This Week in Startups - Twitter’s new CEO, Mr. Beast’s record-breaking Squid Game + Haus’ Helena Price Hambrecht | E1335

Episode Date: November 30, 2021

First, Jason sums up Jack Dorsey's departure from Twitter's CEO role (1:41). Then he breaks down the stats from Mr. Beast's latest YouTube video (11:05). After the news, Haus CEO and Co-Founder Helena Price Hambrecht joins (16:53) to discuss her DTC alcohol brand, changing habits of American drinkers and more.

Hey, everybody, we have an amazing show for you today. Helena Hembrick is on the show. She has a new company called Howes. They are making an online direct-to-consumer aperitif, a flavored beverage. And so we're going to talk a little bit about direct-to-consumer alcohol and some of the hacks you use to reach an audience directly. But first, we're going to talk about the huge breaking news that Jack Dorsey announced he's stepping down from Twitter as CEO. And we'll be leaving the board in a year or so. And finally, we'll talk about a stat that came out that Mr. B Squid Game parody has now matched the actual Squid game in terms of total views.

I'm going to talk about what that means and my one amazing idea for Netflix that could change everything for Netflix. Stick with us. It's going to be an amazing episode. This week in startups is brought to you by LinkedIn Jobs. A business is only as strong as its people and every higher matter. Post your first job for free at LinkedIn.com slash twist. Ladder for fast, easy term coverage life insurance, choose Ladder. Check out Ladder today to see if you're instantly approved. Go to LadderLife.com slash Twist.

That's L-A-D-D-R-L-E-R-L-E-R-L-E-R-L-E-R-T-T-T-S-T-T-T-S. And, Stripe. Join thousands of successful founders who choose Stripe as their payments platform. Whether you're an online or in-person retailer, software platform, marketplace, or subscription business, visit stripe.com to learn more about how Stripe can support your business today. And our first story, Jack Dorsey, is stepping down as Twitter CEO. And he's going to be replaced by CTO Parag Argoal, who we've all known for a long time. It's very popular on the Twitter.

The stock opened up 10% on the news this morning, which was interesting. closed down a little bit, 3%. They're currently cruising at a $36 billion market cap. Q3 revenue was $1.28 billion. Pretty amazing. So if you put that together, just times it by four, you're at exactly $5 billion. It means Twitter is trading at about seven times.

Their sales, which is pretty respectable. That's like high growth territory. Parag has been at Twitter for over 10 years, as the CTO from 2011 to 2017. he was a software engineer, who was promoted to CTO in October of 2017, so he's been in that position for four years. And he ran point on the initial version of Blue Sky,

which is Twitter's decentralized social network protocol. I've never heard any update on that, but that was kind of an interesting idea. What's a decentralized social networking protocol? Well, the idea would be it would crack the stranglehold that Facebook, Twitter, LinkedIn have on a social network by decentralizing it. What does decentralizing mean?

It means that there would be a series of servers run out there that could be run by anybody. And on essentially a blockchain or some sort of distributed database, all the social network relationships, profiles would be held. Therefore, anybody who wanted to pop up a feed of people's updates,

I could just create a website called, you know, people in tech. And you could create one called people on Wall Street, people in music, and then you could just tap into those blockchains or that open protocol and build a stream and nobody could stop you because it would be open. There you have it. He was working on that, but we never heard about that.

And I guess this also leads to the question, well, why is Jack stepping down? Well, in his resignation email, which he posted on Twitter, being very transparent about it, he said, and I'll quote, there's a lot of talk about the importance of a company being founder-led. ultimately, I believe that's severely limiting and a single point of failure. I've worked hard to ensure this company can break away from its founding and founders. So that's interesting. That's one take on it.

But of course, what he's referring to when he talks about founder led is that we've seen with the canonical example being Steve Jobs at Apple, when Steve Jobs was ousted and did next, and then he came back, you could just correlate Apple's stock price, Apple's prominence, Apple's exceptionalism in product to the times when he was there. And if you look at the great, great companies today, whether it's Shopify, Zoom, Facebook, Airbnb, Coinbase, Tesla, they're all led by the founder. Why, as I've talked about many times, founder authority is super important. When the founder says, hey, I want to do X, Y, and Z for this reason, everybody is going to listen to the founder, rally around the founder. and make it move quicker.

When Facebook's Mark Zuckerberg said, I'm buying Instagram, I'm buying WhatsApp, there was no discussion about it. He just did it unilaterally. He had control of the board. He informed the board he was making those decisions. He didn't ask them for permission.

Obviously, we've also seen some incredibly talented executives take over, most famously, or amongst the most famous Sundar and Satya and Tim Cook taking over Google, Microsoft, and Apple. Now, those three companies are massively at scale. And obviously, in Tim Cook's case, the founder is no longer with us, or he would be in charge. In the case of Microsoft and Satya, Bill Gates had left a long time ago. So did Balmer, who is, I mean, he's not a co-founder, but arguably had been there for a while. And Sundar was, Sundar was selected by Larry and Sergey.

A lot of this I've talked about is people don't want to get dragged in front of different government agencies and be grilled at the impact of big tech. I think that's why Sundar was put in charge of Google and made it just a lot easier for Larry and Sergey. And who knows? Maybe Jack has other things he's interested in. And I think that's really what this is about. Jack has been running two companies.

