How I Built This with Guy Raz - Vita Coco: Michael Kirban

Episode Date: August 3, 2020

So—no joke: two guys really do walk into a bar. While sharing a few drinks on a winter night in New York City, best friends Michael Kirban and Ira Liran met two young women from Brazil. That chance encounter eventually led to a business idea: to sell Brazilian coconut water in the US, as an alternative to Gatorade. In 2004, Michael and Ira launched Vita Coco, only to discover that another startup—Zico—was selling a nearly identical product. The two companies went to war, using the time-honored tools of corporate sabotage, but eventually Vita Coco emerged as the top selling coconut-water in the U.S. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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

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

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

It had tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. Your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.ca. Hey, really quick before we start the show, how I built this is now a book, and it's coming out in a few weeks. It's full of insights, advice, wisdom, and guidance all told through the stories of some of the most amazing

entrepreneurs on earth. And if you pre-order the book right now before September 30th, I will send you a signed bookplate to put inside the book for free. To order the book and to get your free bookplate, visit guyroz.com. Just a quick heads up before we start the show, there are a couple of swear words in this episode, so you may want to keep that in mind if you're listening with kids. Okay, now on to the show. I would go in on my rollerblades because I could hit, I don't know, 50 stores in a day on my rollerblades, whereas if I was, you know, walking, it'd be a lot less. Yeah.

One of the early stores I went into, I found the store manager. First, he's laughing at me because I'm on rollerblades, and I'm a sales guy without a polo shirt and a briefcase. And he takes a sip, and he said, this is never going to work. It's tastes like sock water. 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 Michael Curbin shipped thousands of cases of coconut water to New York, fought off a brand that looked just like his, and built Vitico, the top-selling coconut water in the country. You remember that kid in high school who was weirdly interested in business, who had almost no interest in going to college or starting a traditional career, but was determined to start something on their own? You might have snickered about them or even rolled your eyes or maybe that kid was you.

Well, that kid was also Michael Curban. Michael had the benefit of watching his dad pursue a bunch of different business ideas, including ideas that failed. But the specter of failure never worried him. He knew from a very early age that it's part of the game, that you've got to take big swings, which means you will also strike out a lot. And the biggest swing Michael would take would be for Vitacoco. You've probably seen their familiar tetra-packed boxes of coconut water in pretty much every convenience store.

In the early 2000s, when Michael was trying to launch the brand in New York City, he was pretty confident that coconut water would take off. At the time, most people who bought coconut water were immigrants from places like Vietnam, India, the Caribbean, and Latin America. But Michael had a hunch that coconut water could compete with sports drinks like Gatorade. Now, at the exact same moment, someone else had the same exact hunch. It would become a product known as Zico. And so what happened and what you will hear is a story of, about a war, the coconut water wars of the early 2000s, a war with sabotage, subterfuge, dirty tricks,

and eventually a pretty decent outcome for both parties. Today, Bidicoco is the biggest brand of coconut water in the U.S. It has about 40% market share, but it would take a lot of time and a lot of obstacles to get there. Michael grew up in Connecticut, and when he was nine, his parents split up. It was amicable, but while Michael's sister chose to live with their mom, Michael decided to stay with their dad. My mom got custody. I think my dad gave my mom custody, and my dad was actually packing his things and preparing to leave the house. And I packed my Snoopy suitcase, put it with all my dad's stuff. And I remember my mom coming home and saying, what's this?

and I said, I'm moving it with dad. And she said, okay. And that was it. Wow. That's amazing. My mom ended up, a few years later, I ended up moving into New York City. So I'd spend weekends in the city,

you know, and I'd still see her quite a bit. But I was super close with my dad. What did your parents do when you were a kid? As a kid, my dad was an entrepreneur. My dad always had businesses before him. My grandfather always had different businesses. My great-grandfather, same thing. So I come from a long line.

entrepreneurs. I don't think there's a single male in my family who's graduated from college on both sides. And my dad, when I was young, had a roller skating rink, which was awesome. And those were, you know, the successful days. And then he had other businesses that weren't so successful. And we went through periods of doing well and then other periods of not doing so well. And were those like, that's where birthday party, I had roller skating birthday party in fourth grade. I remember it. Birthday parties and church groups and. and youth group events and stuff like that happened there? Everybody I went to school with as a kid

had their birthday party at the roller skating ring. So it was good. So I got to go to all the parties, whether I was invited or not. And then as roller skating kind of went out and wasn't the cool thing anymore, he turned the place into a rap concert hall. So I grew up at 12, 13 years old,

you know, hanging out with Beastie Boys, L.L. Cool J. As a kid, it was really cool experience. So he really pivoted because, I mean, thinking that. What happened to roller skating? It was great. It was like one day it was there and then it was gone. Yeah, it was a real fad.

I mean, it's just, you know, people stopped going. And he pivoted very quickly. And, you know, that worked for a little bit of time. And then just didn't work anymore. So in terms of school, how was it for you? Was it hard? Was it easy? Were you a good student?

Not a good student? School was really tough. I had several learning disabilities from attention deficit of disorder to form of dyslexia. And as I got into high school, they diagnosed me. And by diagnosing me, they put me in what we used to refer to as romper room, which was half the day in normal classes and half the day in basically special ed. It was a room with me and other kids, who, many of which had had more complicated issues than I had. You know, I knew I was very late in reading. And, you know, math was really hard for me. And I had a clear goal. And that goal was,

to get sees and, you know, or get as close to passing as possible. Yeah. And that was always the objective. And I always knew that I would be successful in whatever I did. But why? How did you know that? I don't know. I just felt because even then, right, even though I was in these classrooms, I was still successful in things that I wanted to do. You know, I was not the best athlete, but I worked hard and, you know, I was able to play ball. And I wasn't the best, you know, I definitely wasn't a good student, but I was able to get by. And I just, you know, I just had this confidence from an early age. Were you, were you, did you go to a big high school?

No, I went to actually a really small high school in this small town. And actually, so my junior year in high school, my dad started spending a lot of time in Florida because he was starting to build a business there, doing kind of vacation rental property management stuff for tourists coming to Orlando and then corporate housing. and things like that. And I was alone quite a bit my junior year, and I would have big parties. I would charge admission. I turned it into a business every weekend. I was making significant money. You would have parties at your dad's house? Yeah. With his permission, I'm assuming. Yeah, he knew. And I was super responsible, collecting keys. And sure, nobody went anywhere if they were drinking. Nobody was driving, you know, really, really responsible. But they were big parties. And I was

charging admission and it was a nice successful venture at the time. So you were, and like, do you remember where you were charging like five bucks or ten bucks to come in? Yeah, that's right. It was five bucks and ten bucks for freshmen. Nice. You and your dad eventually, I guess, moved to Orlando, and then you went to college to the University of Alabama, which, I don't know, being like a northern kid at a southern school, like, was that, yeah, like, how did you enjoy it? I had a good time. I enjoyed it, but towards the end of the second semester, I realized, I was actually sitting in an economics class, and I was listening to a professor, and I remember not understanding what he was speaking about. And I remember thinking, I'm not learning anything from him. I'm spending money to

go here. I could very easily not be here and use that money or make money, right? And so there was this moment. I remember exactly where I was sitting when I said, I'm done. Like, school's not my thing. and about a week later I was back in Orlando and that was it. And did your dad ever say, hey, Mike, you know, I think you ought to get a degree, a college degree, or not at all?

