. I knew where the risk was, or at least I thought I did, but ultimately there's just risk embedded in between the coolers and going up against the big soda guys and trying to do something really different in terms of the ingredients. All of that just was going to be challenging. So, yeah, it was terrifying. From NPR, it's how I built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how Bill Creelman started out with a business plan to sell mail order smoked fish, but instead ended up creating spin drift and selling $100 million of sparkling water a year. So back in 2019,

the World Health Organization revised its guidelines for sugar intake. Sugar, it turns out, is actually worse for us than we thought, and too much can be deadly. Now, I say this, by the way, as I finish this delicious sugar cookie my kids made last night. Anyway, the new guidelines now suggest adults should not consume more than 25 grams of added sugar a day. Now, think about this for a moment. A single 12-ounce can of Coca-Cola has 39 grams of added sugar. That is a day and a half of sugar in a can of Coke. And if you go to the movies and get a 32-ounce cup,

you will burn through nearly five days of your sugar allotment before you get to the credits. So what to do? Well, the obvious answer is drink less sugar, which clearly is advice lots of people are taking because last year, the sparkling water industry hit in, all-time high in sales, nearly $2.5 billion, according to Nielsen. And it's why the beverage aisle of your local supermarket is now jam-packed with LaCroy and Topo Chico and Bubly and Poland Springs

and Waterloo and several other brands. And it's also why big players like Coca-Cola, and Pepsi and Nestle are all pushing into the sector. One of the fastest-growing independent brands in sparkling water is called Spin Drift. And unlike virtually every other bubbly water brand out there, Spindrifts water is as basic as it gets, literally just a mixture of sparkling water and fresh squeezed juice, which may not sound all that innovative, but it's actually an incredibly challenging thing to make

because fresh squeezed juice does not stay fresh forever. And Spin Drift's founder, Bill Creelman, took years to figure out how to make it all work. And along the way, he struggled to find bottlers and distributors who would work with him. But the story of how he was inspired to create spin drift probably begins much, much earlier back in his childhood. Bill's parents chose to raise the family on a farm in western Massachusetts. His dad worked for the sporting goods company Spalding. His mom was at home with the family.

And pretty much all the food they ate was local and fresh. The thing I remember the most is just that all of the food seemed to come from our farm or the farms around us. So, you know, we had a sugar house up the street from us. We had, you know, milk that was delivered with a huge head of cream on the top, you know, unbasterized. We would make butter from that. I think the key learning for me was just we had a very clear idea of where our food was coming from because it seemed to always be delivered from our neighbors or just off of our own farm, you know, food that was local and available. And just to be clear, I mean, we're not talking about like the 1930s or 40s.

Like, I believe at the time of this recording, you were 45 years old. So this is like the 80s. This is not that long ago. It really wasn't. And that's what I mean. It was really a choice. And, you know, I'm not sure what the message was. We were supposed to dig away from it.

I would say my mom, she loved this idea of being out in the woods. being on a farm and surviving off of nature. And she was surrounded by friends that felt the same way. And we had almost no rules. Honestly, she had this philosophy that, you know, have fun, do your own thing, and be adventurous. I think she sort of thought of the farm as our playground, our self-expression. And I think the thing I remember is that the farm land just kind of continued in all directions. And so we had farmers to the left and right and around us.

And even to this day, this neighborhood in Western Mass is really still the same way. It's virtually unchanged today. Do you remember how quiet it was at night from like December to, let's say, the end of March? Because I'm imagining there was so much snow. It was absorbing all of the sound at night and it was just silent, maybe a little wind. I remember that really keenly. And I actually think of that often because now, you know, in the suburbs of Boston, you know, that level of silence, that type of silence, you know, is really hard to find. You know, we would keep by firewood for the most part.

We had a big wood stove. And when that fire would burn down to nothing, there was really no sound left in the house save, you know, your breathing or the shuffling of, you know, of a sibling. Was it an old house with like wood wooden floorboards? Yeah, it was an old red. I mean, just where you imagine, a red farmhouse, big red barn, creaking floorboards for sure. So I guess you knew if someone got up during the night. But other than that, it was completely silent. So I read that eventually your family moved off of that farm to the town of Deerfield,

which is also in, I guess, in Western Massachusetts. And you went to high school there. And then to college in Washington, D.C. at Georgetown. And when you got to college, like when you were 18 years old, did you have, like, any idea what you wanted to do with your life? Yeah. So now I was kind of out of the sort of grasps of Western Massachusetts. And I was really starting to, for the first time, think about what I wanted to do professionally. And, you know, I should mention that kind of in high school and then as I started college, I was starting to work on the fishing boats off of the Cape and I.

Islands. Off Cape Cod or like Nantucket or Martha's Vineyard, is that right? That's right. And, you know, it was just, it was just magical. You know, you're on the boat all day. You were fishing for whatever you could catch, striped bass and bluefish. And so when I got to Georgetown, I really, I was working in the summers and then going to school during the year. And I started to really sort of solidify, crystallize, you know, what I thought I wanted to do, which was kind of try to figure out, you know, a business that would be interesting to me. So as I was finishing up Georgetown, I took my Coast Guard test and then eventually got my captain's license right after graduation. And by the way, while you were at Georgetown, you met somebody who became,

I guess, presumably became a girlfriend today, your wife, right? Is it right? That's right. Yeah, very lucky to meet my wife Harley while we were at Georgetown. And we started dating when we were 19. And so we've been, yeah, together ever since. I'm not sure she quite knew what she was getting into way back then. But so while I was at Georgetown, I took an entrepreneurship class in my senior year, and she got to see me present my sort of first business plan. So I guess she had some sense of what she was getting into even in the 90s. And what was your business plan that you pitched to the class?