Running two companies is brutally hard. You can ask Elon about that running SpaceX and Tesla. Plus he's got a couple of other companies like the boring company that he's involved with that are also taking up some of his time. So it's just really hard to be in charge of multiple things. Steve Jobs did it a little bit with Pixar, just very, very, very hard. And it feels like Jack is more interested in Bitcoin and Dow's

and cryptocurrency than he is maybe in Twitter. So a perfect time for maybe him to explore new things. If I was to think about Jack as an executive, and I've known him for a long time, he's really great at coming up with new products, whether it's Square, Twitter itself. And so I will predict here that he will do the same thing at Square. He'll put somebody in charge of Square as CEO, make himself executive chair.

And I think Jack will start a new company and focus his energies on cryptocurrency. CNBC initially reported that Elliott Management's billionaire founder Paul Singer was potentially behind Jack stepping down. They're an activist investor and Singer is a major GOP donor. Who knows? this kind of theory is because in February of 2020, Bloomberg reported that Elliott management took a sizable stake in Twitter, and Singer then said Dorsey should step down from either square Twitter and only run one company.

So maybe there was a little pressure on him. But I think also if he wanted to fight for it, he could have kept the position because I think Twitter has been doing relatively well in terms of product velocity. Product velocity at Twitter has been extraordinary for the last two or three years. They work kind of stagnant. There weren't a lot of changes, and now we see Twitter blue, the news product, where we saw them do Twitter spaces so fast. It was unbelievable.

And Twitter spaces obviously dominating Clubhouse in a major way. And they didn't buy Clubhouse. They just decided they would beat them heads up. They did stories, then removed it. That was actually a good sign that they decided, hey, stories isn't working. So let's just go with Twitter spaces and give that the space. And now they just did groups, which I think are, I don't have the ability to start a group, but I'm in one. also did email lists, which I've been doing, if you go to Twitter.com slash Jason or Twitter.com

slash at launch or TWA startups. You'll see you can sign up for our mailing list. We moved our mailing list off MailChimp, and now we're doing for free with review, which was the email product they bought. It's kind of a substack MailChimp competitor. So that's absolutely amazing that they added all of those incredible products. And now they have super followers, which is going after obviously Patreon, where you can subscribe and pay. I don't have that yet. I'm going to turn that on at some point just as fun. But congratulations to Jack.

I think he got Twitter on exceptional footing. The product's gotten better and better. They were launched Twitter Blue, which I am a paid member of and I love. Twitter as a product is amazing. And I think Jack felt, you know, there were other people who could run the company better than him. And I think that's a very mature, intelligent position to take, which is, hey, if there's somebody better, and he's a major shareholder, still, then they should run it. So congratulations to Jack on an amazing run. And congratulations to the team, really, at Twitter. I, as a power user since day one, or day zero, in fact,

I was like in the beta. I just think the team there has done an exceptional job in the last two years. It's a product that'll be with us for a long time. Does it have problems? Is it full contact? Is it crazy? Sometimes, of course it is. But that's part of the fun of it. And it's an important product in the world. And so I think ultimately this will be a great thing. And the fact that he's going to leave the board as well. It's his way of saying, like, listen, I'm going to hand it over. And that means that if there are no founders, you're going to have to just figure it out, right? And forcing people to figure it out, I think is going to be a great thing. Before we get into the ad, I want you to go to LinkedIn.com slash twist and post your first job for free.

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Of course, apply because they're giving you something for free. All right, in our next story, Mr. Beasts Squid Games parody has now officially matched the actual Squid Game show in terms of total viewership, and he did it in just a couple of days. Mr. Bees' version of Squid Game was published last week on November 24th, and it's absolutely extraordinary. The real Squid Game was two months before that, September 17th. A YouTube vlogger and former employee at Instagram and YouTube tweeted the following yesterday. His name is John, and he's got the blue shack mark. Mr. B Squid Games video 103 million views in four days

it took seven weeks to make Netflix's Squid Game series 111 million views in 30 days it took 10 years to make and I think the guy was actually pitching it even for longer than that and it was in a little more development so that might even be

and this is quoting John more views less time fewer gatekeepers that's the promise of the creator economy that's an interesting observation but what it really says more about is the scale of YouTube Okay, the average monthly users in 2020 for YouTube, ready for this? 2.3 billion monthly users.

Now, Netflix's global paying subscribers in Q3, 2021, was $214 million. In other words, it's 10 times as many people are on YouTube as there are on Netflix. Given that, I think what we're looking at here is this is more a story about the free global reach of YouTube versus the paid limited reach of Netflix. So if we were to look at what percentage of people on each platform have seen something, the percentage of people on Netflix that have engaged with Squid Games is over 50%, right? Well over 50% at this point. The number of people, if we, and views are not people, but if we use views as a proxy for people, obviously some people may have watched it twice.

Some people may have watched only a minute of the video. So let's just take Mr. Beas, you know, from 100 down to 50 million or even 75. You know, he's like maybe 2, 3, 4% of YouTube users have seen his video. That's really the takeaway here. A large percentage of the YouTube people saw, a small percentage of, a small percentage of YouTube people saw Mr. Bees, a high percentage of Netflix people saw the original. And so that's something that would make you pause for a second and say, let's take a moment to imagine a free tier of Netflix. What would happen if Netflix had a free tier? What would a free

tier look like? Well, a free tier might be, you can see these, I don't know, uh, you can see five episodes, one third of the episodes, maybe the first three episodes of these 30 shows. And we're going to change it all the time. Or maybe you can see one season of Ozark, one season of, uh, oranges the new black. You get the idea. Maybe you could watch up to one hour a day. and then it would turn off. How many people around the world would use the free version? Maybe the free version only had 480P, you know, and you could only stream like HD or whatever.