Never even. Wow. What do you want to do? Do you want to do that? Do you think you need a college degree? Do you want a college degree? And it was more of a question to me. And that was kind of the way I was raised with everything, right?

Like even in high school, like, what do you want to be when you get older? Do you want to be an academic? Then if you do, you need to start really studying. If you don't, you need to get through. Like it was just a especially back then. It was different. It sounds like your relationship with your dad was almost like you guys were roommates like friends. Yep. To this day. And we're business partners too, right now. So for the past 25 years. So yeah, no, it's definitely more of a friendship and a partnership and yeah, absolutely. So you come back to Florida, into Orlando and you like go back to your dad's house and live with them there? Yep. And what was your plan? I didn't have one. And it was around that time that my grandfather, on my mother's side, who I was also very close with, passed away up in Connecticut. And so I went to Connecticut and spent some time with my grandmother, helping my grandmother who had Alzheimer's. I was helping with all sorts of family matters and stuff at 19 years old. And then I went back and forth to Orlando, which is I was actually in the process of starting a business at the time with my dad and my friend, this computer software company. that we were developing to help run my dad's business.

This is a property. Your dad was doing a property management business. Yes. And who was your friend? He was a friend of a friend, actually. I met him in Orlando. He was a computer programmer and brought him in to help write this system for my dad's business.

And what was the, what did it do? So it does everything from marketing of the apartments, from booking and scheduling to housekeeping management, move in, moving. about billing. I mean, it's, it's, so it's a pretty large system. So this is like sales force, but specifically for property. And so you started this kind of business with your dad and, and your friend, or you really actually formally started a business. Yeah, so originally it was just, let's build this for my dad's business. And then we started, you know, showing it to some of my dad's friendly competitors. And we had our first sale and then we created a business. And I was

going back and forth to Orlando at the time. But there wasn't much of a business. there. It was mostly development work that was being done. And I should mention that during some of this period, like you weren't even in the U.S., right? Like you decided to spend some time in Italy? Yeah. It's during that time period that I was in Italy. And I can remember back then being on pay phones on the street in Italy, having conversations about should we invest and go to this trade show to show the software. Is it ready? Is it, you know? And, you know, that's before there were cell phones or anything else.

So why, sorry, so you decide that you want to go to Italy for you. First of all, why did you want to go to Italy? What was it? What was it? Because I didn't know what I wanted to do. Right. I didn't even know if one day, you know, if I would come back and go to work doing that business.

At one point, I almost opened a bagel shop in Florence. You know, I had no real plan whatsoever. Yeah. And just wanted to take some time and experience. and, you know, took courses at the university in European politics, which I just found very interesting. I traveled by myself. I think it was during that time that I really found myself. And I know everybody says this, but, you know, it really was so impactful.

It was a very impactful time in my life. So, all right. So you're in Italy and at some point you decide, you know, I'm going to go back to Orlando and just kind of focus on that business? No, I actually went from Italy to New York, moved in with my sister in New York City, and then eventually found my own place. And I was doing a few things. I was doing some promoting. I actually invested in and helped open an event space in Manhattan. How did you have money, by the way? Did you inherit some money from your grandfather when he died? So my grandfather left me like $40,000. And that money was what I was to use for college.

So that's part of the reason I decided not to go to college anymore because I felt I want to make this money last me a little bit longer. So you had that money to kind of keep you going. That's right. But I'm wondering when you got to New York, because this is you're 21, so this must have been the late 90s. I mean, you wouldn't be able to get a job, a lot of jobs without a college degree at that point, right? Yeah, yet I never would have like wanted a job. I never even thought that I would ever have a job. It just never crossed my mind.

You thought I'm going to start something. Yeah, but I was never really overly focused on looking for that thing either, right? I was just kind of doing. And the software business was starting to, you know, we got a couple clients. There was no money to be, you know, made yet. Everything was going back into the business. And then when the software was a little bit more stable and ready to actually sell, that's when I decided that, and I remember exactly where I was, and I had bought an apartment. I took the remaining money that I had. I had like $20,000. and I used it as a down payment on a one-bedroom apartment in Greenwich Village. And I remember being in that apartment and talking on the phone with my dad and having this conversation about, you know, let's start seeing if we could sell this thing. And that's when I went to work and took a small salary and we started building that business together. And then there was the break was a trade show, right? There was a trade show that was formed specifically for the corporate housing industry.

And it was at that trade show where we started getting. real leads. So you're doing that business and did it start to grow pretty quickly? It was a slow burn. I mean, we, you know, it was a grind for many years. It wasn't until 2005, 2006 that we had a couple of big breaks. We brought in Marriott at the time as a customer and another large multinational who was in this space and started to actually make money. before that it was really like paycheck to paycheck you know trying to pay the bills type of thing so all right so you were doing that's the early 2000s you're living in new york and and you got you're lucky you bought an apartment in the 90s and in grunge village because back then you could put $20,000 down and get an apartment today you couldn't get a parking space for $20,000 not even close and it sounds like you were doing fine you know you had this sort of steady income and you were traveling and you were selling this this software and that was it Yeah, I would say for anybody my age at the time, when most of my friends were graduating from college or starting their first year of work, I had a business that was up and running

that was, you know, it wasn't printing money, but it was successful. And I was really balancing work and life, which I've always done. I've always taken very seriously. What did that mean? You were doing what? So when I wasn't on the road and I wasn't traveling and I wasn't on, one specific phone call because I was working from home. I was down at the local cafe down the street where I used to go every day having a very long lunch and talking to all my friends that were also there.

And then I would probably, you know, sit in Washington Square if it was nice and sunny and read a book and start talking to people and meeting people and creating friendships and conversations. How would you do that? I'm curious. How would you just, you just strike up conversations with people? Yeah, I guess. Or people would strike up conversations with me. New York City. And I was always on my rollerblades and I was always outside. You know, it's actually funny. I think of myself almost as somewhat shy. Yet my life has been the opposite. And I think it's, it's strange. So you're, so you're living in New York and hanging out with friends. And I guess around 2003, you and a friend, is this Ira, Ira La Ron? Yep. He goes by Ira.