It was called Nantucket Smokehouse. So the idea was taking smoke bluefish and striped bass and other things and creating a smokehouse out on island that we would then offer the products from all over the U.S. Oh. Turned out to, luckily, not an idea we ended up pursuing, but, you know, the seed was planted for sure. All right. So you graduate from Georgetown in 1996, and what did you do? Where did you go work?

So the first thing I did was go back out to Nantucket and actually continue now with my captain's license in hand, continue working on the fishing boats. You know, it was probably my fifth year. And so I went out there with an idea of kind of finishing that summer and then ultimately going out to the Pacific Northwest to pursue the smoked food world or at least learn more about it. And so my wife Harley was living in her girlfriend at the time was living in Seattle. And we piled into her VW and drove up the coast and basically just started hitting smokehouses and asking them, you know, what the industry was like. Did they like it? Did they not like it? Would they recommend going into it?

And I'll never forget finishing a tour. And the guy who was leading me on the tour pulled me aside and said, let me do you a favor. Never get into this business. You know, it's fish, it's fire. You know, it is a shrinking industry. You know, it's nothing we would recommend. And was that enough to convince you? It was at least enough for me to second guess it.

And so I am incredibly grateful for that person's advice, for sure. And the business idea that ended up kind of coming out of it was a company called Nantucket Harvest. And Nantucket Harvest offered smoked food items that were already being produced, even though it ultimately long term was not terribly successful. it was much better than where we would have landed. Right. Okay.

So you decide I'm going to go back to Massachusetts. I'm going to start a business where I basically, what, like source food from Nantucket and create like a mail order business? That's right. So it was mid-90s. Nantucket had all these really interesting producers that, you know, I had gotten to know some of them over the years. What were they making? Or what do they produce? Yes, so they had, you know, it's 30 miles offshore,

so it kind of has some really interesting, unique products, really only available out there. There was already a smoked bluefish paté, really beach plum jelly, really interesting jellies, base gallops, you know, lobsters, ice cream. So our thesis was, well, if people love these in the summer, I bet they would love to buy them the other nine months of the year, and we wanted to provide them with a solution to do that.

So, Bill, first of all, who's we? You keep saying we. Who's the we? So in this case, my business partner was a childhood friend named Gil McLean. So we had grown up together. He actually lived in the farming community in Leverett. And so I recruited him to join me in this business. And this is like really pre-ecommerce, right?

Because like imagine today we just have to put in some search terms into Facebook or like, you know, AdWords and Google. and you could reach people like in an instant. Back then, you had to like mail these catalogs out and what, and you and your partner would just like sit around and wait for the phone to ring? Yeah, it's almost hard to believe, really. But that's exactly what we did. And we started, you know, with waiting for the phone to ring

and then gradually kind of into the 90s and early 2000s, we migrated to more of a kind of a call center model. But we really were pre-internet towards the very end. We were able to take orders online, but really the bulk of our business was all taken by phone. So you would set up like a storefront or like an office, bring in stuff from Nantucket. And you set up, where did you set up your office? So we set it up in an old mill town and kind of the port city to Nantucket called New Bedford. Sure.

It took a couple thousand square feet. We put in refrigeration, freezer unit, and we went to work in 1997. Where did you have the money to start the business? Well, we didn't is really the short answer. I just had some savings from the fishing industry, and, you know, our parents helped us out a little bit. But ultimately we didn't. And so we actually turned to the town of New Bedford and a few other kind of economic incentive areas in southeastern mass. And that too provided our seed capital for us to get the business off the ground.

What do you mean you, like, applied for grants from the town? We apply for grants from the New Bedford Economic Development Corp. They lent us $25,000 to start the business. All right. So explain to me what you were going to do. You were going to bring in base gallops and bluefish patte and ice creams and like on boats from Nantucket. And you were going to do what with those products? Yes.

So we were excited about really kind of storytelling around their product. And so we created a catalog, literally, you know, four and then eventually eight, 16-page catalog featuring their products. We would mail it out. And the end of the summer, as the tourists were leaving the island. And what we learned is that people really, you know, other than maybe a birthday or a special occasion, the big time for mail order food was really kind of going into Thanksgiving. And then, you know, for that all of December, it was just crazy. every day we'd pack hundreds and hundreds of these things and drive them up, you know,

just as the UPS store was closing and the loading dock was closing. And so, yeah, we were literally receiving orders in the morning, packing things by hand as much as many as we could get out. And then we would sort of count our shekels at the end of December and hope that, you know, we had sort of broken even. It sounds like you couldn't really make a six-week. you know, sales window into a sustainable business? We never could. It really never, you know, and that was really the decision for us was,

do we stay with this kind of on this crazy annual cycle or do we try to diversify? And it was really through that hard kind of thinking that we were fortunate enough for us to stumble on the wholesale side of the business, which is to say the side where you sell to stores on a regular basis. And I guess like when you started wholesaling products, like at that point you kind of, you met someone who really set your business off in a completely different directions. Is that right? Almost, yes. So one of the products that we were featuring in the catalog was called Nantucket Offshore Seasonings. And it was a dry rub for grilling. It was in a silver tin, a really colorful label on the outside. And it was started out on Ireland by husband and wife, had kind of a, a cult following, maybe a half a million dollar business.

And so we were really fulfilling his customer's orders in the beginning. And what ended up happening, which was really sort of unexpected for us, is that he was a real creative guy and was always thinking about different ways to provide seasonings. And he stumbled one day upon a cocktail seasoning, so a salt for margaritas. And we put it in a tin just like the other seasonings. And suddenly the consumer just sort of woke up. And at the time, cocktails were just beginning to become interesting. And, you know, it was the time of sex in the city and mojitos and this sort of thing.