This could be unbelievable. And there's always been talk of what would happen if Netflix signed Mr. Beast or signed other folks. Netflix wants to do high-end content. I remember pitching Netflix executives a decade ago on content like This Week in startups or other content when I was doing Mahalo and we had user-generated content. Netflix actually contacted me and we had a little discussion because we were part of YouTube's premium.

And we talked to Netflix, we talked to Amazon, all those folks, because they just wanted my opinion on it. And I was like, hey, it would be very interesting, you know, if you gave us a budget of a million dollars to make a YouTube level. And you can actually see that. YouTube.com slash X-HIT. YouTube.com slash X-H-I-T. And or you can type in Mahalo video games or Mahalo. pahalo.com and you can see those old channels and we made hundreds of videos they still to this day do amazing you can do mahalo guitar lessons mahalo dance lessons we did a bunch of like how

to stuff we did a bunch of experiments and those channels to this day do really really well one of was called well cast and it was like really interesting as well and exit is the only one we're continuing update because it has over three million subscribers i'd like to find a buyer i'd like to sell that to somebody uh somebody who could use it or spin it out into its own company so if anybody there looks at exit and says, I want to start a company based on this or they have like a fitness passion. There's somebody on Instagram who was like the most famous fitness guru. Jen Seltter was the person I was thinking of. I thought that would have been like a great combination because she has a business. Anyway, there's a number of people on YouTube who are really famous. It just shows

the power of like YouTube is just ginormous. And when something hits, it does really well. Okay. So here is Squid Game Hours watched on Netflix. I guess they release this data. It is just absolutely bonkers how many hours were watched a half billion hours were watched i guess in the third week if you compare that total time watch mr bese video is 25 minutes long and so maybe it's 31 million hours or something like that it's pretty amazing how many people probably if we give him credit for everyone watching his entire video series people would have watched 49 million hours so far just extraordinary the total watch time of YouTube videos. So congratulations to Mr. Beast.

He was going to come on the All-In podcast, and then he was just absolutely killing himself over this specific video, and he DM'd me the morning of or the day before, and it's like, I haven't slept. I can still come on, but is there any way we can reschedule it? I was like, Mr. Beast, take a pause, relax, and we'll have you on the show in two weeks or so.

So Mr. Beast will be on the All-In podcast shortly. But, yeah, he's crushing it, And congratulations to him. All right, next up on the program is my interview with Helena Price Hempric from House. Enjoy. Okay, everybody, next up on the program is Helena Price Hembrick. She is the co-founder and CEO of House, which is an aperitif brand, a direct-to-consumer one, in fact. You can go check out their website while you're listening to the pod at drink.housh, H-A-U-S.

They are stronger than wine, but about half the amount of alcohol as part liquor. they sell mostly your subscription six bottles a month. If you're really going for it at $144, two bottles for 63 one bottle for 35. They got a bunch of different offerings at their website where you can do tasting. And they differentiate themselves, as I said,

from competitors by being a low ABV, which is a new category of beverages, low alcohol by volume, which I appreciate because I don't drink, as people know. Maybe once in a while I have a class of expensive wine when one of my besties pours it. Most aperitifs are in that 20% ABV.

And this should reduce people's hangovers. Welcome to the program, Helena. Thank you for having me. All right. I found out about you because a bunch of people I know, Angels, invested some money in your latest round. Casey Nistat, who was on episode 926 of this week in Startup's Great Episode, a long episode where we talk about his career.

And Superhuman Raul Vora, which I've been invested. in both of his companies and in his first fund. You've got a way co-founder Jen Rubio, who I'd love to have on this program, Yelp, co-founder Russell Simmons. So a great collection. Tell me what's the inspiration for starting an aperitif company? That is a great question.

No one had done something like this in Silicon Valley. When people, you know, ask, what do you do again? The shortest way I explained it is, we kind of created a new kind of alcohol, and it happened to be the one kind of alcohol you can sell on the internet. So we made the first D-Disc see brand in the liquor space. Here we are. But there's a longer story.

That's an interesting point because my understanding is, like, alcohol is incredibly hard to deliver because different states have different rules. You know, some people don't allow you to deliver alcohol at all. Some not on Sundays. There's all kinds of regulations. But you found a little bit of a hack here. explain what that is. Yeah, I hesitate to call it a loophole because that scares people.

It sounds like word. I'll just say you had an interesting business observation. Yeah. Indeed. No, so, you know, I come from Silicon Valley. You know, I've been around here for 10 years doing a bunch of different things. But I ended up in the alcohol space because I married a booze guy. And I got to know the industry through him.

And my first observation as someone who came from Silicon Valley was, my God, this industry seems to be the last to change. And turns out it is one of the most highly regulated industries. The only one more regulated is pharmaceuticals. So what you end up with is a lot of prohibition era laws that are still around, something called the three-tier system where producers make alcohol, distributors distribute alcohol to retailers where you buy alcohol. And it's allowed distributors and corporations to become really friendly. And most of the options that people have around the country are corporate. And that hasn't seemed to be a problem until recently.

It's interesting. Like a few years ago, I started hearing everyone around me complaining about booze. And I've been in booze for a long time. I worked in bars and restaurants. I served a lot of booze. But a few years ago, people really started complaining, not just in my Silicon Valley circles, but like my North Carolina. line of circles weren't from. And it was they were getting drunker than they wanted to or they

weren't looking forward to the hangover or the calories or their joints were hurting or their sleep was suffering, but none of them wanted to stop drinking. That was the interesting catch. You know, they might do dry January, but that was the extent of it. And looking into it, I realized like, wow, there is this industry that's $280 billion and it's not providing options that meet the consumer's demand. And for a drink to be direct to consumer, correct me if I'm wrong here, it has to be great based and under 24% ABV. So the way, okay, great.