Okay. He's Israeli. You guys are hanging. And he was a friend of yours from high school. So, ERA was from New York, or from Israel originally, but grew up in New York City, and then went to study abroad in Florence. And I had just come back from Florence, and a bartender, who I become friendly with in Florence, became friendly with ERA. And ERA was going back to New York to visit his family, you know, for something. And the bartender gave ERA coffee, wine, a few other things to bring and said, find my friend. He's in New York. Bring this to him as a gift. Oh, wow. And Ero looked me up. I remember exactly where we met up. We met up at that same cafe that I was talking about. It was on Thompson Street in Houston. And we hung out and we just hit it off.

We became friends and we hung out all the time. And what did you have in common? I think we're both very similar in that we're very social. We like to have a good time. We're, you know, very driven in a way. And we were always looking for business opportunities. You know, I remember he wanted to start a power washing company. And I helped him, I bought a power washer and loaned it to him and, you know, created a little business there. I helped him with something else he was working on. And so we were kind of always doing some sort of business in a weird way, even though we didn't have a real formal business at the time. And so we were just, we just hung out quite a bit. All right. So the two of you guys are hanging out. And this is important

because from what I understand, there's a pretty significant event that happens. You didn't know it at the time. You guys are, I guess, at a bar and you meet two women from Brazil. What's the story? Yeah. So we were at this party and we were there for a long time. It was like a February or something. It was cold. It was late at night. And, I remember ERA saw these two girls leaving and convinced them to come back into the bar, take their coats off, and have a drink. They were from Brazil, and we sat at the bar, we chatted, and we talked for quite a while. Wait, so these two young women from Brazil are just, you know, chatting.

But there's no, because obviously this is going to eventually lead to coconut water, but there's no conversations about coconut water at this point, right? So coconut water actually did come up at the bar. In a weird way, we were talking about food. We were talking about Sao Paulo. We were talking about restaurants. And somehow it came up, coconut water, Aguji Coco. We actually remembered afterward having a conversation about it.

But it wasn't like, you know, at that moment at the bar, you know, anything specific besides one of those things that are great about Brazil. Yeah. Like you could go to the beach and you could not Sao Paulo, but in Rio. and there'd be people like with coconuts and they'd crack one open and get some coconut water. Yep. And that's just something that they may have mentioned about what they miss about Brazil. Well, it is a cultural thing in Brazil, more than just a beverage. And in a lot of the tropical world, it's a cultural thing.

It's coconut water has all sorts of health properties. And in every country in the world, every tropical country in the world, your grandmother tells you a different reason why you should be drinking coconut water. And it's an incredibly popular beverage that has a cultural connection beyond just being a juice or a beverage. So what happened after you met those women at the bar that night? So one of them era, he ended up seeing a couple days later. And then we started hanging out together for the next week or two while she was in a short period, time that she was in in New York.

Yeah. And he ended up falling in love with her. And when she went back to Brazil shortly thereafter, he went back with her. Wow. And he plans to go to Brazil for, like, a long period of time, or he doesn't know, or he just goes down and follows her. At the time, he wanted to just, you know, go down, check it out. He wanted to be with her.

And so he went. He found his own place. And he didn't really have much going on down there. I went down to visit several months later, and he's like, I'm going to stay. And when you got there, what did you do? We hung out a couple days in Sao Paulo, hung out with her and her friends and her family. But while I was there, I mean, you know, he was talking about staying and he was talking about, you know, different business opportunities. I remember he was looking at leather from the northeast, making women's shoes, which was, you know, becoming a business for export in Brazil at the time.

And he was talking about coconut water. And in Brazil at the time, coconut water was, I think, within maybe a year or so prior to my visit, they'd started selling coconut water in a tetrapac and shelf stable. So it was in grocery stores now. It wasn't only on the beach. And it was becoming incredibly popular in people's refrigerators all over the country, not just on the beach in Rio. And he showed it to me.

He took me to a couple grocery stores. We talked about it. He was in the early stages of developing what was, somewhat of a business plan. Let me just go back for a second. When you get, when you are hanging out with you or there, does he say to you, hey, Mike, people drink coconut water here. It's on, you can get it in grocery stores.

Check this out. I think we should. I think there's an opportunity in the U.S. Was he already saying that when you got there? Yeah. And it wasn't a we thing. It was him, you know, like, I'm looking at different opportunities. This is one of them.

This is one of them. This is one of them. I was more intrigued by the. coconut water thing than any of the others. Why? It sounded much more fun and interesting. I had no interest in being in the shoe export, import business. And, you know, we started digging a little bit deeper while we were there, but then he said he's going to further develop the idea and so on and so forth. And then he came back to New York, I don't know, short period after, with a more developed idea of creating a brand and selling it in the U.S. He didn't have the brand name or any of those

things yet, but it was what he was really focused on. And I remember we were back in that same bar on Thompson and Houston and I said, okay, if you do this, I'll do it with you. I'll invest some money, I'll invest some time, and let's do it together. And I remember we wrote down what each of our responsibilities were going to be. He was going to kind of find the supply and do all these type of things and I was going to figure out distribution and find customers to buy it. So he was going to deal with a Brazilian side. You did not have to go like move to Brazil. No. That's right. And this is 2003, I guess. Yes. And we were off. By the way, when you tried coconut water, were you blown away by it? Or were you like,

oh my God, this is amazing? Or did you have a less excited reaction? So I had tried it over the years, right? I'd been to the tropics a big. I had tried coconut water. But the first time I tried it in a package without my feet in the sand and the whole bit, I wasn't, you know, I wasn't blown away. But when I started to see that it was outselling, you know, Gatorade in every sport drink in the grocery store in Brazil, I thought maybe there's a business here.

And again, it wasn't about creating a big business. We never set out to create a big consumer goods business. It was, you know, let's see if we can make a little bit of money, you know, never expected it to go further than, you know, New York City. All right. So you go back to New York, then Iira comes back and he says, hey, I'm serious about this coconut water thing. And you say, I'm in. I want to be involved. How much money did you put in? Do you remember? I think it was actually, I put in, I think if I'm not mistaken, $75,000 and then later put in, you know, I think the initial investment was $75 grand. And by the way, did you guys like formally put down a partnership and set up an LLC and do all that stuff? Or was it less formal?

No, we pretty immediately formed a partnership. We created an LLC, put a little bit of money in the bank. I remember when we opened up the bank account. So you were going to stay in New York. He was going to go down to back to Sao Paulo. And by the way, he went to Brazil originally to date this woman that he met in New York. Were they still together at that time? Yes.

Yeah. Yeah, they were still together, and I think they were engaged at the time. Wow, so that was pretty quick. Yeah. He got engaged pretty quick. So he marries this woman in Brazil, and he's going to purchase coconut water and send it to you in New York, and you're going to figure out how to sell it. But let me try to break this down. First of all, you were going to sell it the same way they were selling in Brazil in like a cardboard tetrapec in New York?

