Pod Insights How I Built This with Guy Raz Health-Ade Kombucha: Daina Trout (2020) About this episode In 2012, Daina Trout, her husband Justin, and her best friend Vanessa Dew were sitting around a kitchen table spit-balling possible business ideas. Their biggest contender seemed to be a natural product to treat hair loss. Turns out, it's harder than they thought to make one, so they landed on something completely different: a brand of homemade kombucha they called Health-Ade. After nine months of brewing kombucha in their kitchen and selling it at local farmer's markets, the three co-founders quit their jobs to pursue Health-Ade full time. In just seven years, Health-Ade brewed 120,000 bottles of Kombucha every day, and did close to $200 million in retail sales.
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Transcript 12,358 words · 2 speakers
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0:00 Guy Raz? Our presenting sponsor today is Anthropic, the team behind Claude. Every founder on this show started with a hard question. Not the marketing plan, the 2 a.m. kind. Is this idea any good? Am I the one to build it? Should I quit my job? Anthropic got built the same way. A public benefit corporation founded on one hard question. How do we make sure AI goes well for people? So they asked over 100,000 people their hopes and their fears and are publishing what they find, even the uncomfortable parts. Me? I've got my own hard question about AI. Here it is. If everyone has access to something that can help them write the business plan,
0:46 Guy Raz? build the prototype, analyze the market, maybe even come up with the idea, what separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. We get support from U.S. Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't.
1:32 Guy Raz? Say you're 18 months in. Business is growing. You've got expenses coming from six directions. Gas for the van, office supplies, your phone bill, team lunches that are actually client meetings, and you're putting it all on whatever card you grabbed in year one. You're not thinking about it. Why would you? You've got bigger problems. But here's the thing. Path A, you keep going like that. End of the year, you're sorting through statements, trying to figure out what went where. You've left hundreds, maybe thousands on the table in rewards you never earned, money that could have gone back into the business. Path B, you pause and get The US Bank Triple Cash Rewards Visa Business Card.
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5:07 Guy Raz? Visit mobili fuels.com for details. Hello, everyone, and Happy New Year. I just want to let you know that we'll be back next week with a brand-new episode of How I Built This. But until then, we want to bring you this really inspiring episode from our archive. It's my conversation with Daina Trout, the co-founder of HealthAid Kombucha. Dinah was a biochemist who partnered with a pharmaceutical rep and an aspiring musician to start brewing kombucha in a closet. And then they grew the brand into a $250 million business. This episode first ran in the fall of 2020. I hope you enjoy.
5:48 Speaker 01 There were days in the summer that we were making $1,500 bucks in a market.
5:54 Guy Raz? Wow.
5:55 Speaker 01 It surprised us and it surprised the farmer's market people. But first of all, you couldn't walk through the market and not taste our kombucha. We would make sure that everybody who walked by our booth got a sample.
6:06 Guy Raz? How'd you do that?
6:08 Speaker 01 Hey, you. You want to try some probiotic tea?
6:16 Guy Raz? Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.
6:29 Guy Raz? I'm Guy Raz, and on today's show, how an unlikely idea for a product to fight hair loss led to today's fastest-growing brand of kombucha called HealthAid.
6:47 Guy Raz? One of the questions we get all the time from aspiring entrepreneurs is, how do I turn my promising side hustle into my main gig? Because for everyone out there who's making something in their garage or kitchen and maybe selling it on eBay or at a local flea market, or really anyone who's working on a business idea part-time, that moment where you decide to make the side hustle your full-time job can be daunting and scary, especially if you're walking away from a stable career with a salary and benefits. Now, of course, there's no one simple answer to the question of when to do this. It often comes down to an overwhelming feeling
7:30 Guy Raz? that what you've started to build is actually the thing you want to do with the rest of your life. The feeling Nancy Twine had when, after three years of working on her side hustle, she quit her job on Wall Street to go full-time with her hair care products company, Briocheo. And the feeling Sal Khan had when, after years of making YouTube tutorials, he realized Khan Academy was what he wanted to pursue full-time. And today's story follows a similar pattern. In 2012, Daina Trout, her husband Justin, and her best friend Vanessa launched a side hustle selling homemade kombucha at a farmer's market in Los Angeles.
8:14 Guy Raz? They had very little experience and almost no money. But less than a year after that, as you'll hear, they were facing that transition moment. And Dinah decided to go all in on kombucha. Now, over the past 25 years, kombucha has become a huge category in the beverage sector. In fact, in 2020, the market for kombucha in the US is expected to be close to $2 billion. But at the beginning, Daina Trout really had no idea where kombucha was headed. She started making it for fun as a graduate student. At the time, Dinah was living in Boston and working toward a PhD in biochemistry.
8:56 Guy Raz? And she says that if you ask any of her roommates in graduate school what they remember about living with her, they would probably all agree, it was the food.
9:06 Speaker 01 Oh, man, I made the best dinners. I mean, I got into some serious credit card debt in grad school. Let me tell you, because I would invite everybody over, neighbors, friends, friends of friends would come over and I would make something spectacular. Paella, like 24-hour paella, and, you know, every kind of fish under the sun we would find and, you know, build salt rocks and then put that in the smoker for, I mean, it was just really beautiful, real, whole-food cooking, and lots of wine.
9:37 Guy Raz? Yeah, yeah.
9:38 Speaker 01 It was a lot of fun. And I got into, you know, I wasn't really afraid to get advanced. So that's how I started getting into like sprouting things and fermenting things. So, yeah, kombucha, kimchi, sauerkraut, kefir, these were all things I played with.
9:54 Guy Raz? So you end up earning a master's degree in nutritional biochemistry and also a master's in public health, but I guess like you eventually decided not to pursue a PhD?
10:07 Speaker 01 Yeah.
10:08 Guy Raz? So you've got these degrees, it's 2007, and you're living in Boston, in the Boston area. And I guess at the time, you were dating somebody who's now your husband, Justin, is that right?
10:20 Speaker 01 Yeah.
10:21 Guy Raz? And tell me about what, you guys, I guess, decide to relocate to the West Coast?
10:26 Speaker 01 Yeah.
10:27 Guy Raz? Why'd you want to leave the East Coast and go to, I mean, I can understand, I live in California, but why would you, why did you decide to do that?
10:33 Speaker 01 Yeah, I mean, three reasons. The weather, the produce, and the music. So Justin was a musician. So the decision for us as a couple was, are we going to go to New York or LA? It was a tough call, but we just, I think it had been a particularly brutal winter, too. It was like, we just wanted to move to California. And I didn't know what I was going to do yet, but I figured I could figure it out when I got there.
10:59 Guy Raz? So you're in LA, you moved to LA. And I'm assuming you start to look for a job or you started to look for a job before you moved?
11:06 Speaker 01 Well, I was looking, I was very open minded and also practical in the sense that I understood I had, you know, an undergraduate degree to pay for and two graduate degrees to pay for. So I was really looking for what would pay me and what could use my skill sets. And I got recruited, actually, by a pharmaceutical company, which is pretty funny because if you knew me back then, you know, you couldn't even convince me to take an Advil then. So it was pretty funny that I ended up taking a job with the second largest pharmaceutical company in the world.
11:37 Guy Raz? Which is?
11:38 Speaker 01 GlaxoSmithKline.
11:40 Guy Raz? And, and based in LA?
11:41 Speaker 01 Based in LA. And that's where I found myself for five years. That really was my only job. I mean, that was my only real job besides the stuff I did extra just to, you know, buy my beers in college.