I can check my, or I should say my producers in my notes are correct. Shout out to my producers. So you're able to just sell directly. Anybody in the country can go buy this now and ship to their home. Is that correct? Mostly. Yeah. I mean, what you've seen historically is wine.

is what you typically think about when you think about grape-based alcohol that's under 24%. And that's why there are wine clubs. You know, you can go to wine country, you can ship it to your house in Texas, whatever. But there's this other type of alcohol that no one really knows about in America.

It's known in the rest of the world. You see it in Spain, France, like it's elsewhere, but it's called Appertifs. And it's not quite wine. A lot of them are wine-based, but they're fortified up with, a brandy or something like that. And they're really botanical.

They're really sophisticated. You've probably heard of Vermeuf. You've probably heard of Campari, apparel. Sure. Those are all appuritifs. My dad loved a Campari and soda. He always likes to have a Campari of soda. You know, it's like a drink.

Would Gropa fall into an aperitif? Or is that got too much alcohol? Because that really burns my throat. I wonder if that's one too. You know, it might. But again. I think it's a digestive. That counts.

might be more accurate. I don't know what the difference between those two are, but aperitives is the French term. Yeah. Well, and here's the thing, right? From a regulatory perspective, you can't go sell Kampari on the internet because it's not grape based. You can't sell April on the internet, because it's not grape based. So there's this, again, it's this tiny little sliver within this tiny category of alcohol where you can sell it on the internet. And that happened to be the booze that looked like it checked all the boxes of what people wanted. As founders, investors, and executives, we spend so much time building up the companies and products that we love and care about.

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Do it now. You know, I wonder where Uzo, you know, the Greek-based drink that is based on a Nice, because it seems like every culture in, or at least in Europe, has their own version. The one I like is pastis. I don't know if you've ever had a pastise. It sounds like you worked a restaurant, so maybe you have. But that's the French one.

There's a brand called pastis, is Ricard is the other one. I wonder if they're also absent is another one. And what do they call it in Spain? Anistamono. There seems to be one of these Anis-based ones in each country as well. There's so much. I mean, it's really amazing when you go country to country.

Like, everyone has this version, but America is a young country, all things considered. There's not thousands of years of drinking history in modern American culture. And so we created cocktail culture. And that stemmed from prohibition. It is whiskey-based. It is vodka.

It is gin. When you look around the rest of the world, you don't see that like you do in the United States. And it was designed around a different generation's goals, right? We had previous generations who were drinking to totally let loose, to forget the hard week. You know, like it wasn't necessarily, it was truly a vice, the way that. that it was, you know, the way it proliferated in America. Take me through the flavor of these, and it's grape base. So does it taste like wine?

Because the flavors you have are very interesting. Like, you have a ginger oozu, which that's the opposite of like a grape base, right? You would think it's, that's spicy ginger and lemon. So that's not going to taste like wine. lemon, lavender, like those are also citrus flour. These are very strong flavors, I think. So what does it taste like? Yeah, well, the cool thing about launching something on the internet and not having to go through all these old school gatekeepers is we could just reinvent everything.

Like, you know, apparel and Kampari are like one flavor. And you have no idea what that flavor is. It's just apparel or it's Kampari. For us, you know, my whole career, you know, the threat of my whole career is monitoring consumer trends. Like, I'm always seeing what people are buying, what they care about, how that changes over time. And there were many trends in alcohol that that led to house being the way that it is. But another big one was that the way that younger generations were gravitating towards their alcohol choices were flavor-based. Instead of the more traditional, is it gin, is it vodka? They are actually

buying based on flavor. And you see that in Seltzer all over the place. We've got 5,000 new Seltzer brands a year, and all of them are flavor-based. And when you look at, you know, Corona or these other big corporations, they're launching flavor-based. So that was something that I noticed three years ago when we were first starting to build house of like, we don't need to go and do what Kampari did. We need to go and build a flavor system that actually focuses on the main ingredients. And the benefit of that is when you're an internet-era company, you have to help the customer understand what they're buying. And the easiest way to do that is to tell them what's in the bottle and what it's going to taste like. Pomeranet rosemary. That sounds like a big winner for me.

We launched that today. Oh, did you launch it today? Big day. Huge winner for me. I love like a steak Florentine. I got a thing for Rosemary. I got to be honest. Stock of rosemary for me is just like perfection. And I do like pomegranate. So I'm going to be interested in trying that one. What do I mix this stuff with? Is it like just a little club soda and then make it a little sparkly, do people drink it straight over the rocks? What's the story here? It's kind of like an RTD, which is funny. That wasn't necessarily a trend I knew was going to take over America, but appertifs are a lot like the original RTD. You can pour them on the rocks, and they are delicious. They taste like a $20 cocktail. You could squeeze a lemon in there if you want to ask it. Wait, what's an RTD?

Ready to drink? Yeah, exactly. They're like the fastest, yeah, it's the fastest growing category in alcohol right now by far. And we are considered by all behaviors, RTD. So, you pour us on the rocks, we're awesome. You mix us with soda or tonic. You could mix us with like Coca-Cola or orange juice or whatever. Whatever floats your boat, I like, I very much embrace the high-brow low-brow. Like whatever's in your fridge, mix it. See how it tastes.