And the idea of like a colored salt on the rim of the glass was actually pretty new at the time. And it was exciting to us. And the consumers seemed to think it was pretty fun. And so that's how we got into the business. All right. So you had this company called an anti-Qaeda. Harvest. That was an okay business, right? It was kind of, was it barely profitable at its height? Was it profitable? It was never profitable, you know. I would say break even would be generous.

Got it. Okay. So, but I guess like at a certain point you decide, hey, let's just focus on these cocktail seasonings and salts and whatever and forget about the like the other Nantucket Harvest products, like the smoked fish and the scallops, right? Yeah, that's exactly what happened. So, you know, throughout all of these years, it's really just about survival, you know, trying to find something that to keep us going, you know, year-round. And it's really through a whole bunch of trial and error that we landed on cocktails. And so we really ultimately got into the cocktail business as a result of the other businesses really not showing that kind of promise. So at what point did you say that this was going to be a completely new brand?

So what happened was two things. One was that our partner that I mentioned had decided he and his wife were sort of ready to move on. And my business partner and I, Gil, you know, kind of asked ourselves, like, is this something that we want to pursue on our own? And we actually purchased him out of the business. So that was a big step. And then kind of within that, we recognize that Nantucket-Offshore seasonings may not, necessarily fully represent our full idea and the opportunity. And we sort of got together and engaged a whole bunch of people, anyone that would listen to say, you know, we want to create a

platform and really just focus on cocktails. We want to be the premium cocktail business. And we ended up calling it Stirrings. We love the name. And ultimately, that was really the big idea that kind of catapulted us into, you know, kind of a national brand. And it wasn't just the salts and the sugars, which was really, that was what cut you a lot of attention, but it was, it was mixers and like sodas and stuff. And how were you coming up with recipes for this stuff? Were you just, did you work with other people? Did you have somebody make it for you? Did you make it yourselves? So this is where, I would say, we knew enough to be dangerous. You know, we knew what a good margarita tasted like, I think, and in bloody margarine.

You know, I remember standing in my kitchen with, you know, kind of tomatoes everywhere. And really, the value of the brand initially was just in helping kind of demystify a cocktail and making it accessible to a much bigger audience. We saw that there was an opportunity if you made the product interesting enough visually and, you know, the label was sort of elegant. Consumers would proudly display it in their, you know, spirit cabinet or fridge. wherever it was, and it really helped make the product much more accessible and drove a lot more interest in brand awareness.

I mean, was it pretty quick after you kind of created this line of products for strings that it started to make money? What happened is the sales really took off. So eventually a number of liquor distributors ended up bringing it on. But it was a really expensive, challenging product to make, you know, just for us. us to be shipping it around the country and doing it. So we were chasing break-even throughout the entire business. You know, the food business is really like that.

You know, you're always faced with the decision. Do we want to go after the next level of growth or be satisfied with where we are and try to manage it to more break-even? And I would say we were, we chose to really sort of chase growth and make the brand, you know, the cocktail mix in the U.S. But how are you funding the production of all these orders? Did you have to eventually raise money? You know, crazy enough, we really didn't.

We never took outside capital at Sturrings. We borrowed like crazy. I mean, we were leveraged personally. You know, I had, you know, millions of dollars of notes that I was responsible for. We just tried to be as creative as we could. And our supply partners worked with us on terms and that sort of thing. So it was really sort of moving deck chairs around trying to figure out where to, you know, who to pay and what day. Do you remember how many employees you had?

Our high point was around 60 employees or so. So because from the outside, people must have thought, oh, my God, you're just swimming in cash here. Like, you guys are so, you're crushing it. But meantime, all of the revenue was going to just make more product. Yeah, I think that was really challenging because you're, you're, exactly right. You have, you know, we had a big team at this point. We were showing up at everyone's sort of corner store, liquor store, and yet we were from a kind of a business economics, fundamentals perspective. We were just making payroll. You know, I can remember. Wow.

Being in the north end of Boston, you know, hearing that we needed to move, find money to cover a payroll that was three hours, you know, later in the day and having to find the cash somewhere. So that absolutely was a huge lesson for us, just how the optics of a brand and the expense associated with growing isn't necessarily sustainable out of just cash flow alone, even when you're on fire the way we were. All right. So you've got this product that's just, you know, all the rage. And people are doing their sex in the city home parties and using your cocktail mixers and brand. Meantime, neither you and your partner are probably even able to pay ourselves that much. And I guess around, like, 2006, you get an offer from Diageo, one of the biggest liquor companies in the world to buy you out.

That's right. Yeah, they had this huge portfolio, and they were seeing the cocktail craze. And we were lucky enough to get an article on the Wall Street Journal right around the holidays, you know, talking about, how Sturrings was helping to demystify cocktails. And the next week, we got an inbound from their business development lead who said he was interested in meeting with us and talking about partnering up to ultimately pair their spirits with our cocktail mixes. So, yeah, it was... They owned like Smyranov, Baileys, Guinness, I mean, some of the biggest beers and liquors in the world. That's right. you know, there was a lot of synergies between what we did and what they did.