Yeah, which didn't really exactly. exist in any beverage, right? Besides milk. There were cans, there were bottles. Yeah, and yeah, for a single serve beverage, there was no tetrapax. There was nothing like that, yeah. No. So you were going to, uh, this, so that was the first thing because you were inspired by the tetrapex. The second thing is, what was the name? How are you going to, how'd you come up with a name for it? We had all sorts of ideas. I could remember phone calls back and forth. And one day, I remember I was sitting at my dining room table, phone rings. I pick it up. I'm like, what's up. He's like, Vita Koko. I'm like, that sounds like a Ricky Martin song. And he's like,

nope, that's it. And I'm like, you know what? It sounds good. And that was it. So you're going to call it Vita Koko. You were going to basically import it to the U.S. in the Tetra Pax. I'm assuming you would go to one of these companies that was already making a Brazilian version of it and you would just have them kind of white label it. They would basically make it for you under your name, Vita Koko. That's exactly right. How did you do that? How did he, find that company willing to do that. So if I recall, he originally went through Tetrapak. Where were they based?

Or at the time, where are they based? So they're a Swedish company, Swedish family. They've been packing, you know, milk, think Parmalot, things like that. Right, right. And juices all over the tropical world for a very long time. So he got in touch with the company and said, hey, I'm looking to sell, to get coconut water on Tetrapacks. to the U.S., who makes it, and they recommended a company in Brazil?

Yep, they recommended a company who was just getting started, and that turned out to be a disaster. They were getting up and running. They didn't know what they were doing. Coconut Water is a very complicated raw material to work with, and they didn't survive as a company, and then we quickly shifted to the company in Brazil who was making the most common brand in Brazil.

but we had started with this other one. And the other one was also in Brazil. Yes. Do you remember what your first order was for? Like how much coconut water were you going to buy? So I think we had in the bank, $70,000, $75,000 in the bank. Right. And we spent pretty much all of it on the first production.

So it was two containers of product, if I'm not mistaken. Shipping containers. Yeah, shipping containers. Like the back of a truck, like a big rig, 18-wheeler. Yeah, it's like those huge metal. metal shipping containers that you'll see in a port. So two of those, that's $75,000 worth of coconut water. It was going to go on a ship in Brazil and go up the Atlantic Ocean to, I guess, New Jersey,

and you would get it there. That's right. That was the plan. Was any part of you nervous about spending $75,000 on two shipping containers of coconut water? Yeah, but I had already, you know, like started talking to some retailers, and people seemed interested. I didn't think too much about it. And I met a guy on the street right near my house.

I was going to get my morning cappuccino. I see this guy pulling naked juice out of the back of a truck. You know, I knew nothing about distribution or how beverages get to stores. And I went up to him and I said, are you a distributor or do you work for naked juice or what's the deal? Yeah. And he's like, you know, kid, I don't have time.

I'm super busy. And I said, sorry, I've got this coconut water project I'm working on. And then, no, kid, not interested. So I went in the store, got my cappuccino, got my croissant, and the guy taps me on the shoulder and says, sorry if I was a little rude. I like coconuts. Tell me what you're doing. I told him.

He told me he was a distributor for naked juice and other orange juice products at the time. So he wanted to learn more about it. We met a couple times, and then he became my first distributor. But this is even before the coconut water arrived in the U.S. Yeah, it hadn't arrived. I didn't even have a sample. I had nothing. All right. So this is now 2004, I believe. You've got the name of a business and you've got $75,000 worth of coconut water on its way to New York. By the way, what kind of market research did you have, you know, that gave you confidence that people in the U.S. would want it? I mean, coconut water, as far as I understand, in 2004 was like Goya sold coconut water. You could find it in sort of the ethnic aisles of supermarkets. But it was not in.

convenience stores mainly. Yeah, and to be honest, I did such little market research. I didn't even know anything about Goya at the time either. It was just the stuff tastes pretty good. It's really good for you. It's working really well in Brazil. You know, vitamin water was taking off at the time. There wasn't much else on the shelf that was, you know, healthy and functional and clean and better for you. And just thought, sounds like a good idea. And that was really the market research. And did you write off the bat see this as a sports beverage, like a competitor to Gatorade, or did you just see this as a nice tasting natural beverage?

No, right off the bat, we saw it as a competitor to Gatorade. Right. Because that's how it was drank in Brazil, and that's how it's drank across the tropical world. Like a thirst quencher. It's a thirst quencher. It's loaded with potassium, and so it's all about this kind of natural sport drink. Right.

And by the way, did you, I mean, New York has such an incredibly diverse population. So there's huge parts of New York, people from Puerto Rico and the Dominican Republic and, you know, other Caribbean countries knew what coconut water was. It's not, right? I mean, that was the beauty of what we were doing that we didn't really get into this business understanding that. But pretty quickly, we realized that we would have a real business where we could sell some volume without a ton of brand building and marketing right off the bat.

Got it. All right. So, Ira is still in Brazil, and he's procuring this coconut water. and it's a white label, so now you've got two shipping containers. I don't even know how many tetra packs that is. Like what? Something like closing in on 20,000. 20,000.

Cases. 20,000 cases. Wow. And so we were so excited for the product to land. And one day, I remember picking up the phone. It was the brokerage company. And the girl on the other end, she said, I need your registration number.

It's a very specific type of number for low acid food products, which is what coconut water and a tetrapac is. And I said, I have no idea what you're talking about. And she said, well, then you can't import it. And she was in charge of importing it, right? So I would have expected she would have known what needed to be done. Yeah. She expected I had done my research and I knew what needed to be done and it didn't happen. And so she basically told me that we can't import the product until we have this number.

I said, great, let's get the number. This is like a number, like a, like, what kind of register? From who, who, what agency reg gives you that number? The FDA. The FDA. Oh, because this is a food product, yeah. So I was, I was like, okay, let's get the number. What do we need to do?

