Advice Line with Peter Rahal of RXBAR

RXBAR co-founder Peter Rahal joins Guy on the Advice Line, where they answer questions from three early-stage founders about positioning new products in competitive markets. Plus, Peter’s take on getting back in the game with his newest venture, David Protein. First we meet Kristi from Calgary, who’s considering digital ads as her women’s supplements brand maxes out on organic growth. Then Erik from Los Angeles, who’s wondering if Amazon is a necessary channel for his exercise accessories. And April from New York, who’s hoping to find the right messaging for her line of cocktail mixers. Thank you to the founders of Inner Wellth, SquatWedgiez, and Cheeky Cocktails for being a part of our show. If you’d like to be featured on a future Advice Line episode, leave us a one-minute message that tells us about your business and a specific question you’d like answered. Send a voice memo to [email protected] mailto:[email protected] or call 1-800-433-1298. And be sure to listen to RXBAR's founding story https://art19.com/shows/831bd173-0992-41b7-b1eb-112db904d947/episodes/ac962399-409e-44bb-9e9c-c307f4dc064f/embed as told by Peter in a special live episode of How I Built This from 2018. This episode was produced by Chris Maccini with music by Ramtin Arablouei. It was edited by John Isabella. Our audio engineer was Cena Loffredo. You can follow HIBT on X https://twitter.com/HowIBuiltThis & Instagram https://www.instagram.com/howibuiltthis and sign up for Guy's free newsletter at guyraz.com http://guyraz.com/. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 5:17Guy Raz?

  Hello and welcome to The Advice Line on How I Built This Lab. I'm Guy Raz. This is the place where we help try to solve your business challenges. Each week, I'm joined by a legendary founder, a former guest on the show, who will help me try to help you. And if you're building something and you need advice, give us a call and you just might be the next guest on the show. Our number is 1-800-433-1298. Send us a one-minute message that tells us about your business and the issues or questions that you'd like help with. You can also send us a voice memo at [email protected]. And make sure to tell us how to Reach you. And also, don't forget to sign up for my newsletter.

• 6:00Guy Raz?

  It's full of insights and ideas from the world's greatest entrepreneurs. You can sign up for free at guyraz.com. And we'll put all this info in the podcast description. All right, let's get to it. Joining me this week is Peter Raz Hall. He's the co-founder of the energy bar brand RX Bar and a new protein bar called David. Peter, it's great to have you back on the show.

• 6:23Speaker 01

  Great to be here, Guy. Thanks for having me.

• 6:25Guy Raz?

  So of course, you were a guest on the show back in 2018. We did a live taping in Chicago, super fun. And if any of you missed that episode, the story of RX Bar, you've got to go back and check it out. It's a great story and we'll put a link in the episode description. Basically, Peter, you started RX Bar back in 2013 with your friend Jared Smith. And the bars had really simple ingredients, such as dates and nuts and like egg whites. And as the story goes, you sold the brand to Kellogg's in 2017 for over $600 million. It's an amazing story. But before, Peter, before we get to some of the collars, I was hoping to ask you just a couple of questions about this story. Is that, is it okay?

• 7:06Speaker 01

  Yeah, of course.

• 7:07Guy Raz?

  So, all right, so in 2015, and we talked about this a little bit on the episode, you completely like overhauled the packaging, right? Which was, I think it was a game changer. I mean, and a lot of brands kind of have gone on to copy it. And basically, you focused on just like four things. It was like four dates, two eggs, six pecans, or whatever it was, and no BS. Tell me about the decision to do that and how that actually transformed the product.

• 7:37Speaker 01

  Yeah, so we had a, we had a marketing problem. We were really successful in our niche, CrossFit gyms. Those were our early adopters, so they totally understood the product. When we began to expand outside of that market into, say, conventional grocery or convenience store, it didn't sell, it didn't work. And, you know, it's a lesson in simplicity. So when you designed the product like ours, you could claim gluten-free, dairy-free, soy-free. And so sometimes

• 8:09Speaker 01

  You kind of think Moore's the merrier and like you just want to like lay out all your differentiations and communicate it and actually it's confusing.

• 8:16Guy Raz?

  Right, because on the package you could have been like paleo-friendly, but that doesn't, people who are paleo knew that, they would know that it was paleo-friendly.

• 8:25Speaker 01

  Yeah, exactly. And a couple of insights were like, in the bar market in general, if you just study and observe the shopper, you'll see they they reach out, grab the product and immediately flip it over.

• 8:36Guy Raz?

  Right.

• 8:37Speaker 01

  And so that was the real differentiation. It wasn't how much protein we had, it was that we were clean, minimal ingredient product. And so that's what we led with.

• 8:47Guy Raz?

  Right.

• 8:48Speaker 01

  But we fundamentally knew that like, we had a communication problem and we need to really do something more bold to stand out in the competitive market.

• 8:57Guy Raz?

  Yeah, and it was risky, right? It's not like you and your co-founder sat there and like, we have all these, this data, we know this is going to work. Like, it really was risky. It could have failed.

• 9:06Speaker 01

  Yeah, I mean, people thought we were a different, a new company.

• 9:07Guy Raz?

  When you put them out, wow.

• 9:09Speaker 01

  Yeah, yeah, they're like, wait, what happened?

• 9:11Guy Raz?