And, you know, they had this huge network and 30,000 people and distributors and marketers. And we had a cocktail line that kind of went perfectly with everything they did. And so the prospect of working with this sort of global powerhouse and selling not just in the U.S. but potentially, you know, around the world, I mean, all of that was intoxicating. And the plumbing was that we ultimately ended up selling them, you know, a percentage of the business with the idea that we would then exit the business to them entirely pending kind of growth and trajectory of the business. All right. So basically, you came to terms and you agreed, I guess, to stay on for a couple more years before you left in 2000. You would leave in 2009. Is that right? Yeah. So actually, what was interesting to me back then was the idea of actually taking the business.

abroad to other markets. And so I actually moved now my wife and our two very young children over to London and lived and worked with their international team out of London for two years. That was intended to be the term of the partnership. What ended up happening is in 2008, the business and the partnership really kind of hadn't fulfilled the potential that we had all imagined. And there were a variety of factors for that. One was the economy changing. The other was sort of the fit between their big business and our tiny business. And so we ended up agreeing to exit the business to them earlier just because it made sense for both of us. So you walk away from Diageo and Sturings. Reportedly, they bought it for $25 million. Obviously, you didn't get all that money and you got to

pay taxes and all that stuff. But you did pretty. well you come out of that pretty well and what at this point i mean you're like 34 did you know that you were going to go to the next onto the next thing or did you think you know let me just kind of and just take some time to just breathe and i don't know what what was going on in your head when you left i was exhausted honestly you know at that point we had pulled forward this uh agreement with diageo you know which was sort of hard fought and not quite the result we we we had expected, it really was quite a difficult deal to finalize. And, you know, I felt like I had been going for a long time at that point and needed a break. I mean, I'm just curious, did you walk out

of that deal? Because, like, people listening might think, wow, you know, he sold it to Diageo. He walked away with a few million bucks. Like, triumph, you know, he's pumping his fist. He's feeling great. Is that how you were feeling? Were you feeling great, triumphant? This was awesome. I'm so happy that it turned out this way. No, it was really hard. Actually, on the team side, it was really hard, despite some financial rewards. It was, you know, it was really hard to sort disband it and then ultimately walk away from it. So I would say that disappointment for me was a motivator, though. You know, I was still in my early 30s, mid-30s, and I felt like there was a way to do it a whole lot better than what we had just experienced.

Coming up in just a moment, how stepping away from one business gave Bill the space to come up with a whole new idea. And then how he spent a lot of that money he just made trying to make that new idea work. Stay with us. I'm Guy Raz, and you're listening to How I Built This from NPR. Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2009. Bill Creelman is in his mid-30s and he's just sold his cocktail supply business to Diageo. And he decides to move his family back to Boston from the UK. And for the next several months, Bill is kind of in a holding pattern. I was sort of, I would say, in receiving position, waiting for an idea or a thought or an inspiration.

And I still loved being around food. I mean, it was, you know, I just get a charge out of walking down Main Street, you know, looking at what's happening in the world, observing people and what they're eating and drinking. And I was really sort of paying attention to the trends, you know, more than maybe just an average person would. And so at the time, I was a big Diet Coke guy. So, you know, the absurdity of starting a really interesting meal and going out and shopping for fun ingredients, which is what my wife and I love to do. And then in the same afternoon, you know, drinking three Diet Coke. I mean, it just, it was at a certain point, it became confusing, really, because the kids didn't understand why, you know, the two messages around eating healthy

and then why they couldn't have soda. You know, I was having a hard time reconciling it. And so my idea started to coalesce around soda and how there might be an opportunity to do something different. All right. So you are trying to figure out. something. I have to assume that you signed some kind of agreement with Diageo that you could not do anything in the cocktail space, right? I mean, that's usually how these things go. That's right. Yep.

But you could do something in the beverage space. That wasn't – and you knew a little bit about beverages, given that you were selling cocktail mixers. Yeah, that's exactly right. And, you know, I was still around my team, you know, so Stirrings was still kind of going as a business now within Diageo. And I think it was hard to ignore. back then the kind of soda challenge. And so you'll recall, this is when sodas were getting pulled out of public buildings and taxes were starting to get levied. And so...

This is like 2000, around 2010, right? Yep, 2009, 2009. Yeah, like I think New York was trying to, was considering banning like the 32-ounce drink, for example. That's exactly right. It was super exciting for me to start to think, like, what is going to happen with this decline in soda? our soda is going to go away? Is carbonation going to go away? And what's the root cause of all this?

Is it the sugar? Is it diet? And so that puzzle, that idea was just hard for me to ignore. All right. So meantime, you are a parent, right? And you've got kids. And like most parents, I know, and probably you know, you prefer that they not drink soda because it's going to rot their teeth

and it's really bad for them. They won't eat their dinner. But just full disclosure, I do let my kids have soda on vacation. So in your mind, you have this idea of maybe there's something in soda, and then how does it, what's the first step you take towards trying to make something? Well, so going back to my childhood, I mean, I was really interested in ingredients. You know, I started to look at taking real ingredients to, you know, something you would start a meal with, a lemon, an orange, grapefruit.

and what if this could become the base for, you know, sparkling beverage? And so I was in my house with a soda stream. I was cutting up fruit and squeezing it and seeing how it responded and settled and carbonated water and tasting it with my wife and our kids. And, I mean, the idea is not complicated. Everyone has lemons and, you know, has access to sparkling water. But the flavor that this created was just, as anyone that's ordered a sparkling water, you know, with a wedge of lemon at lunch or whatever. I mean, it really is quite unusual.

It has a lot more dimension of flavor. It's got a little bit of sweetness, a little tart, earthiness to it. It's very different than what was out there. And so I began to research whether this was a unique idea or not or something that had been done before. and that was really the genesis of spin drift. So that, I mean, that is literally like the conversation you started to have in your head with yourself. Like, wait, this is great. Why isn't this a product available for sale?

Exactly right. And it actually didn't take all that long to figure out why. And the reason is because it's incredibly challenging. I mean, that flavor that you get from squeezing something fresh and putting sparkling water over the top of it is much, much harder to translate than I think I imagine and, you know, others may. I mean, so what I did literally was, you know, go online. Luckily, there was the internet at this point, go online and really dig in.