Sure. And she said, great, I need some information on, on the facility and so on. But it's going to take like three months to get the number. Like three months. What the hell am I going to do for three months? Wait, three months. This is just to get the number. the registration number so you could then sell the product. And you did not know you needed to do

this. You just thought, yeah, you import it and then you sell it. Yeah, it should be that easy, right? Yeah. But it wasn't. I said, what do I do? I mean, the product is going to lose shelf life. I don't have the money. I need the money from the sales to, you know, to pay for things. And she said, well, you can't sell it. You could either put it in an FDA warehouse. And I said, okay, what's that cost? She said, it's probably about $30,000 a month. I said, that's clearly not going work. Wow. And she said, the other options are you destroy it or you export it. I said, export it. She said, yeah, it just can't come into the country. And so I said, okay, I hung up the phone. I was freaked out. I didn't know what to do. And then I remembered I had been at this trade show in

Chicago where Ira and I went maybe a month or so earlier and met a bunch of people from all over the world and, you know, people at trade shows that are always interested, but, you know, there's sometimes not so much follow up. And I grabbed this card of this really. And I grabbed this really nice guy that I met in the Bahamas, who owned an alcohol distributor, and I called him up, and I made a deal. I told him I'd send him the product, and he wouldn't have to pay me unless he sold it, right? Because he wasn't just going to buy two containers worth of product on the new brand. Right. So he said, if you want to come down and help me sell it, I'll pay you if we sell it. And that's exactly what I did. I went down to the Bahamas, spent, I don't know, probably 10 days,

at least, maybe two weeks. I went door to door with him and his sales guys and we hit bars and restaurants and nightclubs and I was hitting grocery stores and hotels and just selling coconut water in the Bahamas out of a Tetra pack. And that's a lot of coconut water for the Bahamas. I imagine that's got to be, you know, what, two boxes per person or something? It's a lot of coconut water. It's a lot. But luckily, there was no education needed, right? People knew what coconut water was. Right. And people like to drink their gin with coconut water, and now they could do it without cracking open a coconut. And how long did it take you to sell all that?

I was there, I think, just short of two weeks, but his guys kept on selling it for, you know, I would say another month or two thereafter. And I believe they sold just over half of the product we sent. And then together we paid to destroy the rest of it because it was at some point going bad. Yeah. And he paid me for the product that he sold,

which was enough to cover the money. majority of our costs for the initial product. And that was it. So, all right, so that's a first go-around. Meantime, I'm assuming you've applied for the FDA registration. Yep. A couple months later, we got it. So then now take two, try again. Once again, do you order the same amount of coconut water? I think we did a little less the second time. Right. All right. So this is, I think, around August of 2004. That's right. And I remember the product was arriving like a week later, and I went to a GNC store. and I was talking with the manager and I showed him what we were doing and he's like, that is incredible.

It looks amazing. But it's so similar to this guy that was in here yesterday who's selling the same thing. It's arriving next week. And I said, what do you mean? Is it coconut water? He said, yeah. It's called Zico. And he showed it to me.

He had a sample there. And he's like, it's almost the same thing. It's also blue. You know, it's same packaging. Wow. And I remembered my heart sinking. Wow. being like, this is not happening.

Why don't we come back in just a moment? Now, the competition between Vitico and Zico got ugly and why Michael started out as the underdog and made that work to his advantage. 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 from NPR. I'm Guy Raz.

So it's 2004, and Michael has just launched Vitico in New York. city, only to discover that a very similar brand, almost a dead ringer called Zico, has launched in the same place at exactly the same time. That was the problem. In the early days, we didn't know if there was space for both of us, right? Right, right. And so there were plenty of accounts that they would get first, and we couldn't get in.

And I should mention here, your competitor in all this, the guy who's running Zico, is this guy named Mark Rampola, who he's like a peace core guy and tries coconut water and he's inspired to sell it in the U.S. And you'd never, you had no idea that this thing was launching and they probably had no idea you were launching. Yeah. Because this is like still pre-social media. Yeah, no.

Yeah, exactly. So we knew nothing about each other. We just, you know, started running into each other in the street. I remember one of the biggest distributors in New York, I went and pitched him and Mark was in there, you know, the same week. and he ended up choosing Mark. Wow. I said, but why?

He said, because there's as much more sophisticated looking. Because they had that sleek blue bottle. Yes. Yeah. And also being brought in from Brazil? Yep. Zico, okay. So it was a very similar product and similar price point?

Same. Same price point. Yep. But yeah, no, I mean, running into Zico everywhere, everywhere we would go. Whether it was a yoga studio or a grocery store, whatever it was, people were like, oh, I love your product. It tastes great, but I just brought in the other one. Oh, wow.

And did you know, like, this is 2004, 2005, did you, when you started to find out about Zico, did you find out that they were better capitalized than you? They had more money? Yeah, I knew they had a bunch of partners and they had real capital and they had, they just, they also, I think I found online somehow their business plan was published or their initial market research was published. I remember thinking, holy crap, these guys actually did like. market research and they actually had a business plan. Wow. Like, they're for real. All right. So they get

a distribution deal with one of these big distribution companies. And by the way, we should mention this is super important because you just going from bodega to bodega, you're not going to be able to scale. You've got to sign with the distributor. It's sort of like, it's not really the right term here, but it's kind of like a mafia system, sort of. The distributor, you got to kind of go to the distributors, they bless it. They bless it if you don't work with them. Good luck, getting shelf space. That's right. Meantime, you're kind of grinding away trying to get your stuff on shelves. When you would go into stores that were not familiar with coconut water and you tried to convince them to carry it, was that easy? I mean, did anybody say, I don't, I don't like the

taste of this? Yeah, all the time. I would go in on my rollerblades because I could, I could hit, I don't know, 50 stores in a day on my rollerblades, whereas if I was walking, it'd be a lot less. And I would go in and show it to, you know, the store manager, whatever it was. And half the time I'd get kicked out. Sometimes they would find it interesting. They would say send me some, but find out later they weren't going to actually take it. And then other times people were just like, no way this is ever going to work. I remember one of the early stores I went into, I rollerbladed in there and found the store manager.

And first he's laughing at me because I'm on roll. or blades and I'm a sales guy, you know, without a polo shirt and a briefcase. And he takes a sip and he said, this is never going to work. It's taste like sock water is what he said. And and I said, I promise you. I said, give me a chance. I said, take two cases, put it in the store, and if it doesn't work, I'll buy it back from you. And he did. And pretty quickly it started working really well in his store and he was one of the early, real early success stories. But how did people discover it? I mean, if it's just on the shelves,

just randomly people saw Viticole, this looks interesting. I was every single evening. I was in stores handing out samples. Talking about all the health benefits and everything else and getting people to try it. And again, remember, I had this instant consumer in people from the Caribbean,

people from Southeast Asia, people from Latin America. And, you know, in some cases, they would taste it and they would buy a case. They weren't buying a case of anything else first time they're trying it in a store, right? So I had some early success. And then after I would do my demoing, my sampling,

I'd go home and do the bookkeeping. And that was kind of what the day looked like. And meanwhile, you and Zico are totally at each other's throats. Like you guys would sabotage each other. It was like Uber and Lyft, you know. Like there were stories about Viticoco guys taking the price tags off Zico products and stores and Zico calling up.

stores and saying, well, we'll sell you 50 cases and give you 25 cases for free, and they would inundate stores with Zico in order to prevent Vitico from being on the shelves. Is all that true? That is true, and it goes even deeper. Okay, tell me more. What else? I mean, they would literally just to piss us off. They would set up their sampling truck outside of our office every other day and sample people. So everybody around our office would be walking around with Zico. I mean, it just, it was a constant battle. And did you, were you obsessed with this guy, Mark? Obsessed.