  Yeah. It's an amazing story and, and really just people who are interested in branding, marketing and packaging design, this is like a great case study. Um, Peter, your non-compete eventually ended with Katlax and, and then you are, became free to re-enter the protein bar space and you're doing it. I've tried them, they're called David Protein Bars. You launched it, I think, last year. And these are bars high in protein, I think 28 grams of protein, a bunch of different flavors. Tell me about the decision to re-enter the market. Why, I mean, obviously you've got expertise, but tell me about, you know, starting a brand new bar brand, especially in such a super saturated category.

• 9:55Speaker 01

  Yeah. So I basically saw a pretty big gap in the market to make sort of the optimal protein bar, which is, which is, if you're going to design a protein bar from first principles, you want as much protein as possible with as little everything else.

• 10:11Guy Raz?

  And I guess the problem, or maybe the opportunity in protein, is a lot of protein bars are just stacked with sugar or carbs.

• 10:21Speaker 01

  Yeah, exactly. And, you know, like, protein's pretty, it's like unequivocal, the most important macronutrient. It's not just for bodybuilders anymore, it's for, for humans. And so you just it's a delivery system of protein that tastes delicious.

• 10:35Guy Raz?

  One of the things that I mean, obviously, this is a different playbook now because you've been through RXBAR and you're better resourced now to start David Barr. One of the things that's interesting about it, I think it's only direct to consumer, right? You're not selling in stores mainly.

• 10:49Speaker 01

  We're just starting to, but yeah, most predominantly we're direct to consumer and Amazon.

• 10:53Guy Raz?

  Yeah.

• 10:53Speaker 01

  We wanted to start direct to consumer because you can service people directly. You don't have to plan your innovation around a retailer.

• 11:01Guy Raz?

  Yeah, super interesting, a lot to talk about, and I think probably a lot that that will be useful for some of the callers. Why don't we bring in our first caller?

• 11:08Speaker 01

  Great, perfect.

• 11:09Guy Raz?

  Hello and welcome to the advice line. You are on with me and Peter Rahal. Please tell us your name, where you're calling from, and a little bit about your business.

• 11:18Speaker 02

  Hi, Guy. Hi, Peter. My name is Christy Stewart, and I'm from Calgary, Alberta, Canada. And I'm the founder of Inner Wealth Supplements. We are the first supplement line that's dedicated to both alleviating PMS and perimenopause symptoms and increasingly muscle mass in women.

• 11:33Guy Raz?

  Well, thank you for calling in and welcome to the show. So, Christy, tell me a little bit about are these pills? Are they? What's the form of the supplement?

• 11:42Speaker 02

  Yeah, so they're powdered supplements. You just put it in your water, shake it up, and drink it.

• 11:47Guy Raz?

  And tell me a bit about what what they are, like what what do they offer?

• 11:51Speaker 02

  Absolutely. So one is a morning, one is an evening.

• 11:53Guy Raz?

  Yep.

• 11:54Speaker 02

  And the morning one has to do with energy and vitality. So it helps provide sustained energy, adrenal support, helps reduce hot flashes and brain fog, increases libido, and helps with bone health. And then the evening formula, it's called Sleep Cycle. So it contains ingredients that help with your sleep and help bring the ratio of estrogen to progesterone back in context to reduce the symptoms that women typically get in PMS and perimenopause.

• 12:23Guy Raz?

  Yep. And so these are basically you're using different formulations of vitamins, minerals, other sort of right, other ingredients that I'm assuming is a proprietary blend that you came up with?

• 12:37Speaker 02

  Absolutely. My background is in molecular biology and biochemistry. And so I came up with the formula. I submitted it to Health Canada. Canada and the US have very different supplement regulations. It's very, very stringent and strict in Canada. So submitted it to Health Canada, got the approval for the claims I wanted to make, found a manufacturer and launched in June 2023.

• 13:00Guy Raz?

  Awesome. How is the business doing so far?

• 13:03Speaker 02

  Phenomenal. So in our first full year of sales, we hit $500,000 in sales and just came off an incredible month in January.

• 13:13Guy Raz?

  And tell me, how are you, how are you getting, I mean, where are you selling? Is this all direct to consumer?

• 13:17Speaker 02

  It's all direct to consumer. So I, I got my Shopify site like everybody else and I post on my Instagram. I don't have very many followers, but we've grown through just organic social media and word of mouth and I haven't invested into advertising at all yet.

• 13:34Guy Raz?

  Wow. This is a huge and exciting and growing category. I did a, I actually led a panel at CES, a Consumer Electronics Show in Las Vegas for AARP, the American Association of Retired Persons, on this very issue and this very topic and all this cool technology that's being developed around perimenopause because it is a massive exploding business opportunity that has basically been ignored.

• 13:59Speaker 02

  Well, if you think about it, every single woman on the world, if she lives to a certain age, is going to go through it. And we, as women, you know, all the research is done in men, everything is done in men, and finally, women have just I don't know what what has happened in the zeitgeist, but it's finally come to fruition through some really great knowledgeable voices on social media. And the reason I got into it was I started, I kind of hit that age, I'm forty four. When I hit forty, kind of everything went off the rails and I used to own a bunch of fitness studios and so I worked with a lot of clients on nutrition and fitness and everybody started saying the same thing that was, you know, I'm eating how I've always eaten, I'm doing all the workouts I've always done and I'm starting to gain weight.