11:52 Guy Raz? Yeah. So you are, you become like an employee of GlaxoSmithKline. And, and I guess on, on like the first day or in the first week, you get paired up with somebody who would factor into your life later, and this is Vanessa Do.
12:05 Speaker 01 Vanessa Do.
12:06 Guy Raz? And both of you were like young sales agents at that point, sales reps?
12:11 Speaker 01 That's right. Yeah.
12:12 Guy Raz? And, and how were they, how were you guys paired up?
12:14 Speaker 01 So first day, not first week, first day, she, so they make you do a ride along your first day. So they paired us together and we became fast friends. And funny thing happened, I just have to share with you that day because she had broken up with her boyfriend the night before. And so it wasn't a great day for her. And so when she picked me up, I could see she had like mascara under her eyes from tears. And I, and I'm particularly good with people, you know, that have just been through something. And so we had just a really good day and I think it wouldn't have been such a great day had that not happened. So a little bit serendipitous on many fronts.
12:49 Guy Raz? So when you, when you started working there, was it, did you enjoy it? Was it, I mean, what did you like about sales?
12:56 Speaker 01 Um.
12:58 Speaker 01 I don't know if I really enjoyed it. I loved being with people and connecting with people. So, yeah, I did really well. I think the first year I was like probably one of the top, I think me and Vanessa, we won the, the team won the top award for the year. And it was like that the whole time we were there.
13:16 Guy Raz? What was your ambition at that point? Did you think, you know, I'm, I'm kind of kicking butt here at GlaxoSmithKline. Maybe, maybe I'll be an executive here one day.
13:25 Speaker 01 Yeah, for sure. I always had that grandiose fantasy, I guess you could call it. And, and it was, it's only a fantasy because, you know, there were a hundred thousand employees at GSK. But that, that's absolutely where I was focused at that point on being a manager next. And then moving from management up to, you know, more executive leadership and so on and so forth. So it was like, I had my vision to get to the top.
13:49 Guy Raz? I guess a few years in, you are exceeding expectations on sales goals. And they gave you this, this chance, I guess, for a year to sort of step away from the sales side and be what they call a change agent. And what, what is it? What, what did they let you do?
14:04 Speaker 01 So the context of that time is important here. Pharmaceutical companies were all in a transition state because generic medicines were starting to really come out.
14:14 Guy Raz? Yeah, yeah.
14:15 Speaker 01 And there was just a lot of change, a lot of attrition, layoffs every three, four months, productivity went down, engagement went down, morale went down. It was like a, a real turning point. And one of the things they came up with was get your 10, 20 best people and get them to help you bring productivity back and engagement back. And so they called them change agents and I was fortunate to be one of them. And I accepted because I really didn't know what was ahead, but I felt that it was an opportunity for me to continue to move up.
14:49 Guy Raz? So what would you do? You would travel around?
14:52 Speaker 01 Yes, it was really, really cool and also unstructured. And it, and this is why it was an important moment for me. And what I chose to do with that was I went and met with every single team for a week.
15:07 Speaker 01 And I spent time riding along with each individual. I spent time with the manager. I spent time with each team. And I just talked to them.
15:15 Guy Raz? You were an internal consultant, basically.
15:17 Speaker 01 I mean. A little bit, yeah.
15:19 Guy Raz? And then what happens? It ends and they they're like, OK, go back to your job in sales.
15:23 Speaker 01 Basically.
15:24 Guy Raz? And you were like, this is what I'm assuming. You get back to your sales job and you're like, I'm back to what I was doing before that.
15:31 Speaker 01 Yeah. I had all this autonomy and no structure and I could just do whatever I wanted. And I was good at that. Like, I loved that. And then pharma sales is so much rules, so much structure.
15:45 Guy Raz? Yeah.
15:46 Speaker 01 Yeah, no, I was not happy.
15:47 Guy Raz? So you get back and you are feeling uninspired and unfulfilled. Did a part of you think maybe I should find another job?
15:57 Speaker 01 No, it it was, I want to say it was clear, but it wasn't really clear. Maybe a better word is it was loud. There was definitely a calling, I guess you could say, that I needed to start something.
16:13 Guy Raz? And and where did that come from? I mean, you hadn't done any entrepreneurial stuff up until that. I mean, you hadn't been on that track, right? You hadn't been thinking about that. So was it, did it come from someone else?
16:26 Speaker 01 It came from that change agent experience, I think. It may not sound very entrepreneurial, but in fact, it was. I had no, just a very big goal. And so that that sort of built my confidence, too, where I said, hey, I'm really good at this sort of like lack of structure thing and taking charge. And I'm also good at getting people on board and like inspiring them. And I loved that. I really loved that. I felt a lot of fulfillment from getting people to sort of combine forces and and go.
16:59 Guy Raz? And by the way, what was, what was Justin doing at this point? Because I mean, he came to LA to be a musician. So what, what was he doing while you were at Glaxo?
17:09 Speaker 01 Yeah, yeah. Good question, because I think that's another part of what drove the entrepreneurial thing. So Justin was writing songs. We had turned our second bedroom into a songwriter room. He played for a band and on the side, he worked for an entrepreneur, a very, very successful entrepreneur.
17:27 Guy Raz? What did he do for him?
17:28 Speaker 01 Justin sort of, I guess you could say his job was in marketing, but he really was a little bit of like an assistant.
17:32 Guy Raz? Yeah.
17:33 Speaker 01 And he would talk about this entrepreneur and just how successful he was in the life that he lived. So that also, I think, drove my desires because I think we started to say, well, imagine what we could do.
17:43 Guy Raz? Huh. So did you, I mean, so you're still at Glaxo and you're still working there. But did you, did you start to kind of brainstorm with, with Justin? And, and I guess also with Vanessa, your closest friend at, at Glaxo, did you guys sort of start to talk about, hey, what, what could we do?
18:00 Speaker 01 Yeah.
18:01 Guy Raz? You just sit around and kind of throw ideas out?
18:03 Speaker 01 Well, it was more structured than that. The beginning was more of an emotional journey. Like, I think the three of us had to accept that this is what we wanted first. And then we were like, what are we going to do? As soon as we got to the place of knowing we wanted to do this, immediately every Saturday, we were having entrepreneur club meetings. So it wasn't just sitting around. They were structured.
18:24 Guy Raz? Like you had to all come with ideas or?
18:26 Speaker 01 Yes, yes. So the idea was in the week, you were supposed to have a notebook with you. And at any point during the week, if you had a pain, a struggle at all, you had to write it down.
18:38 Guy Raz? Yep.
18:38 Speaker 01 That was what we gathered around. So we had all kinds of ideas.
18:42 Guy Raz? Like what?
18:44 Speaker 01 Like, um, okay, so they ran the gamut. So parking was a pain in the ass. So the idea for an app that would, you know, solve for looking around for parking in downtown LA. Vanessa would come in and say, I remember one of the ideas she brought up was her high boots. She has these like knee high boots and they would slouch. They would fall when she would walk. What could we create that would hold those boots up?
19:08 Guy Raz? Oh.
19:09 Speaker 01 Yeah, I mean, really all over the place. So if we liked the idea, like the three of us would look at it and brainstorm solutions and we thought that there was one that had legs, we would move it to the next phase.
19:20 Guy Raz? Right.