Obsessed. And did you ever meet him at this point? Had you met him? We came across each other here and there at a trade show. We just look at it like, you know, remember in Seinfeld? They'd be like, hello Newman. It was that. It was exactly that.

It was like, hello Michael. Yep. Hi, Mark. And that was it. That's it. We became brutal. enemies for years. Because he was, he was, he was kind of crushing you guys. Yeah, yeah, in the early days. Yeah. And was that because he was running a better business than you were running? Because it was

the same product. I think getting distribution early was the key difference for the first couple of years. He had a huge leg up. How did you finally land? Because I read that in 2006, you actually did land a deal with a distributor, a smaller one. Yeah. And that was kind of a turning point for you at that time because then you started to get there was a distributor who would focus on getting you into more and more stores. The beauty about them is they were a bunch of guys that had left the distributor where Zico was sold. Right. So not only were they a much smaller distributor, but they also had it out for that distributor and for Zico. So together we had this drive to win. It was a war. Yeah. And we were not going to lose.

And what kind of things did you do to Zico? A lot of that, you know, I mean, literally like buying their product out of stores, putting it in trash cans, taking their point of sale material down, hiding it in back rooms. Wow. This is ugly. And, you know, you think about it. I mean, they weren't huge businesses. They had two very passionate founders. It was only in New York mainly.

It was really in New York. And it was we both built these small sales organizations that were also incredibly passionate and treated the brand like it was their own. and any move on it was a personal attack. So aside from you handing out free samples at little shops in New York, what other marketing were you able to do on the cheap? It was that. It was ERA came up with this idea he saw in Brazil with like this blow-up costume and he had a Vitico-Tetrapac made and we put Iira's brother in it

and he would go around New York City as a Vitico Tetrapac. We made these bicycles that were amazing, where we took these, like a normal bicycle, and attached a little small trailer behind it. And we would ride around New York City, and we had these billboards on the back of our bikes that said, you know, try Viticoke or drink Viticoke, what's great, or take a two-minute vacation or these different things. And that was our advertising. So it was like a moving billboard.

And I guess at a certain point, you hired a guy to really kind of agree. help you sell. I only know him by the name of Goldie. Who's Goldie? What did he do? Goldie is the best. Goldie is Michael Goldstein. Goldie was at vitamin water. And then when vitamin water sold to Coke, I brought him over. And he came over because his wife is Brazilian and he loved coconut water. He thought it was a great idea. I never thought I would be able to recruit somebody from a company like vitamin water and he came over and he is just this incredibly aggressive, charismatic, competitive, incredible guy that just does not stop. And so my competitive drive and wanting to win was accelerated to a whole new level. Okay. All right. So you, so you, so you're still trying to

compete with Zico, which is still better funded. And I guess in 2007, you take in some outside capital because at this point, up until that point, was it just you and Ira who owned the company for the first three years? Yeah. You had no outside investor. So you brought in $2 million to an outside investment firm that got what I read 20% of your company. So it sounds to me like you really needed the cash at that point. Like you guys were pretty low on cash. Yeah. It's, you know, it's not insignificant, but it's not 20%. Wow. For $2 million, that's a pretty great deal. Well, we were doing less than a million dollars in sales. So we were not a big company.

And so when you think about it, it's actually a decent valuation on the business at that point. And what is a $2 million infusion of capital enable you to do? We hired Goldie. We hired some marketing people. I wasn't doing as much in-store sampling anymore. Now I had other people to do that. And those people were our brand educators. We started to invest small amounts into marketing.

Like we got a van and put coconuts on top of it and painted it viticoco. And we started to, you know, vitico would, a van would arrive, hydrate everybody and do some hula hooping and all sorts of stuff and then leave. And ERA was still based in Brazil, handling operations there. Yep. By the way, how did you guys pay each other? Were you, I mean, I'm assuming that you were handling all the finances and the money and the account. accounting. And so would you just send him a check every month or something? Yeah, deposit to his bank account. We went on salary. Not so early. I mean, we had one or two employees before we actually

went on salary. Still, at this point, Zico is kind of kicking your butt, I think. I mean, I think by 2009, you're selling like 30,000 cases a month in New York and Boston and a little bit in Miami and L.A. That's pretty good. That's two containers, two and a quarter. containers worth of Vitacoa month. It's not bad. Yeah, there's actually, if I think about it, there's actually probably, say, 6,000 cases on a container. So it's a little bit more than that. But you were not, you were not like hugely profitable, maybe barely profitable at the time? No, we were losing. We were losing money. And then, I guess around, around the time, you kind of got hammered a bit because I think it was like 2009, Coca-Cola announces this huge

investment in Zico. That's right. With with a path to, towards acquiring the business, which means that all of a sudden they get this huge infusion of cash. I mean, do you remember what you were thinking when you found out about that? I was thinking, shit, this is the end of us. Like, how are we going to compete with Coke? You know, there's just no way. If Coca-Cola is taking an interest or basically makes an investment in Zico, they're going to make sure it's a winner and that you're not a winner. And if I was in your position, I would be terrified. We were, but I also realized that, you know, Coke is just so large and Zika was just so small for them at the time that it was going to be, you know, people were telling me they're not going to be successful. You know,

you have to remember, they bought, I think at the time, a third of the business with a path to owning the whole thing over three years or something like that. So they didn't own 100% of it. It was too small for them to focus on and to put real resources towards. And that was an advantage for us. I think Mark, the founder of Zico and the team there, expected it to be easy once they did their deal with Coke, and it wasn't that easy. But how are you able to differentiate yourself?

How are you able to make the case to somebody to buy Vitico over Zico if it was more or less the same beverage? So pre-coke, it was more or less the same beverage. As soon as Coke invested in that business, they moved to a concentrate model. So they were no longer 100% pure, premium coconut water, not from concentrate. So we quickly changed our packaging and put in huge letters across the front, never from concentrate. And that became our big selling difference. All right.

I guess in January 2010, you raise $5 million. But from what I understand, this was not intended to be a fundraising round. And you got that money from celebrities. So first of all, how did that even begin? What's the story? So around the same time that Coke invested in Zico, a friend of a friend, introduced me to Guy Osseri, who is Madonna's manager. Today's U-2's manager.

He's quite connected in Hollywood. And I had coffee with Guy. He wanted to have coffee with you? They just said, hey, Madonna's manager wants to have coffee with you. So basically this friend of a friend introduced us because he knew that Madonna was already drinking Vitacoco. Wow. Guy was married to a Brazilian and therefore has coconut water in the house. And he saw this as a big category, a potentially big category in the future.