And that then sparked, you know, this whole other work stream to really then decide why. You know, was it because these ingredients weren't available 12 months a year? Was it because the product couldn't be. made and then sold commercially for some regulation reason, was there not the consumer demand? And those are the questions that I set out to solve. So what did you do? I mean, you're living in Charlestown in Boston. And did you say, all right, I'm going to get an office and I'm going to start pursuing this? Yeah. So I set up shop in our basement and I went about solving all of those problems. So I found really at the time the only fresh juice supplier out on the West Coast and flew out there and saw how they were squeezing

juice and then found at the time a bottler that was willing to handle all of this fresh juice. They had the facility, cold storage, and I started a fresh supply chain. So the only way we could make the product then was to refrigerate it. So I would run a batch in Worcester, Massachusetts. I would ship it to a cold warehouse where it would remain chilled in Taunton, Massachusetts, and then I would load samples in the back of my Prius and drive up and down the East Coast, you know, Boston, Portland, Portsmouth, Nantucket, Cape Islands, and I would sell it.

I would get people excited about the brand, follow up with them a week later, and ship them product direct. So initially the drink was going to be fresh-squeezed fruits into soda water, sparkling water in a bottle, and it had to stay refrigerated because that's how it would be preserved? That's right. Yeah, there was no other way to maintain that incredible fresh flavor that we were talking about at the time without keeping it cold. I mean, it just was too volatile a product. Maybe I'll just add to that that it was also more of a soda profile at the time. So it had a little bit of sugar in it, natural flavors and color, you know, just sort of whatever. There were things

added early on as we were just trying to dial in the flavor and in order to make it sellable. This is the point, right? And we've had these conversations with entrepreneurs where you go to somebody and you say, I've got this great idea. Now, you had a track record, so people are going to take you a little bit more seriously because you're in your mid-30s and you've already sold a business. But you're going to go to people and you're going to say, hey, soda. with a squeeze of lemon or orange. And someone's going to say, well, if it's such a great idea, Bill, why doesn't it exist already, right? That's exactly right.

I mean, usually people would say that must exist, or they thought they were already getting that and whatever they were buying today or at that time. And so I actually didn't mind that people were questioning the ingredients and wondering why it hadn't been done or was it really being done. really doing what we were saying? That was enough motivation for me to double down and say, okay, now I think we can really make a business out of this as long as we're clear about communicating what is so special about this product. Was that hard to find somebody who's going to bottle this? And even before you were making it, you know, in mass quantities, you just needed to make

small amounts to, right, to see if there would be interest. It was terrifying. I mean, you know, because you had minimum production, quantities. We made, I think, 500 cases of each flavor. We had four flavors, so 2,000 cases. And you had to make 500 cases just for the initial run? Just to turn the equipment on. Yeah. And you had to fund this yourself. Presumably, you're funding this with the proceeds from the sale of stirrings. That's right. So, you know, we had to produce a minimum quantity, and then we had to go out and shuffle it toward a door. And the challenging part really, so the product was very expensive. It was

$3 a bottle. So it really forced us to think hard about where, who would be interested in something like this. And obviously with the decline of soda, there was a little bit of interest in alternatives. And that's, that's really how we positioned it. But you'd have to sell a lot of bottles, $2.99 to break even, to be sustainable. I mean, were you thinking like, okay, hopefully Target will sell it and put it in the refrigerated case? And I mean, were you going to some of your customers that had bought Stirrings brand? We didn't. I think we recognized pretty early on that the great thing about soda and sparkling water,

unlike cocktail mix, is that everyone sold it. So the challenge was actually more to figure out who could we really get to champion this product. Where we ultimately found our people, if you will, is in the fast casual space. The people that were making delicious sandwiches or salads. or that now we're looking for a product that had a similar ingredient profile to what they were offering in their other food. Got it. All right. Okay, so you've got this product, and it's in some stores.

And we should be clear. You had, at this point, two lines of beverages. You had the sparkling water with fresh fruit. But you also had like a soda with sugar, right? Exactly. Yep. And then what? I guess at a certain point you say, hey, maybe we need to go to, like, lunch places, like,

food places where people are just ordering lunch to try and get our product in front of them? We needed a place to tell our story, really. So we went where people were excited about our brand, and it happened to be these small, independent, for the most part, sandwich shops and salad shops. And this was the time of Sweet Green and Kava and Panera was changing their menu to be more health conscious, and we solved a problem for them because often they were, a lot of them were trying to tell health and wellness story with a big soda machine. And so we could come in. Oftentimes, we actually even brought our own equipment, refrigerated equipment, and we would actually work with them. I mean, we'd sit down and say, okay, you're launching a cranberry salad or

sandwich this fall. We have it a cranberry raspberry. It's delicious. You know, let's story tell together. And that made for a pretty good partnership. And this was being made in Massachusetts, like just outside of Boston. You had like a facility that would make your drink for you and bottle it and then put a label on it? Yeah, so what I would do is I would bring a truck in, and the truck would take the batch, whatever we made, you know, 500 cases of each. And we would bring it to a cold storage facility in Taunton, Massachusetts, it's called a miracle. And they would, you know, they had all kinds of other fresh items. You know, they were staging vegetables for the...

next day or cranberries or whatever, you know, they were huge, a gigantic warehouse. And so we would tuck our little pallets into their huge warehouse. And then whenever I needed a sample, I would just drive down there. I would put on a gigantic freezer refrigerator coat, go out and pull product. And then I would take it out into the market. That food service focus with me and now my small team was really all we did for the first four or five years in our business. And how did you come up with a name Spindrift?

So Spindrift is the whitewash of a wave. When it's windy outside, a wave will kind of crest and the wind will shear the top of the wave off, creating this mist. And that windblown mist is called Spindrift. And one of my captains when I was working out on the island introduced me to this name when I was probably 14 or 15. And for whatever reason, I don't know why. It really sort of resonated with me. I just thought it was really interesting word and spin and drift were interesting words too. So I tucked it away.