• 14:42Speaker 02

  And realizing that had to do with our hormones, so I dug into the research, I became a certified menopause support practitioner and just realized that by taking in certain vitamins, minerals, micronutrients can have a positive impact on the way your body metabolizes, detoxifies and excretes your hormones. And if you optimize those functions, all your symptoms go away.

• 15:06Guy Raz?

  And and increasingly, we're hearing that experts around perimenopause, menopause are saying women need to increase their protein intake. So Peter, we'll get to you on that in a sec. Before we bring Peter in, Christy, tell tell us what what your question is for us.

• 15:20Speaker 02

  Absolutely. So I've, I think I've reached my ceiling of organic growth and I'm ready to scale. And for this time period, I believe that online advertising is the best route for me to scale. But if I'm going to scale online, you know, what are the benchmarks? What's an appropriate spend? What is an expectation for ROI? What do you ask agencies? Like just all kind of the general, you know, I know Peter, you're advertising online now with your new company. So what is your blueprint?

• 15:49Speaker 01

  Yeah, I'll I'll answer your question very directly, how I recommend you think about it. So one, you want to prioritize like high intent channels. So Meta, Google and Amazon. Those have been the most effective. You can scale in them. And then I would start with those, like a very low budget, maybe like $200 a day, $250 a day. And as you're you're you like get some data and figure it out, you can scale, but start super small. You want to keep your acquisition cost below the gross margin per order. So you want to be first order profitable. So make sure your unit economics work. That that's what I would recommend.

• 16:33Speaker 01

  But and in general, with anything, I would. Just stay really close to it. And so you learn.

• 16:40Guy Raz?

  Chrissy, are you in the US market yet or just in Canada?

• 16:43Speaker 02

  I have literally a handful of clients in the US. I just figured out how to do really cost effective shipping to the US. So I'd love, yeah, I'm very ready to enter the market there.

• 16:54Guy Raz?

  It's a, I mean, it's a growing, right? There's a lot of, you know, smart entrepreneurs getting into this space.

• 17:00Speaker 02

  Absolutely.

• 17:00Guy Raz?

  I mean, I think one of the, one of the advantages you have is that the, um, the Canadian, um, rules are more and more stringent. And, you know, that means something, especially to the kind of consumer that would be interested in this product.

• 17:15Speaker 02

  Well, it's interesting that you say that, Guy, because absolutely. So before we can sell in Canada, we have to get rigorous third party testing. Even the claims that we have to say have to be approved by Health Canada, and we have to show science to show that. So I think people can have a really good confidence that when you're buying a supplement from Canada, that if it's making a claim that it's going to do something, it actually will. Otherwise, we're not able to sell in Canada.

• 17:39Guy Raz?

  Yeah, Peter, you, I mean, you really leaned into a tribe with RXBAR, CrossFitters. But now there's a new kind of tribe, a much bigger tribe, the protein tribe. And it's a growing tribe of people, right? And, and again, I mean, especially talking, talking about women, you know, in their mid 40s and over, both women and men, but particularly talking about women now. We know that there's increasing evidence that they need to be consuming a lot more protein. How would you sort of suggest, Chrissy? How should she be thinking about getting this out there?

• 18:12Speaker 01

  I would say, one, you need to get to the US market at some point. It's just so massive. And then I think if your product's really good, I would just get it into the hands of the right people and I would start small. So whether that's like mom bloggers, like find niche groups and get your brand and yourself in front of them and get into these communities. And if you have a good product, people will repeat. And then they will, they not only will repeat, they will share about it. So you want like viral word of mouth. That's the best use of, of time and resources. And then I think like on your products, like the protein thing, so.

• 18:58Speaker 01

  I I look at, you know, um AG1.

• 19:02Speaker 01

  So what they did was like an all in one. So if you have an opportunity to do like an all in one with protein.

• 19:08Guy Raz?

  Yeah.

• 19:09Speaker 01

  And some of these other benefits, I think that would be a great way because I think with your consumer, they're like facing a problem. You have the solution. And if you can make it really, really simple, that's like a very valuable thing. Cause if I'm have to take a protein shake and then I have to take your supplement or other things, that's a lot of work. So streamlining into one thing can be a real value unlock. That could be value.

• 19:32Speaker 02

  Yeah. So when you said get it into the mommy bloggers, influential women, would you recommend that we seed people first? Get that buzz going and then do the advertising? Because I've just, you you hear stories that people are pumping money into ads with not a great return because I don't have any brand awareness. So it's like a chicken or the egg, right? Do you do the get the brand awareness first through the ads or the influencers?

• 20:01Speaker 01

  Yeah, it's a good question. Like my bias is use the product and do it more in an organic way and then relying on an ad. Cause like one, you're starting a relationship off in a very generous way. Um, you're introducing yourself. They want to see, you know, you have it, you have some influence. You know what you're doing, you have credibility. And that's what we did at our X and that's David, we're doing it as well. Like we're we sample like crazy. It's like trial is so important. So I, that's where I would go versus going straight to advertising it. And that's the one question I had, you said, we've reached our ceiling and I want to go advertising. And like my first thought was like, are you actually? How do you know you're at your, your ceiling? Like, if you're at your ceiling, what would ads do to change that ceiling?

• 20:45Speaker 02

  That's, I guess I meant I'm at my ceiling for, I think, my organic reach on social media. But then, as I just said, we had an incredible month in January, like 30% higher than we've ever had. And so that almost defeats that I'm at my ceiling, right? So.