19:21 Speaker 01 Which would mean somebody would take it on and do a little research. What's, what does the competition look like out there? How much would it cost to, you know, just sort of initial broad stroke stuff?
19:30 Guy Raz? Yeah.
19:31 Speaker 01 And most of the stuff would get crossed off the list because we just didn't have any significant money. And we had gone through several weeks of this process in the entrepreneur club, maybe even a couple of months. And by the way, Vanessa and I did start one in there.
19:45 Guy Raz? You started a business?
19:46 Speaker 01 We did, we did.
19:47 Guy Raz? Oh, what would you start?
19:49 Speaker 01 I wouldn't say we actually started a business. We made business cards. We felt that parties could be better if they had like a theme.
19:59 Guy Raz? Hmm.
20:00 Speaker 01 And that we have themes for birthday parties as kids.
20:02 Guy Raz? Yeah.
20:03 Speaker 01 Why don't we have theme parties more and easy theme parties for adults?
20:08 Guy Raz? Hmm.
20:09 Speaker 01 And then eventually this could turn into a really great business where we would sell kits. Like that was sort of the thought. And so we called it Thematics.
20:15 Guy Raz? So like if the party, if it was like, the, the theme was the Flintstones, you would go decorate a house like the Flintstones?
20:21 Speaker 01 Yeah.
20:22 Guy Raz? Okay.
20:22 Speaker 01 So we made business cards. We even went and sold a, a party to a record studio in Hollywood.
20:30 Guy Raz? Wow.
20:31 Speaker 01 And it was a, I, it was Halloween and I don't remember. Uh, which is really sad. We never ended up doing it.
20:39 Guy Raz? Oh.
20:39 Speaker 01 That's why I don't remember.
20:40 Guy Raz? Okay.
20:41 Speaker 01 We sold it in and they were excited to do it. And then like it just sort of puttered out. They ended up canceling the party for a reason unrelated to the, uh, the theme.
20:51 Guy Raz? Right.
20:51 Speaker 01 It was like they, they were cutting budgets or something and they decided not to do a Halloween party this year.
20:55 Guy Raz? Right.
20:56 Speaker 01 So there was a bit of frustration, you know, in the group and we were gonna get another party going and Justin basically came into one of the meetings and said, guys, I feel like what you're talking about is just, is gonna be a lot of work. I'm not particularly interested in that. I mean, the three of us really were broke.
21:13 Guy Raz? Um, by the way, and you're still, both of you are still working at GlaxoSmithKline at this point? You're still, because you need the income?
21:19 Speaker 01 Oh, yes.
21:20 Guy Raz? All right. So you guys are having these entrepreneurial meetings and I guess that the problem you decided to settle on was because Justin raised this problem. What was the problem he had and what, what was the idea?
21:32 Speaker 01 Um, the problem was hair loss.
21:35 Guy Raz? Okay.
21:36 Speaker 01 Um, so his entrepreneur, the, the one that he was working for, he became successful by selling a product that basically solved for hair loss. And so Justin would see how far people would go, consumers would go to protect the hair on their head. And so he came in saying, guys, we could make something here. I think he had recently gone to represent that company at a trade show or something. And he just saw the incredible opportunity. So he brought that to the table.
22:06 Guy Raz? So he's thinking, we got to get into hair loss because this is a big deal. It's a huge industry and there's room to kind of enter that market.
22:13 Speaker 01 Yeah.
22:14 Guy Raz? And, and so what did you guys, I mean, where did you start?
22:18 Speaker 01 So Justin, Vanessa and I started researching what would regrow hair. And yeah, the idea was we create some kind of product that worked though. That was the goal.
22:25 Guy Raz? This is a bold swing. This is like a big swing for the fences because for at least 2,000 years, humans have tried to answer that question. And it's pretty bold that the three of you are like, we can figure this out. I mean, I love that.
22:38 Speaker 01 Yeah. So I was particularly interested in finding a natural substance.
22:44 Guy Raz? Got it.
22:44 Speaker 01 And so I was sort of researching, what could you eat? What vitamins would you need? And, and it just started researching that. That was my angle. And when I came back the following week, I had reported that basically I found all this anecdotal event, like all these people all over the world just talking about using a kombucha scoby on their head to regrow hair.
23:05 Guy Raz? Well, just pause for a sec. Okay. I make kombucha, so I know what you're talking about. But in kombucha, there is a large gallopy, um, sort of pale mushroom kind of thing that sits on top of the kombucha called a scoby.
23:18 Speaker 01 It's an acronym. Yeah.
23:19 Guy Raz? What does it stand for?
23:21 Speaker 01 Symbiotic Culture of Bacteria and Yeast.
23:24 Guy Raz? Scoby. It is a, like a mushroom kind of thing that just eats up the sugar.
23:28 Speaker 01 It's a fungus.
23:29 Guy Raz? It's a fungus and that's what makes the kombucha, that's what ferments the kombucha and helps make it sour. So you read that the, that the kombucha scoby, it what? If you stick it on your head, it promotes hair growth?
23:45 Speaker 01 That's right.
23:46 Guy Raz? Wow.
23:47 Speaker 01 And I wasn't just seeing that once. I was seeing that in a lot of places.
23:51 Guy Raz? What?
23:52 Speaker 01 Yeah. People talking about taking that scoby, mixing it with something, or just putting it straight on the head as a mask. But what I really thought was, I know how to make kombucha. And therefore, I know how to make scoby, so we could try this thing.
24:06 Guy Raz? Yeah. So you thought, alright, let's try this out. Because you couldn't, I mean, you knew this from working at a big pharmaceutical company, that there's something called the FDA.
24:14 Speaker 01 Yeah.
24:15 Guy Raz? I mean, you couldn't just put out a product and say, this will stimulate your hair growth, made out of a scoby.
24:21 Speaker 01 So, yes, and I did know all of that. And for this to work, I knew we would have to prove it.
24:26 Guy Raz? Right.
24:27 Speaker 01 So because Justin was thinning, we're like, okay, here's our guinea pig. Let's start with a sample of one, and see if this stuff really works. So I just had to make kombucha, and I just had to make a lot of it.
24:39 Guy Raz? Yep.
24:39 Speaker 01 Because each time you make a kombucha, as you know, Guy, you make a scoby, right?
24:43 Guy Raz? And you were gonna test this out? And what were you gonna do? Were you gonna just directly put it on his hair, or were you gonna mix it with stuff?
24:49 Speaker 01 So, we were gonna just put it straight on his head first. But I think our sort of line of sight was that we would eventually mash this up into a really beautiful mask that had like beautiful smells, and would have other things in it that would probably be good for hair, like avocado, coconut oil, something like that. That was sort of the goal. But at first, we wanted to see the, you know, if, would the active ingredient work, AKA the scoby. So, yeah, but we never actually put one on his head, because we got in, there was an intervening happening.
25:20 Guy Raz? What happened? I mean, you've got this idea, you're gonna try a remedy, a mask for hair loss.
25:24 Speaker 01 Oh, yeah. But Vanessa's friend of a friend, I don't know if she actually ran the farmer's market, but she was one of the leading positions at a farmer's market organization in LA, one of the biggest. And she had called us to say, listen, one of the farmers is dipping out for the summer. I'll give you the spot to sell your hair loss product.
25:43 Guy Raz? Wow.
25:44 Speaker 01 If you want it. So we didn't have the hair loss product yet, but that didn't matter. We said yes.
25:49 Guy Raz? Yes, we said we'll do it.
