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1:38

You are on the road. Say setting up

1:40

demos at any natural food

1:42

store and trying to get people to try

1:44

Right? That's a lot of work. You're

1:46

right. It was a ton of work and most people would

1:48

never do that. They wouldn't live in vehicles for all

1:50

those years. They they wouldn't get along or relationships

1:53

I mean, all those things, but the mate was

1:55

always just so much about bringing

1:57

us together and bigger than any one of us, and we

1:59

actually had a lot of fun. I

2:02

mean, it was a blast.

2:09

to how I built this, a show

2:12

about innovator's entree Pronor's

2:14

idealists and the stories behind

2:16

the movements

2:17

they built. I'm

2:21

Guy Robbins, and I'm the show today. how

2:23

five surfers in California over

2:26

a drink most people didn't even

2:28

know existed and how they built a

2:30

hundred million dollar company to

2:32

share it with the world.

2:38

Building a brand is

2:41

really hard especially when the product is

2:43

virtually unknown to your potential

2:45

consumer base. This is why

2:48

you don't see Americans spreading

2:50

marmite on their butter toast in the morning.

2:52

Even though millions of British people

2:54

eat it every day, it would take

2:56

decades to convert Americans into

2:59

Marmite consumers. salty,

3:01

bitter, brown yeast sludge is

3:03

an acquired Casey. So is

3:05

a bitter, musty beverage called

3:08

Mate. Now if you're not familiar with

3:10

it, Mate is the most popular

3:12

non alcoholic beverage in parts of

3:14

South America. It's made by steeping

3:16

the dried leaves from a Yerba mate

3:18

tree in Herman it's

3:20

usually served hot in a hollowed

3:22

out gourd. In Argentina

3:24

and Brazil, people usually drink it through

3:26

a metal straw. Market has a

3:28

few organic compounds, people

3:30

say make them more energetic or

3:33

Alex, a little like coffee

3:35

BITP without the edge. Anyway,

3:37

back in the mid nineteen nineties, a group

3:39

of friends in San Luis Obispo, California,

3:42

were introduced to Mate by another

3:44

friend from Argentina. And

3:46

within a short period of time, they

3:48

founded a Monte company they called

3:50

Guayak. Now what they didn't

3:52

account for was how difficult it would

3:54

be to convince people to drink

3:56

mate. Let's just say it doesn't

3:59

go down easy. It would take them

4:01

almost fifteen years of grinding

4:03

away before the company turned

4:05

a profit, and much of those

4:07

fifteen years was spent on the road

4:10

in a camper van going from festival

4:12

to festival handing out free samples.

4:14

In fact, the cofounders estimate they've given

4:17

away more than five million

4:19

samples of latte. A few

4:21

years ago, they made a decision that would be both

4:23

incredibly hard and incredibly

4:25

Karr. and that decision was to build

4:28

their own distribution network.

4:30

And how they did Well, we'll

4:32

get there. Today, Guayaquil

4:34

Yerba mate generates more than a hundred

4:37

million dollars in annual revenue in

4:39

a canned and bottled drink are available

4:41

all across the United States. You're

4:43

gonna hear from two of the five cofounders

4:46

in this episode, Chris Mann and David

4:48

Carr. David grew up in

4:50

Hill's being Santa Cruz and Silicon

4:52

Valley. He spent a lot of time as a

4:54

kid outside in the Redwood forests.

4:56

He ended up going to college at Cal Poly

4:58

San Luis Obispo in nineteen eighty nine

5:01

where he took business classes. But

5:03

pretty quickly after he got there, he figured

5:05

out that capitalism didn't really

5:07

appeal to him. So instead, he

5:09

decided to switch to Cal Poly's

5:11

foreign language department, which took him

5:13

to study abroad in France.

5:15

I

5:15

really liked the challenge of learning a language.

5:17

And I I was always been like a people and a

5:19

connector Herman. And I

5:21

lived with a French family, French

5:23

grandparents really so they didn't speak

5:25

any English. Wow. And after, like,

5:27

three to three to four months, it finally started

5:30

clicking. Like, I could

5:32

understand what they were saying and I could speak

5:34

a bit. And so I really liked

5:36

that challenge. And then I also loved the area

5:38

where I was living and I loved the cuisine

5:40

and I loved the attention to, like, there

5:42

was just a different pace of life and I was really

5:45

drawn to, like, sitting down and having

5:47

a meal for two hours and talking and

5:49

sharing a glass of wine, not to get drunk,

5:51

but just to, like, socialize. And so it

5:53

was for me, it was a huge, like, awakening

5:56

of, like, a whole different way of, like,

5:58

living Yeah. Based on what I

5:59

had kinda grown up and experienced just on the

6:02

West Coast. Alright.

6:03

So you come back to California to

6:05

finish up your degree. you

6:08

graduated in nineteen ninety six,

6:10

but

6:10

I guess that was sort of two or three years

6:13

after, right, because you got to school nineteen ninety.

6:15

I started in eighty nine and graduated in

6:17

ninety five. So I had two years abroad. And so

6:19

from because my experience in France was so

6:21

good, I ended up going to another language

6:23

school. in Germany for a

6:25

few months. But then I moved to Spain,

6:28

and then again, I lived with another Spanish

6:30

family. Actually, it was two families.

6:32

to nine person families. So I was like in

6:34

this pack of like eighteen Spanish people.

6:36

Wow. And they didn't speak English at all. So my

6:38

Spanish actually became the best, even

6:40

better than French. Yeah. And so I'm just

6:42

sharing that because when I got back and when I

6:44

met Alex at at the restaurant later

6:46

on, I did have a base of Spanish

6:48

like enough to hang out and converse

6:51

And so I could basically Alex

6:53

could speak to me in his maternal tongue

6:55

and be himself and express himself in his

6:57

own humor, and I got it.

6:59

Alright. So you came back basically

7:01

with two and a half languages under

7:03

your belt. Yeah. You're back in

7:05

San Luis Obispo.

7:07

And I guess you met this guy named

7:09

Alex Prior, Alejandro Prior. Who

7:11

is who who is Alex? He

7:13

was an exchange student in soil science, from

7:15

Argentina. From from Buenos Aires,

7:18

Argentina. Yeah. And we met

7:20

both after we finished, like, I graduated

7:22

ninety five and so did Herman he was working

7:25

at a restaurant locally. Mhmm.

7:27

And that's where he met. You guys

7:29

just struck up a conversation in Spanish.

7:32

Sort of. Not really. He ended up

7:34

spilling food. on

7:36

my girlfriend at the time. And

7:39

so we ended up chatting it up, you know,

7:41

because it was like, oh my god. And then he liked

7:43

us and he invited us out to

7:45

have a meal, like a traditional barbecue,

7:48

which they call a parisha, at

7:50

his place. He was living in a in a mobile

7:52

home, like a little trailer -- Mhmm. --

7:54

on a fairly large property.

7:57

and he was doing organic farming

7:59

studies for the landowner. So he came

8:01

out there, had a meal, and

8:04

then after the meal is when sort of the

8:06

the moment happened, you know, when

8:08

he passed around the traditional Mate Gourd.

8:10

He finished the meal and he

8:12

passes around, there's a drink

8:14

--

8:14

Yes. -- called Mate.

8:16

Yeah. And and tell me what what was what

8:19

do you remember about about how he sort

8:21

of presented it to you? Well,

8:22

I think it's just sort of normal thing to do after

8:24

you have a meal, you if you wanna connect with

8:26

someone and you wanna have a moment, you

8:29

pass around to Monte Gord? A Gord.

8:31

It's literally a Gord, a drug,

8:33

eyed gourd. Right? It's really like there's all different

8:35

kinds of gourds. There's -- Mhmm. -- hollowed

8:37

out, like, canvas, like

8:39

-- Yeah. -- squash, gore. gourds. There's

8:41

ceramic gourds. There's metal gourds.

8:43

They're basically a a container,

8:45

and you put a a metal straw

8:47

into with little slits on

8:49

it that create a little filter at the bottom.

8:51

So when you put this straw

8:53

filter in there and you suck through

8:55

it, the small leaves and particles

8:58

don't come through the little slits and you

9:00

just get the liquid. And were you thinking

9:03

is staying, like, what yeah. Well,

9:05

well, that was the moment. Right? People ask you, like,

9:07

what's that Herman? No. A moment.

9:09

That was the Herman. because

9:11

I had suffered in

9:13

my life from hay fever

9:15

straight up. And I

9:18

had taken sudafed and

9:20

Bennett drill, like, drugs to

9:22

just be able to, like, stop have my

9:24

nose running. I just suffered a lot. I

9:26

had humidifiers in my them growing

9:28

up. And I kinda cut all the drugs cold

9:30

turkey because they just made me

9:32

feel so bad. And the only thing that ever really

9:34

made me feel great was like a lot of exercise.

9:36

So I would if I was

9:38

surfing or mountain biking or doing like

9:40

a two hour a stronger yoga, which is a bit

9:42

more of a vigorous yoga, something

9:45

like that, I could breathe pretty

9:47

well. And it

9:49

took an an investment of time to do that.

9:51

Well, that day when you passed around the

9:53

gourd, within like ten or fifteen

9:55

minutes. I all of a sudden, my nose

9:57

cleared up not completely, but like I was

9:59

breathing and I

9:59

was like, What is this stuff?

10:02

Like, how come I'm You'd never heard of it

10:04

before? Never heard of it. No. I

10:06

mean, the description boost you see, you're

10:08

like,

10:09

sort of saying, I felt amazing.

10:11

Right? But it wasn't

10:13

like a high. Right? It wasn't like

10:15

taking mushrooms or something. It was a describe

10:18

how you like,

10:19

felt besides the fact that you felt like

10:21

your nose cleared up. What else did you feel?

10:23

Well, I felt the energy and the

10:25

clarity of mind too. Like,

10:27

because Mate is a a

10:29

Vazio and bronchodilator, so it gets

10:31

your system flowing. So not only am

10:33

I breathing now, then you have

10:35

more energy, and you have more clarity to

10:37

mind. So those Karr sort of a byproduct

10:39

or an effect of

10:42

having a system that's flowing better.

10:45

Alright. So

10:47

you have this experience with it and I wanna

10:49

be clear about Not everybody

10:51

is gonna have that reaction and there's This

10:53

is not a science show. We don't have the data.

10:56

But you clearly it

10:58

was like, you loved it. There was something about it.

11:00

So did you say to Alex, hey,

11:02

can I get more of this stuff? Like, I wanted drinking

11:05

this tea? I David.

11:07

And we he started sharing more and more gourds

11:09

in me. We we'd hang out. We liked each other. Right?