• 21:04Speaker 01

  Yeah.

• 21:05Speaker 02

  Yeah.

• 21:05Speaker 01

  Yeah, now I would follow that cohort like, cause if you have product market fit, you know, that they should be sharing it. You should see organic growth come from that.

• 21:16Speaker 01

  But but at a high level, like I think like products over ads.

• 21:20Speaker 02

  Yeah, that makes sense.

• 21:22Guy Raz?

  Kristi Stewart, the brand is called Inner Wealth. Thanks so much. Good luck.

• 21:25Speaker 02

  Thank you guys very much. Thanks for having me and thanks, Peter. Thanks, Guy. Guy, I love, I love, I love, I love how I built this. I've listened to every single episode. I've learned so much and thank you for everything you do for entrepreneurs.

• 21:37Guy Raz?

  Thanks so much.

• 21:38Speaker 02

  Thank you both. Bye.

• 21:39Speaker 01

  Thank you.

• 21:41Guy Raz?

  Yeah, this is such an exciting category. When when I did this panel at the Consumer Electronics Show, I mean, there were like all these entrepreneurs working on technology and products for women going through perimenopause. And it's such a fascinating area because there's so much opportunity.

• 21:58Speaker 01

  Yeah, it doesn't seem like the market's being addressed.

• 22:01Guy Raz?

  It's not. No, not at all. I mean, it's just really starting to explode. It's like where energy bars were in like 2008.

• 22:09Speaker 01

  Yeah, she's in a good place.

• 22:10Guy Raz?

  Yeah. All right, we're going to take a quick break, but we'll be right back with another caller and another round of advice. Stay with us. I'm Guy Raz and you're listening to the Advice Line right here on How I Built This Lab.

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• 26:07Guy Raz?

  Welcome back to the Advice Line on How I Built This Lab. I'm Guy Raz and my guest today is RX Bar co-founder and David Bar founder Peter Rahal. Peter, let's bring in our next caller. Welcome to the Advice Line. You're on with me and Peter Rahal. Hello, welcome. Tell us your name, where you're calling from, and a little bit about your product.

• 26:25Speaker 05

  Hey Guy, I'm Peter. My name's Eric Orkisky, calling in from Los Angeles, California. I'm the founder of Squat Wedgies. We build exercise products that enhance your lower body workout with our squat wedges and slam boards being our best sellers.

• 26:40Guy Raz?

  Nice. Welcome to the show, Eric. So the wedge is a wedge that you put under your feet for, I'm assuming for squats, right?

• 26:47Speaker 05

  Yeah, so the most common thing you'll use with a squat wedge or a slam board is to elevate the heel or elevate the whole foot to improve your squatting mechanics, make it easier to squat deeper, opens up those hips and the ankles. But you can also use it to train your calf muscles from a toes elevated position so your toes go up the ramp instead. There's a lot more uses than just the squats and that's what we're trying to show people that they're not just for squatting because our biggest competition is weight plates right now because people just elevate their heels.

• 27:16Guy Raz?

  Oh, they're on weight plates. I got you.

• 27:18Speaker 05

  On a weight plate, yeah. So we're trying to show people that, one, it's way more efficient to use a wedge or a slam board and you can also do way more other exercises than just squats on them.

• 27:27Guy Raz?

  How did you, how did you, tell me about the story because this is a, you know, there are competitors here and we're going to get into that in a sec, but how did you come up with this business idea?

• 27:36Speaker 05

  So I've been training for 13 years now. I became a personal trainer at 19 years old, got my degree in exercise science from East Carolina University, did the strength and conditioning coach thing. So I've been well versed in fitness and if you've been in fitness for a while, you've known that there are squat wedges in the market, but no one was ever really making them affordable. A lot of the products were too expensive, too heavy to move around. So in 2021, we launched a Kickstarter to create the first ever wedgie and, you know, I figured it was a good time to jump into the market and not just build a product, but build a brand around it and hopefully motivate people to exercise in general.

• 28:19Guy Raz?

  Awesome. All right. And how did you finance this? Oh, you had the Kickstarter, I should say. Right, you mentioned.

• 28:24Speaker 05

  So the Kickstarter, um, we raised about 12,000, 12, 14,000 on the Kickstarter, but I've just been self-financing it myself, using a little bit of debt for growth, not the best strategy.

• 28:36Guy Raz?

  So just using your money as a personal trainer to help finance it?

• 28:40Speaker 05

  Yeah, I'm still working. I still train. So I was able to make good amount of money and then save up from there. And I pretty much just put all that into the business to keep our advertising efforts up and finance all those purchase orders and stuff.

• 28:55Guy Raz?

  All right. So you've been, so you've got this product and tell me a little bit about how the business is doing right now.

• 29:00Speaker 05

  We've been growing, uh, a ton over the last three years. So it's been great to see that.

• 29:04Guy Raz?

  Nice.

• 29:05Speaker 05

  So last year, we just had our best year to date. We did 700,000 in revenue. Years before that, we did around 345 and then the year before that we did about 37,000.

• 29:19Guy Raz?

  What's your margin on 700,000?

• 29:21Speaker 05

  So blended, it ends up probably being around like probably 33%. That's my, part of my question is today is the, you know, 400,000 that was from Amazon where our margins around like 21%, 18 to 22%, and then the rest of that was on Shopify, which is after advertising efforts, that goes down to around like 35 to 45%, just, you know, based on returns and website costs and affiliates and all that stuff.