And so he was willing to take a coffee. He wanted coffee with you thinking this is going to be maybe an endorsement deal with Madonna, something like that. That was kind of the idea. You know, I mean, he said Madonna's drinking it on stage. she's talking about it in interviews. It's part of her diet and so on and so forth. How can we work together? And my response was,

I don't have any money to pay her. And even if I did, I wouldn't therefore have any money to put her on billboards or invest behind. You did not have enough money. We're not Coke. We're not Pepsi. We're not of that scale at that size.

And then almost jokingly, I said, you know, but we are looking to raise some money, you know, if you guys wanted to invest. and his ears burked up. He said, you know, not only will Madonna invest, but I'll get other people. Because he manages so many different.

I mean, he manages personally only you two and Madonna, but he oversees a management company that manages tons and tons of famous musicians. That's right. And he's just super connected and friends with all of these people. And he started making some phone calls. And he, you know, called to me more. And he called Matthew McCannie, called Anthony Keatis, a bunch of people and, you know, said,

me and my friends will take the whole round. Madonna took the majority of it, and they all put in the rest of the money. They took the round. And now we had these people with a much bigger mouthpiece than we could have talking about our brand. And that was a game changer. By the way, are they still investors?

Madonna, Demi Moore, Anthony, they still are. Yep. All right, so all of a sudden, you've got all these big celebrities. You get the Red Hot Chili Peppers lead singer. You got Madonna. And as investors, I guess they were incentivized to talk about your brand

because it would also increase our investments. Yeah, which was amazing, right? So now we're not paying somebody to endorse our brand. They've, in theory, paid us, right? They've invested. Now they have ownership. And they're now more motivated than if they were getting paid, you know,

a couple hundred grand or whatever it is to go do something and talk about it. They're super motivated because, first of all, they love the product. That's why they invested. But now they have real skin in the game. All right. When they started to talk about it, did you start to see growth as a result of that?

Yeah, quickly. First, we started to see a ton of incoming inbound PR. I would say we got more PR than any brand of any sort our size should have ever gotten. So I was this guy selling this little coconut product that people a few months earlier had never heard of going on news shows and getting to a point where a year earlier I would go anywhere else in the, the country and nobody would have ever heard of coconut water or viticoco and you know all of a sudden you walk into a store in minneapolis or you walk into a store in Dallas or wherever and people are like oh yeah yeah yeah yeah that's that coconut water thing i've heard about it but everybody's drinking it right so what did that mean i mean did that make it easier for you to get because i think around that time

um you also get signed with a new distributor a very significant one which was the distribution company that does Dr. Pepper and Snapple. I think it was like the third biggest after Coke and Pepsi, a distant third, but still pretty significant. Yeah, so it was huge because now we had a national footprint, right? Now we could go to national retailers, whether it be Walmart, Kroger, Target, and sell to them on a national level.

Well, at the same time, we were getting this great expansion of awareness. So it worked out really well. I think a lot of brands struggle because they get one or the other way before the other, right? you maybe you start to get awareness but you just can't build distribution because you don't have the distribution footprint and power to be able to do it or vice versa you build distribution you see that a lot and the brand just doesn't pull because nobody knows what it is for us these things kind of came together at a very interesting time and it really worked so what i mean you're still up against

a brand that is backed by coke how are you able to win because i think you did i mean eventually you kind of dominated market share. I think it's like 60% of market share at one point for Vitico. Yep. How did you beat Zico when they were clearly kicking your butt in the first few years? They relied on Coke. And so they had some really interesting distribution points that we couldn't get, whether it be certain accounts in airports or whatever it might be,

food service, things that we just couldn't get to with our distribution network. But we had built a team that was just willing to run through walls and willing to fight to beat Coke. You know, we were the underdog, and they should have won. You know, if you remember, I said, early on when Zika was acquired by Coke, I had, you know, several people tell me, don't worry. The entrepreneurial startup business will win

because Coke just won't focus on it. And I realized after about a year or two that that was, in fact, true. And it wasn't only in New York. It wasn't only in the U.S. By this point, we were fighting each of, other in London. We were fighting each other in Seoul. We were, you know, we were becoming a global brand, and they were trying to do the same thing at the same time. All right. So you guys are now really,

you know, starting to grow. And do you, do you remember what year you actually became profitable? Yeah. It would have been 2011. Okay. So this is, I mean, this is amazing because you would really launch the company in 2004. It takes you about seven years before you. Before you, you, you turn a profit, which is not unusual at all. But can you explain what it is that makes it so expensive? Because it seems like a fairly cost-effective business. I mean, you don't own the factories, you don't own the coconut plantations. You're basically having a third-party white label coconut water for you and sending it on container ships, which are pretty relatively cheap. So why was it so expensive? Where was your money going?

So the biggest expense is obviously cost of goods. So you make the product, you ship it across the world, you ship it to stores, whatever it is. Let's say that costs 50% of your wholesale price. So you're already 50% down. Then you spend 10, 20% on marketing. Then you have a team and you have operating expenses and an office and everything else. And unless you have real scale, you know, by the time you're done, you're competing for space. against Coke, Pepsi,

carrot, Dr. Pepper, and Nestle and everybody else, you've got to fight for that space. You need people for that. And is that, because I'm thinking coconut water, the margin's got to be huge,

you know, it's not very expensive, it's coconut water, and you can charge three, four times a price of the cost to make, but is that just not accurate? No, I mean,

you're climbing a tree for every single coconut you get. So harvesting coconuts, that makes sense. It's more expensive than harvesting, I don't know, oranges.

Yeah, but don't compare it to orange juice. Compare it to vitamin water. Compare it to water. Which doesn't have any fruit, right? There's nothing. It's an ingredient. It's an ingredient powder mixed with water in a plastic bottle created down the street in the U.S. Yeah.

And how were you able to? Because, I mean, I'm imagining that because a coconut is an organic product, you can't, it's hard to maintain the consistency. Like, some crops are not as sweet. Some, you know, might not produce as much water. Some may have more salinity or acidity. Like, how do they maintain consistency? Yeah, it's a big, that was a big issue for us early on.

Not only in Brazil, but as we started to produce in other countries, taste was different. Potassium levels were different. Sodium levels were different. Sweetness and sugar levels were different. So taste was an issue, but also nutritional panel was an issue. So over the years, we created a procurement team, a supply chain team that has become the best at blending ages, breeds to create a consistent taste across the globe. And to make money, you've got to sell a lot of it. That's right.