And so when I was thinking about what I wanted to call this now refreshing, sparkling beverage, you know, it suddenly made sense to kind of recycle it again. Now, here's the thing, right? You were funding this business with the proceeds from the sale to Diageo. But, I mean, what was your limit? Like, at what point were you going to be like, I cannot use any more of my money because I'm going to blow it all on this thing. Like, was there for a point where you were a little nervous that you were just going to spend all the cash that you had on this thing that might fail?

Yeah, sure. I was terrified. You know, I'd come out of this now. It was still very early and sort of the rebound out of the recession. So, yeah, these were real fears. And beverage is expensive. You know, I knew that even more so than my prior business, that this is. was going to be a capital intensive business. I mean, it was clear right away that between the

coolers and going up against the big soda guys and trying to do something really different in terms of the ingredients, all of that just was going to be challenging. So, you know, we, from a family perspective, you know, we invested as much as we could. And then we knew we were going to have to kind of make some lifestyle changes and also think about bringing an outside capital. Because just with your own money, your runway probably wasn't going to be that long, right? Yeah, exactly. So what we ended up doing is basically putting mortgages on our house. But again, now you're talking about buying inventory and starting to hire a team.

Wait, this is nuts. You had sold a business. You made a good amount of cash. And now you're taking a mortgage on your house to fund your next business. Like, you'd already done the crazy. risky stuff in your 20s. You're doing this again in your 30s? I mean, yeah, I guess the benefit of having gone through it before was that I knew where the risk was, or at least I thought I did. So ultimately, there's just risk embedded in startups and in food and beverage, and particularly

in single-served beverage space. So I would say we took calculated risks. Like, I would, I would bet on launching a market or a particular customer and make sure that that was up and running and successful, and then I would reinvest it again in launching the next customer. And then around, what, 2014 or 2015, you guys eventually had kind of a breakthrough because you finally figured out a way to store the spin drift on a, like on a shelf with no refrigeration, right? Exactly. Yep, that's right.

So how did you figure out how to do that? At a certain point, we were on our own. I mean, there was really no, we had no one in the industry that could help guide us in this area. I don't think I would have gotten into this business had I known how complicated it was. And again, the unpredictability of the ingredients you're starting with. I mean, the magic of every time you cut into a grapefruit, you're not totally sure what that grapefruit's going to taste like. Is it sweet? Is it tart? Is it sour? we have those same challenges with our product.

The fundamentals are that when you squeeze a lemon or an orange or grapefruit, it is alive. I mean, you know, you put it in your fridge, you know, it will last a few days, and then it no longer tastes like orange juice or lemon juice. So our challenge is how do you preserve that incredible flavor? And the answer was to move very fast, to refrigerate like crazy, and then do it in a predictable way. So it also just required a lot of investment. You know, that was not a small decision to make, especially for, you know, a small business with a small team that, you know, still with a very unsure future. I mean, I imagine you had to like find food scientists who could

figure this out. I mean, were there people who said to you built, this is just, you can't do this, it's not possible, or it's not really possible to do this at scale? We've only, frankly heard that. I mean, when we have our initial call with one of our bottling facilities, you know, they say, oh, geez, you know, I hope this isn't spin drift, is it? Because we've heard about you guys. I mean, you know, it's, and the reason is the unpredictability, you know, when we show up with a tanker of fresh-squeeze lemon juice, you know, it is, it is a problem for these plants because they have to run it right away. It's got pulp, you know, which no one particularly wants to deal with. Wait, why don't they want to deal with pulp?

So pulp, pulp is really fussy. I mean, pulp obviously is sticky, it's bits, it can get into these lines and then get sort of clogged or, you know, and so... Ah, okay. So there wasn't a single carbonated beverage plan in the U.S. that had ever handled a product like this. The closest was something like orangina, you know, in Europe. And they, you know, had figured out how to deal with pulp. But really, none of these guys wanted to be in the business of dealing with, you know, fresh juice and then carbonation. It really took us hand-holding them.

And, you know, the brewing industry has some of this, you know, particularly temperature sensitivity. But it took them really just focusing on it and deciding it was important and that we were willing to kind of stay with it until we got to a successful outcome. And when does that happen? When do you, like at what point do you figure it out? Do you get the grapefruits and the lemons in the soda water? And then you could just put them on a shelf and he didn't have to. refrigerate it. The first, we made one batch of raspberry lime. It was the first time we moved the product over from a bottle into a can. And it was really just on the back of that,

you know, remaining stable that we decided we were now comfortable enough to roll that out. So it was 2014, 15. We finally broke through. I guess around, what, 2016, you got into Trader Joe's. Was that like a total game changer for you in terms of visibility? It was a seminal moment for the business. At the time, we really didn't have any customers for the sparkling water. The soda was doing well in those food service accounts,

but the sparkling water, the unswedened version was really not anywhere. And they, yeah, they just were incredibly brave and took on the product and initially just took it in the East. And we were lucky enough to then get expanded. And they really have just been a real believer. It really changed our business.

We're honestly because without that belief, I'm not sure that we would have had the conviction to continue to expand further into retail. I mean, you had been in a position with your previous business, Sturings, where you just saw this like hockey stick sales growth, right? Like all of a sudden, it's just selling like crazy, but you're still not able to keep up. You're sometimes worried that you're going to make payroll. Were you in the same kind of situation in 2016? So by then we had really made a decision once the product was stable and there was clearly an audience for the retail version, we really said to ourselves, like, are we going to make a run at this? And we took the step to bring in some outside capital. We brought on an incredible team and really said, we're going to go sort of heads down. And really, I would say really that was the inflection point. We now are going to try to compete with the big guys, you know, and it ideally defined.

or find our own space, you know, in this big and in crowded category. All right. You've got this product. You figured out the technology. You're in Trader Joe's. And 2017, you make a decision that is kind of crazy. You decide to stop selling the – because you've got two product lines. You've got the sparkling water and juice.