• 29:49Guy Raz?

  All right. So not, not bad. Pretty good actually. Tell me what your, um, before we bring Peter in, what's your question for us?

• 29:54Speaker 05

  So my question here is we've grown substantially through Amazon. But I don't love Amazon because I feel like it's limiting me in a way when it comes to talking to my customer and being able to potentially upsell them to our other good products and get them on my YouTube channel to see our free workout programs. But I love Amazon for the ability to drive a ton of revenue, drive growth for the company, and obviously cheaper advertising costs compared to Instagram and Facebook. So my question is, at a certain point, as a growing company, can you step away from Amazon and just focus on your own website? So you don't have to compete with others on Amazon with their lower cost options?

• 30:36Guy Raz?

  Awesome. Okay. Let me bring Peter Rahal in. Peter, something right up your alley. I know you like to go to the gym. So he's got, um, you know, he's got Amazon, he's got Shopify.

• 30:46Speaker 05

  Yep.

• 30:46Guy Raz?

  He's trying to figure out, right? Amazon, obviously great channel because it's Amazon, but the margins are lower. What are your thoughts, Peter?

• 30:54Speaker 01

  Yeah, so this is a common issue. We have it at David of how do these channels coexist? How do we optimize them? And Amazon's like a force of nature you can't avoid. So it's not, it should never be a question, are we on Amazon or not? I think it should be, how do we optimize it? And I think you're right, you do want to have a direct website with relationships with your customers and offer different things. So, so one way to think about it is, all right, Amazon is like for volume. Like, right, it's like your, your hero skew is there, it's got to be priced right. But like, how do you differentiate and how do you create value on your own website to bring customers there? So that could be through bundling, it could be through promotion, it could be through education.

• 31:40Speaker 01

  But I would look at it as like a product strategy across the different channels. But I, I just don't, Amazon's everything, it's, there's, it's such a powerful, powerful e-commerce platform. You want to lean into it and, and you don't want to run away from it.

• 31:54Guy Raz?

  Yeah, I guess my question for you, Eric, is why, why is it one or the other? I mean, Amazon, yeah, I get it, you know, you're, they're squeezing you and, you know, listen, it's a, it's a business, but it's also a great channel. On the other hand, I mean, I'm looking at your website here, you've got YouTube channel, you've got all these free exercise routines that you're offering. You know, you've got other products here that you're selling. So I, I guess my question is, can't, can't you do both?

• 32:18Speaker 05

  Yeah, we, and we've been doing both for the last three years. It's, part of it's come down to being able to keep up with the inventory. Like, you know, on, on Prime Day, we kind of just ran out of inventory. And one of the things has just been like trying to keep up inventory from a financing perspective. Because I'm paying for everything upfront before it, we do build in China, before it leaves China. And as of right now, we can only order around like a thousand or 2,000 units at a time. And the lead time on that is about three to four months from like building it to getting it here. And the issue with Amazon is if you don't have enough inventory, you get charge fees. If you have too much inventory, you get charge fees. And then the return issue as well.

• 33:02Speaker 05

  And I just, I don't, as of right now, I don't have enough, I think, inventory to potentially do both.

• 33:09Speaker 01

  Got it. Yeah, if, if you have inventory constraints, then, then you'd want to keep it on the more profitable channel. And yeah, and just you have to accept that people are going to be searching for your product on Amazon and it's going to buy, you're not going to capture those sales. But it sounds like it's more of a cash flow, working capital issue. I would focus on the profitable channel and building your platform. I would spend more of my resources and energy in building Eric as an influential person in fitness. And yeah, then you can create all the demand.

• 33:44Guy Raz?

  Eric, this is a little bit, I mean, going back to this idea of what you are giving your customers or your fans, your potential customers for free. And I know that you're doing these videos. I want to see more of that coming from you because I think that's when people see you as somebody who's a trusted voice, they're going to want to support your products. I'm telling, I just say this as a focus group one here, but I do spend money on some of these influencers who I feel are giving me really great free advice. And I have gone and purchased their courses or their products and they've been really helpful.

• 34:24Speaker 01

  I agree with Guy.

• 34:26Speaker 05

  Okay, I really appreciate that. And also, Peter, I just want to say, I listened to the episode again and hearing about the dyslexia stuff and some of the speech issues. Myself, I went to speech therapy for about six to seven years as a kid. So it's pretty cool to see, you know, someone struggle with that as a kid to be so successful as you are now. So I appreciate the inspiration and talking about that.

• 34:49Speaker 01

  Thank you, of course.

• 34:50Guy Raz?

  Awesome. Eric, thanks so much for calling in. Squat Wedgies is the brand. Good luck, man.

• 34:56Speaker 01

  Great to meet you, Eric.

• 34:57Guy Raz?

  Yeah, squats are so healthy. It's such a great compound exercise.

• 35:02Speaker 01

  Yeah, especially the full, the full range of motion ones. Yeah, I love to squat.

• 35:07Guy Raz?

  Yeah. And super important, Peter, you will start to discover this as you get closer to 50, that mobility is so key, man. It is like, it opens everything up. If you're stuck, if you're tight.

• 35:20Speaker 01

  I know.

• 35:21Guy Raz?