25:50 Speaker 01 Yeah.
25:51 Guy Raz? And this is in 2012?
25:53 Speaker 01 This is 2012. This has got to be like January of 2012.
25:56 Guy Raz? Got it. Okay. And so you're thinking, we'll take it. And when was the spot going to open up?
26:01 Speaker 01 In March. March 26th was the first market and it was going to be for the summer.
26:05 Guy Raz? So you've got two months or less than two months to get this into the market.
26:09 Speaker 01 Yeah.
26:09 Guy Raz? Are you scrambling to try and make this work?
26:12 Speaker 01 Yeah. So, so I've got like 60 Scobies gathered. So I've also got like 60 cases of kombucha in my apartment, which is just like useless to me. It's like byproduct, even though I made really good kombucha. The goal was to make really good Scobies. So like I was just sort of handing that kombucha off to friends.
26:29 Guy Raz? You were just bottling it up and leaving it?
26:32 Speaker 01 We were bottling it up in cheap bottles that we got from General Bottle Supply in LA and just, every time a friend would come over, I would just give them a case. And I remember the week after the lady, we said yes. The following weekend was when we got together and we're like, okay, let's bring all the ingredients together that we've seen online make a difference. And everything was very natural. So we had like avocados, coconut oil, vitamin C, different kinds of food products that had anecdotal evidence around hair growth. And we started messing around, you know? And the goal was to, you know, get to a place where we would be able to create a really smooth, beautifully smelling mask that someone would want to put on their head, right?
27:16 Speaker 01 And you would sell that for like 50 bucks a pop at the farmer's market. Like that was kind of what we were, we were envisioning. And I think the three of us all thought that was going to be pretty easy. And, you know, it took an afternoon for us to realize like this was way, formulating a product was going to be way harder.
27:33 Speaker 01 It was so complicated and the Scobie did not blend well. And it was, um, it was really smelly. You know, like it, and Justin kept saying, I just don't know how anybody's going to put this on their head.
27:46 Guy Raz? So once you realize that this is not gonna, you're not going to be ready in time, what did you decide to do?
27:53 Speaker 01 Well. What was originally a byproduct suddenly became the main show. You know, we saw 60 cases of unlabeled kombucha. And we were like, okay, wait, check, we know this is really good kombucha. Everybody tells us that check, we already have it check, you know, a lot of checks. And so we said, okay, we're gonna, we're gonna sell that.
28:15 Guy Raz? And what did you call it? Did you have a name for it?
28:18 Speaker 01 Yeah, it was called HealthAid.
28:19 Guy Raz? How did that happen so quickly?
28:21 Speaker 01 It happened in about a two hour meeting around a circular table, the same table we started the Entrepreneur Club at. And, um, you know, there wasn't a lot of pressure for this drink. I want to just say, when we decided to sell the kombucha, we hadn't given up yet on the hair loss idea. We just kind of realized it was going to be harder to make than we could make in the time that we needed to make it by. So it was like, we still thought the big idea was hair loss. And so there wasn't a lot of pressure to make all the right moves with this kombucha. We each had different things we were working on. For me, it was create an awesome package. I had stayed at a friend's house in New York City and I loved, she had this like apothecary setup of like old medicine bottles and stuff.
29:04 Speaker 01 Just like decoration and I just loved that look and feel. And so I took a picture and I drew something on a piece of paper that said, you know, bubbly probiotic tea and kombucha. And then I took that sketch and sent it to a friend who was Justin's musician friend, but also happened to be a graphic designer. And, you know, gave him 50 bucks and a case of kombucha.
29:28 Guy Raz? Wow.
29:29 Speaker 01 And he came up with a really awesome label for us that we printed on our jet printer and Scotch taped on the bottle.
29:36 Guy Raz? So you've got the labels and you label them on and you guys just pack that up in a, in a car and you drive to the farmer's market? Did you get like a, one of those like white tents?
29:45 Speaker 01 Yep.
29:46 Guy Raz? What'd you do? You had like a sign?
29:48 Speaker 01 Oh, it was way more than that. I mean, I took this very seriously. It was like, everything had to match. It was, I felt that the whole theme of the booth had to be apothecary. So our sort of thought was it was going to be a little bit like, come one, come all, experience the elixir of life. You know, like that was sort of going to be the theme and it would draw people in the market. It would almost be, we thought maybe we could make our farmer's market like a show.
30:11 Guy Raz? And so what happened? Did you start like getting customers buying it right away?
30:15 Speaker 01 Oh, yeah.
30:16 Guy Raz? Wow.
30:16 Speaker 01 I remember the first purchase. The first guy who came.
30:19 Guy Raz? Who was it?
30:20 Speaker 01 Just some dude. I think his name was Mark, but he showed up and we like asked a couple of questions, took a sample and me and Justin were like sitting there, you know,
30:28 Guy Raz? Yeah.
30:29 Speaker 01 You know, looking at this guy like, is he gonna buy one? And he asked for two.
30:33 Guy Raz? Two bottles?
30:34 Speaker 01 Two bottles. $10, baby.
30:36 Guy Raz? A $5 a bottle. That's a lot. Yeah.
30:39 Speaker 01 Yeah. Well, at the time, actually, that was sort of what they were going at in the store too. They were like $4.50 or something at the store.
30:44 Guy Raz? And, and how many bottles did you sell that day?
30:47 Speaker 01 All of them.
30:48 Guy Raz? Wow. You sold them out?
30:51 Speaker 01 We sold them out in like a couple hours.
30:53 Guy Raz? Wow.
30:54 Speaker 01 It surprised us and it surprised the farmers market people. They were like, what the, where'd this team come from? And, and what frustrated us is we sold out, I want to say by like 11 a.m. And the market didn't close till two, so we could have made a lot more. So the following week, um, you know, we could only do so much because kombucha takes a good week to make. But, you know, two weeks after that, we showed up with a lot more. And there were days in the summer, um, that we were making 1,500 bucks in a market.
31:23 Guy Raz? Wow. And, and by the way, where were you living? Where were you and your, and Justin living at this point?
31:30 Speaker 01 So we had this great apartment off Sierra Benita Boulevard in L.A., right near the Grove.
31:34 Guy Raz? And where were you brewing the kombucha?
31:37 Speaker 01 In our closet.
31:38 Guy Raz? Wait, so because you, so you.
31:41 Speaker 01 Well, that's where it was fermenting, but of course we used our kitchen for, you know, making the tea and.
31:46 Guy Raz? Yeah.
31:46 Speaker 01 Yeah.
31:47 Guy Raz? Were you making it in gallon jars?
31:48 Speaker 01 We were making it in the same jars we make it today. Two and a half gallon cookie jars from Bed Bath & Beyond. And that apartment just happened to have a huge closet with a bunch of shelves. And we put in stainless steel shelves to add to that. You know, you could fit 10 jars per shelf. And we probably had a good 20 or 30 shelves. So we could make a lot of kombucha. And, and then we, we bought, I mean, I'm not sure if this is electrically safe, but we bought one of those, um, space heaters. And just sort of put it in the closet. So it warmed up the room to make the fermentation go a bit faster.
32:22 Guy Raz? All right, so you got all this kombucha going and then you spend the summer just
32:26 Speaker 01 Slinging kombucha.
32:27 Guy Raz? Basically slinging kombucha. But during the week, you were still working. You were still selling.
32:31 Speaker 01 Yeah.
32:32 Guy Raz? From.