11:11

We had a real chemistry. Like, you

11:13

know, we're passing around other green things at

11:15

that time too. And this was like, okay.

11:18

Everyone who started drinking this

11:20

was like, getting the balancing effects

11:22

from it. Like, we were all surfers and spending

11:24

a lot of time, driving

11:26

along the coastline. staring at the waist, trying to

11:28

find the best one, parking, checking Cheng driving

11:30

your car again, looking for that. So you're so

11:32

we all started drinking it in,

11:34

you know, an hour into drinking the

11:36

gourd then we'd go paddle out. And it

11:38

was like, we'd all everyone started saying we had the

11:40

best sessions. Like, everything started clicking.

11:43

You know, you'd have you'd be doing yoga on the beach,

11:45

drinking your Karr, get in. And so it just

11:47

really, like, landed

11:49

so well. Mhmm. And then people started

11:51

quitting coffee. And that's what kinda was like,

11:53

this is really interesting. I guess this

11:55

is a moment where we should pause and talk

11:57

about Mate for a minute because when

12:00

I was doing research on this

12:02

episode, I was amazed to learn that

12:04

Mate is like, it's not

12:06

surprising. It's been around for hundreds and

12:08

hundreds of you ever. It's been around for longer, but it it

12:10

was sort first consumed by,

12:12

you know, indigenous tribes

12:14

in what is now Paraguay and

12:16

around Argentina and

12:18

in those areas it's been

12:20

consumed for like five hundred years,

12:22

but really never really

12:24

made it beyond urgent

12:27

Tina and Paraguay in parts of Brazil. Right? Like,

12:29

what so when you first had it,

12:32

did you ask him? You're like, how is it that this

12:34

thing is, like, only in this

12:36

tiny part of the world? I

12:38

David. And the story that

12:40

I've heard over and over is

12:42

it was actually expanding

12:45

like tea and coffee. Mhmm. And it was kinda it

12:47

kinda went all the way up into Peru and different

12:49

places. And and then there was

12:51

a war that happened between

12:54

paraguay Argentina and Brazil,

12:56

and the trade routes broke down. And so then

12:59

Marte never kept trading and

13:01

going further away, it kinda stayed confined

13:03

to that area, whereas tea and coffee

13:05

continued to expand around

13:07

the world with their trade routes. And I guess you

13:09

could describe dry latte as sort

13:11

of having elements of coffee

13:13

and tea. Right? It's got it's a

13:15

leaf. It's a dried leaf. It's

13:17

brewed like tea. It has

13:20

some of the

13:22

same chemical properties of tea,

13:24

but also has caffeine like coffee.

13:26

Yeah.

13:26

I mean, it was used more

13:29

like our culture uses coffee

13:32

than tea. Mhmm. People used

13:34

Mate in the morning to wake up and

13:37

they brewed it strong. And even

13:39

as we commercialized it, the first

13:41

people to ever really get

13:43

into Mate were not so much tea drinkers

13:45

because people would have, like, generally a cup of

13:47

tea or a lighter cup of tea, whereas

13:49

they would brew the Yerba mate in a French

13:51

press or a coffeemaker and make strong

13:54

cup of Monte. So it was

13:56

very much like you could quit

13:58

coffee drinking Monte.

14:00

Yeah. However, if you look at

14:02

the chemical structure and this was always very

14:04

fascinating, you know, coffee was really

14:06

had a lot of caffeine and so does matte. Tea

14:08

had a lot of tea offoline -- Mhmm. -- and then

14:10

chocolate had theodromine. and the

14:11

and your bimante has all three. And that was very

14:14

much what I attributed sort of the unique

14:16

sensation that people feel from your

14:18

bimante. Like, why is it so different than

14:20

coffee or tea? Well, it's the unique

14:23

combination of these alkaloids in

14:25

the package of something that has pretty much

14:27

the nutritional profile of like a wheat

14:29

grass. Got it. Okay. From what I

14:31

understand, like, most latte is

14:33

commercially grown and like it's grown on

14:35

areas that where there was rainforest.

14:37

Rainforest is like cut down. to

14:40

just plant these matei trees. Mhmm.

14:42

And they can produce a lot of

14:44

matei faster. But matei

14:46

traditionally was grown in deed. Mhmm.

14:48

And matay is not

14:50

like teed, which is grown. It's

14:52

like a low growing leeks.

14:55

Right? It grows close to the ground. Mate grows

14:57

on trees. Right? Mhmm. It's a

14:59

leaf from a tree. I tea,

15:01

like Mate, they they kinda look like

15:03

bushes. Right? So Yeah. -- they're both cultivated

15:06

similarly for the ease of harvest.

15:08

If you were to find a a monet tree in

15:10

the wild, would grow up like

15:12

eighty to one hundred feet tall and maybe

15:14

be like twelve to eighteen inches in

15:16

diameter for bigger trees. But that

15:18

is difficult to harvest. Generally, like, for

15:20

the mass amounts of production,

15:23

they prune the the trees down

15:25

and they make them in more like

15:27

bonsai trees like the size of an orange tree

15:29

and get on step ladders and trim them

15:31

like a t bush. They're probably bigger than

15:33

t bushes, but similar in

15:35

sizer shape. So

15:37

at what point did the idea come

15:39

into your head or into Alex's

15:41

head? To me, be turned

15:43

Mate into a business. What I mean, you're you're,

15:45

like, what are you what was the conversation you

15:47

remember? Well, we were becoming bros.

15:49

Right? We were hanging out a lot.

15:51

You guys for bros. We're bros. We're

15:53

surfing and doing Taekwondo and

15:55

drinking Mate. And at one point,

15:57

he was asking me for advice and we were

15:59

talking and he said

16:00

him he's like, the door is always open. I'm like, what do you

16:02

mean? He's like, we could do this together. And at that

16:04

point, he was putting half

16:06

pounds of matte together in his trailer

16:08

with a bag and selling it at one store

16:11

in San Luis Vispo. So he had it in

16:13

one co op store and he'd make a couple

16:15

of cases and sell it. So I I started

16:17

doing that with him, just helping him actually. I wasn't

16:19

even joined with him yet, but I just would hang out and talk

16:21

with him and pour Matte into the bag. That's what

16:23

we're doing. I was kind of just volunteering my time.

16:26

And would

16:26

they call it would they calling it like Alex

16:28

Mate or was her name? Or It

16:30

was called Guaje for the very It's

16:32

called Guaje. Yeah. Wow. Tell me about

16:34

that name. Well,

16:35

name came from our where we

16:37

all of our Mate originally came from

16:40

Paraguay from an

16:42

area of rainforest that

16:44

was part of like an experimental project

16:47

to reforest Mate in its natural

16:49

habitat. And Alex,

16:51

through his dad, who knew the land owner

16:53

when he got this year of a mate in his hand

16:55

and started drinking it, he was also

16:57

profoundly affected. He was like, man, this stuff

16:59

tastes really good. It's nothing like Yerba

17:01

Mate he grew up drinking because all of them all just

17:03

drank commercial sun grown Mate with chemicals. That's

17:05

all you can get. And the name

17:08

of the reserve where the

17:10

mate was coming from was about twenty five thousand

17:12

acres was called Guayak.

17:14

Mhmm. And so then Alex just used

17:16

the same name, and we've just let it know you're about in

17:18

the sack, and that was it. and this latte was

17:20

different because it was essentially grown

17:23

organically. Organically in the shade, smooth

17:25

tasting, better flavor, all of it. so

17:27

he was, like, hyped on it. And he

17:29

was it was also, I think, if he shared it

17:31

with people, they liked the taste better because

17:33

if you drink the Argentine stuff, it's

17:35

sun grown, it's really, like, almost offensive unless

17:37

you grew up drinking it. It's pretty bad

17:40

tasting. And for me,

17:42

that was when my business brain clicked

17:44

back in. I was kinda like, anti

17:46

corporate. Karr wanna be part of something that's not good

17:48

for the world. And when

17:50

I learned that this year from Mate could

17:52

be grown in its natural environment,

17:55

and produced by small farmers and indigenous people, all of

17:57

it just sort of added up to me. I'm like, wow. And,

17:59

like, the

17:59

more we could scale

18:02

Chris, in return, like, destroyed lands

18:04

back to forest. It would be

18:07

great for the world. Mhmm. I saw, like,

18:09

the power of this

18:11

product to drive real Cheng, and

18:13

that's what that's what got me in. Alright. I'm

18:15

gonna I'm gonna come back to you David in

18:17

in just a moment, but I wanna turn to

18:19

Chris for for a little bit because Chris I know

18:21

that you grew up in Southern California and

18:23

I think like David also loved the outdoors

18:26

and Yeah. You I read your,

18:28

you know, you were a high school athlete

18:30

and super smart kid. I know you studied

18:32

economics at Harvard. Mhmm. And then you went

18:34

into finance after college.

18:36

Right? But from what I I understand you had to just we're not

18:38

happy with the path you were on

18:40

to to sort of quit your job, which

18:42

is around the time you -- Yeah. -- you guys

18:44

mess it. me about that,

18:46

where where were you and David and Alex

18:48

Alex, like, what were you up to? So

18:50

I I at the time was living

18:52

in the Bay Area My wife was

18:54

getting a degree, a master's degree in

18:56

holistic health, and I was trying to figure out my

18:58

next what I wanted to do.

19:00

I was waiting tables, basically, just to make ends

19:03

meet pay rent, but I had a lot of free

19:05

time. And both my wife and I, we were just

19:07

diving into, like, all

19:09

kinds of reading and learning and, you

19:11

know, a lot of eastern thought.

19:13

And just really, I think, grappling

19:15

with, like, who are we as people? And what do we

19:17

wanna do on planet. And I think the more

19:20

I moved away

19:21

from conventional mentality,

19:23

the more it allowed fertile soil

19:26

for for these other seeds to

19:28

grow. Mhmm. So, alright.

19:30

So, you you're going through this kind

19:32

of personal transformation. How did you end

19:34

up in San Obispo, which is on the

19:36

Central Coast of California. So two of

19:38

my high school friends were very passionate

19:40

about macrobiotics, and we're going to

19:42

Cal Polysomos Obispo. And as part of their

19:45

senior project, they were opening a vegan

19:47

restaurant in San Luis. And they

19:49

were living in a house that they had

19:51

converted the whole front yard into a

19:53

living garden and

19:55

into into really like a food

19:57

forest where you had mixed

19:59

trees with different herbs and

20:01

shrubs and vegetables wasn't

20:03

just like planting things in a line. So it was

20:05

it was really kind of a early version

20:07

of permaculture. Mhmm.