  I spent the last like year and a half just focusing on stretching in addition to the other exercises. And it just completely, it just opens all these doors. It's the best.

• 35:31Speaker 01

  I'm not there yet.

• 35:33Guy Raz?

  Not there yet. You still have some grease in your joints and stuff. Okay. We're going to take another quick break, but we'll be right back with another caller. Stay with us. I'm Guy Raz and you're listening to The Advice Line right here on How I Built This Lab.

• 36:01Guy Raz?

  Welcome back to The Advice Line on How I Built This Lab. I'm Guy Raz and today I'm taking your calls with Peter Ray Hall, the co-founder of RX Bar and founder of David Bars. Peter, let's get back into it and bring in another caller. Please tell us your name, where you're calling from, and a little bit about your business.

• 36:18Speaker 06

  Hello, I'm April Wachtel and I am calling in from Brooklyn, New York. And I'm the founder of Cheeky Cocktails. It's a line of badass cocktail mixers for the home and bar that make labor-intensive cocktails a breeze.

• 36:31Guy Raz?

  Welcome. Welcome to the show. Thanks for calling in. Okay, so cheeky. These are mixers, basically like you add this to spirits and then you've got your drink.

• 36:41Speaker 06

  Exactly. These are professional grade, so they're shelf-stable versions of what the pros use behind bars. And they're non-alcoholic, so they can be mixed with spirits, non-alcoholic spirits, seltzer tea, water, et cetera.

• 36:54Guy Raz?

  And I'm on your website now. Love the branding. And so I see espresso syrup, so presumably for like an espresso martini.

• 37:01Speaker 06

  Exactly.

• 37:02Guy Raz?

  You've got some agave syrup, simple syrup, cranberry, lemon juice. So basically, I mean, are you covering the whole gamut of sort of like 50 to 70% of what people order at a bar?

• 37:14Speaker 06

  Yeah, so that's part of the problem.

• 37:18Speaker 06

  It's part of the opportunity and it's part of the problem and part of the question that I have for you, actually.

• 37:23Guy Raz?

  Okay, we'll get to your question in a sec. Tell me a little bit about how this started. How did you start this brand?

• 37:29Speaker 06

  Yeah. So my background, I basically grew up in bars and restaurants. And then I worked my way up over many years, came up through bartending, craft cocktail. And then I became a brand ambassador for Bacardi, consultant for Diageo and a cocktail instructor. So I've taught over 12,000 students how to make cocktails.

• 37:46Guy Raz?

  Wow. So, so you, you could come to this with like deep experience?

• 37:50Speaker 06

  Yes.

• 37:50Guy Raz?

  And you decided, when did you decide to start a business?

• 37:53Speaker 06

  Yeah. So I started tinkering with the first version in 2014. Ran a business for about four years, which I would consider to be a worse version of what we do now.

• 38:02Guy Raz?

  Okay.

• 38:03Speaker 06

  So pulled that apart in 2019, put it back together in 2020 and then launched into March of 2020 into the first wave of COVID.

• 38:10Guy Raz?

  Got it. And now you sell Cheeky cocktails entirely direct to consumer online?

• 38:15Speaker 06

  No, it's about 25% direct to consumer. We're in 1,300 accounts, primarily brick and mortar across the country, but we're in four and five star hotels as well.

• 38:25Guy Raz?

  Nice. And are you mainly in smaller stores or any larger chains?

• 38:30Speaker 06

  About half are small independent boutiques, independent liquor, specialty grocers. And then we're in Anthropologie Nordstrom Home Goods on the chain side.

• 38:39Guy Raz?

  Got it. All right. So tell us what your question is for us.

• 38:42Speaker 06

  Yeah. So there's a lot of ways that Cheeky is distinct from the competitors.

• 38:47Guy Raz?

  Okay.

• 38:47Speaker 06

  But I struggle to encapsulate all of those ways because we are speaking to trade, we're speaking to consumers and different people use us for different things. And I don't know if I just need to nail my messaging better or if this is something that adds complexity and will prevent us from scaling as we try to hit the gas.

• 39:08Guy Raz?

  What's your messaging now?

• 39:10Speaker 06

  Badass cocktail mixers for the home and bar.

• 39:11Guy Raz?

  Badass cocktail mixers for the home and bar. Yeah. I mean, it doesn't tell me anything.

• 39:16Speaker 06

  Right.

• 39:16Guy Raz?

  Right? So what is it that differentiates it from competitors? I mean, there are other brands out there that are mixer brands. So how do you, when you say we, it just takes so long to explain it, what is it that's different?

• 39:27Speaker 06

  So there's many things. For the professional bartender, there are very specific ratios and recipes that are used when they make ingredients from scratch behind the bar. And commercial options that are shelf stable on, you know, sold in retail, don't ever say that. We make our syrups to those specs. So the professionals know what is in them and how sweet they are. And then the consumer is able to replicate those cocktails with certainty because we make the exact same products as the scratch ingredients.

• 39:56Guy Raz?

  Got it. All right. Peter, I want to bring you in here. Messaging is our challenge. I don't know if that's the main challenge here, but what do you think? I mean, again, Badass Cocktail Mixers doesn't tell me anything. It's fun, but it doesn't tell me anything.