All right. So 2011, you get hit with a class action lawsuit because basically the claim was that you guys were touting the health benefits and the nutrients in Viticoco and you get hit with a class action lawsuit from people who say, well, this is, you know, there is no evidence and so on and so forth. Let me ask you about class action lawsuits because on the one hand, I don't want to minimize them. They're legitimate, and most of the time people have legitimate reasons to be involved with them. But I think they're also used by corporations to slow down competitors as well. Yep. Is that what happened in this case from your view?

your point of view? Yeah. I think, you know, look, at the time I was convinced Zika was involved. I don't know if they were

or not at this point. You said it was like a, it was like a influence campaign to slow you down. Yes. And you have no evidence as Zika was involved. No,

you know, I felt, and I still feel to this day, that either there was a competitor involved or it was just a money grab. And typically, we've been through several of these.

We had another big one. a couple years ago. Typically, these are money grabs. And both these class action lawsuits are based around the same idea that you are misrepresenting the health benefits of coconut water? No, the first one was that. The second one was that we had a little tagline on our brand that said, born in Brazil. It was on the back of our package. And by that point, you were not sourcing all your coconuts from Brazil. No, about a third came from Brazil. And we talked very openly about all the work we do in the Philippines in Sri Lanka and Indonesia.

But you were born in Brazil. The brand was born in Brazil. And that was your point. Yes. And you got sued from people who said, no, you're not born in Brazil. Yep. And we literally spent $4 million on legal fees to fight it.

And we won. But the first one, you did settle, I think, for $5 or $6 million. In a sense, did you learn the lesson that you had to be more cautious about how you describe the health benefits of Vitico? Yeah. I mean, the lawsuit claimed, you know, we were claiming that it was life enhancing. Since then, we're obviously very careful about all of our packaging and all of our marketing materials goes through, you know, all sorts of legal checks before anything goes into market

because you don't want to make false claims, but it's less about making false claims, and it's just about making claims in general that could lead to somebody insinuating that you were trying to deceive, which is the last thing we want to do, right? Yeah. All right. So once that distribution deal happened, you were growing really fast and big. And by 2014, you sold a quarter of the company to a Chinese investment group that invests in foods. Yeah. It's actually Red Bull China. So they're the owner of the Red Bull brand in China. So they have a huge beverage company in China. They were looking to diversify, about 25% of the business. and became our distributor in China.

Wow. So not only do they buy 25% of your business, I think they paid $165 million for it, but they become your distributor in China, which means you are guaranteed, more than guaranteed, to become a hugely profitable because that's a brand new market for you. Yep.

The biggest market in the world. That's right. So, you know, kind of like Madonna and them coming in as investors, we had somebody coming in and buying part of our stake, and at the same time, we got major value ad, right? Yeah. It just worked very well.

So you got to keep, I mean, 75% of company, your investors got to keep, which I think you still own today, you and your investors on 75%. You got $165 million for 25% of the company, which I'm sure gave you more than financial stability and security for ever and ever and ever. Why not just sell the whole thing?

I mean, why not, you know, sell 100% of the company? it made selling 100% of the company much less interesting, right? What did? By taking money off the table, a significant amount of money, right? So I've got the financial security to not have to worry about anything. So now I could take bigger risks, always calculated, but I could take risk. I could go longer and enjoy the people I work with, which is basically, you know, my second family. I love what I do.

I love the creative aspects of it. What else am I going to do, right? So I don't have to sell the business. That's the beauty of the position that Red Bull China kind of put me in. So now I'm super focused on, you know, what does the business look like five years from now? And kind of thinking about this business as a broader platform of better for you, healthier functional beverages as compared to Viticoa the coconut water business. We are in the middle of the most trying time for every business in the world,

unless you're Zoom or Slack. I have to imagine that I would think that initially when people were freaking out that there was a spike in sales, we heard this from Cliff Barr and other brands, spin drift, but that after a while they've slowed down because people are not going into Walmart and Target and supermarkets as methodically as they might have been before the pandemic. So is that the case that sales spiked and now have slowed down again? Yeah. So the first few weeks, we saw massive spikes, really, really significant growth. And that was an awkward position to be in. The world was falling apart.

People were losing their jobs in unprecedented numbers. And we were seeing these massive, what we were calling pandemic profits. So that led us to do some things to get back to our local communities. Shortly after the spike, we saw the big club stores continue to do well. Everything else kind of declined. And then after a couple of weeks, it started to really pick up again. And the business now across all grocery, all mass and club stores is growing significantly. And I think it's because people are spending more time at home.

They're consuming more. We've become somewhat of a household staple. People are making their smoothies every morning at home and they're using our product. Have you had to have any layoffs? No, none. We're all working from home. we're going to keep the office closed until September. And even though some people, you know, everybody's got work to do and some people are working

harder than they were in the office, others might not be as busy, especially during a time when things are closed if we can afford to keep people, now is the time to keep people employed as much as possible for sure. What do you think it takes to be a successful entrepreneur? I mean, because clearly in your case, it's not education, right? It's not formal education or post, you know, secondary education. There's something else or other qualities. What do you think they are?

I think, well, for me, I think never having a fear of failing has been very important, right? I've been told since I was young by everybody besides my immediate family, you know, specifically, as we talked about my dad earlier, I was told quite a bit as a kid that I'm never going to be successful, right? So what's the worst I could do is fail like everybody thought I could or what? So I think that kind of sparks a bit of the risk-taking nature that is needed for an entrepreneur. I also think that an entrepreneur who's going to not only be an idea guy, there's plenty of idea guys that can't really create great culture and great organizations. So I think it's a combination of the ability to take an idea, but also the ability to execute

against the idea and bring people along for the ride. And I think that's been one of the things that has helped us become very successful. When you think about, you know, what's happened to you and the success of Vitico and your success, your financial success, how much do you think that's because of your work and your work ethic and your skills and how much do you think it has to do with just luck, just being lucky, being lucky that you met those Brazilian women, you met Ira and you, and you and people cut you breaks. I mean, how much do you think it's luck and how much is just your raw hard work?

I think in order to be successful, you need some luck, right? I look at my life and I look at everything that I've been able to accomplish, not only through work, but also personally and family and everything else. I've been incredibly fortunate and incredibly lucky. But I also think that hard work and positivity brings what could be luck, brings good fortune. It could also be willing something to happen. And that comes with a lot of hard work.

That's Michael Kirbin, co-founder of Vitococo. As for his relationship with the founder of Zico, by the way, do you still hate Mark Grampola? No, he's amazing. We've become friends ever since. We've invested in a couple businesses together. We're good friends now. So the Coconut Wars, happy ending in the end.

Oh, yeah. I think because we won. Thanks so much for listening to the show this week. You can subscribe wherever you get your podcasts. 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. This episode was produced by J.C. Howard with music composed by Remteen Arablui. Thanks also to Candice Lim, Dereth Gales, Julia Carney, Neva Grant, and Jeff Rogers. I'm Guy Raz, and you've been listening to How I Built This.