20:09

And so I lived there

20:12

and the way I I felt

20:14

eating the food, changed

20:16

my body. And then on top of that, we were

20:18

connecting with all these local

20:20

farmers. and so seeing the connection between

20:22

the food we eat, how it

20:24

impacts the land, how it impacts the community, how

20:26

it impacts the health of the body, and I

20:28

was like, wow, we really need to focus on building

20:30

something here. Alright. So you're working

20:32

at the restaurant, helping your friends

20:34

out. How did you

20:35

meet David Carr and Alex?

20:37

Yes, so I met both David and Alex through the

20:40

restaurant. We officially opened I

20:42

think in mid nineteen ninety five.

20:45

And around that same time, Alex

20:47

was

20:47

living on a farm and that

20:49

farm was where we were sourcing our

20:51

subtropical fruits for what we called

20:53

our Forager Karr. had basically a

20:56

giant salad bar, but it was all kinds of

20:58

different fruits and

20:59

vegetables, many of which were locally

21:01

foraged. Wow. So Alex

21:03

came in. He, you know, knew about the

21:05

restaurant, and he thought it would be a great place

21:07

to sell Yuromate. And shortly

21:10

thereafter, David became Herman

21:12

we met and and really hit it off.

21:15

And, you know, David is is such

21:17

a incredible person. I mean, the moment

21:19

you meet him, you really kinda

21:21

light up. And at one

21:23

point, you know, he's like, oh, you should you should come by

21:25

my place and we can play some music or something. I was

21:27

like, oh, that sounds good. When's a good time?

21:29

And he was like, anytime. I

21:31

was like, wow, really. Anytime.

21:34

And he's like, yeah. And when

21:36

I did go to his house, that's when

21:38

we first shared Mateo of the gourd. Mhmm. And that's when it really

21:40

got me, you know. And here is something where

21:42

it's very intimate you're sharing. And

21:44

so, you know, you naturally start having

21:46

these incredible conversations and dreaming about the

21:49

future. And and so, you know, so much

21:51

of of how I think about David

21:53

is just so tied to that.

21:55

Alright. So you guys start to form a friendship.

21:58

David, I mean, you and

21:59

Alex start to really explore

22:02

turning this in to a business. And

22:04

I guess at at a certain point, you wanted to formalize it. You

22:06

you were like, let's file

22:08

an

22:08

LLC and set

22:10

BITP company properly.

22:12

Tell me about how you even started

22:14

that process. Well, that's even a a

22:16

more funny time because

22:19

the way we first sort of ceremoniously

22:21

celebrated our relationship was he

22:23

gave me a silver wampa

22:26

which is a bullhorn that's silver

22:29

plated on top in a drinking

22:31

vessel for Yerba mate. Mhmm.

22:33

So he gave me one of those. as

22:35

like a symbol of our friendship and connection and

22:37

Alex did. Alex Alex that's that was what

22:39

I had for a whole year. That

22:41

was the only thing I we went on,

22:43

but we actually had to go, like, get some

22:45

money. That wasn't enough, I think, for

22:47

the bankers. So we we did come

22:49

up with agreements. But, you know, that was something you gave

22:51

to someone when married or a really

22:53

special time in your life. And so for him, that was

22:55

the most important thing was

22:58

symbolizing our connection. Alright.

23:01

So, David, how did you go

23:04

about I mean, presumably, you

23:06

needed money to import the

23:09

Mate.

23:09

You needed money to buy the bags

23:11

that you would

23:11

then put the Mate in and

23:14

then labels to label them,

23:16

I can't imagine it was that much money that

23:18

you needed to get this started. Right? because you're

23:20

really selling to local shops and Yeah. We

23:22

we got a fifty thousand dollar loan with

23:24

that local loan. How did you get how did you get fifty

23:26

thousand dollars bank loan? Well, that's

23:28

also kind of the funny thing about a small

23:30

town relationships. Right? Because

23:33

Alex worked at the Italian restaurant, and the

23:35

owners were friends with, like, the local

23:37

bank, and they made an introduction,

23:40

and then Alex and I went in there and told him about this

23:42

whole project. I don't think they got

23:44

it at all. Yeah. But they liked

23:46

us enough. and

23:48

they loaned us the money. Wow. What

23:49

kind of collateral did you have? Must must

23:51

be no. No. I mean, we had us

23:53

a looser commodity, but, you

23:56

know, that's what they first bank.

23:58

Sandler's business, but that's what they did. They wanted to support local business.

24:00

And I think a lot in a small

24:02

town comes down to relationship and

24:04

who you know and do you trust them.

24:06

We had to sign personal guarantees, but there

24:08

was no nothing to guarantee. Yeah.

24:10

I mean, that's kind of a crazy loan

24:12

to give. I mean, you know, it's

24:14

an

24:14

unknown product. There's no market for it.

24:16

You basically are going to them saying, look, we're

24:19

gonna create a market in the

24:21

United States. we're gonna educate people

24:23

about this product. And if

24:25

I'm a banker, I'd be like, I'd be kinda

24:27

skeptical back then. Well, part of it

24:29

too was it was an SBA loan

24:31

And so

24:31

the SBA guarantees, you know,

24:33

at ninety percent of the loan. And so

24:35

it's really kinda like how it's designed

24:38

to work. Yeah. But with all the

24:40

banking consolidation, that's changed so

24:42

much. Now it's all about -- Right. -- the numbers and

24:44

stats and everything else. Right. Because

24:46

in the mid nineties, there were still a lot more independent

24:48

banks than there are now. Yeah. If I if

24:50

I recall, the president of the bank

24:52

was named Reese David. And

24:54

he said, you guys remind me of the Saint Louis sourdough

24:57

boys. And that was and Saint Louis

24:59

sourdough had been a big success

25:01

locally, and so that

25:03

was it. That's amazing. That's

25:05

amazing. And there's another really big element to

25:07

it. I mean, I think we had nine personal

25:09

credit cards maxed. Chris and

25:11

my brother Steven and myself. We

25:14

got you remember that time, there was that

25:16

time in the mid nineties. They just

25:18

started sending everyone credit card

25:20

offers. Yeah. So you just, like, said

25:22

yes to them all. And we probably,

25:24

you know, probably had another couple hundred

25:26

k just in credit cards

25:28

Karr top of the bank loans that we did to,

25:30

like, on the business at that time.

25:32

But initially, when you guys

25:34

got together to start David, what do you

25:36

remember about the ambition were

25:38

you like, we're gonna make this the next

25:41

coffee? This is gonna be the

25:43

next massive beverage in the United

25:45

States? Or was it more like, Yeah.

25:47

Let's just see if we can get people

25:49

to buy it in San Luis Obispo. Yeah.

25:51

No. It was always a really big vision, and

25:53

it's a little humbling to even talk talk

25:55

about it now. I mean, I remember

25:57

convincing my brother to drop out

25:59

of university in Chico, which is brother Steven.

26:01

Yeah. To do what he did. He dropped

26:03

out of university. he was almost done. He had, like, a half a year left, but he

26:05

was studying graphic design. I was like, bro, we need

26:08

you. And he was

26:10

living in Europe, kind of following my footsteps for

26:12

six months, and I went out and told everything

26:14

that was going on with Alex and shared

26:16

Mate with him and left him with a gourd

26:18

and and then when he got back,

26:20

he was in. you needed a graphic designer for your

26:22

logo and for your logo. Everything because we Karr a

26:25

packaging and products and we're doing all that. We

26:27

couldn't really afford anyone and none of us were taking

26:29

a salary. So we

26:31

just needed sweat equity in there.

26:33

And, you know, I I remember telling him, I was like,

26:35

we're gonna be a billion dollar business in

26:37

five years. You know, like, I I was

26:39

so so jacked on this product. Yeah. Like, I didn't know

26:41

anything. It was naive. I just thought it would spread

26:43

it a lot faster. I didn't know anything by distribution

26:46

or sails or lead time. I was just

26:48

like, human nature loves this stuff and

26:50

it's just gonna be big. When

26:53

we come back in just a

26:55

moment, to the team

26:57

spreads the word about Yerba Mate

26:59

to people who have never heard of

27:01

it before, and why their first big piece

27:03

of media attention almost kills

27:06

the company. Stay with us. I'm Guy Raz,

27:08

and you're listening to how I built this.

27:12

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27:14

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27:17

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More importantly, their stuff is really great. I've

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29:34

Hey,

29:37

welcome back to how I built this. I'm Guy

29:40

Raz. So it's the mid

29:42

nineteen nineties and buy a

29:43

key is starting to take shape as a company.

29:46

Chris has

29:46

now joined David Alex, and so

29:48

is David's brother Steven. That

29:50

accounts for four of the five founding

29:53

semias or seeds of Guajacchi.

29:55

The fifth founder goes by

29:57

Don Miguel, although his real name is

29:59

my

29:59

Knewton. Michael Newton

30:01

and I were like became college buddies.

30:04

He he was he was also studying

30:06

business, but just, like, hanging out

30:08

surfing and playing music together. It

30:10

just just bros. But, like, he was

30:12

actually the very first one who

30:14

started helping out. Alex and I, even before Steven

30:16

and Chris, because he actually, you

30:18

ended up kinda joining as a quote

30:20

unquote intern and and helping

30:22

drive up, like, the first eight tons a year of

30:25

a mate from Los Angeles to slow

30:27

town in the in the U Hall that was

30:29

rented and, like, you know, having to,

30:31

like, move all eight tons

30:33

himself twice because Chris I mean, the classic

30:35

story, Dol Miguel, he's a workhorse stallion.

30:38

always positive. You know? And so, you know, he

30:40

was working with us early on. And how did

30:42

you guys decide who would do what?

30:44

Did you say, okay.

30:45

You're gonna be the CEO. You're gonna be

30:47

the CMO. You're gonna be this. What do

30:49

you remember about those decisions?

30:51

Well,

30:52

it might be a moment to talk about Alex's

30:54

transition, David. Yeah. because

30:56

essentially, like I said, we had a partnership

30:59

there. And when he was on a

31:01

sourcing trip pretty early

31:03

on, might have been, like,

31:04

a nine what, ninety seven? Mhmm.

31:07

back to Argentina. Yeah. because he's living in,

31:09

you know, the cent the central coast. Right?