Yeah, see how it tastes. Yeah, I'm high and low as well. And what I, is it sweet? Did these have a lot of calories? Because, you know, you're, you've got a lot of fruits going on here. Good question. What's the calorie profile like here? Yeah.

Well, historically, operatives are very sweet. That is the thing about the category that we didn't. not want to copy. So we pulled the sweetness way down and the bitter way down. I don't know, you know, how many uppertifs you've had in the past, but they're quite bitter as well. We decided to not do much of either of those. So we have about 80% less sugar than approll or compari. And the sugar is organic, raw, like unrefined. It's really, it's necessary for mouth feel. It's necessary for taste. It's necessary for preservation. We didn't want to become some sugar-free health beverage, but it's a lot better than what's out there. I like this grapefruit halapeno. How

spicy is that? Is that like, uh, not crazy. It's not crazy. It is a beautiful flavor. It's, it's, it's becoming our most popular flavor really quickly. Mm. Oh, really? Why? Because of margaritas. Margaritas are the number one drink in America right now. So that probably has something to do with it. And, and it's just, it's not something that you see all over the place, right? Like our citrus flower, for instance, it's our first flavor. It's a great. It's a great. seller, but it's a lot like Lillet, which is a appertief that's out on the market already. It just happens to be owned by a corporation and made a fake stuff. But it's still like Lillet, but nothing out there is like grapefri jalapeno.

So we're selling out of that like crazy. I like the packaging as well. When you're creating a new alcohol brand, packaging is obviously critical. You know, White Claw went for like hands that were evocative of Red Bull, I think, to maybe get a certain generation. I think Paul then easy to hold in your hand kind of situation. How did you come up with, you know, this maybe Bauhaus or kind of like, it looks like Scandinavian or, you know, high German design? Well, you know, it's, I find it really. It's right behind you for people who are wondering what it looks like. It's just beautiful. It looks

like porcelain, white bottle, Paul, just really nice looking. Thank you. So we, again, Again, we had so much freedom being able to launch without, you know, traditional liquor guys being like that bottle won't work, which I heard many times from traditional liquor guys. Why did they tell you that bottle won't work? It looks beautiful. Because they have been doing things one way for a hundred years. And this makes them very scared. That's why they say that. But we, you know, when we thought about what the bottle could be, like, we thought about kind of the evolution of packaging from retail to DTC and how like 50 years ago you go to a, a. store, a department store, and all of the packaging is big and bright, and it's covered in sales language and marketing, and because it had to sell itself on the shelf. People receive this bottle after they buy it. So it doesn't have to function as a sales object. So what could it be?

Like, it just needs to be a beautiful object in your home. So we stripped all the marketing, all the things that could be on the bottle. We took them all. And we thought about what do people do put in that. Wait, they put like white, beautiful, ceramic, natural, you know, natural objects. Let's make something that feels really natural and neutral and doesn't detract from your decor and something you'd be proud to put on your bar or your mantle piece. And let's make the logo type illegible. So it's more of just an art object and not a sales object. That is so brilliant. It reminds me of the Casa Azul bottle, which that is my inspiration. I'm so glad you said that. Uh-uh.

Oh, my gosh. Well, you know, because you put that, whenever I go to somebody's house, they don't put that in the liquor cabinet under the cabinet. You know, usually you pick three or four bottles that you put in your cocktail station above ground, the ugly bottles you put below ground, or maybe even transfer them into a nice decanter or some other bottle.

Like, that's what people do with their scotch, right? They put it in a nice crystal scotch thing because the one you're getting is meant to look good at the store on a shelf to pull you in or whatever. these are meant to be objects of art like you're saying and I'm guessing people could reuse them or whatever they're they're that good looking they do I have uh I have some flowers in one behind me

looks like 1970s like Santa Monica come over for cocktails like yeah groovy vibe you're doing a good job so you know I my background's in brand and I put a lot of thought into this brand um I also worked with Jin Lane, who was at the time, you know, the top dogs in the D to C space when it came to brand building. But I came to them and I was like, hey guys, uh, I'm very honored that you'd be willing to work with us. I have one catch. It's not going to look like any other brand that you've ever done. Is that okay? Because they, you know, they did hymns. They did the, the whole era of like Warby Parker style, you know, it's like digital photography. Gin Lane, they don't exist anymore. They, they turned to pattern brands. But at the time, they were the top D to C brand agency in existence.

They were like getting in with Gin Lane was like getting into white combinator for brands. It was like almost impossible. But now they're called pattern. A multi-brand consumer goods company owned and operated under one roof got it. They pivoted to making products. Oh. So they were for services and then they went, that's fascinating. Yes.

No, big, big courageous decision. But I went to them and said, I want something that looks completely different than every other D to C brand. Everything at the time was digital and shiny and on like a colored studio. backdrop. Like you remember, I'm sure you saw the ads. And I wanted something that looked almost like our parents' photo album of the parties in the 70s, you know, something that felt like a little Laurel Canyon. Yeah. Maybe like just old, you know, sparked. Maybe somebody's rolling a joint. Somebody's got some Jackson Brown on. Exactly. Kind of groovy. And it's something that felt nostalgic because drinking is something that's been done forever. We're not selling something new or

selling a behavior that our parents and our grandparents did and that they made really good memories around. So I wanted the brand to feel that way. If you're a startup founder, you know early decisions can be the difference between your success and ultimately, sadly, your failure. One decision that thousands of successful founders have made is choosing Stripe as their payment platform. We all know this. Everybody loves Stripe. It's the industry standard. And CEO Patrick Carlson was on episode 723 back in April of 2017. Over the past decade, Stripe has made processing payments simple and borderless. In fact, they enable businesses like Shopify, Postmates and Kickstarter. You may have heard of those, huh, to grow revenue and expand

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Just head to Stripe.com and get started today. How do you acquire new customers outside of word of mouth? What's working? Because D to C, I've had a particularly hard time with D to C companies as an investor because it's so competitive marketing right now. The ad networks are filled. Customer acquisition costs has gone up, up, up. The ad networks are less efficient because of this Apple change.