And you've got the sodas, which actually is more or less the same thing, but with sugar. You decide, even though that's profitable, from what I understand, that you just, you decide we're not going to make that anymore. We're just going to make the sparkling water with the squeeze of fruits. Yeah, that was a really important moment for us. And what we were experiencing, even just in our day-to-day lives, was just the concern around sugar. And so we had a low, very low sugar soda. But even that among our team was confusing. You know, people say, well, I don't drink soda and say, well, wait, this actually isn't a soda. And so, It was sort of the perfect storm. So we made the hard decision to shut down. It was about a $5 million

business, super profitable, and just focus our resources on the sparkling water. And I mean, if it was a profitable business, you did this for the sole reason that you thought, let's just focus on this thing we do. Let's just make this a company about, you know, sparkling water with a squeeze of fruit. Yeah, I think it was the recognition that in, you know, 2016 or 2017, there's been a lot of innovation coming into beverage. And the risk was for us that if we didn't really stand for one single thing, that we were going to go down the path of so many other businesses where you sort of try to do everything pretty well and nothing really, really great. Both businesses were resource intensive. You know, you have two inventories, two supply chains,

you know, kind of two of everything. And so we said, look, if we're going to really be as successful as we think we can be, we just can't do everything twice. So I would say, though, it was purely on the belief that this was a big idea. And in order to get there, we had to do what we call simplified amplify, you know, basically really get behind the business we had. So I guess at the same time, you decide to drop the sugared soda, you also decide to to stop using natural flavors in your drinks.

And when I see natural flavors, I'm assuming it's like essential oils, like essence of cherry or lemon, just like a couple of drops in the drink. And then you've got the drink. Is that what natural flavors are? So we were at the time, we had natural flavors in our drinks. And we started to get people writing in asking what natural flavors were. Natural flavors is the word that the government asked you. used to kind of describe the whole world of these essences that you just described. So we actually reached out to our flavor houses and asked them, can you just give us a little

bit more information? We're being asked by our consumers. Is it really just the lemon oils that are being squeezed? You know, they would say, let me get back to you. I just need to confirm that myself. Or they would say we don't disclose that. And no one would tell us what they were. And so that's where, you know, we had to go rogue and really sort of start to investigate further on our own.

I mean, I distinctly recall a conversation with a food scientist who was working for a flavor house at the time. And he said, let me go into a closet because I'm afraid if I have this conversation out in the open that I'm going to get in trouble. And so here I was, you know, decade plus in the business. And I was putting an ingredient in that I couldn't totally be sure what it was. And it really for us was a problem. Okay, but before that point, right, you were still making drinks with natural flavors because everybody was, because that sounds fine, right? But then you started to say, well, if I don't know what's in it and my suppliers won't tell me what's in it, maybe this is a problem? Like, that's what started to go through your head?

Yeah. I mean, we went through. We reversed engineered the ingredients. We got in scientists when we spent a lot of money to really understand even. And even what we were buying, I mean, I'm a little embarrassed to say because we just didn't know. There really is no standard for a natural flavor. There may very well be all of the things you described, but there's no assurance of that. And I don't think anyone felt they were doing anything bad with natural flavors. It was more for us a decision that we made as a business, that we wanted to stand for

what was in the product. And so we made the hard decision to get out of natural flavors entirely. That's really the, you know, kind of our position in the market. Your growth from 2015 to just to 2017, it was like 800%. I think in 2017, you did like $33 million in revenue. And this year you're projected to more than $100 million. I mean, what explains it Is it just more visibility? More people are just being exposed to it? Yeah, I think so the growth has been attributable to, I think, just this incredible team that, you know,

brought people into real ingredients. And obviously, we've been very fortunate with the turn of drinks to more of a less sweet profile. And I think, lastly, people really starting to care about ingredients and transparency and what they put in their body. And so I think we've been lucky to benefit from kind of all of those things happening simultaneously. You need all of them in different amounts. Bill, you started this company in 2010.

You grew up with, you know, your mom was at home. Your dad had to work hard to support the family, traveled a lot. I have to imagine it's been kind of similar. for you for the last nine or ten years trying to get this off the ground. I mean, have there been personal sacrifices you've had to make to get this business up and running and to make it successful? I think, you know, anyone that gets into startup space and I guess specifically food and beverage, I think sort of knows they're going to be sacrificing a big part of sort of their life outside of work. I mean, it's just you have to be 100% in or, you know,

It's probably not the right vocation for you. What I've tried to do is really focus on the business and my family, and I don't know any other way to do it. I've tried in the past, but I think particularly in a dynamic space like this, you really have to be 100% committed, or it's probably not going to end up successful. What keeps you up at night? I mean, you're doing 100 million revenue.

It's super successful. Like, do you still get nervous and anxious? Or are you, like, chilled out and able to kind of relax a little bit? No, we still have, we feel like we really are just getting started. You know, if you look at the landscape of sparkling beverages, and there are some incredible brands out there. And we are, we're really kind of the new guy. So that's incredibly motivating for us.