31:11

But he goes back on the sourcing trip and

31:14

he meets his future wife, Florencia, and things

31:16

change for him too. And

31:18

so now he's kinda

31:20

like, hey, We're sharing a

31:22

gourd. It's a very emotional charge

31:24

moment. So he basically says give me ten or

31:26

twenty percent of the business, and I'll send you the

31:28

Yerba. And I'm

31:30

like, And just to be clear, he

31:32

was telling you, Alex was saying, I'm moving

31:34

back to Argentina. Yeah. I can't run

31:36

this business from here, but I can

31:38

send you the the mate. Yep.

31:40

And he did. Yep. But he was the

31:43

guy. Yeah. He was the the

31:45

connection to Mate. He was the

31:47

Argentine. And continues to be my soul

31:49

brother. I mean, later introduces me to my wife. I

31:51

mean, he's my he's like my soul bro. And so, of

31:53

course, what do you do? You love your your friends and

31:55

yeah. For me, I never wanted to be just

31:57

the guy. You know? I I liked doing things with

32:00

people Karr partnerships and friends. And

32:02

so that was when we shifted up the

32:04

equity structure Herman then we distributed

32:06

the rest of the equity to the four of us

32:08

based on sort of responsibility that we

32:11

had. Alex Alex moved

32:13

to back Karr. And that said, he was sort of out of the picture on

32:15

day to day operations. From the next, you know,

32:17

three to four years, it was more he took another

32:19

job as well. Mhmm. It didn't require

32:22

that much of his time

32:24

until we started growing. Right. It

32:26

was

32:26

one of those things that, like, it wasn't the

32:28

right time for it, but ultimately, it

32:30

never would have worked. Had he not moved down there?

32:33

Yeah.

32:33

is a challenging business that you

32:36

started in nineteen ninety seven, really

32:38

nineteen ninety six because

32:40

you had to introduce a product

32:43

to

32:43

a market that ninety

32:45

nine point nine percent of people had

32:47

never heard of. you had to convince them to

32:50

try and

32:51

then you

32:52

had to hope that they would

32:54

experience the benefits of it

32:57

enough to turn this into a sustainable business.

32:59

Mhmm. But it's one

32:59

of those products that you can't just like sell

33:02

to a a natural food

33:04

store and hope that they're gonna sell it shelves.

33:06

It's a kind of product that you have to

33:08

demo in a store, give it to people,

33:10

let them try it. So

33:13

presumably, you're doing that in San Luis to

33:15

dispo at this time. Yeah.

33:16

So that kinda goes back to the original question

33:18

of sort of how the roles and responsibilities

33:20

broke out because now there's five

33:23

of us. And Alex is now in

33:25

South America, sending us Europe, and Chris is

33:27

running the business, holding it all

33:29

together. Domigail and Steven and I, the

33:31

three of us, get on the road as,

33:33

like, full time Cebadores. And

33:35

Cebadores, just to clarify, these are it's

33:37

like a barista of Mate.

33:39

Yeah. It's a it's a traditional term for someone

33:42

who shares and who prepares and shares

33:44

the Yatoba. So we we are Sabadores.

33:46

Yeah. And we we started doing that

33:48

in slow town in San Luis Vispo at

33:50

the farmer's market. And you were just brewing it

33:52

tradition just normally. No sugar, no

33:55

well, nothing else. Exactly. That was the thing. Right?

33:57

We had a very small percentage of

33:59

people who could actually drink it because we Karr so

34:01

hyped on our own kool Aid. Right?

34:03

We brewed it so strong in those percolators,

34:05

those coffee percolators that would drip for like

34:07

half an hour and then serve it

34:10

to people. at the and they would drink, like, this cowboy

34:12

matte, like, straight and dark and strong. Like,

34:14

just the espresso -- Yeah. -- she was

34:16

just strong. Right? And so

34:18

people fell David. some people

34:19

Karr, like, not for me, and they'd walk away.

34:22

Like, eighty percent of people, like, they'd smell it.

34:24

I can't do this or too strong or too

34:26

bitter or too much. But those who did were

34:28

just, like, Hell yeah. That was amazing. And so we

34:30

kinda got that that whole feeling of

34:32

it. We got we took that show on the

34:34

road. Steven and I, my bro, and to the

34:36

North, don't we

34:38

go in Altria is from Long Beach and did SoCal. Steven and I

34:40

would go together. We were living in my VW

34:42

bus. Okay. And DomiGo

34:44

had his truck and he was more on

34:48

his own. then the three of us would come together for certain events

34:50

like like some of the first festivals that were

34:52

being started on the West Coast. This is back

34:54

when festival culture really

34:56

hadn't started what kinds of festivals? Like like back in the day, it

34:58

was like health and harmony was like the

35:00

first one Karr- Mhmm. -- on the West Coast,

35:02

and then

35:04

there was Coachella and Bonnaroo, and then there's

35:06

a crazy tribal stop right here on

35:08

the river. So

35:10

music was your that was the

35:12

tribe that you were going for, the people going to

35:14

the festivals. It was kinda what we were

35:16

into. Yeah. And if you're gonna go to

35:18

a festival, It was where

35:20

younger people were and

35:22

people wanted to stay up late to catch the

35:24

music and they needed the energy because they're

35:26

dancing. It just

35:27

fit right in. Yeah. And then Stephen and I after going all the way north and going

35:29

all the south ended up in LA and we're like, oh my

35:31

god, this is great down here. Everyone was

35:33

like so into into

35:36

health and wellness. And so we just, like, planted ourself into

35:38

Panga for, like, a year, but there

35:40

was something that happened when we were

35:43

down in LA. That's when soy milk started getting popular.

35:45

Yeah. So we started putting honey and soy

35:48

milk in the mate and making mate

35:49

latte. And then, like, the

35:52

percentage of, like, maybe fifteen,

35:54

twenty percent of the people actually tried it and liking

35:56

it went up to like fifty

35:58

or more. People are like, oh, this

35:59

is great. I can drink instead of my coffee

36:02

Karr. I can drink This

36:04

is before Whole Foods really blew

36:06

up. So you were going into mainly

36:09

independent health food stores

36:11

co op type places. yeah, like the

36:13

Santa Monica co op and then the Whole Foods. But also, we were at that era

36:15

when you could actually just still go in and talk

36:17

to a Whole Foods buyer.

36:20

and get them jazzed on it and they would take it in. So that was how we did it. In

36:22

the store. Yeah. You'd walk in with with a bag

36:24

of octane and say, what would you can I talk to

36:28

the buyer? we have the same strategy the whole way along. We said,

36:30

look, if you let us come in and demo

36:32

our product, we'll sell you the

36:34

product on consignment

36:36

and can just basically sell whatever you you want will take the rest

36:38

with us. But what inevitably happened was it

36:40

was like a top selling

36:42

product in

36:44

their store. and they would take us in. And then we would basically well,

36:46

we're on the road. We'd call back to Chris

36:48

and be like, Chris, send out a few

36:50

cases of this store, and then

36:52

ship it via UPS for, like, for the first four years, we shipped product

36:54

out direct to stores via UPS. I

36:56

got you. So you would get these

36:59

big, big sacks of Mate.

37:01

You guys would hand package it

37:04

yourselves. You know, at that point,

37:05

we weren't hand packaging. It was being

37:07

hand packaged, but we were working with this group called

37:09

the Achievement Herman. out at Quest

37:11

to College. Mhmm. And it was a a group

37:14

adults with disabilities. They did

37:16

all the loose packaging for us.

37:18

And

37:18

then we also had a tea bag co packer

37:20

we worked with who put it in tea bags. Right. because

37:22

I imagine that selling loose latte

37:24

was not gonna go very

37:26

far because most people are

37:28

not latte Chris. Right? They're on the gourd,

37:31

and so tea bag probably made more

37:33

sense practically. Right? For yeah. For most people,

37:35

I mean, that was definitely we sold more

37:37

bags than loose. I

37:38

think in the natural foods industry at

37:41

one point, our bags were the

37:43

number two selling tea. Mhmm. And

37:45

the loose was like number six. So, I

37:47

mean, they both did really well relative to that that

37:50

market. Alright. So, David,

37:50

you and your brother David on

37:53

your VW bus. and Don Miguel is

37:55

going down to SoCal. Chris, you're manning

37:58

the the headquarters in San Luis

37:59

Obispo. Mhmm. This would

38:02

be like 567

38:04

years of

38:05

driving up and down

38:07

the West Coast of the United

38:09

States, setting up demos at any

38:11

natural food store and trying to get people

38:14

to try it. Right? Correct. That was, like, till

38:16

two thousand three, then we

38:18

started doing cross

38:20

country tours. you know, that was when we had to get the bigger vehicles

38:22

like the the RVs. I

38:24

can't imagine how I mean, that's a lot

38:26

of work. because

38:28

you're there's a business to run based in San Luis Obispo, and

38:30

you are on the road,

38:32

what? I mean, we

38:34

did

38:34

some tours that were just eight months

38:36

long or six months long, we always just

38:39

go. And I think Steve and

38:41

Dol Miguel and I personally served

38:43

over five million cups of latte.

38:45

Wow. Like, we spent a lot of time

38:47

architecting how to get as much year by

38:50

latte in people's hands And then that was way

38:52

easier to scale with cans and

38:54

bottles as we grew. But in the

38:56

beginning, with loose, it was very challenging

38:58

and required a lot of

39:00

preparation and a lot of breakdown,

39:02

but the advantage was when you

39:04

serve someone a really strong hot cup of

39:06

matte or a hot matteilate, It was definitely

39:08

even a little bit more impactful than just drinking

39:10

a can. Yep. But to do that

39:12

person by person by person by person is

39:14

very Karr. it wasn't like you

39:16

had a forty million dollar

39:18

marketing budget to take out billboards and Times

39:20

Square in every bus in Los

39:22

Angeles. You couldn't scale this thing. It

39:24

was like you know, one at a time. That's a lot of

39:26

work. You're right. It was a ton of

39:28

work and

39:28

most people would never do that. They wouldn't live

39:30

in vehicles for all those Karr.

39:33

they they wouldn't get along, their relationships I

39:35

mean, all those things, but the mate

39:37

was always just so much about bringing us

39:39

together and bigger than any one of us, and we

39:41

actually had a lot of fun. I mean, it was

39:43

a blast. Never. But this is my question,

39:46

David. I, you know, I think anyone at

39:48

the beginning of

39:50

their career. it's a grind, but you're doing this for a long

39:52

time. You never got down, you never

39:54

felt like, god, this isn't taking off as much

39:56

as I had expected or as quickly as I

39:58

expected it

40:00

Well, I definitely felt fat. I definitely was, like, thought I would

40:02

take off a lot quicker. And that wasn't

40:04

demoralizing. It didn't get you down.

40:07

No. It's never amazing how how.

40:09

I loved everyone I worked with. Mhmm.