And let's face it, it's super competitive. You have all these, like, somebody figures out mattresses. Now there's 100 mattress companies. Somebody figures out, you know, whatever the category happens to be, sunglasses. Now there's too many. So how are you thinking about growth in 2021 going into 2022 for house? Yeah. Well, it's funny.

We are, we're about to put a lot of focus off of D to C. So D to C was necessary for us to launch. Again, no indie brand has done what we've done ever. We were able to bypass the gatekeepers. We were able to build this big brand. But the plan was always to go omnichannel. It's so funny, I end up in these conversations where they think it's like zero sum and it's a binary and you have to choose D to C or wholesale. But for us, the plan was always, oh my God, we figured out how to launch D to C.

This is amazing. Let's go prove that we're making something that people want. Because all these industry people in the beginning told me my idea was the dumbest thing they'd ever heard. They were like, who wants another appriteef? What are you talking about? Who wants to buy alcohol on the internet? I mean, all of them just blew me off. So if I could go and prove to them that I made something that people want, then I can go to

all these distributors, show them, like, I've de-risten it for you. You don't even have to sell this product. I've got demand for it all over the country. And luckily, we've gotten to that place. You know, like that was my pitch in the beginning. But now we're two and a half years in. And we've got wholesale inbound demand all over the country. We've got distributors coming to us, which again is unheard of for an indie band.

And so. But they take a lot of margin. So how do you think about that? Here's the kicker. The margin. Shipping liquid is not a good margin business. Our margin is 25% better in wholesale. Oh, wow.

Oh, shipping liquor is hard because it's, uh. It's just heavy. It's heavy. You know, go ship vitamins, easy, peasy. Ship a giant ball of liquid, not fun. So for us, you know, D to C was never the end. Like, it was never the end game.

It was our foot in the door. And now we can go and continue to use D2C as this insights channel, as this marketing channel. We have memberships. We have larger formats for entertaining. We have gifts. But then if you want a bottle of house, you better be able to go find it in your grocery store,

your favorite bar, right? I see your ads are all over Facebook, or I'm looking at the ad library and you're doing the whole Black Friday thing. How is it, how is that working? Is it too competitive this year to compete on Facebook for ads? By the way, gorgeous ads. The sample packs look great.

That looks like a great experience. Four bottles, six bottles. You get to pick them. Really nice. Looks good for corporate gifting as well. Thanks. How is Facebook working as a channel? Does that work anymore?

Well, iOS, the iOS changes were rough. I mean, for everybody. No, we watched our CAC triple overnight. Triple. Customer acquisition costs tripled overnight. Wow. That's brutal. That sucks.

Luckily, we were able to get it. back down almost to where it was, but it took us six months. But again, it's just like, it's this other... What did you do? Just iterate on creative or different audience segments or... Yeah, I mean, I think for us, it was getting back to the core messages of why we launched house in the first place. Oh, got it. You know, it's, you can try a lot of things, but I've found over, again, I've been doing this for three and a half years now, always getting back to the why is what converts people. You can go into the what all day, but again, that's not going to inspire loyalty. And the Y is, hey, you're not going to be hungover, great flavors, great aesthetics.

Yeah, I mean, there's a lot of layers to Y, right? It's like, I launched this. Well, those are the three I remember here, but did I get the top three? Yeah. I mean, it will make you feel better. It's a product that's not full of trash, which, again, you wouldn't know is the status quo, but it is. What about non-alcoholic? I know there's like ritual was like the zero-proof brand. I remember them, you know, pitching pretty hard all over the place, like a tequila and a whiskey. But again, you're saying people pick based on flavor. Those are based on the alcohol category.

Yeah, function. What do you think about, did you even consider doing a zero-calorie version of this or an even lighter version of this? Or do you think you might offer that in the future of like, hey, here's just the flavor? That would be easy because it's a binary. And people love binaries, right? They love like sugar-free, zero-calorie, like zero-alcohol. It's a lot easier to message those kinds of things, right?

When I was doing the consumer research that led to the idea for house, you know, I was just researching this industry kind of for shits and giggles because it seemed like there was room for innovation. I saw this, I saw this binary in the industry, which was all like super boozy, like, you know, just the vices of the vice. And then there was functional beverage on the other side. And that was no alcohol, no sugar. And no one was willing to hang out in the middle, which was interesting to me. And I get it because it's hard. It's really hard to message the middle. And, you know, one of my kind of OG inspirations in this space is honest tea. And, you know, he went and looked at the market, saw all of this super sugary sweet tea. And then he was seeing this proliferation of this aspartame, sugar-free, zero-calorie. And he was like, what if I just made something with a little bit? You know what I mean? Like, that's what I want? Maybe like it doesn't, it can be in the middle. And I'm sure he experienced a lot of the same challenges with people being like, but sugar's bad. But he built a multi-billion dollar business based on that.

