The Chris Voss Show - The Chris Voss Show Podcast – Michael Saxon, CEO of TAAT Global Alternatives

Episode Date: September 22, 2022

Michael Saxon, CEO of TAAT Global Alternatives Taatglobal.com

You wanted the best. You've got the best podcast, the hottest podcast in the world. The Chris Voss Show, the preeminent podcast with guests so smart you may experience serious brain bleed. The CEOs, authors, thought leaders, visionaries, and motivators. Get ready, get ready, strap yourself in. Keep your hands, arms, and legs inside the vehicle at all times because you're about to go on a monster education roller coaster with your brain. Now, here's your host, Chris Voss. Hi, folks. It's Voss here from thechrisvossshow.com, thechrisvossshow.com. Hey, welcome to another great podcast. We certainly appreciate you guys sitting in. Thanks for being here.

As well, as always, refer to the show to your family, friends, or relatives. Go to youtube.com forward slash chrisvoss. Hit the bell notification button over there. Go to goodreach.com forward slash chrisvoss. See all the amazing people we're interviewing over there. And all of our big groups on LinkedIn, Twitter, Instagram, TikTok, all the crazy places those kids are playing. We've got some upcoming authors that are going to blow your mind. They've written some

amazing new books. We've got some Wall Street Journal authors that are coming out talking about lawyers and different things. And we've got some other folks from, I believe, the New York Times coming on. So we're excited to see those and watch for those shows coming up. Today, we have an amazing gentleman on the show. He's from TAT Global, T-A-A-T Global. Michael Saxon is on the show with us today. He is an accomplished consumer products executive with over 25 years of experience, growing Fortune 100 businesses in the United States, Europe, and Asia, having successfully influenced government policy and led units with a full P&L responsibility from U.S. dollars $100 million to $3 billion while operating in different

regulatory systems. His career reflects a demonstrated history of setting record income and market share results in a wide range of market conditions and succeeding in various go-to market models, including wholesale, distributor, and DSD. He brings a strong innovative mindset from his experience creating new products and brands and having been the catalyst for successful large-scale transformation initiatives to drive organic growth and executing M&A transactions to enter new markets. Mr. Saxon served in various positions for 20 years with Altria Group, a Philip Morris International, and most recently he helped create Trolley Ventures, a Richmond VA venture capital firm investing in early stage startups. Welcome to the show,

Michael. How are you? Good morning, Chris. Doing great. It's awesome to have us. And give us your title there at TAT Global, if you would. Yes, I'm the CEO of TAT Global and also a member of the board of directors. There you go. There you go. So thanks for coming on the show. Give us your dot com so people can find you guys on the interwebs or whatever the dot is. So our corporate website is www.tatglobal.com. That's T-A-T-G-L-O-B-A-L.com. And our branded website is trytat.com. Awesome sauce.

Awesome sauce. So you've done a lot with your business career. What made you want to start this company? Well, you know, I wasn't here from the beginning. So I've been on the advisory board for a couple of years now and I'm kind of, the company's probably two years into its journey. But what excited me was really the latest generation of the product. And when I looked at the landscape over my career, and especially if you look at the tobacco landscape in the last 10 years, it's probably experienced more disruption and innovation than it has in its entire history.

But all of that innovation is bringing the consumer something that they have to change their behavior and they have to change their experience. And I thought what was really intriguing about the TAP product was, you know, it was something that looks and feels and tastes just like their normal experience, but it doesn't have tobacco and it doesn't have nicotine. And I thought that was an intriguing idea. And that's really what excited me about the opportunity. So what is the product? Define it for us that you guys make. Well, we make something that looks, feels and tastes just like a cigarette, but doesn't use tobacco. And as a result, that doesn't contain nicotine.

We like to call it Beyond Tobacco. And it's a product that, while still at its early stages in terms of its footprint across the U.S., but one that is proving to be something that adult smokers do find attractive. And so it's kind of like the Beyond Meat. Would that be a good comparison? You know, people that aren't eating meat anymore, they don't want to eat meat. They have the Beyond Meat. It's kind of faux meat, if you will. So it fits along those analogies, but we refer to it as beyond tobacco, and we believe that the adult smoker will find this product an attractive product in terms of their consumer behavior experiences. So it's basically a nicotine and tobacco-free smoking experience. That's kind of interesting.