40:11

And we loved to get him together. And

40:13

when we got together, and

40:15

shared a gourd, you know, it kinda got to

40:17

the point where it didn't matter how big

40:19

or how fast. Mhmm. What mattered was,

40:22

like, survive until

40:24

you thrive. Chris, you

40:26

are

40:26

in Karr Luis Obispo. You see

40:28

the numbers. You know, we're talking two thousand two

40:30

thousand one, two thousand two, two thousand three, four

40:32

or five, that it's it's not profitable. Were you

40:35

as optimistic as David and and those

40:37

guys? Were you like, yeah,

40:40

This is awesome. Or were you ever stressed yet a kid? Yeah. Well, I think a big

40:42

part of my role is balance as well. And

40:44

the way that I looked at it was like, this is

40:46

gonna happen, but we don't know how long it's

40:50

gonna take. So let's

40:50

try and build structure that can last

40:53

a long time. And so, you know,

40:55

if you go back to as

40:57

David mentioned, we got an SBA loan. We got

41:00

a second SBA loan in

41:02

ninety eight, maybe, and

41:04

then like a two hundred KSPL in,

41:06

like, two thousand. So maybe that was total of, like,

41:08

you know, three fifty. So we didn't have any equity

41:10

that we had sold or anything. And

41:12

so we

41:13

really were, like, we

41:15

really wanna be super frugal and, like, do

41:17

this in the right way so we don't have

41:19

this outside pressure -- Mhmm. -- trying

41:22

to drive And if it takes twenty five years or if it takes

41:24

twenty years or it takes a hundred

41:26

years, let's cut it out.

41:28

No. I I

41:30

love that. I love that you had patience that that

41:32

optimism. I love that, but not everybody

41:34

would stick with it. And the business

41:36

would not become profitable I

41:38

think until two thousand

41:40

eleven. So you're talking

41:42

about thirteen years of

41:44

unprofitability for a consumer

41:46

brand, for a drink. I

41:49

can't

41:49

imagine that's not scary at certain times. Howard Bauchner: So you

41:51

know, we profitable early on because

41:53

we weren't

41:55

paying ourselves We were,

41:57

you know, basically just covering expenses and and whatnot, and we were

41:59

shipping via UPS. You know, we weren't making

42:01

much, but we were

42:04

sustaining ourselves. when it started

42:06

to change was in all sudden, it's like, okay, now

42:08

we've got a national footprint. We need to

42:10

bring in the national sales manager and now we

42:12

need a broker network and now we need

42:14

a distributor. and you start seeing, you know, all those costs add up. And so

42:16

you're right from, like, probably, two

42:18

thousand four to two thousand eleven, we weren't

42:20

profitable. Mhmm. But we're

42:22

always close you

42:24

know, and so what we did was we started bringing in equity

42:26

capital, but always from

42:28

friends and families or angel investors. And so

42:30

I I ended up spending a lot of

42:34

my time over that period of time raising money because we never went out and said we're

42:36

gonna raise five million. It was like, okay, let's

42:38

raise two hundred fifty k. Let's raise

42:40

another five

42:42

hundred. And that way we able to, you know, minimize the dilution,

42:44

bring in the right, you know, at those

42:46

smaller numbers, you can really find people that

42:48

are really believe in the mission and vision,

42:51

and we'll stay with you long term, and many of them are

42:53

still investors to this day. What

42:55

about media attention? I mean,

42:57

you know, part of this

42:59

is you can explain to people what

43:01

Mate is, just word-of-mouth, but that's

43:03

not enough. Chris is

43:06

a very specialized products, especially in two thousand one, two thousand

43:08

345 when you're starting

43:10

out. Were you trying to reach out to

43:12

press to get them to write

43:14

about it? We

43:15

did have a big media success in

43:18

two thousand three that actually led to our first

43:20

near death experience.

43:22

What happened? So we we were on the cover of this

43:24

magazine called women's world that was

43:26

on, you know, at the checkstand of every

43:28

grocery store across America, and

43:30

it said South America's

43:32

secret weight loss tea -- Oh,

43:34

wow. -- because Yerba mate is known to

43:36

suppress appetite, and so it's used in

43:38

a lot of weight loss pills

43:40

in Europe. And so that headline came, we didn't know about

43:42

it. All of a sudden, we just started getting calls and we

43:44

started getting orders. And I remember it

43:46

was like, September.

43:48

And, you know, our sales doubled from the

43:50

previous month. In October, they tripled from the

43:52

month before that. Wow. November,

43:54

they tripled again. And then

43:56

all of sudden they stopped. And then

43:59

January, we got nothing. February, we got

44:01

nothing. And we had this like,

44:03

oh, Moment, like, what

44:05

is going on. Yeah. And what we found out

44:07

was was like a weekly.

44:10

So it was out for a week or two weeks,

44:12

and then the next thing came on. So

44:14

everyone wanted BITP, but

44:16

for a

44:16

very short period of time. And the

44:18

whole infrastructure, the retailers were

44:20

ordering it, so distributors were ordering BITP.

44:23

and then we were making it. But by the

44:25

time the retailers didn't need it anymore, there's

44:27

such a lag that we didn't know, and so there

44:29

was a glut of inventory. And that's why we

44:31

weren't getting sales for those next few months. But the other thing

44:33

was they bought it all in consignment. I took the calls, like,

44:35

from Vitamin Shoppe and GNC, I think it

44:38

was. And I was like, oh my god, this

44:40

is amazing. signing.

44:42

You know, you say yes and you're like cool sign

44:44

the document, but BITP consignment. I think only

44:46

GNC was. Yeah. But a lot of it

44:49

came back. And the second irony to that was we

44:51

had a major crash crash, but we had

44:53

a second piece of PR as well. And

44:55

David ended up being on the cover

44:57

of Money Magazine at this point. Wow. Talking about

44:59

how successful we were and how great everything was going. You want

45:01

the cover of Money Magazine? Yeah.

45:03

When was this? It

45:05

was like right after it and that was kind of

45:08

embarrassing too because Money Magazine

45:10

was not a big deal to me. In fact, I

45:12

was kind of against like a lot

45:14

of like just traditional

45:16

corporate behavior, but it was an article on

45:18

social impact. Okay. It was me

45:20

and a few other people. Anyway,

45:22

that led to to our first significant investment that

45:24

actually came in at the right time.

45:26

One thing I just wanna

45:27

reference is we actually did not

45:29

lay anyone off through

45:31

that experience. Mhmm. And I bring it up only because it

45:34

was it was a big decision and it was

45:36

kind of formative to how we

45:38

grew. We decided that everyone would take a

45:40

pay cut rather

45:41

than lay people off. And so

45:43

the significance we took the biggest pay cut, but everyone

45:45

took a pay cut. How many people were working for the company

45:47

at that point? I think we had about fifteen or

45:49

twenty at that point. And when you were on the cover of

45:51

of Money Magazine, David, I mean, you

45:54

guys were be three four

45:56

million dollar company were pretty small. I think

45:58

that was

45:58

about right? Yeah.

45:59

Yeah. Yeah.

46:01

Alright. Two

46:04

thousand five a couple of things happened that year. You move your

46:06

operations to Sebastopol, California,

46:08

which is where, I think,

46:09

your main headquarters or one of your

46:11

headquarters is still located. And

46:13

by this point, David was in British Columbia because

46:15

he fell in love as well. So you

46:17

moved up to British Columbia?

46:20

Yeah. Wow. k? And that

46:21

year, you start to sell bottled Mate.

46:24

Mhmm. And you

46:26

brought on a

46:28

new head of sales who had worked for Coca Cola by named

46:31

Pierre Ferrari, Karr lot going on

46:33

that

46:33

year. Well, to rewind a

46:36

little bit at a Bioneers conference before that, I had

46:38

met Ben Cohen from Ben and Jerry's -- Oh,

46:40

yeah. -- and gave him

46:42

a sample. And apparently,

46:44

he tried it on the plane and hated

46:46

it. But he was impressed enough with

46:48

our business model that he had

46:50

one of his people reach out

46:52

to us And it turned out when they sold to Unilever, they created

46:54

two small venture fund, two five million

46:56

dollar funds, one run by Pierre

46:58

Ferrari called HotFudge and one

47:00

run by Chuck Lacey called Bardrock. And so they were

47:02

both our first bigger investor,

47:04

bigger meaning they have each investor like a hundred and

47:06

fifty thousand

47:08

dollars. Yeah. and they were both on

47:10

our board. And so that's how we got to know

47:12

Pierre. And so he had previously been the

47:14

head of marketing for

47:16

Coca Cola. BITP he was also very much into, you know, social

47:18

justice and was invested in a lot of different

47:20

interesting companies doing fair trade clothing and

47:22

and whatnot. a natural

47:24

fit for us? Yeah. because you were a fair

47:26

trade company from the get go.

47:28

So when we

47:29

started, fair trade wasn't

47:31

really Yeah. A thing. But in spirit,

47:34

the whole idea was that because Monty

47:36

natively grows in

47:38

the rainforest, We can use it as an

47:40

economic driver to steward and restore

47:42

rain forest and be able to

47:44

partner with the communities that live and rely on

47:46

that forest. BITP from the beginning, that was the way that we operated and

47:48

so as fair trade became, you know, a

47:50

more legal entity. We that's

47:52

something that we've got very involved with and very

47:54

committed to. guess it's important to

47:56

mention that like something like ninety percent of the Mate

47:58

groan is controlled by like three or

47:59

four big companies in Argentina.

48:02

Right? So I think the growing

48:04

is a little more complex than that,

48:06

but it's a very consolidated. And

48:08

as a result, most of it is

48:10

is not grown in a

48:12

sustainable way. Is it Fair to say.

48:14

Yeah. It's it's it's like, you know,

48:16

virtually all sun grown

48:18

latte and any shade grown latte that

48:20

exists tends to get blended in with

48:22

the sun grown latte. So it's all

48:24

essentially some grown latte. And you wanted

48:26

to just sell shaved grown

48:28

latte. Yeah. Our belief not only

48:30

because we felt like the highest

48:32

quality latte came from the rainforest, but just

48:34

intuitively because that's where it natively

48:36

grows. And it also is the,

48:38

you know, what makes the whole business

48:40

model work. we call our business model

48:42

market driven regeneration. And the idea is that through the market,

48:44

i. e. customers, people believe

48:47

in our they will purchase a

48:49

product then drives the growers to be able to

48:52

regenerate forest, to be able to steward

48:54

and store the forest

48:56

they have, So it's this whole market

48:58

driven regeneration concept. So it relies

49:00

on Rainforest Mate. Alright. Two

49:02

thousand five, that year you

49:04

also start to bottle mate and sell it

49:06

in glass bottles. Presumably

49:08

because, I mean, this is kind

49:10

of the beginning. I think

49:13

of, like, the natural tea boom. Right? There had

49:15

been snapple in the eighties and nineties

49:17

and Arizona iced tea, but this is, like,

49:19

you're starting

49:21

to see honest tea on the shelves at this time. You're

49:23

starting to see Karr unsweetened teas.