• 40:11Speaker 01

  So like your positioning of communication is a reaction to the competitive landscape. It can never be done in isolation. Yeah, like I think badass cocktails is like a fun thing, but it's not a very telegraphic. It doesn't like really communicate and one of my sort of design principles. It's a bit crude, but I think it's a very good approach to packaging design is like the consumers are stupid and lazy, stupid in the sense that they don't really care that much. The brand is supposed to make it easy for them. And then lazy in the sense they're not going to like look at your package and like read the third point and then flip it over and read the story.

• 40:54Speaker 01

  So question for you, if you're to boil down the value in a one statement, what is it?

• 41:00Speaker 06

  So this is part of where I'm getting hung up. So the packaging itself is really attractive. It's minimalist and it's premium.

• 41:06Guy Raz?

  Nice.

• 41:07Speaker 06

  And so thank you.

• 41:08Guy Raz?

  It looks like New York art deco-ish, really cool. Love it.

• 41:11Speaker 06

  Thank you. So that I think for the consumer, that is the first thing that catches their attention. It's relative to a very crowded cluttered marketplace and competitive set. It pops out because there's a lot of white space. Like it's more relaxing to look at our packaging on shelf or if it's in your home bar or in a professional bar. So that's the first thing. The second thing is the ingredients quality is incredibly high and we don't use preservatives. We don't use natural or artificial flavorings. So it's really shelf-stable versions of the ingredients that pros use.

• 41:44Speaker 01

  Where do you have the most success, like on-premise or at home?

• 41:46Speaker 06

  So our focus this year is the on-premise, so food service for sure. Yeah.

• 41:51Speaker 01

  Yeah. And is that, is that because you're providing, you're making the bartender's job so much easier? Is that the value?

• 41:58Speaker 06

  Um, I think it's a couple of things, one of which is if it's in a cock- yes, but it's if it's in a cocktail on a cocktail menu and it eliminates multiple steps, it improves consistency, you know, all of that fun stuff. Um, yeah, then it's of course ea- easy for them to use.

• 42:15Speaker 01

  Yeah, I always say like, strategy is choosing what not to do.

• 42:19Speaker 06

  Yeah.

• 42:20Speaker 01

  So one of the, I, it sounds like your product's kind of working everywhere a little bit.

• 42:25Speaker 06

  Yeah.

• 42:25Speaker 01

  But it's probably one of those things where like, if you really were to just focus on where it's the highest demand is, where people are like, oh my God, finally a product like this. Like where they're not price sensitive, where they forgive you if there's like a quality issue because it just, there's like the early adopters are there.

• 42:40Speaker 06

  No, you, you've identified the issue, which is I have been conflicted because it is working everywhere. And so choosing up until this year has been difficult.

• 42:49Guy Raz?

  You know, I'm looking at, I keep thinking about this, this, you know, badass cocktail mixers and, and, and I mean, I'm looking at your coffee mixer for the espresso martinis and I noticed in the back, I'm looking at the label here on your site, you're using a very specific kind of premium coffee, you know, you're using really high quality ingredients. I mean, you even named the coffee. Um, it, it reminds me a lot of the story we did on La Colombe a few years ago. And when they launched back in the day, you know, they, they were making a very, very premium coffee and they started by working with really the best restaurants in Philadelphia, New York. Because when people tried it, it was just, it was different. It tasted better. But I feel like there's a way for you to convey that. You

• 43:32Guy Raz?

  know, people use words like artisanal, which is overused or, um, you know, premium. But there's something around that idea that I think can really pop because the fact that you have sourced the coffee that you're using in your syrup mix is really interesting to me. And I think that would be interesting to a certain set of, of cocktail enthusiasts.

• 43:56Speaker 01

  Yeah. Cause that's not communicated.

• 43:58Speaker 06

  Yeah, so there's two, so two things. The trade gets it immediately. Like, we, we do zero explanation with the trade and immediately they're like, oh, my God, I cannot, like, this is amazing. With, with consumers, we used to call it bar quality syrups and juices. Then we said professional grade syrups and juices. So that was why we adapted it because the consumer reaction was like, ah, like another premium product. And when we started saying badass, everyone just laughs. And that is more in the spirit of what, of the reaction we want to get from people because it opens people up and then it's more of a fun conversation versus just kind of groaning and saying, oh, yes, yet another of these.

• 44:37Speaker 01

  Cheeky is like English humor, right?

• 44:40Speaker 06

  Yes.

• 44:40Speaker 01

  So, but so then badass is like American.

• 44:43Speaker 06

  Yeah.

• 44:44Speaker 01

  So I find those two things are odds, like.

• 44:49Guy Raz?

  Yeah.

• 44:49Speaker 01

  Good brands have great tension, but I don't think those tensions really work. They're more confusing.

• 44:55Guy Raz?

  It's a really, really interesting insight. I, I think that, you know, I mean, again, it's not the answer, but something like, you know, a mixers for, for cocktail nerds, you know, some way to kind of convey that it's like, you cannot get anything better than this, you know, like if you are, if you're into like watches or you're into pens, right? There are people who are, and there are a lot of people like that. They want the absolute best. And the good news is a lot of people who are really into making the absolute best cocktails.

• 45:30Speaker 06

  Yeah, I mean, it's a, it's a lot of food for thought. I think because there's a lot of sort of exclusionary behavior associated with the highest quality craft cocktails. I'm trying to share a, like a more approachable version. And so that's the thing that we've been batting around for a number of years at this point is like, how can you be super approachable and fun and light and also be very serious about what you do?