It really is interesting. I really remember seeing honesty. And I don't know what they said, like a little bit or just a hint. They said something, like a hint of honey, a little bit. And I was like, oh, that's kind of what I'm looking for. Like the fake sugar doesn't taste so good, but like I don't want to have a two or 300 calorie beverage. But if it was 60 or 90 calories, yeah, that's. might be interesting

to me. Absolutely. Okay, let me ask you about the 8 billion pound elephant in the room, which is Amazon.

They tend to be a point of contention for D to C companies. How do you think about Amazon? Because when I typed in your name into Amazon, it's drop-down search

suggested your operative sampler pack. So there's obviously people on there searching for it. They're filling in the search. When it fills in the search, it doesn't exactly show competitors, but do they even allow alcohol on Amazon?

I'm guessing Whole Foods does, but how do you think about Amazon? Yeah, Amazon's dabbling. It's funny, when I thought about kind of, you know, you're putting together your first pitch deck for your seed round and you're thinking, okay, what are my potential acquisition targets? Amazon was up there for me because they are dabbling in alcohol in the rest of the world. Like you go to Europe. And Amazon has their own brands. What?

They're doing house brands for alcohol? Yeah. No pun intended. That's, you're doing house brands. Yes, thank you. I'm like, a little slow in the dry here.

Just a tad sweet is the honesty. Uh-huh. Just a tad sweet. They must have suffered over the tad. I'm sure it brought them grief, but now they're fine. Yeah, I think they got it. So they have,

Amazon has their own alcohol house brands. Wow. Yeah. Yeah, so they are very... Private labels what I mean by house. Yeah, exactly. So just so people aren't confused. Amazon and House, no. So they are, I know that they are waiting, waiting for regulation to change in the U.S. And they are wise to be waiting because, you know, in the beginning, we always, we had people ask, well, what if, what if regulation closes up and they, you can't sell?

It's like, no, that's not going to happen. If anything, regulation is going to keep opening. And then COVID accelerated that by a thousand million percent. where the behavior of ordering alcohol online is normalized now. And we're the only ones taking the full margin on that. When you are buying from drizzly, when you're buying from any of these online alcohol purchasing, you're not buying it direct.

You're buying from a courier who bought it from a retailer, who bought it from, you know, Yeah, there's like a million people who are taking a cut of that. So corporate alcohol doesn't like that. They're going to want to have more skin in this game. and you've got, you know, the go puffs of the world that are growing at like a massive pace. Like, there are going to be big incentives for Big Alc to want to change. But the funny thing is, is you're looking at kind of a classic Warby Parker Luxottica kind of situation where if corporate alcohol wanted to suddenly go D to C, the big distributors who they've been in Cahoots with for 100 years would not be happy with that.

And so they kind of have each other by the throat, which allows people. like us just to slowly take market share by ourselves. Yeah, I was actually pitched by a startup that was working with McAllen, I think, to actually experiment with direct sales. They are dabbling in it, right? Some alcohol brands are dabbling with direct to consumer. Yeah, I mean, dabbling could look something like hiring these in-between career services, but it looks like direct. And liquor can sell to seven states. So you could. It'd be a kind of weird attempt at marketing to just seven states. What's the next step for the business? You've raised this, you know, I think a seed round. Maybe it's a series A. I'm not sure what I don't even know what to call it anymore. We've raised a

bunch of money on notes. Got it. Okay. So there's a C, I would call it a seed round then. What do you have to do to sort of get to the next level here and prove, let's say, some giant venture firm to do a series A or do you raise from angels and then go the private equity route? Because it does seem like VCs maybe don't dabble here too often. So is your plan to try? They haven't. Yeah. I don't think so. So what's the plan? Do you try for that? If not, just go private equity, which seems to get this all the time. Yeah, we'll raise more money. You, I mean, you know, like VC has never touched alcohol. It's kind of a miracle. I was able to raise from who I raised from. But we'll raise money. There's money out there, whether it's P, whether it's family offices. I don't, I want to get off the fundraising hamster wheel. So I've been really focused on, you know, I think in the early, earlier days of CPG 1.0, you didn't have to worry about the economics this early. You do now. Like, it's just, it's a different ballgame. So for me, I'm really focused on getting the business to profitability. So I don't have to raise money. I've got this guy, Jerry Ruvow, on the,

my board. He was the chairman and CEO of Compari USA for a long time. He's like a liquor god. And he said, you know, a very, very good thing to remember, for all of us to remember, nobody wants to buy something that's for sale. Right. So if you go and look at someone's P&L, and it's very obvious that they have to raise money again and again and again and again. You know, that's for sale. I mean, you could be profitable. It's a high margin business. People are willing to pay for it. So I think it'll, you'll get there pretty quickly. Yeah, but, you know, we're just focused on doing what we're doing. Like, It's a great business to be in.

Successful consumer brands and liquor get purchased for 10 to 20x revenue. It's like software multiples. We have been called the next Cosamigos by some liquor guys who know what they're talking about. That would be wonderful. Perfect. But, you know, I'm just trying to stay focused. I think there's a really big trend here because there's a lot of pressure, especially towards young people to drink.