I imagine everybody's doing the beyond this, beyond that thing and trying to find alternatives, but people want to have the same sort of experience. This is kind of interesting. How long has the company been developing this sort of technology? It's been approximately two years in development since we've been publicly listed. There's probably been some work our founder did well prior to that, but you know, we're on the third generation that we've commercially launched. Our early products were, I would call very hemp forward. Hemp is one of the main ingredients that we do use. But it was something that really would have attracted a hemp smoker, but not necessarily a tobacco smoker. And our target market is the adult smoker.

We know this is a very, very large total addressable market. And we wanted to provide adult smokers an alternative that didn't contain nicotine and didn't contain tobacco. Interesting. Interesting. How many smokers are there still left in America? And I know around the world there's still a lot. Yeah. The number off the top of my head in the U.S. is somewhere between 20, 25, and 30 million smokers. The incidence rate is somewhere in the high teens to low 20% depending on the latest government statistics.

And tell us a little bit about your background, why you joined TAT, and I understand you were considering retirement when you took the position. Well, I spent 20 plus years at two of the larger tobacco firms. And one of the reasons I stayed as long as I did was in the late 90ss when Philip Morris launched the first version of a product they now market as Icos today, and it was called Accord back then. It really gave me a chance to have a kind of a peek behind the curtain on how much R&D was being invested in next generation products. And then when I came back to the U.S. in 2012, I was really at the height of kind of the e-cigarette or e-vapor frenzy. And, you know, when you stand back and you take off your kind of big corporate hat and you look at where innovation in this space has happened, it's

largely been small entrepreneurs or founders like our founder, Joe. And that was one of the things that really intrigued me. Big Tobacco has been spending a lot of money in this space for a long time. But when you look at everything that's been brought to the market successfully in the last 10 years, it's been largely things that was innovated outside of Big Tobacco. And I was excited to that. And I thought that some of my skill set would be able to add value to the company going forward. That's pretty awesome. So what are some of the benefits for cat smokers? What do they get from not having a product that doesn't have tobacco and nicotine? Well, you know, they get a product that really resembles much of what they're used to, right? If you saw one of our products,

it looks, feels, and tastes really like a cigarette. So they get to continue that experience that they're used to, but no longer have that nicotine urge or nicotine addiction that brings them back. So we're excited about its potential. And the early signs that we have from some of our focus markets are pretty promising. And is that going to compete with, you know, we've seen the huge emergence of these, like the Juul products and things like that. And I think, yes, the government's been trying to squash them because of the nicotine and stuff that's in their products, I believe still. And so there's the huge market of people that are taking the vaping. Are you trying to compete with that or offer a better alternative product that doesn't have the same sort of stuff that they have in theirs? Well, we know from plenty of other people's studies that overwhelmingly a large percentage, but a large percentage of adult smokers are looking to either quit or

switch altogether. And we think our product can be part of that alternative choice for them. And that's why we're also investing in the science behind our product. While we're not regulated by the FDA, we think to be a credible stakeholder in this conversation that we've got to have the science to support our product. So we've invested in some early science already, and we believe we're on the right track and we're going to be investing more in the months and years ahead to continue to validate what our hypothesis is as it relates to this product. Yeah, I imagine it can help people get away from nicotine and tobacco smoking. I've had friends that they're so used to that urge and the world sort of experience of having a cigarette,

it's hard for them to do it. And it's big business to charge people to try and get off of nicotine addiction, which technically they just people to try and get off of nicotine addiction, which technically they just give you a pill that gives you nicotine addiction. I see the packs that they now put behind plexiglass walls because they're so expensive. It's like 40 bucks a pack for nicotine gum or something like that. And I'm just like, holy crap. And so there's a big market for trying to help people get off of nicotine addiction. Yeah. I mean, like I said, overwhelmingly, you know, I think it's some last statistics I saw was something like 80 to 90 percent of people have either tried to quit, want to quit, switch to something less harmful.

And it's a really hard thing for adult smokers to do. And that's why I've always believed that there's not going to be one kind of silver bullet that solves this problem. And, you know, we're not claiming to be that silver bullet either. We're saying we're one of the products that's out there that can potentially help a smoker switch. And like you said, there's a lot of aspects for adult smokers on smoking that causes them to continue, right? And part of it's the nicotine and part of it's some of the other factors that you mentioned. So we believe our product provides that alternative that doesn't have nicotine. So hopefully that addictive element isn't there anymore for them.