There's always risk. businesses, and so I'm keenly aware of that. I never, for a minute, take any of this for granted. The challenge is how do you maintain everything you love about the business, what got you into it as the business grows? I think the businesses that really get sort of lost are the ones that lose their identity. And so we're trying to do everything we can to ensure that doesn't happen. How big do you want this company to be? I mean, what is being a billion-dollar company important to you? Not, not captured that way. I mean, I think what I'm learning now with kids and kind of the world changing the way it is, for me, I think it's important that we are big enough

to survive, you know, kind of through twists and turns. I just have incredible respect for brands that have survived, you know, decades, centuries, and are part of the fabric of culture. I mean, that's really interesting and exciting to me. So how do you measure that? I'm not sure. But I think we're marching forward and not really thinking about or being distracted by the other stuff today. Bill, when you think about your journey and you've had two successful businesses, which not, you know, one would be amazing, but very few people can say they've had two. How much do you attribute that to your intelligence and work ethic and how much do you think that's just because you got like?

I think it's a combination. So, you know, I've thought a lot about that question and we talk about it even just internally a lot. We are all incredible workers. And our commitment level of the company is insane and has had to be for a long time. And what that allowed us to do is see opportunities when they surfaced. You know, when when the world was moving out of sweetened beverages and sugar, we were positioned well to be able to be able to be able to. see that and take advantage of those changes. So is that good luck? Is that, you know, why did we reposition that way? It's not clear to me, but I think we needed a good dose of both of those to get to where we are today. That's Bill Creelman, the founder and CEO of Spindrift. By the way, back around 2015, Bill almost had to give up the name Spindrift. There was a legal problem with the trademarks that had to be resolved and Bill was just days away from changing the name. And if Spin Drift hadn't worked out, the companies more than 100 employees would today be working for a beverage manufacturer called Presscraft. Hey, thanks for sticking around because it's

time now for how you built that. And this week's story starts with Garav Chavla, who grew up in Western India, where like almost everywhere else in the country, people drink a ton of chai. People have four or five times per day. Like, you know, people get bored, they make chai. They want to relax. They get chai. They want to sleep. And for the non-cha drinkers out there,

chai is a deliciously soulful blend of black tea and cinnamon, cardamom, and ginger, often spiked with some hot milk. So chai is like, you know, ever present in all aspects of life. But actually, Garev only started drinking chai when he moved to California after college. His roommate used to make it every morning. And in those cold Berkeley mornings, you know, with the fog rolling in, I wanted to try something warm. And that's how I started, you know, getting into chai and I started loving it. Loving it, but kind of hating it too because chai is so time-consuming to make.

Measuring the tea and the spices, heating the milk, and then hovering obsessively over the stove. You're making the chai and you just look away at the wrong time. If somebody calls you at the wrong time and the chai boils over, you know, The milk goes everywhere. It sticks to the stove. So the stove is a mess to clean. Now, you could just go to Starbucks and get a venty chai, right? But as Garav will tell you,

chai made from a concentrate is just not the same. And because Garav is an engineer, he started to think about designing his way out of the problem. And then I started thinking, oh, wait, on the coffee side, there are so many machines and brewers. Why are there no chai machines in the market? Garav started doing a little research. And I found out that they were product designers and then there are tea companies.

And the tea companies have never been product designers. And product designers are coffee machine makers. They don't care about the tea market. So that intersection hasn't happened. Well, it hadn't happened until Garav got there. He quit his day job working as an engineer at Salesforce. And he set out to make a brewing machine for chai, a little like a curieg or an espresso. When I started working on this, the first thing I was.

I did was I took a rice cooker and modified it, and I programmed it myself. And after that first basic prototype actually worked, he kept tinkering. Like, I would tell everyone I met that, hey, I'm working on making a chai machine. And initially, they would not understand whether I'm saying chai machine or time machine. And once they figured out, oh, I was talking about chai, like, their faces would light up. They would be like, oh, my God, I'll be your first customer. And even at that very early stage, Garov was able to get a few angel investors interested in this project. And he raised enough money to hire more engineers and to find a factory in China to develop the chai machine.

And I know I just said all that in a few seconds, but this whole process, it took five years. It is tough, and it's not something that you can just, like, you know, in the software world, you could just make something on a weekend. People can use it and give you feedback, you change it. It's very fast. Here, every single change takes weeks, so it was really tough. And while all of that was going on, Garov was also working with a partner, to source the black tea and the spices from India and to get it all packed fresh into these little capsules. And we have five different kinds of capsules.

So one is just plain black afam tea. Other ones are with cardamom, with ginger, with ginger. All right, so basically the way this all works is you choose your flavor, you fill the back of the machine with water, you put milk in the front, then you press the button, the machine bruise the tea and heats the milk, and about three minutes later, you've got a cup of chai. And you can smell the spices. Garav calls his company Chime, and late last year, he raised $100,000 on Indiegogo.

And for us, the goal is to have this kind of machine available everywhere. So wherever you go at home, at work, in cafe, in hotels, like, you know, there should be an easy way to get your chai. But that's still a ways off. Right now, Garav and his team are focused on filling hundreds of orders from Indiegogo. But of course, he already has a chime sitting. in his own kitchen, and he says he'd never go back to the old way of making it. Absolutely

not. Like, I would never go back. Like, I have better things to do than watch milk and water boil, right? If you want to find out more about Chime or hear previous episodes, head to our podcast page how I built this.npr.org. And, of course, if you want to tell us

your story, go to build. comptr.org. And thanks so much for listening to the show this week. You can subscribe at Apple Podcasts, or wherever you get your podcasts. And while you're there, please do give us a review. You can also write to us at HibT at npr.org. And if you want to send a tweet,

it's at How I Built This or at Guy Raz. Our show is produced this week by Casey Herman with music composed by Rumtin Arablui. Thanks also to Candice Lim, Julia Carney, Neva Grant, and Jeff Rogers. Our intern is Sequoia Carrillo. I'm Guy Raz, and you've been listening to How I Built This.