32:32 Speaker 01 But it was, it was hard, man. Like, so yes, in the week I was working and at night be just working so hard at making the kombucha, making more kombucha. At the height of the summer, we were in seven markets and there were only three of us. So.
32:47 Guy Raz? You were in seven farmers markets?
32:49 Speaker 01 Yeah.
32:50 Guy Raz? And by the way, how are you? I mean, this is not just on the weekends, right? You had to do weekday markets, but you and Vanessa had weekday jobs. So what did you do?
32:59 Speaker 01 And so did Justin. Yeah, I mean, we didn't do the weekday markets at first. We did weekend markets, but then we did pick up a Thursday market, but we hired somebody to do that. So he would do it for a hundred, a hundred bucks and a percentage of sales. And so that's how we were doing the seven, of course. Three of us, each of us would do a market and then we had four people.
33:20 Guy Raz? All right, so you are, it sounds, I'm assuming you're getting repeat customers, people coming back to your stall at the farmer's market and saying, I bought this stuff last week. This is great. I want a few more bottles.
33:29 Speaker 01 Yes, at least half of our customers were repeat. And then the other half were new, which was so cool. We were really driving people to the category, people who were new to kombucha. And we would, first of all, you couldn't walk through the market and not taste our kombucha. We would make sure that everybody who walked by our booth got a sample. It was just.
33:50 Guy Raz? How'd you do that?
33:52 Speaker 01 Hey, you, you with the kid. You want to try some probiotic tea?
33:57 Guy Raz? And who were your customers? Were they like yoga people? Were they like, was it just LA? It's just LA people are kind of health conscious.
34:06 Speaker 01 It's kind of just LA. I mean, for sure, the ones that knew kombucha were probably more like the yoga customer. But I would say a lot of customers that came to us and bought really had never heard of kombucha before, you know, had heard something about probiotics.
34:21 Guy Raz? Yeah.
34:22 Speaker 01 And were just like, well, my doctor told me I should have probiotics. I'll give this a try. Let me buy one. And another thing we were doing at that time, pretty quickly, customers who loved it would say, will you just bring this to my house? Like, I don't want to carry a case around the farmer's market. Will you just deliver? If I buy a whole case, will you deliver it to my house? And we're like, yeah. So then this whole other business started, which was us distributing cases to homes all throughout LA after the market. So like Saturdays and Sundays became extremely busy for us.
34:52 Guy Raz? Now, here's a question. So this is, this is very promising. You know, you're selling a lot of kombucha at farmer's markets, but it's a, it's a farmer's market business. Did you, you know, did you think, hey, we should take this beyond the farmer's market? Did you think this is going great? This is going to be a great farmer's market business?
35:09 Speaker 01 No, no, we, we quickly saw, I want to say it was like June or July when we had-
35:14 Guy Raz? Of 2012.
35:15 Speaker 01 When we, yeah, when we had realized this was the business.
35:18 Guy Raz? Wow.
35:18 Speaker 01 To be honest, it was about the consumer to us. Like, there was a response. They like loved our kombucha. We were getting, they would say things like, I drove 100 miles to buy this kombucha. You know, it was like that. And we were like, okay, we have something here. It felt wrong to go back to hair loss after that. There was something here. It was alive and like, growing.
35:40 Guy Raz? When we come back in just a moment, how Dinah, Justin and Vanessa started to ramp up production while burning through cash, and how one single week would determine whether HealthAid would survive or die. Stay with us. I'm Guy Raz and you're listening to How I Built This from NPR.
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39:43 Guy Raz? Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So it's toward the end of 2012, and in less than one year, Dinah and her co-founders have pivoted from selling a hair loss treatment to a business selling kombucha at farmers' markets around LA. And at this point, they can tell that HealthAid has the potential to become much, much bigger. The problem, though, is time. All three co-founders are still working their day jobs, and they had to decide whether it was time to jump into this side hustle full-time.
40:21 Speaker 01 Well, everybody in our families was telling us not to do it.
40:24 Guy Raz? Everyone said, "You're nuts. Don't leave that job."
40:26 Speaker 01 Don't, don't leave that job. Don't.
40:28 Guy Raz? Sensible advice.
40:29 Speaker 01 Yes.
40:30 Guy Raz? But, I mean, but for you, the decision to quit, I mean, was it just obvious that it was time and this, this new thing with kombucha was going to take off?
40:37 Speaker 01 No, it was so scary. It was so scary. I was so afraid to call my father and tell him. Oh my goodness, I remember that. I was like shaking.
40:46 Guy Raz? What'd you tell him?
40:47 Speaker 01 You know, "I've made the decision to quit my job and give HealthAid a full-time go." He was sort of like, come on, you don't have to do that. I mean, listen, I'm supportive of HealthAid. It's going well. You should keep doing it, but like, don't quit your job. You should be making some money first, you know?
41:04 Guy Raz? Yeah.
41:05 Speaker 01 Because it wasn't at that time. I think Justin and I had scrounged together enough money to have a couple of months of rent saved up. So at the end of the year, we found ourselves in this place of being like, it was like our dream. All three of us had the dream to give this thing a go. So we made a sort of pact at November, I want to say it was around Thanksgiving, where we said, okay, let's put in our notice, end of the year, boom, we're done. January 3rd, we come back, it's game time, baby. That was sort of the, that was the thought. And it really was, as soon as we showed up, I call that one of the most important marquee moments, because it was when we came back that we could put our full mind share to this business and growing it. And that's when we moved away from farmers markets.
41:49 Guy Raz? All right. So you, you quit. By the way, you're making all the kombucha in your apartment. You guys are making it in your apartment.
41:57 Speaker 01 Oh, yeah. No, I had like, our apartment literally turned into a factory of-
42:02 Guy Raz? A kombucha factory? Did it smell, by the way, of kombucha?
42:05 Speaker 01 Oh, yeah. Yeah, yeah, yeah. We were like, definitely, I mean, neighbors who lived at Sierra Benita with us, thank you, because we really, yeah, their lives were worse off because of us. Not only did it smell like kombucha all the time, but we had people coming in to help us make it. I mean, any friend that needed, you know, some cash.
42:23 Guy Raz? Sure.
42:24 Speaker 01 Um, but there was a point where our kombucha, you know, just could not fit anymore. And we needed some space. Plus, we started to sell in stores. Like, stores would come to our markets and say, hey, can I sell this in my really awesome, you know, craft cocktail store? Or can I sell this in my like, high-end market? And so we would deliver not just to individuals, but also to small wholesale accounts. And when we did that, that was when legally, you know, they would say things like, hey, uh, you know, where's your-
42:53 Guy Raz? Nutrition label.
42:54 Speaker 01 Where's your nutrition label? And like, where's your like, business location? And we're like, yeah, we can't be like, uh, Sierra Benita Apartment A, you know?
43:03 Guy Raz? Right.
43:03 Speaker 01 So, um, we found a-
43:07 Speaker 01 It was called Cake Bake Shop in Manhattan Beach. And the owner's name was Laura. And she was closed on Sundays and Mondays. And in exchange for us opening on Sundays and Mondays and manning her shop, she let us use all the extra space she had for free.
43:23 Guy Raz? I mean, there's so many like really cool strategies here because you didn't really need a lot of money to start up. You didn't have an office, so you just kind of bartered to use the space.
43:33 Speaker 01 Uh huh, it was a barter.