And it's part of their consumer journey on the path that they're trying to achieve for themselves. There you go. So what markets are you guys currently in right now? Well, currently we're in the United States and the UK markets. In fact, I just got back from London in Europe last week where we've just now shipped our fourth order. And I was meeting with our distributors and partners there in the UK and really encouraged by that sign. In terms of the United States, we're spread out a little bit. But we've now, since I joined about three months ago, we've really worked with a company called IRI that's helped us analyze the U.S. market and determine what states are priority for us.

In the last three months, we've really been focused here in our home market in Las Vegas of really trying to combine our sales and marketing efforts geographically. And we're really intrigued by the results we're already getting. And we're only two to three months in this. One of our partner accounts out here in Vegas is called SpeedyMark. And they saw triple digit growth rates from August versus July, which shows that we're not only getting the awareness of our product, we're getting people to try it and getting people to make that permanent switch to our product through We're getting people to try it and getting people to make that permanent switch to our product through the repeat sales. So we're excited by that early case study and look forward

to taking that case study to other chains and other states for us in the United States. There you go. Speedy Marts are big in Vegas. I've lived in Vegas for 20 years. So where are your manufacturing plants? And I guess, is this an American-made product? Absolutely. We like to use the hashtag Vegas born. Not only our headquarters out here, but that's where our primary manufacturing facility is. And we're proudly Vegas born and look to continue that going forward. That's awesome, man. Awesome. So what are your goals for TAP? Well, you know, in the near term, it's really for us to refine the sales and marketing approach on a geographic level and then build the company's infrastructure to scale that across the U.S., right?

You know, I have a modest goal that for us to be successful, we'd be 1% or the equivalent 1% of the adult cigarette market. And if we achieve that, it'll be a great milestone for us in our corporate history. So I always take the logic, you got to get one before you can get two. And so our near-term goal is to try and achieve 1% of the equivalent cigarette market. And again, that's a modest goal, but still an aggressive one. And we like what we're starting to see here in Las Vegas and excited to take that story across the US. There you go. So how is TAT and its product fall in line with the FDA and helping smokers? I mean, do you still have to put the warning label on the package, or how does that work? Well, we're not regulated by the FDA.

That said, there's plenty of scar tissue that's either current or history that we're making sure we avoid. So we put health warnings on our packs and our advertising materials voluntarily. And we're also, like I said earlier, investing in the science so that we can inform consumers exactly the impact that the product can have on them. But for the moment, we're outside of the FDA's jurisdiction. But at the same time, we very much intend to market this product responsibly and only to adults. That's something that's very important to us. And some of the things I've put in place since arriving helps ensure that. There you go.

What about the price point? What's the price point in this? Because I know traditional cigarettes are, I mean, they're astounding and high. In Vegas, they open shops just to sell cigarettes because there's, I assume there's so much market, but I assume that's why they started so many of them. Right. And the price is an interesting part of our story. Not only is price attractive from a consumer point of view. I take most recently we've launched in the state of Texas and our price point there is $5.

And most of the branded discounts are not only branded discounts, but your leading brands are well above that. So it's an attractive price point for the consumer. But what's also really important for us is that it's attractive for our trade partners. While cigarettes are still a really large category from a margin point of view, it's one of the categories they make the least amount of margin. And with our product, retailers can find that our margins are substantially more attractive. And hopefully that helps us as we scale that when major retailers across the U.S. see our product, not only see the product itself, but see its impact that it's having in some of their peer group companies in other states, that they'll be like, wow, this is a really interesting product. It really truly is an alternative for the adult smoker. And they'll list it as well. So we're pretty excited right now. We've

launched a major retailer out in Texas this month called Buc-ee's, which is a pretty iconic brand in the state of Texas. We're also distributed in West Virginia in an account called Parmore. So we're really excited about these early results and excited for our upcoming NAX show here in Vegas, where all the major retailers from across the U.S. will be here in our home market, Las Vegas. There you go. Someone in our audience is asking, what about Switzerland? Are you in Switzerland yet, I guess? We are not in Switzerland, but I was in Europe last week and one of the other things being newly in this chair is I'm really intrigued by the international inbound offers we're receiving. But as a small company, we have to focus. So we're looking at each of those