49:26

And so was the was the thinking like

49:28

this is the only way to grow?

49:30

Yeah.

49:31

For sure. I mean, there's a combination of things. One

49:33

is, with the loosened bag market, we realized just

49:35

in the United States, it's just a

49:37

pretty small market. statistically

49:39

in the United States, it's like seventy five or

49:42

eighty five percent of tea is consumed

49:44

cold. Yeah. Thus, David and

49:46

Steven and Dom Miguel had spent so

49:48

much time making Mate

49:50

lattes and making Mate tastes so

49:52

good. People loved it, but they would always say

49:54

we can't make it the way you make it. And so we

49:56

felt with a ready to drink, it gave us the

49:58

opportunity to make the way we wanted to

49:59

make it and then be able to share it much more broadly. Yeah. The one other thing

50:02

to add, after we had

50:04

that really crazy

50:07

cash crunch situation of having our sales really

50:09

decline -- Mhmm. -- through our classically

50:11

our strong months, like the

50:14

fall winter, and spray them when

50:16

it was cooler out and people would drink hot

50:18

beverage. And now we're entering, like, the

50:20

desert, the

50:22

dry season. Right? Hot weather. So Chris and

50:24

I and Alex and crew at that point where it's

50:25

Alex, we gotta come out with

50:28

something cold. We need to be a four

50:30

season business.

50:32

And because we had the relationships in natural foods and because

50:34

it wasn't that big of a stretch to

50:36

find, like, a bottler Producer a

50:39

hundred thousand bottles and put

50:41

them in the stores where we thought they would do

50:43

well, where we had a customer base is

50:45

is kinda how we started that

50:47

business. And at the time it

50:49

glass bottles insistent on because glass bottles

50:52

are clearly recyclable. Karr no

50:54

matter what anybody says, plastic is

50:56

not recycled. like

50:58

ninety percent of plastic in the US is not recycled. Glass

51:01

is very recyclable, but it's

51:03

heavy and it breaks and

51:06

it's risk here, it more to ship, which is why so

51:08

many beverages aren't plastic

51:10

bottles. Did you at all

51:12

consider plastic? think

51:14

in the beginning, we didn't consider plastic at all, partly

51:16

for the environmental reason, and partly just because

51:18

we felt like from a health standpoint,

51:20

you know, the plastic you kinda

51:22

get the leaching effect and whatever. And the cleanest way to drink,

51:25

something would be out of glass. Flash

51:27

forward a couple years,

51:30

when we were, you know, looking at how do we expand our

51:32

reach and we did consider plastic at that point,

51:34

but ultimately decided plastic didn't make sense

51:36

for us and we opted to go with aluminum cans.

51:39

because we felt like it's the best out of those

51:42

three containers because it's so

51:44

energy efficient to recycle, flash

51:46

forward five, ten years and everything's

51:48

in cans now. Yeah.

51:50

Okay. Here's the

51:51

thing. Making a drink, it's a

51:53

great idea, but then getting it into

51:55

the hands of consumers is

51:58

another thing. From what I understand, if you're not in convenience

51:59

stores, it's really hard

52:02

to scale it. you've got to be in in the

52:04

corner shops. Right? You can't just be in

52:06

Whole Foods. you can maybe be

52:08

A89 million dollars

52:10

business if you're at every Whole Foods.

52:12

But beyond that, it's really hard.

52:14

Yeah. That that was

52:16

our experience. Yeah. So so for the first really year and

52:18

a half, two years, it was just natural

52:20

foods. Yeah. And so I think

52:22

to your question guy

52:24

about convenience. That was kind of the

52:26

next And we knew to

52:28

do that. We were gonna need a direct store

52:30

distribution to DSD. And at our

52:32

size, it was gonna need to probably

52:34

be a mom and pop type of

52:36

operation. And so we reached out to people

52:38

in our network we knew. And in

52:40

particular, Blaine and Seth from honesty were

52:42

really helpful. And they introduced

52:44

us to a couple of their early distributors. One was

52:46

literally one one person

52:48

show based out of Berkeley. And so that was our very first

52:50

distributor. We just started going up and down the

52:52

street and selling in to stores right

52:54

around UC

52:56

Berkeley. and then we got a second distributor that was up in this area

52:58

and then we added one in Pacific

53:00

Northwest and kind of just went like that.

53:03

Yeah. I mean, I'm curious, were you surprised

53:05

at how challenging that whole thing

53:08

was because you can

53:10

get a distributor but some of them are

53:12

very small and then you don't

53:14

necessarily have control over where they're placed

53:16

in the shelves. Is that what

53:18

you discovered? Yeah. I think you're

53:20

such a small fish in that pond.

53:22

Yeah. Just getting space on the truck is

53:24

Karr, getting attention from

53:26

the route salespeople's really hard because

53:28

every month, you have companies coming in and just laying huge stocks

53:30

of cash on the table and saying, you know, every

53:32

account you get, we're gonna pay you a hundred bucks.

53:34

And that was never the way we

53:38

operated. And, you know, kind of a funny

53:40

related story. One time, our LA distributor, I

53:42

wasn't

53:42

doing the presentation, but the person our

53:44

team that did it they had to follow body

53:46

armor, and body armor brought in

53:48

their new investor, Kobe Bryant. Yeah. And

53:50

so that was just the constant challenge

53:52

because there was so much money in the industry and people were paying to get the

53:55

placement, and we wanted to really make sure

53:57

we earned it. Yeah. But one

53:59

other

53:59

thing is we also had

54:02

this insight that and I

54:04

think Pierre actually came up with

54:06

this, was that we could either be a

54:08

gentle rain meaning that we can spend a little bit of money in nationally

54:10

we can create thunderstorms. And the

54:12

idea was like, let's focus really tightly

54:14

geography so that we can really

54:17

make an impact. And so that's what we

54:19

decided to do. We put all of our money into sampling and everything

54:22

in the West Coast so that we could

54:24

really have an impact there and and people

54:26

felt us.

54:28

I'm curious about

54:28

a moment in the company's history, two thousand

54:31

nine, from what I understand, the

54:33

brand is available, the bottle still,

54:35

you're not quite yet

54:38

in can. sense, but you're in six thousand stores. So sounds like a

54:40

lot, you're reporting about ten

54:41

million dollars in annual sales. So you've been you've

54:44

been around since nineteen ninety

54:46

six. So what thirteen years

54:48

later, you're still a Yerba, at this

54:50

point, a tiny company or small

54:52

business, you're still losing money.

54:54

Was this a kind of an inflection

54:56

point? Was there any moment

54:58

where you're thinking maybe we won't

55:00

be sustainable, Chris? Chris there

55:02

Karr always worries. I for

55:04

years, I mean, was managing cash flow so tightly. I

55:07

mean, we would certainly David, Steven

55:09

and I David payroll.

55:12

more times than we would like to admit. And at the same point, you know,

55:15

we saw friends companies that were, you

55:17

know, just hockey sticking and just like,

55:19

wait, we're getting left behind. BITP

55:22

there was never a long term concern. It was always just short

55:24

term like, okay, how are we gonna get through this

55:26

valley? How are we gonna get, you know,

55:28

to the next peak? How are we gonna make

55:31

this work? We joked every year. This is gonna be the year of the

55:33

year by. This is the year. Next year is the year of

55:35

the year by. When

55:39

we come back in just a moment Herman David,

55:41

and the team finally make

55:43

it work and why they decide to

55:45

start a second massive

55:48

venture building their own

55:50

distribution company. Stay with

55:52

us. I'm Sky Rise and you're listening

55:54

to how

55:55

I built this. You don't

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57:29

Hey,

57:37

welcome back to how I built this.

57:39

I'm Guy arise. So it's two

57:41

thousand nine and Chris David and the

57:43

rest of the crew

57:46

have been grinding for over a decade. Guayaquil

57:48

has yet to really take off,

57:50

but they aren't even thinking about

57:52

giving up. Although

57:54

it's clear some of their

57:56

competitors in the beverage space

57:58

seem to expect that they

57:59

will. You know, I was

58:00

getting a lot of calls like,

58:04

040506 from people that wanted to

58:06

buy Guayak. And some of them, what

58:08

they said was, you know, we just know

58:10

that about seven years, people get tired.

58:13

and we're looking for a deal. Like, we're hoping that you guys are

58:15

kind of burned out and and we can grab it.

58:17

But then in very end of two thousand five, almost

58:19

like two thousand six, we launched

58:22

the beverage. And it was almost like we were a

58:24

startup now. And so it was really much

58:26

like a second wind. So if

58:28

you think being in two thousand nine

58:30

in a way we're only like two or three years in on the

58:32

beverage business at that point. But we knew

58:34

that we needed to reach more people. So our

58:36

thought was we wanted to come

58:38

up with a product that had a

58:40

more simple flavor profile that would

58:42

really resonate with a wider audience

58:44

and that we could then go more into

58:46

convenience and really be able to grow. And so we did raise a little bit

58:48

of capital again. And at

58:50

the end of two thousand nine is when we

58:52

formulated the lemonilization in

58:54

a can did a test launch

58:56

in San Diego. And then later

58:58

in ten, we came up with the other two,

59:00

the the Pebbleberry, and

59:02

the enlightenment. think about everything was it's been such a long journey. Everything was

59:04

relative. Like, it took so much

59:06

energy and time to,

59:08

like, make mate latte on

59:12

the road and there's honey stuck on the floor and on your like,

59:14

plants and, like, yeah. And then all

59:16

of a sudden, we have bottles and they're,

59:20

like, Great.