43:35 Guy Raz? But did you, and you had to buy jars, you had to buy bottles. Did you at any point go out to people that you knew and say, hey, can we take a loan? Can you help us out? Did you like do anything like that?
43:47 Speaker 01 Yeah, no, we were so busy, Guy. And we were the type of people that in the walk-in fridge at the bakery shop, when the light was out, we didn't like fix the light. We would just like work in the dark. So, yeah, no, I mean, we probably should have been thinking ahead because there's no question that as we got bigger, cash was coming back to us at a later time. And that was starting to really infringe upon our cash situation. But we weren't really thinking about that. So, no, when we needed money, the first time we really needed money, we needed money to buy our first filling line, which already we were past the Cake Bake Shop stage. It was the next stage, but we asked both of our parents for that. Vanessa asked her dad and I asked my dad and they, they gave us money at like a, you know,
44:32 Speaker 01 I don't even think there was an interest rate. It was like pay us back in a year.
44:35 Guy Raz? And how much money did you need to get a filling machine or whatever?
44:39 Speaker 01 60 grand, so 30 grand each.
44:41 Guy Raz? Right.
44:41 Speaker 01 And that was just for a filling line. That was like gone. It was literally the price of that. And so we were, yeah, we were out of cash fast.
44:50 Guy Raz? And what was the, the sort of the division of labor between you and Vanessa and Justin? I mean, you were the chief kombucha brewer, right?
45:00 Speaker 01 Well, yes and no. I mean, I was also the marketer.
45:03 Guy Raz? Okay.
45:04 Speaker 01 In the beginning, it was like anybody who has arms and legs and has like, we all shared the chores and the responsibilities. And brewing was the most physically difficult. I mean, it's a lot of lifting cases of liquid, moving cases around, filling bottles. So it was like no one person could do that all week. So we would switch. There was no clear kind of job responsibility yet. But once we quit our job, what we did is we put jobs. Individual jobs and responsibilities onto postcards. So we had like a hundred postcards each with a job from, you know, making deliveries to brewing the kombucha, to opening accounts. And we put those on a wall and we sat at the back and we just said, okay, go pick up the postcards, the three of us.
45:49 Speaker 01 Go pick up the postcards that you, you know, are most drawn to and you think you're the best at.
45:54 Guy Raz? Wow.
45:54 Speaker 01 And naturally Vanessa picked up the sales ones. I picked up the marketing and leading people ones. And then Justin picked up a lot of the operational. Manufacturing ones. So it, so we very naturally fell into our roles of CEO, for me, chief of sales for Vanessa and COO for Justin.
46:14 Guy Raz? And, and when it came time to having that difficult conversation, sometimes difficult about how to divide up the business, was it difficult or not? Was it just like, yep, a third, a third, a third? How'd you figure that out?
46:24 Speaker 01 It was not difficult. Yeah, we, we all are very grateful that the three of us landed with each other because I know a lot of people have founder issues. It's natural, right? You've got a thing of value. But for us, it just really hasn't ever been. The three of us were equally devoted, dedicated, put the same amount of work into HealthAid. So we were, yeah, a third, a third, a third, all the way and always have been.
46:50 Guy Raz? All right, so you guys start, so you decide, all right, let's get this in stores, right? And how do you, where do you start? Because I guess, uh, did you approach stores with your kombucha? Did you like?
46:59 Speaker 01 Yeah, oh, yeah.
47:00 Guy Raz? And, and were they instantly like, yes, we're in? Or, or did you get more pushback?
47:04 Speaker 01 You know, some, you know, we had a sales sheet that like I had, you know, used my, as inspiration for my sales, pharmaceutical sales days. Sometimes you'd, you'd get somebody that was super stoked about it. One of the biggest early on challenges was refrigeration.
47:22 Guy Raz? And this is, we've done this before on the show with like, you know, Honest Tea and other products that some need refrigeration, some don't. It's very hard to get onto refrigerated shelves.
47:33 Speaker 01 Yes.
47:33 Guy Raz? In stores.
47:34 Speaker 01 Yes.
47:34 Guy Raz? Because there's limited space and everybody wants that space.
47:37 Speaker 01 Yes, it's totally cutthroat.
47:38 Guy Raz? And you're just some three friends making kombucha.
47:41 Speaker 01 Yeah, we're kind of a joke. Yeah.
47:43 Guy Raz? And but you would, what would you do? You would go to these stores and say, hey, can I talk to the manager? And you would have like samples with you?
47:48 Speaker 01 Yeah, a six pack of kombucha is usually what we show up with and we just, we'd say, you know, try it and you know, sometimes we'd be able to put it right in the fridge, right then and there. And um, we, we created a whole self-distribution model for a good two years. We ended up buying a van or renting, you know, leasing a van, a big white van. It wasn't refrigerated, but we put a bunch of coolers in there. But yeah, I mean, it wasn't as easy to make a wholesale sale um as it was to make like a customer sale on a farmer's market. But it was worth the squeeze because usually the bigger the store, the more cases they would order at a time. But there was a period of time where Vanessa, Justin and I, we would each take a day to deliver during the week, a couple of days a week.
48:30 Speaker 01 So we delivered every single day and our days were full and we would just drive around LA and drop off products to restaurants, cafes, small grocery stores.
48:42 Guy Raz? And they were buying like, what, a couple of cases here and there?
48:44 Speaker 01 Yeah, like probably the average delivery was somewhere between two and 10 cases.
48:48 Guy Raz? So I guess you eventually in 2013, you land a deal with Arowan, which is a larger market, like an upscale market in LA.
48:56 Speaker 01 Yeah, it's like a proper grocery store, but they only have three of them at that time. Actually, at the time, they only had two. So it was still not a huge chain. Like we could make the deliveries.
49:05 Guy Raz? And with all of the beverage options at a place like Arowan, already by 2013, that was a pretty crowded space. Not just kombucha, but just beverages, fruit juices, natural juices, cold press, this press, that press, everything, you know. It's all, how are you getting people to notice HealthAid kombucha in the refrigerated case?
49:23 Speaker 01 We just wouldn't let it lose. We would show up and do samples.
49:27 Guy Raz? Right.
49:28 Speaker 01 Justin, Vanessa and I were doing samplings at least once a day. And then, you know, we did a good job of creating a bit of buzz around the product, too.
49:38 Speaker 01 Yeah, and I think people liked that we were like a trio, you know, of entrepreneurs that were just getting started. And we had a really good kombucha, so hopefully people would tell their friends. I don't know, it just, it really did grow, but, but we pushed it very hard. I mean, we were always, always selling this thing. I was always demoing, it felt like.
49:56 Guy Raz? And but did you have any employees at this point? It was just kind of volunteers or friends or interns or what?
50:03 Speaker 01 We had some people that worked hourly for us in the brewery to help us. And then we also had some independent sales reps that got paid a commission. So let's say we had about 20 of those individuals that were working like some five, six hours a week. So not, not a lot. That was how we ran our sales. That was how we were able to grow in accounts. And then on the brewery side, we probably had two or three individuals.
50:29 Guy Raz? And were you also using credit cards to pay your bills?
50:32 Speaker 01 Yes.
50:33 Guy Raz? And maxing out on your cards?
50:35 Speaker 01 Every month.
50:36 Guy Raz? All right, so you need to scale up, right? You're getting more demand, so, and clearly you've got a winning thing here. Could you go to a bank and get a loan? Did you try?
50:45 Speaker 01 Well, I always gave my middle finger at the Wells Fargo, you know, billboard on the 405 because it would be like, helping small businesses grow. And I'm like, you didn't help us.