opportunities on a standalone basis. And if there's a right fit for us where we have the right partner that can really support the company as it launches into a country, then we absolutely take advantage of those opportunities. There you go. And I imagine, you know, there's, they're constantly doing legislation to ban menthol. And I believe, I believe they banned menthol recently, or they tried to, I don't know where it is in the courts, but in regulate nicotine and tobacco harder, that gives you kind of more of a future edge when you say. Well, you know, like I said earlier, we fall outside of the FDA's jurisdiction, but we're at the same time, we're investing in the science behind our product so that, you know, if there was ever a point in time where we had to meet with members of public health or members within a regulatory body because, you know, the're excited about the UK market. The UK market, hence then, one of the countries where their public health officials have been very bullish on alternatives for tobacco smoker. And we think some of the science that we're now gathering on our product will be very intriguing.

And that's one of the other reasons the UK market is also very important for us. Yeah, this should be pretty interesting. You know, the more alternatives people can have. I've had Beyond Meat and I've done veganism. There's like 50 different flavors of veganism, so you have to be careful, which I just call it veganism. It's not full veganism. I've had the Beyond Meat experience. Yeah, it's a lot different, better, and anything that might be more healthier for you than some of the alternatives out there definitely make a difference. You run a lot of companies and built a lot of things. What are some things that you use when

I say leadership and leading companies? What are some different books that maybe you've read or things that have inspired you or leadership styles that you use that you find work for you? Well, you know, I really had a terrific mentor, the gentleman that hired me to come into the company. His name was John Clary. And he was really instrumental in my career. And he had a funny phrase, and this is probably a slightly older school kind of, you know, showing my age here a little bit. But, you know, his kind of view was, well, the higher up you get and get in the food chain, the less actual work you do. And he wasn't necessarily meaning you don't work very hard, but you're guiding work, you're directing work, you're influencing work. And what that inspired in me was this phrase that I had another mentor say one time, which was, love your people and they'll love you back.

And I think the key thing is people really want to know where they stand. And I think over the course of my career, I find a lot of joy in the fact that many people around the globe that don't how to write and how to make things more simple. In fact, the first couple of pages are about the length of a credit card contract when you sign it and how this person's journey was to get it on one page. But I thought that what's inspired me about this work is that at the end of the day, many times in life, especially in business, we overcomplicate things. And if you can boil things down to really what the simplest way to do things, it really makes life a lot easier, especially for larger organizations. Definitely, definitely. That's been pretty interesting. So as we go out, I've got a question that's popping up. This is, I think you've already answered this question, is the plan to move to other countries, any other country in Europe? I think you've kind of answered that one. We covered that, didn't we?

Yeah, we did. Okay. We got some questions that are being thrown at us here. Are you guys going to uplist to the NASDAQ or any other, or TXS in Canada? Any plans to do that? We're evaluating all of those as we speak. And when the right opportunity and the market conditions fit us, we absolutely would love at a future point in time to be on a more major exchange. Of course, yeah.

I mean, that's the whole goal is to move up there and get public funding and all that good stuff. So thanks to my audience for those questions. So we really appreciate them. As we go out, what do you want people to know about TAD? And what do you want to leave them with? Well, you know, at the end of the day, we're a young company,

but one that has really high ambitions. And we're already starting to see those ambitions realized in a few markets here in the U.S. and one market overseas. So we're excited to stay on this journey. I'd ask people to stay in contact with us by registering on our website at TACglobal.com. And they'll hear the most recent announcements we make. And we'll be having hosting, in fact, our first earnings call tomorrow, Wednesday afternoon at 4.30. So if folks would like to know a little bit more, please join. There you go. I'm getting some messages that people are looking forward to seeing that. It's been wonderful to have on the show, Michael.

Thank you very much for coming on. Give us the.com so people can find out more on the interwebs there. Yeah, Chris, thanks again for hosting us. And people can find us at on the interwebs there. Yeah, Chris, thanks again for hosting us. And people can find us at www.tatglobal.com. That's T-A-A-T-G-L-O-B-A-L.com. There you go. Thanks again, Chris, for having us on. Thank you, Michael. We certainly appreciate having on and I love your insights to leadership and what you're doing, man. You're just rocking it. So thanks, Manish, for tuning in. Go to goodreads.com for just Chris Voss. Go to youtube.com for just Chris Voss here, a big 130,000 group on LinkedIn. Follow that in our LinkedIn newsletter that you probably be seeing this on in the next few days. Thanks for tuning

in. Be good to each other. Stay safe and we'll see you guys next time.