59:20

They're they're awesome. They can't quite scale, but

59:22

now people can actually drink it. Just

59:24

by cracking it open, it was whole,

59:27

like, oh my gosh. And that was exciting. But when

59:29

the cans hit, it was a whole another

59:32

thing. Right? It was like another

59:34

generation of consumers. All of a sudden,

59:36

young people could use this

59:38

product in place of all the other canned

59:40

drinks. And now we're starting to

59:42

build, like, around two thousand

59:44

eleven. So it was a whole renewed sense

59:46

of, like, optimism and, like, wow. Okay. This product

59:48

can do it. Did did

59:50

you, Chris, at any point Chris

59:52

the the period where you

59:54

weren't profitable? and you had

59:56

outside companies coming to you. And I'm sure they were

59:58

saying, guys, make Coca Cola about Honest

1:00:00

Tea. Right? There's all this

1:00:02

consolidation happening. I'm sure you were

1:00:04

getting the same pitches. Like, you're just not gonna make it as

1:00:06

an independent company. You've gotta be with a bigger

1:00:08

player, but we'll respect your values and you

1:00:10

guys can run it just as you wanna run it

1:00:12

and we'll put an infusion of

1:00:14

cash in that never ever sounded tempting at all?

1:00:16

No. And I think, you know, something

1:00:17

maybe I didn't highlight before in

1:00:20

talking about

1:00:22

you know, what also motivated us is for us, it was never about the

1:00:24

money, it was about the mission. And at

1:00:26

the same point, we very much felt

1:00:30

a responsibility to the

1:00:32

growers. Yeah. Because, you know, they were

1:00:34

relying on us and and especially as we did

1:00:36

grow and we're buying more and more matte

1:00:38

from them. you know, if we partnered with another company, they weren't gonna it.

1:00:40

The press releases are always so positive

1:00:42

and then a year or two later,

1:00:46

at most, the founders are out and and the company is doing different things.

1:00:48

And in fact, I was on a number of

1:00:50

panels at different, like, investment

1:00:52

conferences and stuff Karr I

1:00:54

always represented because when we raise

1:00:56

money, we raise it with no exit

1:00:58

strategy. And typically, that's the first question

1:01:00

investor has is, well, how am I gonna get my

1:01:02

money back? And we would

1:01:04

say, we're not sure. We're not ruling out

1:01:06

selling, but it's not something we're focused on. We

1:01:08

really want to grow this for the long haul. But

1:01:10

we just felt like that was a much more

1:01:12

sustainable business for us and it allowed us to grow slower and kind of figure things out.

1:01:14

Had we grown fast out of the gate? We

1:01:16

wouldn't have figured out the bottle or

1:01:18

the can wouldn't

1:01:20

have had those products we probably would be owned by someone already because

1:01:22

it seems like the faster you grow, the

1:01:24

faster you kind of hit that

1:01:25

plateau, whereas if you

1:01:28

can grow slower, you can really find your market and not

1:01:30

buy your market. Mhmm. And we wanted

1:01:32

to create a legacy business that

1:01:34

was alive and thriving

1:01:36

beyond us. That doesn't

1:01:38

preclude us from going public. It doesn't

1:01:40

preclude us from partnerships. It doesn't preclude us

1:01:42

from anything. But it does mean

1:01:44

that we need to partner with the

1:01:46

right people at the right times and make the right moves. And interesting

1:01:48

that like you you referenced honesty, which

1:01:50

has just been announced by Coca Cola, that it's

1:01:52

gonna be discontinued by the end of twenty

1:01:56

twenty two. So that brand is no longer a legacy business. It'll be

1:01:58

a tombstone. And it's like,

1:01:59

okay. It was a good run and

1:02:02

that's great. but

1:02:04

we see beyond that. All of us have

1:02:06

come together for reasons that

1:02:08

we felt like the the current

1:02:10

paradigm of business and capitalism

1:02:12

isn't serving people the way it

1:02:14

needs to be served. It could be done better with

1:02:16

more interest than just the

1:02:18

stakeholders or just the people that own the

1:02:20

stock. And so that's really the driving

1:02:22

force behind a lot of our decision

1:02:24

making. Alright.

1:02:25

So in two thousand ten, right,

1:02:28

you've got cans out into the world. And by two thousand eleven, you

1:02:30

actually have your first, I think your first

1:02:32

profitable year, fifteen million

1:02:34

in revenue, Yeah. And

1:02:36

then a few years later, you do something that I think

1:02:38

is really interesting because

1:02:40

I almost never heard of this.

1:02:42

You essentially decide to create your

1:02:44

own distribution company. And

1:02:46

before we get to how you did and

1:02:48

what you did. Right? Help

1:02:50

me understand why you even started to think about doing something

1:02:52

like that. And around two thousand

1:02:54

fourteen,

1:02:54

we weren't national.

1:02:58

were at the stage of growth where we

1:03:00

were approached by the big beverage

1:03:02

companies and could have been on those

1:03:04

beverage trucks And had we done that? We probably would be two or three

1:03:06

times bigger than we are now, but we also might

1:03:08

be that size and getting canceled,

1:03:10

you know.

1:03:12

or we might be not involved. It might be a product that

1:03:14

we didn't don't feel good about. And so

1:03:16

at the time, we thought what are other

1:03:18

Karr know, we could build out this third party network

1:03:21

with a a whole range of independence. Mhmm. But

1:03:23

we knew a lot of people that had done that and it's,

1:03:25

you know, you have, like, two hundred

1:03:28

distributors and you know, hundreds of employees and it's just so much to manage

1:03:30

and no one cares about your product as much

1:03:32

as you do. Yeah. And so

1:03:34

we thought why don't we try it

1:03:36

ourselves and see how it goes? And

1:03:37

the other big appeal beyond what Chris

1:03:39

just shared, you know, the sort of the lack of

1:03:41

control of destiny was more of the potential

1:03:43

control of destiny with our own vehicles. In

1:03:46

other words, we wanted to

1:03:48

have the energy

1:03:50

of our brand translate through our

1:03:52

drivers and in the relationships that

1:03:54

would occur at the store level.

1:03:57

and have way more visibility into that

1:03:59

relationship. Like, okay,

1:04:00

you have a great relationship. Maybe you can get a cooler

1:04:02

in there. You have much more reporting over

1:04:04

what's happening at the flow through.

1:04:06

and a much closer connection to retailer and then

1:04:09

ultimately the customer because we've kinda we

1:04:11

always have that vision of like

1:04:13

seed to Casey. like, all the

1:04:15

way from the Urban Mateo Tree to the

1:04:18

shelf, ultimately, would be a

1:04:20

great way to steward the the

1:04:22

product all the way through. Well, let

1:04:24

me ask

1:04:24

you a quick quick question before we get there. I mean,

1:04:26

let's say you did partner with a large a

1:04:29

distributor basically is a company that

1:04:31

has the trucks that you load your product on and then

1:04:33

they drive it to the store and then they put it

1:04:35

on the shelves of the store. If a big company

1:04:37

came to you and said, hey, we wanna distribute

1:04:39

your product. What how would that affect your values?

1:04:41

I mean, you say now that you might have

1:04:43

been even bigger than you are now, had you done

1:04:45

that but

1:04:48

how would that have been compromised? More so compromised from

1:04:50

a business standpoint, I feel, because, you

1:04:52

know, if you go with one of

1:04:53

the three big companies, you're with

1:04:56

that company. they

1:04:58

make their money off of carbonated soft drinks. Yeah.

1:05:00

And that's that's what dominates the shelf. That's

1:05:02

what dominates the truck. If

1:05:04

you're Coca Cola and you own Coke

1:05:06

and you own Diet, on that is

1:05:08

through the roof. And so there's a

1:05:10

limited room for other products on those

1:05:13

trucks, and they have to

1:05:16

really perform. BITP lot of times when you're building something, it doesn't perform out

1:05:18

of the gate. It takes time to build it. You

1:05:20

know, I think we have seen that with other

1:05:22

companies when they've been acquired by one of

1:05:24

those companies. and they get on

1:05:26

those trucks and they just

1:05:28

can't meet the volume thresholds because it

1:05:30

takes time to build and and so then

1:05:32

you start trying to discount and move quickly

1:05:34

and that's where it really changes the

1:05:36

way the business is run. Alright. So

1:05:37

twenty seventeen, you guys

1:05:39

decide. We're gonna build our

1:05:41

own distribution network. what

1:05:44

literally does that mean? Does that mean you have

1:05:46

to buy your own trucks, hire

1:05:48

your own drivers? Because

1:05:50

that's a different company. That's a logistics company.

1:05:52

Did you essentially have to start a brand new company? Yeah.

1:05:54

It was a new company

1:05:55

that was started. And to be fair, it's

1:05:58

not David and I that built that

1:05:59

network. We started

1:06:02

a separate company and LLC out of Jacksonville, Florida with

1:06:04

a separate team that ran it and built

1:06:06

it. And from the beginning, the idea

1:06:08

wasn't for it to

1:06:10

necessarily be a national distributor. It was to fill in all the gaps where we

1:06:12

weren't because there's a lot of places

1:06:14

in the country where there aren't good

1:06:16

third party options. It's either

1:06:18

gonna be one of three

1:06:20

or like a nine hours or bush? So,

1:06:22

alright, over

1:06:22

the next, I think, two

1:06:24

years, you started to buy

1:06:27

Cheng bolts. This was gonna be

1:06:29

your fleet. Great Karr Chris, very

1:06:32

small. Yeah. Eventually, you would buy three hundred of these.

1:06:34

Chevy, I think you're the biggest customer of Chevy

1:06:36

Bolt's in America. First of

1:06:38

all, how do

1:06:39

you fit enough product in a

1:06:41

Chevy Bolt to get it

1:06:43

to enough stores?

1:06:45

Well,

1:06:45

COOLIE, after a year, they developed one

1:06:47

based on our feedback, and so they took the back seats out,

1:06:49

put additional suspension in, had

1:06:52

a Casey. but our model was very modular. And

1:06:54

because we started out going after

1:06:56

markets where, you know, there were new markets for us

1:06:58

where we were in natural food stores, but we didn't have

1:07:00

any convenience

1:07:02

distribution. It was very small small scale to

1:07:04

start with. And so it was just starting

1:07:06

from scratch, basically knocking on doors, opening

1:07:09

accounts, making it Herman,

1:07:12

And so, you know, a small vehicle that could hold

1:07:14

sixty cases was sufficient in

1:07:16

those areas. Mhmm. You know, in Wyoming, we

1:07:18

might only have one vehicle for instance

1:07:21

one one vehicle. But as the

1:07:23

model shifted and we started taking

1:07:25

over more distribution ship and as the

1:07:27

sales grew, then that obviously became

1:07:29

a huge limit. belief was that, you know, within two years,

1:07:31

there'd be electric vans and trucks, and

1:07:34

there aren't. Right.