• 45:56Speaker 01

  But, but I, I think that one of the other puzzles that's making this difficult is that you're talking to the bartender, like on premise is a very different communication than to the consumer and you're trying to do both.

• 46:10Speaker 06

  Right.

• 46:11Speaker 01

  And so like one strategy would be like, we're just going to dominate on premise. They get it. We can just align our communication to prioritize them. And then guess what? When you, if you do that really, really well, the word of mouth, they'll see it on premise, like, oh, my God, that cocktail was great. What was it? It's cheeky. So. I kind of think you're just deluding yourself across those two different channels.

• 46:31Speaker 06

  Interesting.

• 46:32Speaker 01

  And, you know, it sounds like your DNA is on premise, you know it.

• 46:35Speaker 06

  Yeah.

• 46:36Speaker 01

  And they get it. So it's like Cholula is a good example, like Cholula just popped up in every cafe.

• 46:42Speaker 06

  Yeah.

• 46:42Speaker 01

  All over America. And then next thing you know, you start to see them in grocery stores. Next thing you know. And so there has been a history of that sort of strategy. So I think this is a strategic question, and then your positioning and messaging should align with that strategy. And then as you scale, it's a growth area.

• 47:02Speaker 06

  I think this is so interesting how like, that was not my question, but you got to the actual question behind the question.

• 47:09Guy Raz?

  April, good luck. The brand is called Cheeky Cocktails. Awesome. Congrats on what you built and we'll be cheering you on.

• 47:18Speaker 06

  Thank you. And thank you so much to both of you. This is such an honor and I'm such a huge fan of the show. So thanks so much. Cheers.

• 47:24Guy Raz?

  Thank you.

• 47:25Speaker 01

  See you.

• 47:27Guy Raz?

  Yeah, I mean, a product like this is particularly is positioned well because obviously still lots of people drink alcohol. But a lot of people are moving away from it. As you know, Peter, right in your space, I mean, a lot of people are just not drinking anymore. But they still want to have something. They want to have a some kind of cocktail like drink.

• 47:44Speaker 01

  Well, and the thing is you're seeing on premise people prioritize non-alcohol menus because it's a huge revenue grab, basically. Cause they could like sell like, you know, without the alcohol and charge $20, $15.

• 47:57Guy Raz?

  Yeah, mocktails are super expensive. Or a lot of fancy restaurants are doing a non-alcoholic pairings where they're making these concoctions. And they're just as it's still 120 bucks in some of these super high-end restaurants to get a non-alcoholic pairing. Peter, before I let you go, I want to ask you one question that I've been asking people to come on the show, which is, you know, now that you've got a new brand that you're building and you've got a chance to kind of do things in a different way, right? And not make the same mistakes you made in the first go around. But if you, if you could go back to where you were in the early days of RX Bar now and say, hey, this is a piece of advice I'm going to give you, what do you think would have been helpful for you to hear?

• 48:35Speaker 01

  Yeah, I was full of pride.

• 48:39Speaker 01

  Uh, when I first started, meaning I was sensitive to criticisms. I was defensive. I was very proud of my baby. This product is my life, you know, like, oh, they don't, you know, my product's not the problem. You're the problem. Like, and so I would tell myself, like, removing yourself of pride is super important. And instead of like being defensive on criticism, you should actually seek criticism. Like, it's about finding what's wrong and fixing it. And so you just being super objective, pragmatic, and not emotional about your product and its position and it is really, really prudent to be successful.

• 49:15Guy Raz?

  It's great advice. That's RX Bar co-founder and David Bar founder, Peter Rahal. Peter, thanks so much for coming on the show.

• 49:22Speaker 01

  Thank you, Guy. That was amazing.

• 49:25Guy Raz?

  And by the way, if you haven't heard Peter's original, How I Built This episode, you've got to go back and check it out. We'll put a link to it in the podcast description. And here's one of my favorite moments from that interview. You got this idea. You have a plan. Did you think, yeah, let's go raise money?

• 49:42Speaker 01

  So that was actually our initial plan. And I remember Jared and I like talking about, like, all right, who are we going to raise money from? Like, I remember asking my dad, like, do you know any, you know, rich people I can like, you can connect me with, who'd give us some money? And my dad was like, he's old school. It was like, super traditional. And he's like, you need to shut the up and sell a thousand bars.

• 50:07Guy Raz?

  Thanks so much for listening to the show this week. Please make sure to check out my newsletter. You can sign up for it for free at guyraz.com. Each week, it's packed with tons of insights from entrepreneurs and my own observations and experiences interviewing some of the greatest entrepreneurs ever. And if you're working on a business and you'd like to be on this show, send us a one minute message that tells us about your business, the issues or questions you'd like help with, and hopefully we can help you with them. And make sure to tell us how to reach you. You can send us a voice memo at [email protected] or call us at 1-800-433-120.

• 50:49Guy Raz?

  298 and leave a message there and we'll put all this in the podcast description as well. This episode was produced by Chris Messina with music composed by Ramtin Arablouei. It was edited by John Isabella and our audio engineer was Sina LaFredo. Our production team also includes Alex Chung, Casey Herman, Iman Maani, Elaine Coats, J.C. Howard, Katherine Seifer, Carrie Thompson, Sam Paulson, and Neva Grant. I'm Guy Raz and you've been listening to the Advice Line right here on How I Built This Lab.