66% of Melan Hills are trying to reduce their act. according to a survey recently by Nielsen, we're trying to reduce their alcohol consumption and 47% of U.S. adults are trying to reduce their alcohol consumption. So people understand, like, hard alcohol, like drinking too much. It's like poison is for your body

when you start taking it to that level. And there's like this, you know, sober curious moment or like being mindful about drinking and maybe binge drinking in America, which is some bizarre thing that doesn't exist in Europe. where people are allowed to drink socially at a younger age, maybe we can reset how we look at alcohol. And I think the reason why Europe maybe doesn't have this

is because they have aperitives and they have wine culture. It's not hard liquor culture, whereas America's like moonshine, scotch, vodka culture. Yes. You're writing that wave. It's true. I mean, can you imagine, I mean, one of the things that keeps me really inspired is,

can you imagine if we all gathered in the same way that we all gathered, but suddenly our glasses had half, of the alcohol and none of the other, you know, synthetic, terrible ingredients that have historically been in that glass. What if we didn't have to change her behavior at all? And we could just focus on hanging out with each other, making connections, making memories, catching up. That to me is the beauty of a product like ours existing in the world of like, you don't have to go and struggle through a dry January. You don't have to try and not go out. Like, you can just go and enjoy all the same things that other people enjoy in drinking culture

and maybe you have no alcohol in your glass. Like, it's such a great thing that there's all of these options available now that feel like you're doing the thing that you used to do, but it's not as bad. I had a strategy because I didn't drink from maybe the age of 15 or 16 until maybe I was 30 years old.

It's one of the reasons I was super productive in my 20s. I just didn't like alcohol. I still, you know, only drink a very little amount. One glass is enough for me, maybe two. Um, but my trick was I would just order a club soda with a splash of cranberry. And I tell them to put it in a short glass. So it looked like a vodka cranberry. Don't put it in a pine glass.

I mean, people would give it to me in a pine glass to be generous. And I'd be like, you know, people would be like, whoa, that's a big vodka cranberry. And I just put it in a small one. Then people would stop pressuring me. So they saw me drinking a cocoa go. Oh, what are you drinking? What are you drinking? What are you drinking?

I'm just like, oh, I'm just having one cocktail. Oh, great. Yeah, I'll join you. But the pressure in my, I remember in my 20s in New York was so intense. And that's when I moved. to champagne because I was like, you know, I'd get a bottle of vuv, I can nurse it all night, I give away a couple of glasses, I drink one or two glasses, I'm good. Yes, no, it's not fair. I mean, I experienced it when I was pregnant. I've got a three-year-old. And, you know,

when I was going through, you know, people knew I was pregnant before I was willing to tell them because they saw that I had a drink in my hand that wasn't booze. And it's just so silly that that's the way things are. But again, like, I've had people ask, well, why aren't you in a can? Why aren't you like all these canned seltzers? And it's like, because, we want to fit into the way people drink. And people drink out of glasses. Sometimes they drink out of cans. They drink out of glasses.

Yeah. I mean, if you're going to a college or a frat party, no offense to my young producers on this podcast. Yeah, there's a time in a place. Some people, like, if you have a party, here's an idea. You know, throw away the red plastic cups. Instead of putting like white claws in ice, you know, maybe get a couple bottles of house.

You invest in some glasses. Maybe get like a stirrer and some. a bag of nice ice cocktail ice and yeah you do it nice for once well for them class to join up they can do whatever they want but for someone like you or like me who maybe doesn't want to drink a super boozy cocktail but wants to look like everyone else in the room yeah there should be a way to do that absolutely absolutely and you don't have to fake it like i did all right listen continued success everybody out there you can go uh if you're so inclined to drink dot house not h o us e house as an h a

U.S. So drink dot house. I didn't know there was a dot house extension, but great. I'm assuming you have drinkhouse.com as well. Yes. People want to type that in. But I like typing in the new extensions. Drink.

Dot H-A-U-S. They've got a ton of little sample kits. I'm ordering one right now. I've got my little four sampler kits. I'm definitely going to do grapefruit jalapena. That's a no-brainer for me. Ginger, Yuzu, like two of my favorite flavors in the world. I have Yuzu soda that I get from Japan.

It's good stuff. I've got to go pomegranate at rosemary. That's a big win for me, big on rosemary. Mm-hmm. And now I'm looking at new fashion. I'm not kind of into old-fashioned. Citrus flour. Yeah, flour is not my thing.

Rose-rosay. I am rosé all day. So I'm going to put a pin in that one. I think that's number four. Maybe. No, spice cherry. You know what? That's my favorite.

I'm going spice cherry because I was in Italy and I had gelato once or twice a day with my daughters. And they have cherry gelato in Florence. in Italy all over the place. They just have this incredible cherries and in syrup and they pour it over your like vanilla ice cream and then they kind of fold it in. Unbelievable. The cherry, gelato always very strong. So I'm going spice

cherry. It gives me two spiced. One rosemary's, I got one herb and then I got one that's well no actually with the ginger, if you consider ginger a little spicy, I went three spicy and one and I'm going no sweet. You have one that's strawberry too, right? We had a strawberry basil summer

flavor. It'll come back one day. You can try it. Oh, are you doing that thing like magic spoon cereal where they do a seasonal or whatever? Yeah, that's actually a really smart move. When you do the subscription, do you surprise them or can they say surprise me in the subscription or no? They choose whatever they want. So you got to, that's a mistake. You got to, this is a mistake. What you got to do is you got to let them choose a couple and then say, surprise me for the fourth with like, or get the first shot at the limited edition flavors. Like, you got to be able to put in limited edition flavors is my preference. I will do that.

People love getting surprised in the fourth bottom. Done, done and done. We already shipped it. Thanks for coming on the program. Everybody check it out again. The website, drinkhouse.com or drink.h. And we'll see you all next time on this week and starves. Bye-bye.