1:07:37

With this distribution,

1:07:38

system now that you

1:07:40

start in twenty seventeen. First of all, how

1:07:42

did you finance it? I mean, three hundred vehicles

1:07:44

and three hundred drivers and a

1:07:48

team to manage that

1:07:50

and, you know, how did you

1:07:52

finance that? When we started it, we were able to

1:07:54

self finance because we

1:07:56

just started I think our first market might have been Jacksonville and that

1:07:58

was maybe three or four cars we

1:07:59

leased, three or four people. And

1:08:02

then as we started adding markets at a

1:08:04

certain point, it

1:08:06

outgrew our ability to fund

1:08:08

that cash flow. And so we

1:08:10

needed to raise some capital. So

1:08:12

twenty ninth fifteen and end

1:08:14

of eighteen, end of nineteen. I think we raised about thirty million.

1:08:16

Mhmm. And most all of that

1:08:18

went to all of that went to

1:08:20

distribution that was purely a hundred

1:08:22

percent distribution. Alright. Here's a question. And I think it's a

1:08:23

fair question

1:08:27

to ask because you are focused on restoring

1:08:29

parts of the rainforest. I know you're very committed

1:08:32

to trying to finance the restoration

1:08:34

of like two million acres of the

1:08:36

rain for us.

1:08:38

But, you know, how do you guarantee given that you're not in Argentina you

1:08:43

know, or Brazil, how do

1:08:45

you make sure that's the Casey? How do

1:08:47

you make sure that the farm workers are treated well?

1:08:49

I mean, because your values are so aligned and so

1:08:52

tied to to that idea,

1:08:54

how do you make sure that you're not getting the wool pulled over your own eyes? Yeah. Well, I mean,

1:08:56

that is what our

1:08:58

South American team focuses

1:09:00

on we

1:09:02

have, you know, dozens of people down there on

1:09:04

the ground in each country Karr Paraguay,

1:09:07

Argentina and Brazil working

1:09:09

with the communities that we source from. Like, there's no

1:09:11

broker, and that's probably one of the biggest

1:09:13

distinguishing factors between Guayaqui and other businesses.

1:09:16

Like, these are relationships that people

1:09:18

have cultivated over more than two decades

1:09:20

now. And

1:09:20

to your point, Guy, we have uncovered a

1:09:22

lot over these years because we've always invested in having

1:09:26

a team down there. And we an example where we

1:09:29

were paying a cooperative who had

1:09:31

a number of growers, and it

1:09:33

turned out that the cooperative wasn't

1:09:35

paying the actual growers. but

1:09:37

the growers thought that we weren't paying them. So then

1:09:39

our team had to go grower and connect with

1:09:42

them, explain what happened, carry

1:09:44

cash, through

1:09:46

the countryside and actually pay cash to

1:09:49

ensure that this was happening. And so building

1:09:51

that team down there is

1:09:53

critical. We have offices in Paraguay,

1:09:55

Brazil, and Argentina, and we have a full processing

1:09:57

facility as well in Brazil. I'm

1:09:59

curious about

1:10:00

the five founders who are

1:10:02

still actively engaged in the business.

1:10:04

You're all distributed. You all live in

1:10:07

different places. Right? Steven and I are both in Sevastopol, but yeah, everyone else

1:10:09

is somewhere in

1:10:11

a different place. And how

1:10:13

how do you guys make that work?

1:10:15

Do you get together regularly, quarterly? Yeah. We

1:10:17

always have. That's been part of the beauty. How

1:10:20

how often? oh, we're

1:10:22

together several times a year, somehow, usually around surf trips or or work gatherings. I mean,

1:10:24

I think from, you know, a lot of it, it

1:10:26

would it would probably be, you know, ten times

1:10:30

a year. Obviously, during COVID, that's changed a

1:10:32

bit. But we all travel

1:10:34

and we meet where we are.

1:10:36

But the other factors that some of us

1:10:39

have always been apart throughout the whole journey just because the nature of being on the road. And so we've gotten really

1:10:41

good at just

1:10:44

communicating and just

1:10:46

because we're so connected to the the mission and vision, you know, even when there's times when we haven't spoken, when we get back

1:10:48

together about something that

1:10:51

we haven't talked about, like

1:10:54

ninety nine percent of the time, we're

1:10:56

completely aligned on it. How many employees do you

1:10:58

have now? I think somewhere

1:10:59

around four fifty, and

1:11:01

that includes the the distributors. Yeah. The the majority of that would be the

1:11:03

distribution business. David, you mentioned earlier that, you

1:11:05

know, can

1:11:06

be a billion dollar business one

1:11:10

day. Mate as a whole from what

1:11:13

I understand is closer to a

1:11:15

three hundred million global business, and

1:11:17

that includes all Mate. around the world

1:11:19

sold. And you guys now are about a

1:11:22

third of that. How big can this

1:11:24

grow? Well, I think

1:11:25

it can can grow to be

1:11:27

any size that a beverage company could grow to be. And it

1:11:29

really comes down more to execution

1:11:31

than anything. And you

1:11:34

know, if anything, I have more faith in that

1:11:36

than I ever had before, especially because

1:11:39

we're we're part of really

1:11:41

driving for this regenerative

1:11:43

movement we want all kinds of businesses that

1:11:45

are stewarding, you know, the planet and taking care of people. We

1:11:48

want those kind of businesses to

1:11:50

to be successful, to do just

1:11:52

that. And

1:11:54

I think for

1:11:54

us, you know, we had a big reset in twenty twenty.

1:11:57

You know, COVID hit us hard, and it was

1:11:59

a moment for

1:11:59

us to reflect and say, you know, what

1:12:02

do we really want? do we sell the company at this point? Mhmm.

1:12:04

Do we wanna bring in other partners? What

1:12:06

do we wanna do? And I think David

1:12:09

and Alex and I were like, we

1:12:10

do feel like we need to bring in the expertise to be able to

1:12:12

take this to the next level because we, you know, we

1:12:15

got to a hundred million without Costco

1:12:17

Walmart Amazon, any of those big retailers that are usually a big part

1:12:19

of it. And I think we're just engaging with them now, you know, as

1:12:21

we hit like one

1:12:23

fifty or so. So

1:12:26

you're not in Costco or Walmart or places I just Costco Mhmm.

1:12:31

-- this year. I'm wondering,

1:12:33

I mean, as you now approach a hundred and fifty million

1:12:35

in revenue and start to get to the bigger stores

1:12:37

like Costco and Walmart, you're obviously likely

1:12:39

to grow more and

1:12:43

more, you're not ruling out selling your company

1:12:45

one day, but it's not something

1:12:47

that you

1:12:48

can imagine anytime soon. Yeah.

1:12:51

And

1:12:51

and two, I think going back to the scale conversation -- Mhmm.

1:12:53

-- Karr know, one of our competitors

1:12:55

is owned by Pepsi, and they're

1:12:57

on the Pepsi trucks, and

1:12:59

they have unlimited distribution. but it's not really working.

1:13:01

And I think it's because it's it's just premature. You know, the market's not

1:13:03

ready. There's not enough customers that know about it. So I I

1:13:05

think for us, we can make the decision that feels

1:13:07

like it's right for

1:13:10

the brand over the long haul. And so

1:13:12

if that means going public, then that's a

1:13:14

path. If it means partnering with a bigger

1:13:16

company, then that's a path as well. BITP

1:13:18

there's nothing on on our agenda currently.

1:13:20

When you

1:13:21

think about the journey, it

1:13:23

took me this is basically a

1:13:25

company that started in nineteen ninety

1:13:27

six ninety seven took a long, long time to reach

1:13:30

ten, fifteen million dollars in revenue, you

1:13:32

know, thirteen,

1:13:35

fourteen years. And now you are where

1:13:37

you Karr, easily the biggest Miara

1:13:39

Bomate in the United States, one

1:13:41

of the biggest in the world. there's

1:13:43

not been an easy path, and I understand that you've enjoyed

1:13:45

pretty much every minute of it. I think

1:13:47

that's amazing. But it doesn't take

1:13:50

away the fact that it was

1:13:52

hard how much of that

1:13:54

do you think has to just do with

1:13:56

the hard work you put in the years

1:13:58

of driving door to door,

1:13:59

the setups of making millions of cups

1:14:02

of Mate. what you did and how much do you think assets Karr

1:14:04

just getting lucky. You know, the natural foods

1:14:06

business and industry kind of coming up

1:14:09

and whole foods expanding and people becoming more aware

1:14:11

of natural foods. What do you what do you think? So I'm

1:14:13

a incredibly

1:14:14

grateful person, and so

1:14:17

I could easily say it's all

1:14:19

luck. I think luck is more of the accelerant, and it's the

1:14:21

work that I think links those

1:14:23

lucky moments. And in

1:14:26

some Casey, the luck saves

1:14:28

your life as well. In one way, it's

1:14:30

lucky that I that I met David Alex and Miguel

1:14:34

and Steven but I I'm humbled by what we've been

1:14:37

able to create and what we have yet

1:14:39

to create. And I know that

1:14:41

luck definitely plays a

1:14:43

big part of it. David? David,

1:14:44

I think you you

1:14:45

make your own luck. Okay? Like, you can't really look back

1:14:47

and say how it

1:14:50

would have been different. but I feel like we made our own luck

1:14:52

by really investing

1:14:55

in connection and

1:14:57

relationships. We tried to do right by people we

1:14:59

worked with. Whether it was the achievement house, you

1:15:02

know, the adults with disabilities at first

1:15:04

packaged our

1:15:06

loose Montay and tea bags or, like, showing up at a store and, like, connecting

1:15:08

with the store buyers of the front ends

1:15:10

and, like, really making someone an incredible Matay

1:15:13

latay. Like, the relationships that Chris and

1:15:16

Steven and No Miguel and Alex and I will have

1:15:18

with each other, like, all of that is very meaningful

1:15:21

and profound. Is there a lot?

1:15:23

Well, sure, we've survived until we

1:15:25

thrive. We're still doing it. We

1:15:27

were like on the bleeding edge

1:15:29

for most of my career. And

1:15:31

now I just say we're on the

1:15:33

right side of history. That's David Carr and

1:15:36

Chris Mann. two of

1:15:38

the five co founders of Boyake, Yirba mate. By the way, that VW Bus, that David and his

1:15:40

brother Steven, drove up and

1:15:42

down the West Coast, way back

1:15:46

when they first started serving Mate,

1:15:48

it actually has a name. It's called

1:15:50

Dani. Stephen painted the side of the

1:15:52

bus with images of the rainforest

1:15:54

and Amatego above the message, honk, if you pack them. Hey,

1:15:56

thanks so much for listening

1:15:58

to the show

1:15:59

this week. If

1:16:02

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1:16:23

episode was produced by

1:16:26

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1:16:28

was edited by Casey Herman with research

1:16:30

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1:16:32

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Chris, and Carla Estebes. I'm

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