50:55 Guy Raz? Oh, you actually went and asked them for a loan?
50:57 Speaker 01 I mean, everybody said no.
50:58 Guy Raz? Because you had no collateral?
50:59 Speaker 01 No collateral, no, yeah, no assets as individuals, but also no profitability. It was just like a complete, you know.
51:07 Guy Raz? So you actually went, you met, went and met with the loan officer or loan officers?
51:11 Speaker 01 Yes, yes.
51:12 Guy Raz? And, and you showed them your pure like business model and everything?
51:15 Speaker 01 Yes. We didn't get good loans from banks until like a couple of years ago. Because our business was a bit like a rocket ship that. You know, it was growing like crazy, but we didn't have any sense of where our next dime was going to come from and except from, you know, selling the kombucha. But like, we were going way faster than we could keep up with, for sure. So I think from a conservative bank perspective, it just was not, it was not a safe move until recently.
51:43 Guy Raz? So what do you do? I mean, if, you know, either, this is a point where, you know, this can be like the trough of sorrow, right? Where you need a bridge loan, or you need some money, or you're going to fizzle out, right?
51:55 Speaker 01 Yeah, 100%. And I remember the moment, we were at the brewery and we had a $50,000 credit limit. And we just assumed that Amex would extend our credit because we were good about paying it in full every month. You know, so we were like, oh, it's not going to be a problem. I mean, we've been great customers, you know? And then, yeah, we got a flat no.
52:16 Guy Raz? A flat no to extend your $50,000?
52:19 Speaker 01 Yes. Like, it was like, you're maxed out and you're not getting any more credit from us.
52:25 Guy Raz? When we come back in just a moment, Dinah and her co-founders struggle to find funding until their funding finds them. Stay with us. I'm Guy Raz and you're listening to How I Built This.
52:52 Guy Raz? Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2013 and Dinah, Justin and Vanessa have maxed out their credit cards and can't get an extension. So they scramble to make a list of people who they can ask for money.
53:08 Speaker 01 We were starting to gather those people and we got a cold call from a guy by the name of J.C. He was a manager at an investment company called First Beverage, so.
53:20 Guy Raz? Yeah. And he found out about your product maybe by going to Air One or Farmers Markets?
53:25 Speaker 01 Yeah.
53:26 Guy Raz? Yeah, okay. And he called you to what? To?
53:28 Speaker 01 Say he tried our kombucha and he thought it was the best he's ever had.
53:31 Guy Raz? Wow.
53:31 Speaker 01 And, you know, they really want to talk about an investment.
53:34 Guy Raz? Wow.
53:35 Speaker 01 Now, they had just gone through a very long diligence process with another kombucha company that was bigger than us at the time. And they didn't end up doing the deal, for whatever reason, I'm not sure why. But they were convinced about the category.
53:48 Guy Raz? Wow.
53:49 Speaker 01 So it's like they entered our world already sold, that they needed to get into a kombucha and fast. And it was like, could this be any more perfect? Like, where do we sign? And they, they were able to cut a deal pretty quickly. Within six weeks, we had cash and they allowed us to include some friends and family as well. So we did like a series A slash friends and family round together. And that was in 2014 and that was our first investment.
54:14 Guy Raz? So you get this investment, what does it mean? What were you, I mean, how, by the way, how much did they invest?
54:19 Speaker 01 Over $2 million.
54:21 Guy Raz? Wow. So they, but this enabled you presumably to hire people.
54:25 Speaker 01 Yes, so that was exactly what we did with the money.
54:27 Guy Raz? Gotcha.
54:28 Speaker 01 So we did two things with the money. We moved into our, the next brewery, which was really, really important because we were in way too small a space. Um, and couldn't keep up, like we were maxed out. So we used half the capital probably to build out our next brewery, which we had already found the space and identified the equipment we needed. We just needed, you know, to write the checks. And, um, and then the other half to hire four, five key people. And I mean, that was like game changing guy. Cause like, yeah, it's game changing.
55:01 Guy Raz? And as you kind of did this, got, get this investment, you also land a deal, a distribution deal to get into, uh, into Gelson's and then, which is a chain in, in LA, mainly around LA. And then also other places in the West Coast.
55:20 Guy Raz? And we have a sense of how important distribution is, right? Cause you need to get in with a distributor, otherwise you yourself have to go door to door to door to door. And it's impossible really to, to scale your product. You need it everywhere and only a distributor can kind of help you do that, right?
55:34 Speaker 01 Yeah. But then the catch 22 is the distributor won't usually take you on unless you have some stores.
55:42 Guy Raz? Right.
55:42 Speaker 01 Like they don't want to build you from scratch.
55:44 Guy Raz? Right.
55:44 Speaker 01 So they want to know, oh, you've got Gelson's on board? Okay, we'll take you on.
55:48 Guy Raz? Got it. So this distributor is called Nature's Best that you signed.
55:51 Speaker 01 Yeah.
55:51 Guy Raz? And was that, was that just a huge turning point for you?
55:54 Speaker 01 Oh, yeah. I mean, it was a huge, it was the next phase, right? So now we're like moving away from the majority of our business being from farmer's markets and, and home deliveries to, okay, now we're talking about huge orders.
56:08 Guy Raz? Yeah.
56:09 Speaker 01 So more stores are willing to accept us and, and we're very focused on growth, aligned with our investors at this time on just like, let's grow, let's grow this.
56:20 Guy Raz? Was it hard for you to, I mean, I can't even imagine how hard it would be to all of a sudden go from just you and your husband, your best friend, to a company of even 10, 15, 20 people. And you gotta be the leader and the boss and there's HR issues and like, it's gotta be overwhelming.
56:36 Speaker 01 Yeah. And then there's the capital piece. Like, we got that money. We thought that money was gonna last us. I remember when we got the 2 million bucks, it was like, oh, my gosh, we're good. Like, let's build this now, baby. And then it was like, gone a year later. And it's not that we were reckless at all. It's just the capital for growth is really intense and immense. And so we were already having discussions a year later of doing this again. And that's, that's a lot of pressure and responsibility when I'm also the one that's still picking up the broom. I mean, so many pressures and responsibilities in growth. It's almost hard to pinpoint why you're, you're building something. So proving it, proving that you can do it. I mean, so many times, I think the biggest fear was
57:20 Speaker 01 not living up to that. So, I mean, almost everything requires discomfort and push. It's, in times of growth, like, it's probably the hardest times.
57:34 Guy Raz? Can I ask you about having a business with your husband? I mean,
57:38 Speaker 01 Sure.
57:38 Guy Raz? It's you, your husband, your best friend. And God, that could spell recipe for disaster in many instances, right? Because, because it could be two of the people are in a family and one person isn't, and there could be tension, and also the tension with the two partners who are married. And how do you guys manage that? There's no way there isn't tension between at least you and Justin, or you and Vanessa, or Justin and Vanessa.
58:03 Speaker 01 And that's, that's really where the tension is, me and Justin. It's not, it doesn't really sit for me and Vanessa. I don't know exactly how to explain why. Part of it is that Vanessa and I are wired very similarly. So I think we just really operate from the same space. I think that's a part of it. I think another part of it is we don't live together. So I think that's separation time. And then also, the other thing that makes it challenging for Justin and I is we're very different. Like, he and I are in some ways opposite. You know, he's the operations guy. He's the one that, you know, wants to dot the i's, cross the t's, make sure everything is operationally sound and like structured and processed and system oriented, which obviously we need.
58:48 Speaker 01 But I am a very different type of force. I am, I am the dreamer. I'm the one that like, you know, doesn't think about that stuff. And so it calls for quite a bit of conflict between the two of us at work. And I actually invite that. I'm very comfortable with that level of conflict. In the end, we end up having a very solid dream. I guess you could say our executable dream. But you just don't really want to have sex with that person that night.
59:19 Guy Raz? I might cut that part out. I got you. I hear you.
59:22 Speaker 01 You know what I'm saying though? I mean, it's, it's tough to come home and then, and then you have this other relationship to tend to, which is a much more personal one. And it's just, it's hard to transition, especially with children. There's no break. It's not like you can go to your yoga class and then come back and be like, okay, now we're husband, wife. So, you know, we just have had to work through that. And we have.
59:44 Guy Raz? So, so Diana, I mean, this brand, right? HealthAid that, I mean, that you started by fermenting kombucha in your closet. I mean, today, I mean, you're looking at hundreds of millions of dollars in annual retail sales. And I think, I think you guys have raised almost $50 million total or something like that. Is that about right?
1:00:02 Speaker 01 Yeah.
1:00:03 Guy Raz? And last July of 2019, you got $20 million from Coke, which isn't just 20 million investment. That's like the backing of Coca-Cola, the biggest beverage company in the world.
1:00:15 Speaker 01 Huge milestone.
1:00:16 Guy Raz? Do you feel now like you can take a breather? Like you're like, ah, okay, we're going to be fine. Like I can, I've been grinding away since, you know, 2012 on this. And now I'm like, okay.
1:00:27 Speaker 01 Um, I kind of got to say no.
1:00:30 Guy Raz? Okay, all right, fine.
1:00:32 Speaker 01 Yeah, like, yeah, no, it feel, I will, I, I will say for sure it was a huge milestone. I was extremely proud and am extremely proud that we've been able to build something literally from nothing, from that table to something that the biggest beverage company in the world would want to invest at this level. Like, yeah, I mean, it's awesome. But the keep going part didn't die down. Now, I will say, over the journey, regardless of that investment, over the journey, I've been able to, you know, pay myself more than $10 an hour like we did at the beginning. And sort of, I feel now I'm at a point where I feel fairly paid. And that's allowed for me to at least go on vacations.
1:01:16 Guy Raz? Because you have a board that approves your pay.
1:01:19 Speaker 01 Yeah.
1:01:19 Guy Raz? Yeah.
1:01:20 Speaker 01 Yeah, exactly. I still have to fight for it, though.
1:01:22 Guy Raz? Yeah, and this is the thing. I remember we talked to Andy Dunn of Bonobos about this. Because a lot of people assume you get all this investment, and all of a sudden, you're loaded.
1:01:29 Speaker 01 Oh.
1:01:29 Guy Raz? You're just swimming in cash. But actually, the more outside investment you get, the less equity you have in the business. And really, most entrepreneurs, until or if they sell their shares in the business or equity, they're dependent on a salary that is determined by a board. And that could be a perfectly fair salary, but it's not going to make you filthy rich.
1:01:51 Speaker 01 One of the funniest emails we got was after we got that first money. I just, I got an email and it was like, you know, for your, for your charter flight needs, you know, think of executive charter.
1:02:02 Guy Raz? Oh, from a company that was like, oh, this person's rich. Now they're going to need charter flight.
1:02:06 Speaker 01 Flying, like private, Justin and Vanessa were like, oh. And I wrote back, I was like, we're still flying, coach. You know, like this is, and still we are.
1:02:15 Guy Raz? Here's, here's a tricky question for you. We've had people like Gary Erickson of Cliff Bar, who own his, he owns his company. He was almost going to sell to investors and sell to a big, a big company, and he didn't. We've had, you know, Sarah Kaus of Swell. She owns 100% of her company. Some people say they couldn't have done what they did without outside capital, that it would have been impossible to scale their business. And some people say, I wish I didn't do it. And other people say, had I done it, we would have grown faster earlier. There are all kinds of different views on this. But there's no question that when you bring in outside capital, you do lose control, right? There are going to be people who have opinions and they're going to assert those opinions. If you would have done it again,
1:02:59 Guy Raz? would you have avoided outside investors?
1:03:02 Speaker 01 No.
1:03:03 Guy Raz? No.
1:03:04 Speaker 01 So much of the choice you have is, is, yes, there's experience, but it's also what's the context of the situation? I mean, we couldn't get a loan if we needed it. We were totally out of cash. We, I, it really felt like we had no choice. So I know if I was back in that position, I really still would have no choice. But to be honest, they helped us a lot in the beginning. They helped us build forecasts and get into the right distribution. And so honestly, I think we did it exactly right.
1:03:32 Guy Raz? Yeah.
1:03:33 Speaker 01 And I would say that to all those people, if you have access to capital outside of private equity, great, go for it. But there's not only one way to do it.
1:03:41 Guy Raz? Um, when you, uh, when you think about where you are right now and where you've come from, how, you know, how far you've come in pretty short time. I mean, it's, I'm sure it seems like a long time. I'm sure it seems like forever and ever.
1:03:56 Speaker 01 I know.
1:03:57 Guy Raz? But in the grand scheme of things, it's pretty quick, right? I mean, you, you've become a pretty big company quickly. How much do you think that has to do with just the grind and your hard work and, and how much, because you got lucky?
1:04:08 Speaker 01 Okay. It's definitely not zero luck. The initial number that came up was 20% luck. That's what I wanted to say. I would say it's 80% grit. There's definitely moments of blessings, you know, that ride along with Vanessa. HealthAid would not be where it is without Vanessa. That is a blessing. You know, the phone call from the farmer's market, um, just when we needed investment, the guy that chose to buy a HealthAid and called us and said we wanted investment. I mean, those types of things are, are hard to explain and there's, and there's more of that. But even in those, all those examples, you get a card dealt to you. It's not the whole deck. You get a card. You still have to do something with that card. You have to take it and run with it.
1:04:52 Speaker 01 And without that grit, that card's just a card and it flies away. So yeah, I would, I would say it's 80% hard work, 80% pushing through and just like doing it when no one else would.
1:05:07 Guy Raz? That's Daina Trout, co-founder of HealthAid Kombucha. Since we last spoke, the firm that was HealthAid's initial investor, first beverage? Well, they acquired a controlling stake in the brand. Over the next few months, Dinah and Vanessa plan to step away from the company. And after a short break, Dinah wants to get back in the game and start building yet another business. Hey, thanks so much for listening to the show this week. If you enjoyed it, please spread the word. Tell someone about How I Built This or post about it on social media. And if you want to contact the team, our email address is [email protected] . If you want to follow us on Twitter, our account is at HowIBuiltThis and mine is at Guy Raz.
1:05:49 Guy Raz? And on Instagram, we're at HowIBuiltThis and I'm at Guy.Raz. This episode was produced by Casey Herman with music composed by Rameed Tien Arablui. It was edited by Sarah Sarason with research help from Derrit Gales. Our production staff also includes Neva Grant, J.C. Howard, Elaine Coats, John Isabella, Liz Metzger, Kerry Thompson, Alex Chung, Chris Messini, Carla Estevez, and Sam Paulson. Our intern is Susannah Brown. I'm Guy Raz, and you've been listening to How I Built This.
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